James v Moussa (No 2) [2026] NSWSC 810 | Case summary

James v Moussa (No 2) [2026] NSWSC 810 | Case summary | Zoe

On 19 June 2026, I handed down the decision in James v Moussa [2026] NSWSC 704 (‘the Principal Judgment’) in which I dismissed the plaintiff’s third further amended statement of claim. I deal now with costs.
Both sets of parties accept that the usual position is that costs follow the event on the ordinary basis, but both sets of parties contend that the Court should depart from that usual position.
I deal first with the defendants’ contention.
The defendants seek indemnity costs on the cumulative basis that the plaintiff’s claim was hopeless at least as regards breach of trust, fraud and dishonesty, the plaintiff delayed in bringing the proceedings, the plaintiff did not take steps to obtain emails from the Department of Defence until shortly before the trial, and the plaintiff pressed on with her claims after receiving what I described in the Principal Judgment as the termination emails of September 2009 and November 2010.
I do not accept that any of these matters warrant an indemnity costs order. The plaintiff was confronted with defendants who had advanced demonstrably untrue matters in their defence and in subsequent iterations of their defence. While I ultimately was not persuaded to make the findings of fraud sought by the plaintiff, I am satisfied that the plaintiff’s legal representatives had a proper basis for making the allegations. I concluded that, while the defendants’ conduct in relation to their defence and to subsequent iterations of the defence was to be deplored (Principal Judgment at [50]), it did not warrant a finding of dishonesty. I only reached that conclusion after having the benefit of seeing Mr Moussa being cross-examined for the best part of two days. While the defendants’ counsel invites the Court to be critical of cross-examining counsel, I do not accept that the conduct of the cross-examination was improper. I allowed it to go for a considerable period of time in order to give counsel a full opportunity to put the allegations of fraud, which counsel had a basis for putting but which fairness required Mr Moussa should have a full opportunity to address.
I do not accept that the multiple amendments to the statement of claim warrant an indemnity costs order. As I have indicated, the history of the pleadings does the defendants no credit. On my review, the plaintiff’s amendments were understandable as matters stood at relevant times in the proceedings.
I further consider that none of the other factual matters on which the defendant succeeded warrant censure by an indemnity costs order. I found the facts as set out in my Principal Judgment, but none of the plaintiff’s contentions were advanced improperly, nor were they productive of any undue waste of time, having regard to the genuine issues in dispute between the parties. I decline to make dishonesty findings against the plaintiff personally for the purposes of the costs dispute, having specifically not made those findings in my Principal Judgment.
While I did not accept the plaintiff’s legal arguments that a trust relationship survived the termination of the MOU, these arguments were not patently untenable or improperly put. I accepted the plaintiff’s argument that an equitable lien survived the termination of the MOU over the defendants’ argument to the contrary. So far as the equitable lien is concerned, the limitation point on which the plaintiff lost was one which was attended by doubt, and the plaintiff’s counsel advanced the plaintiff’s arguments cogently and efficiently on that matter.
Any costs order in favour of the defendants will be on the ordinary basis.
The plaintiff says the Court should make no order as to costs.
The plaintiff draws attention to a number of pleadings in the defendant’s original defence, repeated in later iterations of the defence, which were untrue and which (as I found in the Principal Judgment) it does not appear that Mr Moussa can have believed to be true at the time he swore the verifying affidavit: see Principal Judgment at [48]-[50]. His verification of the pleadings reflects poorly on him or his legal team or both. At its most charitable, it showed a serious disregard for the gravity of the Court process. I will return to that.
In relation to plaintiff’s trust claims, the defendants succeeded because of the conclusions I reached about the consequences of the termination emails. While the defendants first raised one of those emails in Mr Moussa’s affidavit of August 2024, Mr Moussa only provided an incomplete description of what occurred – including, in particular, no evidence that Mr James accepted Mr Moussa’s purported termination in September 2009. In fairness, that was in part attributable to the extensive delay, such that it would not be surprising for Mr Moussa to forget about emails before they were ultimately produced on subpoena. But the defendants are not assisted by the fact that they continued to advance iterations of their defence that did not articulate the matters on which the defendants ultimately succeeded.
