Federal Court of Australia

Dyer v Chrysanthou (No 4) [2022] FCA 51

ORDERS

THE COURT ORDERS THAT:

1.    The orders made by Thawley J on 11 June 2021 and Registrar Luxton on 19 January 2022, the effect of which is to require the respondents to pay costs assessed on a lump sum basis in the amount of $430,200.00, be temporarily stayed pending the outcome of the appeal and cross-appeal filed by the respondents in respect of the judgments and orders of Thawley J (appeal proceeding NSD612/2021), subject to the following conditions:

(a)    the sum of $430,200.00 is to be paid into a trust account of the first respondent’s solicitors, Kennedys, by 4.00pm on 4 February 2022; and

(b)    subject to any further order of the Court, Kennedys are not to release those funds from the trust account before 5.00pm on the day of the delivery of judgment in the appeal proceeding NSD612/2021; and

(c)    if the appeal proceeding:

(i)    is resolved in favour of the applicant, the funds are to be paid to, or at the direction of, the applicant within 48 hours of the time referred to in order 1(b); or

(ii)    is resolved in favour of the respondents, the funds may be paid to, or at the direction of, the respondents; or

(iii)    does not resolve the question of costs wholly in favour of any of the parties, the funds are to be paid or released in accordance with the orders of the Court or as agreed between the parties.

2.    The respondents pay the applicant’s costs of the respondents’ interlocutory applications heard on 2 February 2022.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

WIGNEY J:

1    Ms Joanne Dyer successfully applied to the Federal Court of Australia last year for an order that Ms Sue Chrysanthou of senior counsel be restrained from acting for Mr Charles Christian Porter in a defamation proceeding that Mr Porter had commenced: see Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641 (the injunction judgment). Ms Chrysanthou and Mr Porter were subsequently ordered to pay Ms Dyer’s costs of those injunction proceedings: see Dyer v Chrysanthou (No 3) (Costs) [2021] FCA 642 (the costs judgment). The question of costs was subsequently referred to a registrar, who determined that Ms Dyer’s costs be determined by way of a lump sum assessment. On 19 January 2022, the registrar ordered that Ms Dyer’s costs be determined in the amount of $430,200 (lump sum costs order).

2    The effect of the costs judgment and lump sum costs order is that Ms Chrysanthou and Mr Porter are required to pay $430,200 to Ms Dyer in respect of her costs of the injunction proceedings. As no time was specified in the lump sum costs order, Ms Chrysanthou and Mr Porter must pay the assessed sum to Ms Dyer within 14 days of the order: r 39.02 of the Federal Court Rules 2011 (Cth).

3    On 24 June 2021, Mr Porter filed a notice of appeal in respect of, relevantly, the injunction judgment and the costs judgment. On 16 July 2021, Ms Chrysanthou filed a notice of cross-appeal in respect of the costs judgment.

4    The appeals are listed for hearing before the Full Court on 20 and 21 April 2022.

5    Neither Mr Porter nor Ms Chrysanthou have filed any appeal or application for review of the lump sum costs order, though an appeal or application for review has been foreshadowed.

6    On 2 February 2022, Mr Porter and Ms Chrysanthou filed interlocutory applications seeking various orders, including an order that the lump sum costs orders be stayed pending the determination of the appeals in respect of the injunction judgment and the costs judgment and the determination of any appeal of the lump sum costs order. Those interlocutory applications were listed before me as duty judge on the basis that they were urgent. The urgency was said to be that, if the lump sum costs order is not stayed, Mr Porter and Ms Chrysanthou would have to comply with that order and the $430,200 to Ms Dyer by 4.00pm on 2 February 2022.

7    Rule 36.08 of the Rules provides as follows:

36.08 Stay of execution or proceedings under judgment appealed from

(1)    An appeal does not:

(a)    operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or

(b)    invalidate any proceedings already taken.

(2)    However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.

(3)    An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind.

8     Similarly, r 41.03 of the Rules provides that “a party bound by a judgment or order may apply to the Court for an order that the judgment or order be stayed”.

9    The principles upon which a stay of execution or stay of orders may be granted pursuant to r 36.08 of the Rules were helpfully summarised in a recent judgment of Abraham J in Viagogo AG v ACCC [2021] FCA 175 (at [10]-[12]):

Rule 36.08 confers a broad discretion. Generally, there must be demonstrated “a reason or an appropriate case” to warrant the exercise of discretion in favour of granting a stay. It is not necessary to establish special or exceptional circumstances for the grant of a stay: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66.

