Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie

Background to the Registrar General's Costs Applications

1. The Registrar General's present involvement in these proceedings commenced on 18 April 2018. On that date, the Registrar General was made a respondent to a Notice of Motion filed by the Phams seeking removal of caveat AN232813, a caveat lodged by Mazen Zraika ("the Zraika caveat"), and the removal of caveat AN217443, a caveat lodged by Mr Ramzy Sebie ("the Ramzy Sebie caveat"). The plaintiffs' Notice of Motion was returnable before the Court on 24 April 2018 and was substantially argued that day.
2. In addition to the Zraika and Ramzy Sebie caveats, Mr Robert Sebie also lodged another caveat in the name of Warwick Mirzikinian, numbered AN267238, ("the Mirzikinian caveat"), which was, in the end, not recorded on the title of the Chiswick property for reasons to be explained below.
3. In the Court's orders made on 26 March 2018, the Court extended the date for settlement of the contract for sale of the Chiswick property to 2pm on 11 April 2018. In the end, the parties were not in a position to settle by 11 April 2018, so the Registrar amended the date for settlement to 2 May 2018 at 2pm. The three caveats in question were all filed or sought to be filed before 24 April 2018.
4. This was not the Registrar General's first involvement in these proceedings (proceedings 2015/325044). The Registrar General had previously been brought into the proceedings under a Cross Claim brought by the second defendant, Ms Musabwasoni. But that Cross Claim had been discontinued against the Registrar General under consent orders made by Darke J on 14 October 2013. Thereafter, apart from the present Notice of Motion brought by the Phams, the Registrar General has taken no part in these proceedings.
5. Together, the Zraika caveat and the Ramzy Sebie caveat, and the attempt to lodge the Mirzikinian caveat, disrupted or caused delay to the Court ordered settlement of the Chiswick property. The first two caveats were lodged and recorded in the Register before settlement and therefore prevented settlement taking place. But attempts to file the Mirzikinian caveat also separately caused disruption to settlement. The details of the Court's orders for settlement of the Chiswick property are dealt with in the Court's previous judgments. Further background to these events may be found in my two judgments: Pham v Mazen Zraika; Pham v Sebie (No. 4) [2018] NSWSC 566 and Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 5) [2018] NSWSC 567.
6. The Mirzikinian caveat claimed an interest in the Chiswick property in respect of an alleged fixed loan agreement. But the Registrar General formed the opinion that the caveat was defective in a number of ways. It was not marked as showing that stamp duty had been paid and no copy of the fixed loan agreement was identified or provided. This caused the Registrar General, on enquiry, to doubt the authenticity of the caveat and raised a suspicion, in light of the Court's orders, as to whether it may have been procured by Mr Robert Sebie to further delay settlement of the sale of the Chiswick property.
7. The recording in the Register of the Mirzikinian caveat was prevented by order of this Court, forbidding any further caveats being lodged or causing such caveats to be lodged by Mr Robert Sebie. The Registrar General had recorded the Court's order to this effect as notation AM954181 in the Register in respect of the Chiswick property.
8. In my view, it is clear that all these caveats were filed in order to prevent settlement occurring in conformity with the Court's orders. The only reasonable explanation for the filing of the caveats at the time they were filed on this property was to inhibit a Court ordered settlement, the approaching date and time of which was well signalled. This conclusion may be drawn apart from the question of who filed the caveats. But this timing also grounds the inference that the caveats were lodged under the authority of Mr Ramzy Sebie or Mr Robert Sebie, who are the persons most likely to benefit from a frustration of the Court's orders.
9. Whether the filing of these caveats may amount to a contempt of Court is something which may be considered in these proceedings at the end of the day. In the meantime, it is more important to resolve the issues raised by the Registrar General's costs application in the proceedings. But to the extent the caveats were an attempt to frustrate the Court's orders, they were ultimately unsuccessful.
10. Once the caveats had been filed, the Registrar General was joined at short notice to the proceedings by the Phams so that the Registrar General could be directed, if required, to remove the caveats. The Court accepts that that urgent joinder required the Registrar General to carry out a substantial amount of work at short notice. The Court was greatly assisted by the evidence provided by the Registrar General in the proceedings about what had occurred in relation to each of these three caveats. The Registrar General prepared an affidavit, undertook its own extensive title searches, and its in-house lawyers read voluminous correspondence provided by the competing parties in the matter.
11. The Registrar General then appeared before the Court by its solicitor, Mr Anthony Booth, for an extended period on 24 April 2018 to assist the Court as to the current status of various caveats affecting the title of the Chiswick property.
12. The substantive debate involving the Registrar General was concluded on 24 April. In order to crystalise the costs issues, at the Court's suggestion, the Registrar General filed a Notice of Motion on 1 May 2018 seeking a specified gross sum costs order against Mr Robert Sebie. The Registrar General claimed such an order in the sum of $5,000 and that such amount to be payable from the funds currently held in Court from the sale of the Chiswick property, which, at the time of sale, was held by Mr Robert Sebie. It also emerged in argument that no costs order had been made in favour of the Registrar General against Mr Robert Sebie, so that issue was considered as well.
13. The Court then ordered that the question of the Registrar General's claim for costs be stood over to 12 June 2018 and then 2 July 2018. On 12 June 2018, the matter was argued briefly amidst other issues in the proceedings and then the matter was stood over for further submissions on 2 July 2018.
14. This judgment deals only with the question of the Registrar General's costs, not the costs of other parties.