The defendants only clearly raised termination, as the plaintiff observes, on the Friday one business day before the first day of the trial (a Monday). While each party says that the other side could have obtained the emails from the Department of Defence earlier, the fact is neither party did so. I am not persuaded that either party demonstrated any degree of delinquency by failing to obtain those emails earlier.
There is force in the plaintiff’s submission that the absence of a clear pleading of termination gave the case a materially different complexion. Mr Moussa had maintained a position that the payments up to September 2009 were gratuitous and as the plaintiffs’ counsel observed before me today, s 14 of the Limitation Act 1969 (NSW), the provision on which the defendants ultimately succeeded, was only pleaded by the defendants on 20 March 2026.
I am satisfied that the defendants’ conduct in relation to the pleadings warrant a departure from the ordinary position that costs should follow the event even where a successful litigant loses on particular issues. That conduct takes the circumstances outside those contemplated by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 when his Honour said that trials regularly occur in which the party who is substantially successful nevertheless fails along the way on particular issues. I take into account that, as Jacobs J observed, the ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, even if they are attended by real doubt.
The defendant also drew my attention to the decision of the High Court in Milne v A**ttorney-General for the State of Tasmania (1956) 95 CLR 460; [1956] HCA 48 where the Court stated the general rule that “a wholly successful defendant should receive his costs unless good reason is shown to the contrary”. It is not clear to me that this adds anything to r 42.1 of the Uniform Civil Procedure Rules 2005, but I have adopted the approach that may be discerned in both Mil**ne and r 42.1. I regard the defendant’s conduct in relation to their pleadings as providing good reason for departing from the general rule. While I did not find that Mr Moussa was dishonest, the conduct is nevertheless a matter warranting real censure. On repeated iterations of the defence, he verified the defence when it contained factual allegations that he could not have believed to be true if he had thought about them, and which were contrary to the documents his lawyers had been provided by the plaintiff. I accept that this contributed to the cost of the proceedings and to the plaintiff’s concern that Mr Moussa was not an honest witness. It also reinforced the plaintiff’s position in pressing a case in relation to the unpaid rent and the sale of the units. The assertion that the sale of units was by reasons of financial pressure from Westpac was only raised during the trial.
The plaintiff draws attention to the decisions of White J in Bonic v Pacific General Securities [2009] NSWSC 1221 and of Slattery J in Harrington v Greenwood Grove Estate Pty Ltd (No 2) [2011] NSWSC 1598 as examples of where a successful defendant was deprived of costs. I have considered those cases, although, of course, each case will turn on its own facts.
Ultimately, I am satisfied that I should depart from the usual position that costs follow the event, but I do not consider that the case warrants a conclusion that there should be no costs order at all in favour of the defendant. I will award the defendant a percentage of his costs on the ordinary basis. In considering an appropriate percentage, I take a broad-brush approach. I take into account the fact that the defendant enjoyed substantial success on a number of issues – including the ultimate event – and that I do not consider that the defendant’s conduct of the trial itself caused any unnecessary cost or delay.
Taking all of these matters into account, I consider that the plaintiff should be ordered to pay 60% of the defendants’ costs on the ordinary basis.
As for the costs in respect of the dispute today, the defendants say that the parties would have had to come to Court anyway because Court orders about caveats over the units would need to be discharged. I do not accept that. Those orders could readily have been dealt with by consent in chambers. The plaintiff has enjoyed substantial success in this costs dispute, in that the plaintiff has persuaded me to depart in a substantial way in her favour from the usual costs position. I do not think the defendants’ application for indemnity costs should have been regarded as sustainable in the face of the observations in my Principal Judgment about the defendants’ deplorable approach to pleadings. I propose to make a separate order that the defendants pay the plaintiff’s costs of the hearing before me today, including the costs of submissions and preparation for that hearing, on the ordinary basis.
Accordingly, I make the following orders:
Subject to order 2, the plaintiff is to pay 60% of the defendants’ costs of the proceedings on the ordinary basis.
Order the defendant to pay the plaintiff’s costs of the hearing today including the costs of submissions and preparation for the hearing on the ordinary basis.
Discharge orders 2 and 3 made by Justice Pike on 29 September 2025.

James v Moussa (No 2)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

JUDGMENT – ex tempore (revised)

Parties

Legislation Cited (2)

Cases Cited (7)