Two questions must be considered: first, is there an arguable point on the proposed appeal: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) at [24] or some “rational prospect of success” in relation to any of the grounds of appeal: Burns v AMP Finance Ltd [2005] FCA 761 at [5]; and second, does the balance of convenience favour the grant of a stay: Nolten at [24], [46].

The party seeking the order bears the onus of demonstrating a proper basis for a stay, which must be fair to all parties: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (Alexander) at 695. That party must demonstrate that there is a real risk that it will suffer prejudice or damage if a stay is not granted, which will not be redressed by a successful appeal: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd, McLean Tecnic Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 (Kalifair) at [18]; Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658 (Flight Centre) at [9(f)]. This requirement will be satisfied if a successful appeal will be rendered nugatory unless a stay is granted: Ali v Australian Competition and Consumer Commission [2020] FCA 860 at [11]; Australian Competition and Consumer Commission v BMW (Australia) Ltd (No 2) [2003] FCA 864 (BMW) at [5]; Alexander at 695; Kalifair at [18].

10    Similar principles have been referred to and applied in relation to the discretion in r 41.03 of the Rules: see Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [48]-[51].

11    Mr Porter’s interlocutory application was supported by an affidavit sworn by his solicitor, Ms Rebekah Giles. Similarly, Ms Chrysanthou’s interlocutory application was supported by an affidavit affirmed by her solicitor, Mr Nathan Buck.

12    Ms Giles asserts in her affidavit that Ms Dyer was not “out of pocket” in respect of the costs of the injunction proceedings because her legal team had acted on a contingency basis. That assertion is confirmed by the copies of the engagement letters and costs agreement annexed to Ms Giles’s affidavit. The costs agreement between Ms Dyer and her solicitors states, for example, that the solicitors had agreed to act for her on a “speculative basis”, meaning that the solicitors would not charge for their work unless Ms Dyer was successful in the proceedings and the Court made a costs order in her favour.

13    Ms Giles also asserts that if Mr Porter and Ms Chrysanthou actually pay Ms Dyer pursuant to the lump sum costs order, that would “trigger the payment obligation in the retainers and the money will likely be passed on to her lawyers”. The result would be, so it was asserted, that if the appeals in respect of the injunction judgment and costs judgment are successful, “[Ms Dyer] will not have the $430,200 to pay back, let alone the respondents’ costs of the appeal and the costs of the proceedings at first instance, for which she would also be liable”.

14    Ms Giles’ reference to the triggering of the payment obligation is presumably a reference to clause 16 of the costs agreement between Ms Dyer and her solicitors, which provides as follows:

Costs orders: If a costs order is made in your favour during the proceedings, and the amount assessed as being payable to you under that costs order exceeds the amount of our fixed fee or retainer fee, then you are liable for the higher amount. We will not require you to pay the excess unless and until you recover that amount from the parties liable to pay the costs order.

(Emphasis in italics added.)

15    The assertion, or at least implication, by Ms Giles that Ms Dyer may not be able to pay back the $430,200 paid to her in respect of costs if the appeals are successful would appear to be based on a brief passage in a media article annexed to her affidavit. That article, which was published in the Good Weekend magazine of the Sydney Morning Herald on 28 January 2022 related to Ms Dyer and touched on her involvement in the circumstances that ultimately culminated in publications that were the subject of the defamation proceedings commenced by Mr Porter. The article also referred to the injunction proceedings and Ms Dyer’s concerns about possibly having to pay Ms Chrysanthou and Mr Porter’s costs if she was unsuccessful in those proceedings. The passage in the article which was emphasised in Ms Giles’ affidavit was as follows:

The night before the judge’s decision, “there was such a weight in the house”, recalls Michael Rowland. “It was very quiet, not much overt emotion: just this weight. I remember thinking, ‘Even if she sells everything she owns and we all sell everything, she’s not going to be able to.’”

16    According to the article, Mr Michael Rowland was staying in Ms Dyer’s sunroom at the time. The article does not otherwise explore the precise nature of the relationship between Ms Dyer and Mr Rowland. It was certainly not clear that Mr Rowland would necessarily have had any real knowledge of Ms Dyer’s financial position or her ability, or inability, to meet any possible adverse costs order.

17    It should also be noted that the article made clear that Ms Dyer was a relatively well known and successful figure in the arts sector. That fact is capable of casting some doubt on Ms Giles’ assertion or suggestion concerning Ms Dyer’s ability to repay the $430,200, should it be paid to her, if the appeals by Mr Porter and Ms Chysanthou ultimately succeed. While those in the arts sector may generally not be as well remunerated as those in other sectors of the economy or community (such as those in the legal sector), it would appear to be unlikely that Ms Dyer is impecunious or devoid of any assets.

