Farah v Elias

The dispute

1. Mr Elias contends that Mr Farah's ultimate concession that he had indemnity insurance forecloses his ability now to complain about the issue of the summons to produce or any argument concerning his obligation to comply with it. He maintains in effect that Mr Farah has conceded the correctness of his approach and that costs incurred in attempting to have Mr Farah comply with the summons should be evaluated by reference to his eventual capitulation.
2. Mr Elias maintains in addition that Mr Farah acted unreasonably in prosecuting the present proceedings on the basis of the relevance of the documents in dispute when the real reason for opposing production was that Mr Farah's insurer was withholding its consent. Mr Farah later conceded in uncontroversial terms that he held the appropriate insurance in any event.
3. Mr Farah contends in contrast that Mr Elias' conduct precipitated the need for him to commence proceedings in this Court. He reasoned as follows.
4. From the earliest point in the dispute, Mr Farah took objection to the production of documents upon the grounds of relevance. On 23 February 2015 he lodged a formal objection with the Tribunal. He subsequently limited his objection to categories 5 and 6 but produced the balance of the documents sought in the summons. On 16 March 2015 Mr Farah filed written submissions with the Tribunal objecting to the production of the documents sought in those categories. The objection was adjourned. Mr Farah continued to demand access to the pleadings and evidence that had been filed in order to make further submissions on relevance. Mr Elias unreasonably refused to provide these to Mr Farah and continued to maintain that position up to and including the Tribunal hearing before Member Meadows on 17 March 2015. By reason of the Tribunal decision to reject Mr Farah's objection to paragraphs 5 and 6 of the summons, Mr Farah was left with no alternative but to commence the present proceedings for judicial review. It was only by 19 June 2015 that Mr Elias effectively capitulated on the production issue, with the result that these proceedings were rendered redundant.
5. At the heart of Mr Farah's position is that it is apparent that the erstwhile contested documents were not and could never have been relevant to Mr Elias' proceedings against his builder in the Tribunal and that the Tribunal erred by failing to consider that question when reaching its decision contrary to Mr Farah's objection. Mr Farah also complains that the proceedings in the Tribunal with respect to his objections were afflicted by an absence of procedural fairness because he was refused access to pleadings or evidence upon which he would have been able to mount his submissions touching the questions of the relevance and the legitimate forensic purpose of the documents sought by Mr Elias. Mr Farah contended that success for him in this Court on the substantive issues raised in the proceedings was almost a certainty.
6. For these opposing reasons, Mr Farah and Mr Elias each assert that the costs in this Court should be paid by the other.

Costs - general principles

1. Unless the Court otherwise orders, costs ordinarily follow the event. Where there has been no hearing on the merits, however, there is no relevant event. Where both parties have acted reasonably in commencing and defending proceedings, a proper exercise of discretion might on one view mean that an appropriate order is that there should be no order as to costs: Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 625 per McHugh J as follows: "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans."
2. Costs will ordinarily be awarded to a party where the Court can find that: 1. One party has acted unreasonably in prosecuting or defending the action; 2. One party was almost certain to have won had the case been tried; 3. One party has effectively surrendered to the other.
3. The Court may also have regard to the conduct of a defendant prior to the commencement of the proceedings if such conduct precipitated the litigation: Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371.
4. Section 60 of the Civil Procedure Act 2005 provides that "In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute."
5. Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 per Mason CJ, cited by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67]: "The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or conduct of the proceedings which makes it unjust or unreasonable that there should be such reimbursement."
6. These principles are given statutory force by s 98 of the Civil Procedure Act 2005 and UCPR 42.1.
7. Contemporary attitudes to the proper exercise of the wide discretion with respect to costs indicate that "[t]he days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit and the recovery of all costs must be put behind us": Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 325 at [4] per Finkelstein J.
8. In Turkmani v Visvalingam (No 2) [2009] NSWCA 279, relying heavily on what was said about the prior, but in substance indistinguishable, regime under the Supreme Court Act 1970 and rules, in James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [13], Hodgson JA, referring to an earlier judgment of his own said: "[121] In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach."

