These reasons concern the costs of these proceedings, which were heard over the course of five days from 24 April to 5 May 2023, with further written submissions received thereafter. Final judgment was delivered on 15 May 2023: In the matter of ENA Development Pty Ltd (in liquidation) [2023] NSWSC 503 (the principal judgment).
The plaintiffs succeeded in obtaining an order pursuant to s 8 of the Vexatious Proceedings Act 2008 (NSW) prohibiting each of the defendants from instituting proceedings in New South Wales relating to or connected with the winding up of ENA Development Pty Ltd against the plaintiffs (ENA Development Pty Ltd and its liquidator, Mr Peter Krejci) or directors, employees, agents or consultants of the liquidator's firm or the firm of solicitors acting for the plaintiffs in these proceedings, without first obtaining leave of this Court. That was the plaintiffs' principal claim for relief. All of the evidence adduced by the plaintiffs was directed to that claim, and almost all of the productive time during the hearing was directed to that claim.
The plaintiffs did not succeed in their application for an order staying a proceeding that had been commenced in the Equity Division of this Court on 1 February 2023. That application occupied no time at the hearing. It failed because the plaintiffs adduced no evidence in relation to that proceeding, and it was disposed of in one paragraph of the principal judgment. [1]
The plaintiffs also failed in their application for a "blanket" order staying any proceeding commenced by or on behalf of one or more of the defendants on or after 27 April 2023 relating to or connected with the winding up of ENA Development Pty Ltd. That application was not the subject of evidence, save to the extent that evidence adduced in relation to the plaintiffs' principal claim for relief might potentially have had some bearing on the application for a "blanket" stay. The application was the subject of some brief submissions made on behalf of the plaintiffs, but otherwise occupied no time at the hearing and was disposed of in three paragraphs of the principal judgment. [2]
I have stated above that almost all of the productive time during the hearing was directed to the plaintiffs' principal claim, on which they succeeded. Much of the hearing time was unproductive due to the disruptive conduct of the first defendant, Mr Robert Sebie, which I have described in detail in the principal judgment. [3] Mr Sebie was the only defendant who filed a notice of appearance in these proceedings and who appeared at the final hearing.
The plaintiffs seek an order that their costs of the proceedings be paid:
1. by Mr Sebie on an indemnity basis; and
2. by the other defendants on the ordinary basis.
The plaintiffs have filed written submissions in support of their application.
Despite being granted an extended period of time in which to do so, Mr Sebie has not made an application in relation to the costs of the proceedings, and has not filed any written submissions in response to the plaintiffs' costs application and submissions.
As I have already explained, the issues on which the plaintiffs failed were not complex, were not the subject of evidence, and accounted for an exceedingly small portion of the hearing time. I accept the plaintiffs' submission that, in those circumstances and having regard to the plaintiffs' success in relation to their principal claim for relief, an order requiring the defendants to pay the plaintiffs' costs of the whole of the proceedings is appropriate and consistent with the established principles that govern the exercise of the discretion in relation to costs under s 98 of the Civil Procedure Act 2005 (NSW) where a party has succeeded on some, but not all, issues. [4]
The next question is whether that costs order, insofar as it operates against Mr Sebie, should operate on an indemnity basis.
