BRENDAN KING PTY LTD v TOSESKA - COSTS

SOLICITORS : Tony Vella 38-40 George Street PARRAMATTA 15a Belmore Street BURWOOD

• 4 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HULME J Tuesday 29 August 2006 10480/04

BRENDAN KING PTY LTD v Liljana TOSESKA JUDGMENT 1 HULME J: In this matter, I delivered reasons on 26 May last and on 8 June made substantive orders to give effect to those reasons. Sacrificing some accuracy for brevity, at the instigation of the Defendant and on grounds of unconscionability, I set aside a mortgage she had granted in favour of the Plaintiff. As is common in that situation, there were terms imposed or orders made resulting in some payments being received by the Plaintiff. 2 These reasons are concerned with what order or orders for costs should be made. 3 The Defendant was substantially successful in the litigation and, prima facie, should be entitled to the costs associated with that success. 4 However the Defendant pleaded and also gave evidence in support of a case of fraud and on this she was unsuccessful. The time expended on that claim was not insignificant and prima facie, her entitlement to costs should be decreased by, and she should bear the costs of, that claim. 5 The litigation did not follow an orderly path prior to the hearing and the Plaintiff submitted that the Defendant should be ordered to pay the Plaintiffs' costs of the proceedings prior to the 4th or 5th April 2005, the time at which the Defendant first filed a Defence and Cross-Claim. A consideration of this submission requires some attention to the earlier events in the proceedings. I do not think it necessary to refer to all of these but the following chronology provides some indication of the more significant events. 23/2/04 Statement of Claim filed 11/8/04 Judgment for Possession entered 23/8/04 Requisitions from Court registry 7/9/04 Writs of Possession issued 19/11/04 Order staying Writs of Possession After at least one extension this stay seems to have lapsed on about 2/12/05 24/12/05 Order extending 2 caveats lodged by D After a number of extensions, these seem to have lapsed on 12/1/05 24/12/04 The D files an affidavit in which she alleges having been told the interest rate was 7.2 not 72% per annum 4/1/05 Injunction restraining P from dealing with the conveyance of 2 of D's properties Injunction dissolved 12/1/05 Order that proceeds of sale of 2 properties be held by P's solicitor as trust funds pending further order Costs reserved. Directions that D file & serve within 28 days any application re moneys held 10/2/05 N/M by P seeking that D account for funds received from P or from sale of 2 properties Declaration that D's caveats have lapsed 22/2/05 Injunction against D and her father restraining the lodging of further caveats Order that D pay Ps' costs of motion. 14/3/05 P files N/M seeking release of moneys the subject of 12/1/05 orders and that 8/3/05 (sic) directions be set aside P files N/M seeking 16/3/05 - to set aside default judgment - leave to defend - permanent stay or writ P given leave to amend 18/3/05 D given leave to file Defence & Cross-Claim The orders contain no reference to costs Directions made 23/3/05 Amended S/C filed 4/4/05 Defence & Cross-Claim filed These pleadings squarely raise, albeit for the first time, the issue of unconscionability on which the Plaintiff succeeded Default Judgment set aside; Writ stayed; 5/4/05 D ordered to join R-G D ordered to file any affidavits by 17 May; Costs reserved 19/4/05 Defence to Cross-Claim filed 31/5/05 D files N/M seeking dismissal of proceedings on Defence and Cross-Claim for failure to comply with directions to file by 17/5 An affidavit in support shows P wrote a warning letter on 25/5, D said would file by 30/5 and did not. 8/6/05 N/M of 31/5 dismissed The orders contain no reference to costs D ordered to join R/G etc by 17/6/05 21/6/05 D files N/M seeking dismissal of proceedings on Defence and Cross-Claim for failure to comply with directions 22/6/05 Amended Defence and Cross-Claim filed 27/6/05 N/M (Presumably of 21/6) dismissed D ordered to pay costs of N/M 8/7/05 Referred to call-up list

6 Undoubtedly the Defendant should be made to bear some of the costs incurred in the period prior to 4 April 2005. The conclusion is inescapable that some were caused or contributed to by her failure to lodge a Defence and/or Cross-Claim at more or less the appropriate time, some were incurred in consequence of applications in which she failed and some followed on her failure to comply timeously with directions that were made. 7 On the other hand, it is also appropriate to notice that a further cause of costs incurred during that period was the Plaintiffs' conduct which led to the mortgage being set aside, conduct which included full knowledge on the part of the Plaintiff or its agent of at least many of the factors which led to the ultimate conclusion of unconscionability. Persons like the Plaintiff who, personally or by its agent, prey on persons weaker than themselves, cannot be regarded as completely lacking in responsibility, or not a contributing cause, when those weaker persons to some degree flail around, looking for relief somehow. Particularly is this so when one of the effects of the actions of the predator is that the weaker party is sufficiently denuded of funds, or the ability to obtain them, as to make obtaining competent legal advice either impossible or at least difficult for some time. Although the experiences of the Defendant in that regard was not the subject of significant evidence, the history of proceedings leads to the clear inference that that is probably what happened. 8 Considering the main events referred to in the chronology individually, there is much to be said for the view that the costs of them should be borne as follows, and for the reasons indicated:- 23/2/04 P should bear Costs of S/C part of the general costs of the litigation 11/8/04 to D should bear Largely due to the D failing to lodge Defence & making claims she was not entitled to 4/1/05 12/1/05 P should bear Preserving the subject matter of the litigation 22/2/05 D should bear Due to D pursuing remedies she was not entitled to (Already the subject of an order for costs) 16/3/05 to P & D should share Some due to D's defaults but P opposed leave to amend and lost. P received benefit of amendment to S/C. Cost of most of the Defence and Cross-Claim are part of the general costs of the litigation. 5/4/05 31/5/05 to P & D should share No order made at the time. P's application due to Defendant's delays but failed and arguably premature and excessive 8/6/05 21/6/05 to D should bear P's application due to Defendant's further delays (Already the subject of an order for costs) 27/6/05

9 (In saying that the Plaintiff and Defendant should share the costs during a period, I do not mean to indicate any view that that sharing should necessarily be in equal proportions.) 10 Significant also to the costs associated with a number of affidavits filed on the Plaintiffs' behalf during the above periods is that the affidavits were wrong - see my principal reasons at [120]. 11 The above tables are, as I have indicated, not comprehensive but they and my other remarks reveal enough to show that the entitlement to costs of the earlier steps in the proceedings is not all one way. There is obvious disadvantage in forcing the parties to the expenditure of yet more time and costs in pursuing and assessing the costs of each of the steps in the proceedings and in seeking to determine how much of the costs since April or June 2005 was due to the issue of fraud on which the Plaintiff lost. (At least in terms of the hearing, I already have some knowledge of the extent of material and time expended on that topic.) 12 It strikes me that, putting aside costs orders that have already been made, there is much to be said for notional set offs and allowing simply a proportion of costs of the proceedings, for part or all of the time they occupied. 13 In judging what any such proportion should be it also seems to me relevant to record that at the outset the Plaintiff was unrepresented and much of the work done, and many of the appearances, on the part of the Defendant prior to December 2004 was done by her personally. 14 In the result the conclusion at which I have arrived is that, apart from orders for costs already made and with which I do not interfere, each side should bear its own costs of the proceedings up to and including 5 April 2005, including such costs as were reserved and that the Plaintiff should pay 65% of the Defendant's costs since that date. I order accordingly. **********

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