Consideration

1. The context in which to apply these principles in the present case is one where Mr Elias sought the production of documents that could not have been of any discernible relevance to his dispute with his builder in the Tribunal and in circumstances where he was apparently seeking comfort by establishing, if he could, that at least someone connected with his failing project might have been insured.
2. Mr Elias sought production of documents from Mr Farah by the issue of a summons to produce. The Tribunal summons was dated 10 February 2015. Items 5 and 6 in that summons were in these terms: "5. A copy of your current membership card from the Institute of Engineers Australia or any other professional engineering body. 6. A copy of your current professional indemnity insurance to include the schedule of cover."
3. After the skirmish in the Tribunal, referred to above, Mr Elias' solicitor wrote to his opposite number on 5 June 2015 in the following terms: "We act on behalf of Mr and Mrs Elias who are the owners of a partly constructed dwelling at 19 Rawson Road, Greenacre. As you are aware your client Mr Monzar [sic] Farah, Engineer has provided our clients with a document dated 12 August 2014, said to be a structural certificate in respect of the footings, slab on ground, suspended slab and timber frame. (Copy attached.) As you are aware from our previous correspondence (copy of our letter to you dated 24 February 2015 attached), we sought clarification from your client as to the details of his inspections given that no mandatory inspections were carried out by a certifier on the dwelling pursuant to the conditions of the development consent. Details of your client's inspections would have assisted our client, in that our client would have asked the local Council to accept those inspections as satisfying the conditions of consent. However, for reasons known only to your client he has refused to assist. A summons was issued on your client to provide the documents requested. We note from the documents that were produced that they did not contain information as to the dates nor details of any inspection. Your client has also been ordered to produce over his objection, details of his professional indemnity insurance. We note you have appealed that decision and it is currently the subject of litigation before the Supreme Court. We also note your objection to our client's further summons to Engineers Australia on the basis of abuse of process. We have indicated that we will not press the remaining item of summons at the Tribunal and we will withdraw the summons against Engineers Australia. This is because our client now needs to move on with the building process and with its litigation against the builder. To this end, we seek from your client the following: 1. An assurance that he has in fact carried out the inspections said to underlie the certification dated 12 August 2014 and that the certification is a genuine one. 2. An assurance that he was in fact properly registered and insured at the dates of his inspections and at the date of his certification. Should we not receive the above assurances within 7 days we shall conclude that his letter of certification dated 12 August 2014 may not be relied upon."
4. Counsel for Mr Farah sought to characterise that letter as a surrender. It is apparent that the letter at least made it clear that no further issue apart from costs of the proceedings in this Court remained in dispute.
5. The matter was put beyond doubt on 19 June 2015 when Mr Elias' solicitor wrote to his opposite number in these terms: "We refer to the above and to our conversation earlier today, We will not press for production of items 5 and 6 of the summons before NCAT as previously advised. It is a matter for you what you wish to do next."
6. I am not called upon in these proceedings to assess the correctness or otherwise of the Tribunal decision ordering Mr Farah to produce the documents sought in the summons. However, based upon the material before me it seems highly unlikely that Mr Farah's professional indemnity insurance status could ever have had any relevance to the dispute joined between Mr Elias and his builder. It was argued on his behalf that the local council's decision concerning whether or not the unauthorised or uncertified works would be demolished was a relevant issue because it potentially affected the question of the quantum of Mr Elias' loss in his claim against the builder. That was said to be so inasmuch as the local council may have been interested in the outcome of the Tribunal's decision and that the Tribunal's decision may in turn have been influenced by the prospect that the works would or might be required to be demolished.
7. As convenient as this argument appears at first sight I do not think it is correct. First, and obviously, the summons sought production of Mr Farah's "current" insurance details. These would presumably have had no connection with the dispute between Mr Elias and the builder unless the period of insurance corresponded to the date of a relevant default by the builder. That connection has never been made on the evidence before me.
8. Secondly, and more fundamentally, it is difficult to see that Mr Farah's professional indemnity insurance status could have had anything at all to do with Mr Elias' dispute with his builder. Mr Farah certified the structural integrity of the works by his certificate dated 12 August 2014. The certificate was in these terms: "Ref: New dwelling. At: No19 Rawson Rd, Greenacre Item: Structural components (Footings, slab on ground, suspended slab and timber frame). STRUCTURAL CERTIFICATE This is to certify that an inspection was carried out at the above site to the reinforcements of the structural elements prior to pouring of concrete. At every inspection the sizes of the structural components (footings, slab on ground and suspended slabs) and the laid steel reinforcements were in accordance with the engineer's design, instructions and AS 3600 and approval was given for the pouring of concrete. Please note that the timber frame is considered adequate and in accordance with AS 1684."
9. The question of whether or not Mr Farah was insured at the time he furnished the certificate in question could have had no relevance to that dispute. Mr Farah was not a party to those proceedings. No allegations had been raised against him concerning the accuracy or reliability of his certificate or in any other way at all. Mr Farah's insurance status could not in my view even have been relevant as a source of collateral comfort to either the Tribunal or the local council in considering whether or not the works would or might have to be demolished. The adequacy of the structure erected by the builder would certainly have been relevant, and the certificate from Mr Farah would possibly have been critical to that determination. The prospect that Mr Farah may have been a worthwhile target of litigation is and was an entirely different matter.
10. It is regrettable that these matters were not adverted to or given closer consideration when the summons was prepared. Items 1 to 4 in that summons appear to have been uncontroversial and have accordingly attracted no attention in the dispute before me. Items 5 and 6 are different and were always likely to be contentious. Earlier attention to matters that now seem obvious would undoubtedly have obviated the current unseemly dispute.

Conclusion and Orders

1. In my opinion, whatever view one might have of the reasonableness of his position, Mr Farah is correct in contending that he is entitled to his costs. Accordingly I make the following order: 1. Order the first defendant to pay the plaintiff's costs of and incidental to the summons.

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: 30 September 2015