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A positive step for access to justice
The High Court of Australia has refused leave in El Ali v Royal & Ors; Zreika v Royal & Ors [2019], thereby leaving undisturbed the unanimous decision of the Full Court of the Federal Court in Zreika v Royal [2019] and Royal v El Ali (No 3), write Dr Christopher Birch SC and Penny Thew.
Dr Christopher Birch SC and Penny Thew
The Full Court of the Federal Court decision confirms that the indemnity principle is satisfied provided there is a contingent liability to pay fees at the time of making a costs order. This is in line with previous judicial statements recognising the importance of conditional costs agreements in promoting access to justice which may otherwise be unaffordable, as was said by Santow JA in Wentworth v Rogers (2006) 66 NSWLR 474 at [54], and as was recognised by the Victorian Court of Appeal in Mainieri & Anor v Cirillo [2014] VSCA 227 at [53] as just and socially desirable.
Orders were then made in favour of the Royals in Royal v El Ali (No 2) [2016] FCA 1156 giving effect to the principal decision, including orders vesting the shares in the bankruptcy trustee (being a successful applicant with the Royals in the principal decision along with two creditors) and orders in respect of the proceeds of sale of the properties. Thereafter, in the costs hearing, the respondents (Messrs El Ali, Zreika and ors) argued unsuccessfully that the indemnity principle was not satisfied in respect of the costs agreements of both counsel and the solicitors and that therefore no costs orders could be made in favour of the successful applicants, which argument was rejected in Royal v El Ali (No 3) [2016] FCA 1573.
The respondents above (the appellants in the Full Court, Messrs Zreika, El Ali and ors) appealed all decisions to the Full Court of the Federal Court of Australia in Zreika v Royal [2019] FCAFC 82 and were unsuccessful in all appeals other than on one point not argued in the proceedings below. In relation to the appeal of the costs decision, the Full Court adopted in whole the findings in Royal v El Ali (No 3) [2016] FCA 1573, finding in favour of the Royals. The appellants (again, Messrs Zreika, El Ali and ors) then sought special leave only on the question of whether the indemnity principle had been satisfied, which the High Court refused in El Ali v Royal & Ors; Zreika v Royal & Ors [2019] HCATrans 227.
The implications of this are that the findings in Zreika v Royal [2019] FCAFC 82 at [314], [320], which adopted Royal v El Ali (No 3) [2016] FCA 1573 in which the unanimous findings in Mainieri & Anor v Cirillo [2014] VSCA 227 were applied, constitutes the current statement of law on the satisfaction of the indemnity principle under conditional costs agreements.
Dr Christopher Birch SC and Penny Thew, instructed by Michael France of Watson Mangioni Lawyers Pty Limited, appeared for the respondents (the Royals) in El Ali v Royal & Ors; Zreika v Royal & Ors [2019] HCATrans 227 and Zreika v Royal [2019] FCAFC 82, and the applicants in Royal v El Ali [2016] FCA 782, Royal v El Ali (No 2) [2016] FCA 1156, Royal v El Ali (No 3) [2016] FCA 1573 and Royal v El Ali (No 4) [2017] FCA 299.