The plaintiffs accept that the fact that they instituted the proceedings under the Vexatious Proceedings Act 2008 (NSW) does not, by itself, warrant an order that their costs be paid on an indemnity basis rather than the ordinary basis. [5]
An order for costs on the ordinary basis does not fully compensate a successful party for its costs. The purpose of an indemnity costs order is not to punish the unsuccessful party, but to compensate the successful party fully for costs that it has incurred in circumstances where it was unreasonable for the unsuccessful party to have subjected the successful party to that expenditure. Whether there has been unreasonable conduct or "relevant delinquency" on the part of the unsuccessful party is to be determined by reference to the conduct of the proceedings, not the conduct that is the subject of the substantive dispute. [6]
In the present case, Mr Sebie's conduct of the proceedings was unreasonable. In particular, Mr Sebie made wholly unmeritorious applications to adjourn the hearing or to strike out the proceedings as an abuse of process, and sought to agitate various other informal applications during the hearing in a manner that was disruptive to the conduct of the hearing. [7] After filing a notice of motion in respect of his various applications, Mr Sebie repeatedly sought to press for those applications to be heard and determined in advance of the plaintiffs' claims for relief, after I had already determined not to entertain some of those applications and to determine others at the same time as determining the plaintiffs' claims for relief. [8] Mr Sebie sought to read and tender a vast volume of evidence that had been read and tendered in earlier proceedings. That evidence was of questionable relevance in these proceedings, and Mr Sebie did not have copies of the evidence. He had no reasonable excuse for failing to comply with the Court's directions for the filing and service of evidence to be relied on in these proceedings, yet repeatedly agitated for the Court or the plaintiffs to obtain the material from files in another court, or to isolate and print documents that he wished to rely on from an electronic file containing thousands of pages of material. [9] Mr Sebie conducted his cross-examination of the plaintiffs' witnesses in an unreasonable manner, persistently asking questions of no relevance to these proceedings. [10] Mr Sebie further disrupted the conduct of the hearing by failing to appear at times, without prior notice and without having sought to be excused. [11]
The hearing was conducted over five days on 24, 26, 27 and 28 April, and 5 May 2023. Mr Sebie's unreasonable conduct referred to above, which is described in more detail in the principal judgment, extended the hearing time by at least two days in total elapsed time, being most of the day on 24 April 2023, [12] the whole of the morning of 26 April 2023, [13] and the whole of the afternoon of 27 April 2023. [14] This does not account for all of the delays caused by Mr Sebie's unreasonable conduct. However, I note that some delays were also caused by the plaintiffs' application for leave to amend their originating process, [15] and by the need to defer completion of closing submissions until the plaintiffs had prepared and provided a supplementary written submission identifying with appropriate specificity each of proceedings which they alleged were vexatious within the meaning of the Vexatious Proceedings Act and their contentions in relation to each of the five defendants against whom the plaintiffs sought a vexatious proceedings order, and until Mr Sebie had been afforded an opportunity to respond to that submission orally or in writing. [16]
In my opinion, the appropriate exercise of the costs discretion in all the circumstances is to order Mr Sebie to pay the plaintiffs' costs of the hearing on 24 April 2023, any costs thrown away by reason of the commencement of the hearing on 26 April 2023 being deferred until 2:00pm on that day, and the costs of the hearing on the afternoon of 27 April 2023, on an indemnity basis. In my opinion, that achieves the object of compensating the plaintiffs for expenditure that they were required to incur by reason of Mr Sebie's most egregious unreasonable conduct, whilst relegating to the vicissitudes of litigation the delays caused by Mr Sebie's other unreasonable conduct and by the conduct of the plaintiffs to which I have referred above.
For those reasons, the orders of the Court are as follows:
1. Order that the defendants, jointly and severally, are to pay the plaintiffs' costs of the proceedings, on the ordinary basis as agreed or assessed.
2. Order that the first defendant is to pay the following components of the plaintiffs' costs of the proceedings on an indemnity basis, as agreed or assessed:
1. the plaintiffs' costs of appearing at the hearing on 24 April 2023;
2. any costs thrown away by the plaintiffs by reason of the resumption of the hearing on 26 April 2023 being deferred until 2:00pm that day; and
3. the plaintiffs' costs of appearing at the hearing on the afternoon of 27 April 2023.
1. Order that the plaintiffs are not to recover any component of their costs twice under orders (1) and (2) above.
[2]
Endnotes
Principal judgment at [352].
Principal judgment at [246]-[248].
Principal judgment at [161]-[230].
See, for example, Tonna v Mendonca (No 2) [2020] NSWSC 306 at [169]-[176] (Ward CJ in Eq, as her Honour then was) and the authorities there referred to.
See Chateau Constructions (Aust) Ltd v Zepinic; Zepinic v Chateau Constructions (Aust) Ltd [2018] NSWSC 246 at [27] (Robb J).
See, for example, In the matter of Horizons (Asia) Pty Ltd [2022] NSWSC 52 at [7]-[10] (Rees J) and the authorities there referred to; Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009 at [44]-[45] (Ward CJ in Eq) and the authorities there cited.
Principal judgment at [170]-[183].
Principal judgment at [191]-[196], [200], [205].
Principal judgment at [201], [205], [213], [215], [221].
Principal judgment at [209].
Principal judgment at [188]-[190], [203], [211].
Principal judgment at [187].
Principal judgment at [188]-[190].
Principal judgment at [209].
Principal judgment at [206].
Principal judgment at [216], [236] and [263].
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Decision last updated: 15 June 2023