38 It is rare for a successful party who is guilty of misconduct in the litigation to be ordered to pay the unsuccessful opponent's costs where the misconduct does not lengthen the proceedings unnecessarily, cause unnecessary issues to be canvassed or otherwise cause the costs of the litigation to be increased. Indeed, the court's entitlement to depart from the usual order that costs follow the event has sometimes been said, in effect, to be subject to the qualification that the misconduct in question occasioned unnecessary litigation and expense (see Huxley v West London Extension Railway Company (1899) 14 App Cas 26 at 32-33 per Lord Halsbury LC; Ritter v Godfrey [1920] 2 KB 47 per Atkin LJ at 60). In other cases, however, this qualification has not been mentioned: see for example Donald Campbell & Co v Pollak [1927] AC 732 at 811-812; Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433 at 500; Jamal v Secretary, Department of Health (1988) 14 NSWLR 252 at 271-272; Re Elgindata Limited (No 2) (supra). On balance, it seems to me that while delay and increased expense brought about by improper conduct in the course of the litigation are highly relevant factors in the discretion to depart from the usual order as to costs, they are not essential to the exercise of that discretion. It would, in any event, be very unusual for misconduct of that kind not to cause unnecessary delay and expense.' (emphasis added)." ( Hooker v Gilling (No 2) [2007] NSWCA 214, per McColl JA, with whom Ipp and Basten JJA agreed.)
Application of Principles
8 I have already determined that the plaintiff, and its solicitors, have acted appropriately and no criticism ought to be made of them in obtaining the default judgment: Permanent Custodians Ltd v El Ali [2008] NSWSC 1264 at [28].
9 I have also recounted the circumstances of the failure by the solicitor for Ms Awad in failing to file a defence. Ms Awad submits that this was a "regrettable oversight". She relies upon the statement by Allsop J (as he then was) in White v Overland [2001] FCA 1333 at [4]:
"Litigation is not a game. It is a costly and stressful, though necessary, evil.… Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false.… In the long run, the only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone."
10 Ms Awad claims that the sentiments of Allsop J (as he then was) relate to the proceedings before the Court in the instant matter. She submits that the plaintiff was aware that the signature had been forged, because there had been an affidavit sworn, and for another purpose, served on the plaintiff's solicitor, which affidavit set out clearly the allegations of forgery, made by Ms Awad.
11 I accept, without deciding, that the plaintiff was aware that Ms Awad claimed the mortgage was a forgery, at least in respect to her signature. It is also the case that Ms Awad did not (and does not) dispute the capacity of the plaintiff to exercise its rights under the mortgage and effect a mortgagee sale. The mere fact, if it be the fact, as alleged by Ms Awad, that the plaintiff was aware of her claim of forgery, does not translate into an understanding that the second defendant (Ms Awad) was contesting the debt. To say the least, given Ms Awad's attitude to the mortgagee sale, such an understanding would not necessarily follow.
12 The failure to file a defence, even if it were a defence confined to a debt beyond that sum realised by the mortgagee sale, is the kind of "misconduct in litigation" to which Ipp AJA (as he then was) referred in Arian v Nguyen, supra, cited, with approval, by McColl JA in Hooker v Gilling (No 2), supra. Understandably, Ms Awad submits that she should not bear the cost of the "regrettable oversight", but that is a matter between Ms Awad and her solicitor.
13 Because these are costs in an interlocutory proceeding, and I do not make an order that the costs be payable forthwith, it seems that the most appropriate exercise of the discretion of the Court, in the circumstances, is to order that the second defendant, Ms Awad, pay the costs of the motion, which costs result directly from her failure to file a defence in time or at all. Otherwise, the costs will be payable at the conclusion of the proceedings and the issue between Ms Awad and her solicitor is, at this stage, a matter for them.
Conclusion
14 The Court orders that the second defendant, Ms Awad, pay the plaintiff's costs of and incidental to the motion to set aside default judgment, such costs to be as agreed or assessed.