18    As for Mr Porter’s appeal in respect of the injunction judgment and costs judgment, Ms Giles states that she believes the merits of the appeal are “strong”. She does not, however, elaborate on that belief or the basis for it. She does not refer to the grounds of the appeal or annex to her affidavit a copy of Mr Porter’s notice of appeal.

19    Ms Giles also states in her affidavit as follows in relation to the possibility or probability of an appeal from the lump sum costs order:

If the respondents were to appeal the cost judgment, I believe the merits of the appeal would be strong for reasons including the following:

(a)    The appeal would be a hearing de novo;

(b)    Counsels’ costs were awarded in excess of the National Guideline;

(c)    While a line-by-line assessment is not necessary, 70% is excessive for party to party costs where solicitors’ rates exceeded the scale and such a large amount of costs was incurred in such a short space of time; and

(d)    Aspects of Ms Rosati’s evidence were not considered.

20    The Court was only provided with a copy of Mr Buck’s affidavit very shortly prior to the hearing. His affidavit essentially annexes some correspondence between the respective solicitors after the making of the lump sum costs order. In respect of the prospects of an appeal from the lump sum costs order, Mr Buck states that he understands an appeal lies as of right from that order and that within which such an appeal may be filed is 21 days from the date of judgment. He goes on to state that he holds instructions to “make this appeal”. Mr Buck’s affidavit does not otherwise identify the nature or basis of the appeal or its grounds.

21    It should perhaps be noted at this juncture that Mr Buck’s understanding about an appeal lying as of right from the lump sum costs order is not strictly correct. In fact, a party has a right to apply to the Court to review a registrar’s exercise of power pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 3.11(1) of the Rules. A review under s 35A(5) of the FCA Act is in the nature of a hearing de novo: Guildford International Group Pty Ltd, Aviation 3030 Pty Ltd, in the matter of Aviation 3030 Pty Ltd [2018] FCA 600 at [1]. The application for review must be filed within 21 days after the day on which the power was exercised: r 3.11(2) of the Rules.

22    The main basis upon which Mr Porter and Ms Chrysanthou contend that a stay of the lump sum costs order is appropriate is that the prospects of success of their appeals are good and they will suffer prejudice if the lump sum costs order is not stayed pending the determination of their appeals. That prejudice is said to be that if they are required to pay the sum of $430,200 to Ms Dyer in accordance with the lump sum costs order, they will be unable to recover that sum from her if their appeals succeed and the costs judgment is overturned. The sole basis for that contention would appear to be the short passage from the Sydney Morning Herald article referred to earlier.

23    In opposing the application, Ms Dyer relied on an affidavit affirmed by her solicitor, Ms Emma Johnsen. Ms Johnsen deposes, amongst other things, to the fact that while Ms Dyer’s solicitors sent a letter to Mr Porter’s solicitors on 20 January 2022 demanding payment of the costs, Mr Porter’s solicitors did not reply to that correspondence until 26 January 2022. It was not until 31 January 2022 that Ms Dyer’s solicitors were made aware that Mr Porter proposed to move on an application for a stay before the duty judge. Ms Johnsen also annexes to her affidavit some correspondence between the parties concerning a proposal to resolve the issues raised by the stay application by way of undertakings. The rival undertakings proposed by the parties’ solicitors will be discussed later.

24    Ms Dyer submitted that it was not appropriate to grant the stay on the terms sought by Mr Porter and Ms Chrysanthou for a number of reasons.

25    First, an appeal itself does not operate as a stay.

26    Second, the Court has not been put in any position to assess the merits of the appeal in respect of the injunction judgment and the costs judgment. The Court would not be satisfied that the appeals have strong prospects as asserted by Mr Porter.

27    Third, Mr Porter and Ms Chrysanthou have not filed any review application in respect of the lump sum costs order and the Court should not proceed on the basis of a mere hypothetical review application. There is, in any event, no basis upon which to conclude that there is any realistic possibility that if such a review is filed, it will result in a lower lump sum assessment.

28    Fourth, the Court would not be satisfied that there is any risk that, should the appeal against the injunction and costs judgments be successful, Ms Dyer would not be able to refund the money paid to her pursuant to the lump sum costs order. Ms Dyer submitted, in that regard, that the evidence relied upon by Mr Porter and Ms Chrysanthou in relation to the alleged risk was wholly inadequate.

