Preston v Nikolaidis

LEGISLATION CITED : Civil Procedure Act 2005, ss 56, 57, 58, 64(1)(b), 64(2), 65(2)(b)

Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175 Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 CASES CITED : Greenwood v Papademetri [2007] NSWCA 221 Newmont Yandal Operations Pty Ltd v The J Aron Corporation [2007] NSWCA 195; (2007) 70 NSWLR 411 Preston v Nikolaidis [2010] NSWSC 131 R v Lawrence [1982] AC 510

John Michael Preston - First Plaintiff PARTIES : Western Suburbs Constructions Pty Ltd - Second Plaintiff Leon Nikolaidis and the estate of Mitrofanis D Nikolaidis trading as M D Nikolaidis & Co - Defendants

COUNSEL : Mr R R I Harper SC - Plaintiff Mr T S Hale SC/Mr J S Tobin - Defendants

SOLICITORS : Davidson Gerathy Lawyers - Plaintiff McLachlan Chilton - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1993/023395 JOHN CLEMENT PRESTON & ANOR v LEON NIKOLAIDIS & ANOR JUDGMENT 1 I am dealing with three matters in consequence of my judgment of 2 March 2010 (Preston v Nikolaidis [2010] NSWSC 131), having heard further submissions on both 30 March 2010 and 20 April 2010. 2 The first matter concerns Mr Zwar and the fact that, although he has, over a long period, been treated as a party (and, indeed, has represented himself to be a party), there has never been any formal step taken to make him a party. The plaintiff says that Mr Zwar is - and always has been - a necessary party and that he ought to be joined with retrospective effect at least to July 1994 which is the point at which he was first recognised as a party. The defendants say that there is no need to join Mr Zwar and question whether there is power to join him. 3 The proceedings concern the terms of the solicitors' retainer and a dispute about costs rendered by them. The original first defendant (Mitrofanis Nikolaidis) and the second defendant (Leon Nikolaidis) were, at relevant times, two of three solicitors practising in partnership. Mr Zwar was the third member of the firm. 4 It follows that he should have been a party from the outset. He needs to be a party to ensure that he, along with the estate of Mitrofanis Nikolaidis and Leon Nikolaidis, is bound by the outcome of the litigation. He has indicated that he will not in the future seek to depart from that outcome, if he remains a non-party. I do not, however, regard that as a suitable basis on which to secure the finality that will hopefully soon be achieved in this excessively protracted litigation. 5 I referred in my earlier reasons to the decision of the Court of Appeal in Newmont Yandal Operations Pty Ltd v The J Aron Corporation [2007] NSWCA 195; (2007) 70 NSWLR 411 and the observation that the court has an inherent power to correct its record to record what it "had pronounced or intended to pronounce" [original emphasis]. The defendants say that such an order could not overcome any limitation defence to which Mr Zwar is entitled. 6 I do not need to pursue that question since I am of the opinion that, if the inherent power is for some reason insufficient, a relevant and appropriate power is available under s 65(2)(b) of the Civil Procedure Act 2005 in a way that avoids limitation issues. On principles discussed in Greenwood v Papademetri [2007] NSWCA 221 (particularly at [33] to [35]), that section will support an order making Mr Zwar a party. This case is of the kind referred to by Campbell JA at [69]: "In my view, if it was clear that a plaintiff intended to sue the owner of a particular piece of property, and sued A in the belief that A was the owner of the property, but in fact the owners were A and B, there is no reason why an amendment to add B could not count as an amendment 'so as to correct a mistake in the name of a party to the proceedings' . . . . As I have earlier stated, the words 'whether or not the effect of the amendment is to substitute a new party' do not limit the width of the power under section 65(2)(b)." 7 Here, the plaintiff must be taken to have intended to sue all three members of the firm of solicitors, so that Mr Zwar is properly regarded as the equivalent of "B" in the foregoing formulation. 8 There will therefore be an order that the plaintiff have leave to amend the summons filed on 24 August 1993 by adding Michael Zwar as a defendant. 9 I consider next the plaintiff's application for leave to file an amended statement of claim. That application was made by notice of motion filed on 30 March 2010, following the striking out of a statement of claim filed on 19 June 2009 (see paragraph [81] of the reasons of 2 March 2010). 10 The amended statement of claim now proposed by the plaintiff contains three substantive claims, being a claim for a declaration that the letter dated 19 April 1984 "is void and of no effect", a claim for damages and a claim for equitable compensation. The second and third claims are new, in the sense that they had no counterpart in any of the pleadings put forward by the plaintiff up to further amended points of claim filed on 15 April 2002 (see paragraphs [50] and [51] of the reasons of 2 March 2010). The further amended points of claim claimed the following relief: "(1) A declaration that the terms of the retainer agreement between the plaintiffs and the defendants in respect of the matters set out in the Schedule to the Summons are as pleaded herein. (2) A declaration that the second defendant is guilty of fraudulent conduct as alleged in paragraphs 71, 76 and 77 hereof in respect of the matters pleaded in paragraphs 65 to 70, 72 to 75 and 77 respectively hereof. (3) A declaration that in the events which have happened the defendants' bills of costs in respect of the matters set forth in the Schedule to the Summons are unenforceable as tainted by the fraudulent conduct of the second defendant. (4) Such further or other declarations, orders and/or relief as the nature of the case may require. (5) An order that the defendants pay the plaintiffs costs of the proceedings on an indemnity basis." 