(1) Should A Costs Order Be Made?

1. The Registrar General contends that a costs order should be made in its favour against Mr Robert Sebie. The Registrar General submits that the evidence strongly points to Mr Sebie being responsible for the filing of the caveats and that it is his conduct that caused the costs to be incurred. Mr Sebie, in contrast, says that it has not been established that he was responsible for filing the caveats and a costs order should not be made against him.
2. In the result, the Court has reached the view that a costs order should be made against Mr Robert Sebie.
3. Mr Robert Sebie contended that he was not the party responsible for filing these three caveats. He pointed to evidence upon which he relied in his affidavits sworn on 6 June 2018. The Court did not find any assistance from Mr Robert Sebie's affidavits of that date in resolving this question. And the Registrar General had several powerful arguments that Mr Robert Sebie was behind the filing of these caveats, which conduct occasioned the joining of the Registrar General and incurring legal costs by the Registrar General.
4. Mr Robert Sebie did file, or assisted in the filing of, these caveats. They have now been removed. Quite apart from any claim to compensation that any other third party might have under Real Property Act 1900, s 74P against Mr Robert Sebie for the lodgement of these caveats without reasonable cause, the Registrar General, in my view, is entitled to a costs order in respect of the legal costs it has incurred by being joined to these proceedings. That costs order should be paid on ordinary costs principles by the party ultimately responsible in substance for the need to join the Registrar General, which is Mr Robert Sebie, not the Phams.
5. First, a strong circumstantial inference is available from the timing of the lodgement of these caveats that they were filed by Mr Robert Sebie. Although one of them is nominally filed by Mr Ramzy Sebie. It is quite evident from Mr Ramzy Sebie's appearances in Court that he is highly immobile and has at times appeared in Court in a wheelchair. Mr Robert Sebie has declared to the Court in Mr Ramzy Sebie's presence that he assists his father and has done so in open Court. The Court infers that, because Mr Robert Sebie would benefit from giving Mr Ramzy Sebie that assistance in this case, he is likely to have done so by lodging the caveats.
6. But there is direct evidence that Mr Robert Sebie did lodge one of the caveats, the Mirzikinian caveat. That caveat was challenged by the Registrar General when it was presented to the NSW Land Registry Services ("LPI"). Because of the suspicious nature of the caveat and the existence of the Court's orders recorded in the folio in the Register as (AM954181) restraining Mr Robert Sebie from lodging caveats, the LPI challenged the person lodging the caveat who was required to identify himself by the provision of a driver's licence. The driver's licence presented by the person was that of Mr Robert Sebie. The Registrar General immediately rejected the Mirzikinian caveat. I infer that from this direct evidence that Mr Robert Sebie was involved with the Mirzikinian caveat and that he was also probably involved with the other caveats.
7. But the Mirzikinian caveat itself was productive of major disruption. The Court became aware, notwithstanding its prior injunctive relief against Mr Robert Sebie preventing him lodging caveats, that the caveats were then filed. The discovery of the attempt to lodge the Mirzikinian caveat was another reason for the Registrar General's joinder and involvement in the proceedings, so that the true facts could be ascertained and proper order brought into the proceedings to allow a smooth settlement of the Chiswick property conveyance by 2 May. In the Court's view, the costs order now to be made is justified on the basis of the Mirzikinian caveat itself, quite apart from the inferences drawn about the other two caveats.
8. The Court will make an order for costs in favour of the Registrar General against Mr Robert Sebie.

(2) Should a Specified Gross Sum Costs Order Be Made?