29    Fifth, the undertaking proposed by Ms Dyer’s solicitors had, in any event, negated the alleged risk.

30    The proposal to resolve the issues raised by the stay application by way of an undertaking was first advanced by Ms Dyer’s solicitors in a letter of 31 January 2022. In that letter, Ms Dyer’s solicitors proposed that if Mr Porter paid $430,200 into their trust account in accordance with the lump sum costs order, they would “provide an undertaking that the funds will not be released from the trust until 5.00pm on the day of the delivery of judgment of the appeal to be heard on 20 and 21 April 2022, subject to any further order of the Court”.

31    Mr Porter and Ms Chrysanthou did not accept that proposal. Instead, they proposed to resolve the stay application issue on a different basis. Their proposal was that the funds payable under the lump sum costs order would be held in trust by their solicitors and that the solicitors would undertake not to release those funds “until the determination of the appeal to the Full Court and/or any costs appeal of the decision of Registrar Luxton [the lump sum costs order], whichever determination is later”.

32    Ms Dyer did not accept that proposal. Her solicitors noted, in their correspondence with the solicitors for Mr Porter and Ms Chrysanthou, that no appeal had been filed in respect of the lump sum costs order and that even if such an appeal was filed, it would dispute only “part of the quantum of that judgment”. In those circumstances, there was “no basis for the entire costs judgment to be stayed”. That prompted Ms Chrysanthou’s solicitors to propose a different undertaking, the effect of which was that if the appeal in respect of the injunction judgment and costs judgment was unsuccessful, 50% of the funds would be released and 50% would be retained on trust pending the outcome of any appeal in respect of the lump sum costs order. Ms Dyer rejected that alternative proposal.

33    As the parties were unable to resolve the issue by way of undertakings, Mr Porter and Ms Chrysanthou moved on their interlocutory applications. The issue for the Court in those circumstances is not, as some of the submissions advanced by the parties suggested, which of the forms of the undertakings proposed by the parties is the most acceptable. The question is whether a stay should be granted on the terms proposed by Mr Porter and Ms Chrysanthou.

34    In my judgment, it is not appropriate to make a stay order in the terms proposed in the interlocutory applications filed or to be filed by Mr Porter and Ms Chrysanthou. That is so for a number of reasons.

35    First, the Court has not been put in a reasonable position to determine whether the appeals filed by Mr Porter and Ms Chrysanthou in respect of their appeals against the injunction judgment and the costs judgment are arguable or have reasonable prospects of success.

36    As already indicated, the notice of appeal and notice of cross-appeal filed by Mr Porter and Ms Chrysanthou were not annexed to the affidavits relied on by them in support of their applications. They were only tendered in the course of the hearing when counsel for Mr Porter and Ms Chrysanthou was pressed about how the Court could form a view as to whether the appeals were arguable. In any event, the appeal documents alone did not greatly assist. They provide scant particulars of the grounds of appeal. While counsel for Mr Porter and Ms Chrysanthou was able to explain the nature and basis of some of the grounds of appeal, the reality is that the Court is in no position to assess whether the grounds are reasonably arguable, let alone “strong”, as asserted on behalf of Mr Porter and Ms Chrysanthou. The onus is on Mr Porter and Ms Chrysanthou to demonstrate that they have arguable appeals. They failed to discharge that onus.

37    Second, no review application has been filed at all in respect of the lump sum costs order. It is true that the time for the filing of any such appeal has not yet passed. Nevertheless, if the stay was to operate until the determination of any review application in respect of the lump sum costs order, as proposed by Mr Porter and Ms Chrysanthou, some attempt should have been made to file the review application prior to the hearing of the stay application.

38    Third, in any event, the Court is in no real position to determine the likelihood of any review application, assuming one is ultimately filed, resulting in any material reduction of the lump sum costs assessment. While Ms Giles asserted that the merits of any appeal in respect of the lump sum costs order were strong, the reasons advanced by her in support of that assertion were sparse, difficult to assess in the abstract and at best unpersuasive.

39    Fourth, the evidence does not demonstrate that there is any substantial risk that Ms Dyer will be unable to repay the funds paid in accordance with the lump sum costs order in the event that the appeals by Mr Porter and Ms Chrysanthou in respect of the injunction judgment and costs judgment are successful. The short passage in the Sydney Morning Herald article provides a most flimsy basis for the assertion, or implication, that Ms Dyer would not have the means to repay those funds if so required. It demonstrates, at most, that a friend of Ms Dyer’s thought that she would not be able to pay Ms Chrysanthou’s and Mr Porter’s costs if her injunction application was unsuccessful. It is, however, entirely unclear whether the friend had any reasonable basis for arriving at that view.

