[1993] FCA 801
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
[1988] FCA 364
Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164
Harrison v Schipp (2002) 54 NSWLR 738
[2002] NSWCA 213
Kazal v Independent Commission Against Corruption (No 2) [2020] NSWSC 17
Oshlack v Richmond River Council (1998) 193 CLR 72
[1998] HCA 11
Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676
Source
Original judgment source is linked above.
Catchwords
[1993] FCA 801
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397[1988] FCA 364
Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164
Harrison v Schipp (2002) 54 NSWLR 738[2002] NSWCA 213
Kazal v Independent Commission Against Corruption (No 2) [2020] NSWSC 17
Oshlack v Richmond River Council (1998) 193 CLR 72[1998] HCA 11
Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676[1912] HCA 9
Stanley v Layne Christensen Co [2006] WASCA 56
Vink v Tuckwell (No 3) (2008) 67 ACSR 547
Judgment (2 paragraphs)
[1]
Judgment
These reasons deal with the costs of the plaintiff's application to remove caveats lodged by the defendants over a property in Port Kembla that is the subject of my judgment in Ageist Pty Ltd v Samuel M Holdings Pty Ltd (Receiver and Manager Appointed) [2021] NSWSC 988 (judgment). They assume familiarity with and adopt the same terms used in that judgment.
In the judgment, I made orders pursuant to s 74MA of the Real Property Act 1900 (NSW) that the SMHPL and Stojcevski Caveats be removed and for Mr Murabito and the second and third defendants to be restrained from lodging any further caveats on the Property without first obtaining leave of the Court. Directions were made for the provision of written submissions on the issue of costs, which the parties agreed could be dealt with on the papers.
The plaintiff seeks its costs to be paid on an indemnity basis and a lump sum costs order for its costs thrown away by reason of an adjournment of the hearing on 29 July 2021. The plaintiff relies on its written submissions dated 9 August 2021 which were filed and served in accordance with the directions.
The second and third defendants and Mr Murabito have not filed any written submissions on costs and no request was made for any extension of time to do so. I have, therefore, proceeded to consider the issues and determine the plaintiff's claims for costs in the absence of any submissions from those parties.
The plaintiff submits that an award of indemnity costs is appropriate for six reasons.
First, the Stojcevski Caveat was lodged during the currency of the proceedings and was only discovered during the oral address of the second defendant, who had been granted leave to be heard in support of the SMHPL Caveat, and Mr Murabito. The plaintiff submits that if the Stojcevski Caveat had not been lodged on 22 July 2021, it is almost certain that the SMHPL Caveat would have been removed on the first day of the hearing and no further time or cost would have been necessary.
Second, the evidence and submissions made in support of the Stojcevski Caveat did not amount to a serious question to be tried as to the interest which it claimed: judgment at [119]ff.
Third, the purpose of lodging the SMHPL Caveat was to stymy the completion of the Sale Contract: judgment at [117].
Fourth, the subject caveats were the most recent in a very long line of caveats where attempts had been made to claim interests which had been rejected for registration, had lapsed or had been ordered to be withdrawn: judgment at [128].
Fifth, despite being granted numerous opportunities and adjournments to provide evidence in support of their various submissions, particularly as to bad faith on the part of the plaintiff, the defendants did not ultimately adduce any such evidence.
Sixth, the SMHPL and Stojcevski Caveats were always doomed to fail. If the equitable interests which they claimed were found to be valid, those interests could not defeat the plaintiff's exercise of its un-impugned legal right as the second registered mortgagee. Further, even if the plaintiff's right was ultimately impugned, the highest remedy to which the defendants could have been entitled was damages, such that there would not have been any proper basis to restrain the plaintiff's exercise of its power of sale: Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676; [1912] HCA 9.
In my view, there is force to the plaintiff's submissions. Based on those submissions and for the following reasons, I have concluded that this is an appropriate case to award indemnity costs in favour of the plaintiff.
The Court has discretion in awarding costs, which extends to determining who should pay costs, the extent of those costs and whether they should be paid on an ordinary or indemnity basis: Civil Procedure Act 2005 (NSW), s 98(1). While the Court's discretion is broad, it must be exercised judicially having regard to the circumstances of the case: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack) at [22] (Gaudron and Gummow JJ), [65] (McHugh J), [134] (Kirby J).
The principles governing the exercise of discretion to award indemnity costs are well established. As with costs orders generally, the purpose of an indemnity costs order is not to punish an unsuccessful party but to more fully compensate the successful party for its costs in circumstances where the exercise of discretion calls for such an order. Such circumstances include conduct by the unsuccessful party which is plainly unreasonable or some relevant delinquency on their part: Oshlack at [44] (Gaudron and Gummow JJ); Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6].
While the categories which may warrant an award of indemnity costs are not closed, the cases have identified that they may be awarded in the following circumstances: where proceedings have been conducted so as to cause unreasonable expense or delay; where a party commences or continues an action which they should have known had no chance of success; where proceedings were commenced or defended for some ulterior motive; or where groundless contentions are made leading to undue prolongation of proceedings: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-4; [1993] FCA 801; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-1; [1988] FCA 364.
While there has been some reluctance by courts to make an award of indemnity costs against self-represented litigants, such an award has been recognised as appropriate in circumstances where the self-represented litigant must have known that there were no prospects of success, where they made serious allegations without a proper basis, and where they unreasonably rejected a genuine offer of compromise: see, for example, Vink v Tuckwell (No 3) (2008) 67 ACSR 547; [2008] VSC 316 at [109], and Kazal v Independent Commission Against Corruption (No 2) [2020] NSWSC 17 at [64], [68], [71]-[74].
