El-Mir & 1 Or v Risk

El-Mir v Risk [2005] NSWCA 215 Maloney v Kull (Court of Appeal, unreported, 21 March 2003) CASES CITED: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1

Abdullah El-Mir (First Appellant) PARTIES: Mona El-Mir (Second Appellant) Gary Risk (Respondent)

J Bartos (First and Second Appellants) COUNSEL: E M Olsson SC (Respondent)

David Begg & Associates (First and Second Appellants) SOLICITORS: Snelgroves Solicitors (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40661/03 DC 9850/00

HANDLEY JA IPP JA McCOLL JA

Monday, 8 August 2005 Abdullah EL-MIR and Mona EL-MIR v Gary RISK [No 2] Judgment on Costs

1 HANDLEY JA: I agree with McColl JA. 2 IPP JA: I agree with McColl JA. 3 McCOLL JA: The Court delivered its judgment in this matter on 24 June 2005: El-Mir v Risk [2005] NSWCA 215 (the "primary judgment"). Pursuant to Order 3 the appellants were granted leave to amend their Notice of Grounds of Defence subject to such terms as to the costs of the earlier proceedings in the District Court and the reference as this Court may impose after receiving further submissions. 4 A timetable was set requiring the respondent to file written submissions as to the terms as to which leave should be granted within fourteen days. The appellants to file written submissions in reply within a further fourteen days and the respondent to file any submissions in reply within a further seven days. 5 Those times have now expired. The Court has received written submissions from both the respondent and the appellants. None have been received pursuant to the liberty granted to the respondent to file submissions in reply and, accordingly, I assume that the respondent is content to rely upon his primary submissions on this issue. 6 The respondent submits that the grant of leave to amend the defence should be made conditional upon the appellants being ordered to pay the costs of the respondent (including the costs of the appeal), such costs to be assessed forthwith and payable within twenty eight days of assessment. 7 The respondent contends that that order is appropriate on the basis that the issue of accord and satisfaction should have been pleaded at the outset and a separate trial of the question sought shortly thereafter. He submits that in the circumstances where the separate trial of that issue will take place after the hearing of the appeal, all of the costs of the District Court, the reference, the adoption hearing and of this appeal will have been wasted. 8 The appellants oppose the orders sought by the respondent. While they acknowledge that a defence should have been filed at the outset of the proceedings, they question whether, had the defence been pleaded earlier, the District Court would have ordered a separate determination of that issue prior to the reference. They point to "the normal rule" that all questions of liability and damages should be heard together and submit that a departure from that rule would rarely occur: see Tepko Pty Limited v Water Board [2001] HCA 19; (2001) 206 CLR 1 at [168]. This is particularly so, they submit, in the present case where separate determination of the issue of accord and satisfaction would have, and presumably will, involve calling the parties as witnesses and most probably, cross-examination as to their credit. They contend that this is a further circumstance why the District Court may well have been reluctant to have the matter determined as a separate issue: see Maloney v Kull (Court of Appeal, unreported, 21 March 2003, BC200303461 at [10]). 9 Further, while the appellants concede that some costs have been wasted as a result of their conduct of the case below, they contend that "to some extent the respondent brought the situation upon himself", referring to para [7] - [14] of the principal judgment. Accordingly, they submit that the District Court would be in a better position to make a determination as to costs when the proceedings are finally disposed of after taking all of the circumstances into account. 10 If that submission fails, the appellants submit that if the Court is minded to impose a costs order as a condition of granting leave to amend the defence, they should only be responsible for a portion of such costs, being no more than half of the costs of the proceedings below.

Conclusion 11 The history of this matter is set out in the primary judgment. I shall not repeat it. The appellants ought to have pleaded the issue of accord and satisfaction in their defence and, further, ought to have sought a separate determination of the issue pursuant to Pt 26 r 5AA of the District Court Rules 1973 at the earliest opportunity. The matter would have been appropriate for a separate determination as resolution of that issue, if decided in favour of the appellants, would have brought the proceedings to an end: see Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 - 142. 12 The appellants did not raise the question of accord and satisfaction until a preliminary conference before Mr O'Mara, the referee, on 22 October 2002. He granted an adjournment to enable them to seek a stay of proceedings and have the issue determined but (as appears from the primary judgment at par [18] - [20]) nothing was done until approximately a week before the hearing of the reference when, having regard to the imminent reference hearing, Garling DCJ decided the issue should first be considered by the referee. 13 That occurred at the hearing of the reference on 17 March 2003. The appellants have persisted with the defence of accord and satisfaction since then: see [76] of the primary judgment. 14 In my view, it would be consistent with the interests of justice that the appellants bear the costs of the proceedings in the District Court from 22 August 2001 when they filed their defence and cross-claim without relying upon the issue of accord and satisfaction, up to and including the reference hearing on 17 March 2003. I can see no reason why those costs should be restricted to a half, as the appellants contend. 15 I would not, however, accede to the respondent's submission that the costs should be assessed forthwith and payable within 28 days of assessment. The rules prevent the taxation of costs prior to the conclusion of proceedings without leave: Pt 52 r 9A(1). I would not grant that leave, particularly where the Court concluded (see primary judgment at [7] - [14], [75]) that there was always the possibility the appellants would raise the settlement issue in the District Court proceedings. 16 The hearing before Balla DCJ on 18 July 2003 largely concerned the appellants' argument that the referee's report should not be adopted because of the settlement issue. In my view the costs of that hearing should be in the discretion of the judge who determines the separate issue the subject of Order 4 in the primary judgment.

Slip rule 17 The appellants' written submissions also raised the question of rectification of Order 6 of the primary judgment. They drew attention to their written submissions in the primary appeal in which they pointed out that the referee's report had erroneously failed to deduct an amount of $4,581.33 in respect of costs of rectification which he had otherwise concluded should be allowed to the appellants and set off in the final reconciliation. 18 This issue was raised in the Further Amended Notice of Appeal (grounds 9 and 10) and in the appellants' supplementary submissions dated 23 August 2004. The respondent did not demur to this submission in any of his written submissions. 19 It was not referred to in the oral argument and was, regrettably, overlooked in formulating the final orders. Order 6 should be amended pursuant to the slip rule.

Costs 20 In my view each party should bear their own costs of the written submissions consequent upon delivery of the primary judgment.

(1) The grant of leave to amend the defence in Order 3 of the Court's orders in the primary judgment be subject to the appellants paying the costs of the proceedings in the District Court from 22 August 2001 up to and including the hearing of the reference by Mr O'Mara on 17 March 2003.

(2) Costs of the adoption hearing before Balla DCJ on 18 July 2003 to be in the discretion of the judge who determines the separate issue the subject of Order 4 in the primary judgment.

(3) Amend Order 6 by substituting the amount "$194,591.55" for the amount "$199,172.88" therein appearing.

(4) The parties to bear their own costs of the written submissions consequent upon the primary judgment.

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.