1. The second question is whether a specified gross sum costs order should be made. The Registrar General submits that such order should be made. The Sebie parties contest the making of such an order.
2. The applicable principles in relation to the making of specified gross sum costs orders under CPA, s 98(4)(c) may be shortly stated. Although the CPA, s 98(4)(c) power has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to cases of that type: Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006 at [3] (Burchett J). The power to award a CPA, s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever the circumstances warrant its exercise. The purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 (von Doussa J) and Hamod v State of NSW [2011] NSWCA 375 (Beazley, Giles and Whealy JJA).
3. Probable inability to pay a costs order will usually provide a proper basis for the making of a CPA, s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered, then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J).
4. But there are many other reasons for making such an order. Here, there is a pressing need in the interests of a number of parties interested in these proceedings to bring consequential aspects of the proceedings to a rapid conclusion.
5. There is no procedural obstacle to the CPA, s 98(4) discretion being exercised now. CPA, s 98(4) provides as follows: "98. Courts powers as to costs (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount."
6. The Court may make such an order "at any time before costs are referred for assessment". The costs order just made has not yet been referred for assessment.
7. The Court has an unconfined discretion under CPA, s 98(4): "the Court may make an order…." [emphasis added] including a lump sum costs order. Cases such as Schipp and Hadid make clear that lump sum costs orders are not limited to existing categories of case, but may be made where circumstances require.
8. The Registrar General submits that Mr Robert Sebie and Mr Ramzy Sebie have demonstrated a pattern of behaviour that is designed to frustrate the completion of the contract for sale of the Chiswick property, which is a basis to infer that they are likely to frustrate and delay an assessment of costs. A simple survey of the course of these proceedings shows that this submission has considerable force. Both Mr Ramzy Sebie and Mr Robert Sebie have taken point after point, almost all of which have been entirely without legal substance or reasonably maintainable evidentiary backing.
9. The Registrar General also points to Pembroke J's findings that Mr Robert Sebie "is incapable of telling the truth, unless he thought the subject matter was irrelevant to the contentions, assertions and propositions on which he had constructed his implausible case." I have also had cause to disbelieve Mr Robert Sebie's evidence.
10. In my view, Mr Robert Sebie and Mr Ramzy Sebie are determined to frustrate (and will take any step necessary to prevent) their removal from the Chiswick property by lawful means. It is highly probable that if a costs assessment were to take place in these proceedings that it would become unnecessary, expensive and contentious.
11. A counter argument is that the Registrar General is only seeking a relatively small amount for costs, in the sum of $5,000, and it is therefore unlikely that a costs assessment for that amount would cause much extra expense, delay or aggravation. But there are two responses to this argument.
12. First, the smallness of the issue has not, so far, shown itself as a basis for Mr Ramzy Sebie or Mr Robert Sebie to show any restraint in taking points in the conduct of these proceedings to date. The Court is not confident that because only a small amount of money is involved, that automatically means that a proportionately small amount of expense or aggravation will be incurred.
13. Second, the relatively small amount claimed, $5,000, compared, for example, to the proceeds of sale of the Chiswick property, a sum approaching $2 million, provides its own argument for making the specified gross sum costs order. Third parties who are temporarily brought into proceedings and have small costs orders made in their favour should be able to exit involvement with proceedings quickly without being involved in protracted costs assessments. Subpoenaed parties are one example of this. The Registrar General is often involved in proceedings in a similar way. Quite apart from the conduct of the Sebie parties, this is another reason why, in my view, a specified gross sum costs order should be made in this case.

(3) What Amount Should be Assessed?

1. The Registrar General seeks a specified gross sum costs order of $5,000.
2. A lump sum costs order under CPA, s 98(4)(c) can be fixed broadly having regard to all the information available to the Court: Schipp, [22] and Hadid, [27]. The approach taken to the estimation of costs must be "logical, fair and reasonable" and the power should only be exercised when the Court considers it can do so "fairly" between the parties and that includes "sufficient confidence in arriving at an appropriate sum on the materials available": Schipp at [22], per Giles JA.
3. By affidavit sworn on 31 May 2018, Mr Booth set out the basis of his claim for $5,000 in costs. He is a senior solicitor, grade V-VI with the Registrar General. His external charge out rate is $406.20 per hour. The Court accepts as accurate and reliable a useful summary of the work that he has done, which includes the following: 1. perusing correspondence from early April 2018, when the Registrar General was joined to the proceedings (three hours); 2. preparing an affidavit of 24 April 2018 (four hours); 3. preparing and attending the hearing on 24 April 2018 (three hours); and 4. preparing and attending the hearing on 1 May 2018 (three hours). The total work claimed to have been done is 13 hours at $406.20 per hour. This amounts to $5,280. The Court accepts that the work as claimed was all done.
4. But the Court notes that, since that affidavit was sworn, Mr Booth has been required to attend on at least three subsequent occasions and has prepared written submissions. So the Registrar General's actual costs are likely to be comfortably in excess of this figure.
5. In a number of cases in which the Court has been required to determine specified gross sum costs orders, the Court commonly applies either evidence or the product of its own experience that upon a costs assessment, the actual costs incurred by a client may be discounted, so that only 70 to 80 per cent of those costs are recoverable on the ordinary basis from the other side.
6. In this case, on the evidence available, the Court could reasonably infer that the Registrar General has incurred about $6,500 in costs. Eighty per cent of that amount would be $5,200. It is not unreasonable, in my view, therefore to allow the Registrar General $5,000 as a specified gross sum costs order and the Court will so order.