In my view, there was sufficient delinquency and unreasonableness on the part of Mr Murabito and the second and third defendants in lodging the SMHPL and Stojcevski Caveats and conducting their purported defences to warrant an indemnity costs order being made against them.
The timing and circumstances of the lodgement of the Caveats are particularly significant. The SMHPL Caveat was lodged by Mr Murabito in his capacity as director of SMHPL without the authority or consent of the company's Receiver. It was lodged the day after this Court had ordered Mrs Stojcevska to withdraw another caveat and two days prior to the rescheduled completion of the sale of the Property. It claimed an interest in the Property in almost identical terms to a caveat previously lodged by Mr Murabito that had been rejected by the LRS in April 2021. It was also apparent at the hearing that Mr Murabito had lodged the SMHPL Caveat due, primarily, to concerns with the manner in which the plaintiff dealt with Mrs Stojcevska and a desire to protect her interests, rather than any bad faith practised against SMHPL as registered proprietor and mortgagor (judgment at [19], and [83]-[86]).
As to the Stojcevski Caveat, it was lodged on 22 July 2021, the very day that settlement of the sale of the Property had been rescheduled to take place, yet it was based on the assertion of a charge that allegedly arose on 29 June 2017. Like the SMHPL Caveat, the Stojcevski Caveat claimed an interest in similar terms to caveats that had previously been lodged by the second and third defendants which had lapsed or been rejected for registration.
The lodgement of the Caveats just prior to and on the date of the rescheduled settlement did not allow time for the plaintiff to make the usual pre-litigation demand for the caveats to be withdrawn and necessitated urgent applications being brought on the afternoon of that settlement. No explanation was proffered by Mr Murabito or the second and third defendants as to why they were lodged at such a time. The stances adopted by Mr Murabito and Ms Stojcevski on behalf of the second and third defendants resulted in a hearing that took place over three days at considerable expense and inconvenience to the plaintiff. There was also inadequate explanation for the failure by Mr Murabito and the second and third defendants to comply with a timetable that had been set by the Court taking into account their request for time to put on evidence and brief lawyers.
Further, for the reasons set out in the judgment, the claims advanced in the SMHPL and Stojcevski Caveats had no reasonable basis: judgment at [98]-[128]. In particular, the matters referred to by the plaintiff above (at [8], [9] and [11]) meant that it was inevitable that the attempts by Mr Murabito and the second and third defendants to retain the caveats on title and prevent completion of the sale of the Property were bound to fail.
In all of the circumstances, the only inference to be drawn is that the SMHPL and Stojcevski Caveats were lodged late in the day and defended as part of an attempt by Mr Murabito and the second and third defendants to deliberately delay the settlement of the Property without proper regard for whether there were reasonable grounds for the claims alleged in the Caveats or the utility in defending them.
As was observed by Kunc J in Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 at [1], "lodging a caveat is not a trivial act to be undertaken lightly. It has immediate legal effect and can have significant commercial and financial consequences". Mr Murabito and the second and third defendants were on notice that the plaintiff intended to claim indemnity costs. A costs order of that type was sought in the plaintiff's notice of motion that was served on 22 July 2021 and in the Amended Summons filed and served on 23 July 2021.
Mr Murabito was granted leave to be heard and make submissions on behalf of SMHPL pursuant to r 2.13(1)(a) of the Supreme Court (Corporations) Rules 1999 (NSW) and was on notice that he was on risk of costs in doing so: (29 July 2021 T10.22-31). Rule 2.13(2)(a) provides that where the Court considers that additional costs have been incurred by a party granted leave under the rule, it may direct that party to pay those additional costs. As the plaintiff submits, the grant of leave to Mr Murabito added to the cost and time of the proceeding. Given the Receiver did not authorise the lodgment of the SMHPL Caveat and consented to its removal, the SMHPL Caveat would likely have been ordered to be removed on 22 July if Mr Murabito had not appeared.
As to the plaintiff's other application, I am satisfied that it is appropriate to make an order that the plaintiff's costs thrown away by reason of the adjournment of the hearing from 2pm on 29 July 2021 to 2pm on 30 July 2021 be paid by Mr Murabito and the second and third defendants. The adjournment was granted over the plaintiff's opposition to enable Mr Murabito and the second and third defendants to adduce evidence in circumstances where they had failed to comply with the timetable set by the Court. The adjournment represented an indulgence granted to Mr Murabito and the second and third defendants and I see no reason why the general rule that the party seeking the indulgence of the Court be required to pay the costs of the application, including costs thrown away, should not apply: Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 619 at [22]-[25]; Stanley v Layne Christensen Co [2006] WASCA 56 at [52].
However, I am not persuaded that I should exercise my discretion and make a lump sum costs orders in amount of $4,750 plus GST, which the plaintiff submits represents the solicitor and counsel costs wasted for the half-day on 29 July. In the absence of affidavit evidence or other documents supporting that claim, the Court does not have the information before it to be sufficiently confident that there is a logical, fair and reasonable basis for the sum claimed: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [22].
For these reasons, I consider it appropriate to exercise my discretion and order Mr Murabito and the second and third defendants to pay the plaintiffs costs on an indemnity basis and make the following order:
1. The plaintiff's costs of its application to remove caveats AR256711 and AR265339 in respect of the land comprised in folio identifier 8/12/DP8146 and for the relief sought in paragraph 6 of the Amended Summons filed on 23 July 2021, including its costs thrown away by reason of the adjournment of the hearing on 29 July 2021, be paid by the second and third defendants and the director of the first defendant, Mr Steven Murabito, on an indemnity basis.
[2]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 27 September 2021