40    It is true, as counsel for Mr Porter and Ms Chrysanthou submitted, that Ms Dyer had not adduced any evidence of her financial position in opposition to the stay application. Ms Dyer did not, however, bear any onus in respect of the stay application. Nor should any adverse inference be drawn against her for not adducing any evidence in respect of her financial position. The evidence relied on by Mr Porter and Ms Chrysanthou was flimsy and scarcely compelled Ms Dyer to respond by adducing such evidence. The delay in Mr Porter and Ms Chrysanthou filing their stay applications and the urgency in which those applications were brought before the Court also gave Ms Dyer little if any time to file any evidence, let alone acceptable evidence of her financial position.

41    Fifth, the main issue between the parties was ultimately whether any stay should continue to operate until the determination of any review application in respect of the lump sum costs order. There is considerable force in the submission advanced on behalf of Ms Dyer that the Court should not grant a stay on the basis of what is no more than a hypothetical review application.

42    Mr Porter and Ms Chrysanthou submitted, by reference to s 37M of the FCA Act, that it would be inefficient and costly to effectively require them to file separate stay applications relating to, or based on, the foreshadowed review applications in respect of the lump sum costs order. While there may be some force in that submission, any undesirable inefficiencies or additional costs incurred by Mr Porter and Ms Chrysanthou should that circumstance arise would largely be of their own making. As already noted, it was well within their power to file review applications in respect of the lump sum costs order prior to the filing of the stay applications. It was also open to them to advance persuasive submissions as to the merits of any such appeal. Had they done so, they may have made out a case for a stay pending the determination of a review of the lump sum costs order.

43    The basis upon which Mr Porter and Ms Chrysanthou contended that a stay should be granted pending the outcome of a review of the lump sum costs order is also far from compelling. While there was some faint suggestion that the outcome of any such review could be that no costs would be payable, the reality is that the best case scenario for Mr Porter and Ms Chrysanthou is more likely to be some reduction of the quantum of the lump sum costs payable. In those circumstances, it is difficult to accept that there is any risk that Ms Dyer would be unable to repay the difference between the amount paid to her in accordance with the lump sum costs order and the lump sum costs order made on review.

44    In all the circumstances, I am not persuaded that any stay of the lump sum costs order should operate or be effective up until the determination of any review application that may be filed by Mr Porter and Ms Chrysanthou pursuant to s 35A(5) of the FCA Act in respect of the lump sum costs order. I am, however, persuaded that it would be appropriate to grant a conditional stay pending the determination of the appeals in respect of the injunction judgment and the costs judgment. That is so for a number of reasons.

45    First, the appeals are listed for hearing in the not-too-distant future. It is, in those circumstances, unlikely that the stay will operate for a particularly lengthy period of time.

46    Second, it cannot be said that a short stay will deprive Ms Dyer of the ‘fruits’ of the judgments in her favour. Nor will she be prejudiced in any way from a short stay given that she has not been required to pay her legal team. The only persons who could be said to be “out of pocket” as a result of the stay are the members of the legal team who may have to wait some time for the payment of their fees.

47    Third, it may be accepted that there is at least some risk that Ms Dyer would be unable to repay the full amount paid to her in respect of the lump sum costs order in the event that the appeals filed by Mr Porter and Ms Chrysanthou are wholly successful. So much so appeared to be acknowledged by Ms Dyer. Were it otherwise, it is unlikely that she would have proposed to resolve the stay application by way of an undertaking by her solicitor to retain the funds in trust until the resolution of the appeals.

48    In my judgment, the preferable course is to grant a limited stay subject to conditions that largely mirror the undertaking proposed or offered by Ms Dyer through her solicitor. The funds should, however, be held in the trust account of Mr Porter’s solicitor. Ms Dyer did not object to that course.

49    The only remaining issue concerns the costs of the stay applications. While Mr Porter and Ms Chrysanthou have succeeded in obtaining a stay of the lump sum costs order, the stay is on more limited terms. The terms of the stay also largely mirror the terms of the undertaking openly offered by Ms Dyer upon becoming informed of the stay applications. Also relevant is the fact that the stay applications were filed very late in the piece, with the result that they had to be determined as a matter of urgency by the duty judge. No explanation was given for the delay in seeking the stay. In all the circumstances, it is appropriate to order that Mr Porter and Ms Chrysanthou pay Ms Dyer’s costs of the stay applications as agreed or assessed.

Associate:

Dated:    11 February 2022