11 The claims for damages and equitable compensation now sought to be added by the plaintiff were first contained in the statement of claim of 19 June 2009 that was struck out by me on 2 March 2010. By that time, the proceedings had been on foot for sixteen years and the fraud of Leon Nikolaidis had played a part for some seven years. 12 The plaintiff has not attempted to explain in any way why the claims for damages and equitable compensation were not added in 2002 when the fraud of Leon Nikolaidis was first alleged. 13 The rationale for the amendment is put as follows in the submissions of counsel for the plaintiff: "The matter has been complicated and has evolved factually from when proceedings were first filed in 1993 because of the fraud of Mr Nikolaidis. What had begun as a costs exercise has developed because the first plaintiff came to the realisation that he and his companies were routinely overcharged. As a consequence, while the claim is still at its centre a costs exercise, it has taken on a different form in order to ensure the plaintiffs and their related entities are in a position to argue for a recovery of the amounts they have overpaid." 14 The fact is that the proceedings have always been no more than a "costs exercise", their objective being to discover the true terms of the retainer so that a pending process of costs assessment may be properly informed. If, as the plaintiff fears, he and his companies "were routinely overcharged", the costs assessments will show that; and if the assessments establish that the plaintiff and his companies paid more than they should have paid, that of itself will support a claim for recovery. 15 Several factors combine to warrant refusal of the amendment the plaintiffs seek. First and as just mentioned, the amendment is not necessary to the determination of the "real questions" in the proceedings (see Civil Procedure Act, s 64(2)). Second, the amendment is raised without adequate explanation many years after it could have been raised. Third, the amendment adds new factual dimensions many years after relevant events and at a time when recollections have obviously faded. 16 As to the last matter, counsel for the defendants placed emphasis on observations of McHugh J in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541, including the following quotation from the speech of Lord Hailsham LC in R v Lawrence [1982] AC 510 at 517: "Where there is delay the whole quality of justice deteriorates." 17 In addition, principles of case management dictated by ss 56, 57 and 58 of the Civil Procedure Act 2005 will be best served by refusing leave to amend in this case: see Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175. 18 The third matter for determination is costs. 19 The plaintiff's view is that the defendants should pay the plaintiff's costs of the motion dealt with in my reasons of 2 March 2010. The plaintiff takes that position because, first, the defendants were unsuccessful in their attempt to have the proceedings dismissed and, second, the result the defendants did achieve (striking out of the statement of claim filed on 19 June 2009) was not something explicitly sought by the defendants - to which one would now add that the plaintiff's application in respect of Mr Zwar, which was resisted by the defendants, has now been successful. 20 The defendants say that the decision of 2 March 2010 was consonant with the position they took, that is, that the only extant claims were those dealing with assessment of costs and ascertaining the terms of the retainer, that it was indeed consistent with their submissions for the statement of claim of 19 June 2009 to be struck out and that they were successful in establishing that claims for the delivery up of files and for an account had already been adjudicated - to which one would add that the defendants have now successfully resisted the plaintiff's application to amend by adding claims for damages and equitable compensation. 21 Looking at the totality of the matters litigated upon the defendants' application filed on 2 October 2009 and the plaintiff's application filed on 29 March 2010 (which, in a very real sense, grew out of the earlier application), it is fair to say that each party has enjoyed an appreciable measure of success and suffered an appreciable measure of failure. It cannot, I think, be said that either side achieved clear victory in respect of a discrete and substantial "event". 22 In those circumstances, the discretion with respect to costs will be appropriately exercised by allowing costs to rest where they have fallen. 23 The orders and direction now made are as follows: 1. Order pursuant to s 64(1)(b) and s 65(2)(b) of the Civil Procedure Act 2005 that the plaintiff have leave to amend the summons filed on 24 August 1993 by adding Michael John Zwar as a defendant. 2. Order that the plaintiff's notice of motion filed on 30 March 2010 be dismissed. 3. Order that there be no order as to costs with respect to either the defendants' notice of motion filed on 2 October 2009 or the plaintiff's notice of motion filed on 29 March 2010. 4. Direct that the proceedings be listed before Registrar Walton on 24 May 2010 for directions and, if appropriate, for allocation of hearing dates. 24 I should add, in relation to this last matter, that the listing before Registrar Walton on the terms stated is intended to ensure close case management of the kind referred to in the reasons of 2 March 2010. It may be that Registrar Walton will refer the matter to a judge for ongoing attention. **********

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