(4) Should the Specified Gross Sum Be Paid From the Funds in Court?

1. The Registrar General is now able to enter judgment against Robert Sebie in the amount of $5,000. But the question arises whether that sum should be permitted to be paid out of Court.
2. In my view, this sum should be paid out of Court to the Registrar General. An order will be made that the monies cannot be paid out until 28 November 2018. This will permit any party who may be aggrieved by this order to question it by seeking leave to appeal if necessary.
3. The Court has reached its conclusion for several reasons. First, a principal objective of the Court exercising its CPA, s 98(4)(c) jurisdiction is to give weight to the consideration that the Registrar General should not be vexed by further forced involvement in these proceedings. The making of a specified gross sum costs order and the assessment in the relatively small amount of $5,000 were all designed to allow the Registrar General to not incur further costs in chasing a small amount of costs incurred in the discharge of its public statutory duties. If the money is not paid out of Court now, then the Registrar General will still have to monitor these proceedings, seek payment out of Court later or take other enforcement action.
4. Prima facie, the funds in Court belong to Mr Robert Sebie. He was the vendor of the Chiswick property and the funds are legally his, subject to the claims of others. Notice of this application has been given to all other parties in the proceedings. Principal among them is Ms Musabwasoni who has, no doubt, a substantial claim in the Family Court of Australia over the funds in Court in Mr Sebie's name, a matter which will soon be resolved in the Family Court. Ms Musabwasoni generally opposes payments out of Court, particularly the substantial payment which is separately sought by the Phams. But few arguments have been advanced to oppose the payment out of Court of these monies.
5. Thirdly, the Court sees little prospect of prejudice to the other potential claimants to this fund by making this payment out now. This can be easily seen. Were this payment to be made out of Court, other parties will only be be prejudiced if they were to gain rights over the whole fund. If Mr Robert Sebie were to retain a right to as little as $5,000 in the fund, then adjusting orders can be made at the time those claims are determined, to ensure that this present liability of his is paid out of the residue of the fund to which he is entitled. That will mean that these other parties' claims over the fund are not prejudiced. Moreover, the sum now being ordered to be paid out is less than 1% of the gross value of the funds in Court. It is difficult to see much prejudice to any party from this when balanced against the need for the Registrar General to be free of this litigation, particularly when the fund is earning interest every few months which would exceed that figure now being paid out.
6. Fourthly, the Court has an obligation to address the just, quick and cheap resolution of the real issues in dispute in proceedings: CPA, s 56. Any contest between the Registrar General and other claimants to this fund in Court, to which Mr Robert Sebie is prima facie entitled, seems, in the circumstances, to be more technical than real. Whilst the Court has not had an opportunity to assess whether Ms Musabwasoni might take the whole of a fund that would otherwise be Mr Robert Sebie's, in the ordinary course that outcome seems highly improbable on the materials that have been made available to the Court in the course of these proceedings.
7. The Court's reasons in this judgment may affect the way the parties approach the issue of the payment out of Court of the specified gross sum costs order already made in favour of the Phams. The Court will therefore allow the parties to put on a short submission of no more than two pages in relation to that question and it will be listed for hearing for no more than one hour at 9.30am on 7 December, or such other date as may be arranged with my Associate. The Court needs to be updated in the meantime about the progress of the Family Court proceedings which may be relevant to the Court's decision on that question.

Conclusions and Orders

1. For these reasons the Court makes the following orders and directions: 1. Order Mr Robert Sebie to pay the Registrar General's costs of the Registrar General's involvement in these proceedings. 2. Order that a gross lump costs order be made in respect of the costs the subject of Order 1 instead of assessed costs. 3. Make a specified gross sum costs order in the amount of $5,000. 4. Order that the specified gross sum costs order amount of $5,000 may be paid out of the monies in Court to the Registrar General on 28 November 2018. 5. Direct the parties by 4pm on Wednesday 5 December 2018 to put on written submissions of no more than two pages as to whether the Court should give judgment on any other issues in these proceedings before the resolution of related proceedings in the Family Court ("the Family Court timing issue"). 6. List the Family Court timing issue for short argument at 9.30am on 7 December 2018 or on such other date as may be arranged with my Associate. 7. Grant liberty to apply in relation to the implementation of these orders.

Amendments 01 November 2018 - [27] Whealey JA to Whealy JA. 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: 01 November 2018