Preston v Nikolaidis

Defendants' submissions

1. The defendants submitted that the plaintiff should be ordered to pay their costs of the application for leave to file the verified pleading for five reasons.
2. First, in circumstances where the plaintiff's claims in the verified pleading were found to be so untenable that they could not possibly succeed, [1] the plaintiff should have known that he had no chance of success, assuming that he was properly advised.
3. Second, the refusal of leave to file the verified pleading on the grounds that it was an abuse of process is, [2] by itself, a sufficient basis for an order that the plaintiff pay the defendants' costs on an indemnity basis.
4. Third, the refusal of leave to file the verified pleading on the grounds of Anshun estoppel is, [3] by itself, a sufficient basis for an order that the plaintiff pay the defendants' costs on an indemnity basis.
5. Fourth, the court made significant adverse findings that the plaintiff's conduct was unreasonable in not having pleaded the Dishonest Conduct Claims and the allegation made in paragraph 208 of the verified pleading prior to the dismissal of the accounting aspect of the 1993 proceeding on 28 February 1995. [4]
6. Fifth, the defendants submit that these four reasons when taken together in the context of the procedural history of these proceedings, in particular the plaintiff's history of failed applications to amend the proceedings, and the plaintiff's position since 6 February 2018 being that he no longer seeks the delivery up of the files the subject of the lien and no longer intends to have the Bill of Costs assessed such that there no longer a purpose for keeping the proceedings alive, meets the threshold of a case where "there is some special or unusual feature in the case which would justify the court exercising its discretion in that way": Preston v Preston [1982] 1 All ER at 58; principal judgment [11]-[123].

Plaintiff's submissions

1. In relation to the defendants' second and third reasons referred to above, the plaintiff submitted that the fact that his application for leave to file the verified pleading had been dismissed on abuse of process and Anshun estoppel grounds did not, without more, warrant an order for indemnity costs. Rather, it is necessary to identify some special or unusual feature of the case over and above the dismissal of the application on those grounds before departing from the usual course of ordering the plaintiff to pay the defendants' costs on the ordinary basis.
2. The plaintiff emphasised that one of the defendants' alleged grounds of abuse of process (illegitimate purpose) was rejected.
3. In relation to the ground of abuse of process on which the defendants succeeded (unjustifiable oppression and bringing the administration of justice into disrepute), the plaintiff submitted that there was a comparatively large amount of evidence before the court concerning these matters and his written submissions dated 17 June 2020 had advanced "respectable arguments against a finding of abuse of process".
4. The plaintiff submitted that: "Where the abuse of process arises from an improper use of court proceedings by a plaintiff, this may justify an indemnity costs order. But where the abuse of process turns on burdens on the defendant and the administration of justice, as in the present case, this does not involve improper conduct by the plaintiff which justifies an indemnity costs order."
5. The plaintiff did not cite any authority for this general proposition, other than noting that the case referred to in the defendants' submissions in which indemnity costs had been awarded against an unsuccessful party where the proceedings had been found to be an abuse of process involved a proceeding maintained for an ulterior purpose.
6. The plaintiff submitted that the defendants' reliance on Anshun estoppel first emerged when the defendants served further written submissions some months after the hearing (in response to further submissions of the plaintiff). The plaintiff further submitted that his own submissions had raised respectable arguments concerning Anshun estoppel.
7. In relation to the defendants' first reason referred to above, the plaintiff submitted that this was not a case in which he and his advisers must have known that he had no possibility of success in his application for leave to file the verified pleading. Where it cannot be said that an unsuccessful party did know or must have known that there was no chance of success (as opposed to should have known), caution should be exercised before awarding indemnity costs.
8. The plaintiff raised three matters in support of his submission that this was not a case in which he must or should have known that his application for leave to file the verified pleading had no chance of success.
9. First, the grounds of the defendants' opposition to the plaintiff's application for leave were not articulated until the defendants' written submissions were served on the evening before the hearing of the application. As I have already referred to above, the defendants' reliance on Anshun estoppel was not articulated until the defendants served further written submissions some months after the hearing (in response to further submissions of the plaintiff).
10. Second, the plaintiff submitted that the principal judgment suggested that his claims in the verified pleading to set aside previous adverse costs orders under r 36.16(3) of the UCPR were arguable.
11. Third, in relation to his claims under UCPR r 36.15(1), the plaintiff's submissions in support of his application for leave to file the verified pleading did address the issue that there had been no new discovery of something material since the costs orders sought to be set aside were made. The plaintiff's application for leave to file the verified pleading insofar as it pleaded claims under r 36.15(1) relied on the proposition that there was no clear Court of Appeal authority as to "whether the 'new discovery of something material' test applied to interlocutory judgments".
12. In relation to the defendants' fourth reason referred to at [15] above, the plaintiff submitted that the circumstances to be considered for the purpose of exercising the costs discretion are the circumstances that applied in the litigation process that is the subject of the costs order, and not circumstances prior to that process.
13. Finally, the plaintiff submitted that the matters raised by the defendants' fifth reason referred to at [16] above are not relevant to the exercise of the costs discretion.

Consideration and determination

1. Applying the principles summarised at [4]-[10] above and having regard to the parties' submissions, I consider that this is a case in which the discretion under s 98 of the Civil Procedure Act and UCPR, r 42.2 should be exercised to order the plaintiff to pay the defendants' costs of and incidental to the plaintiff's application for leave to file the verified pleading on an indemnity basis. My reasons are as follows.
2. I accept the plaintiff's submission that it does not necessarily follow from the dismissal of a proceeding or application on the grounds of abuse of process or Anshun estoppel that the unsuccessful party should be ordered to pay the successful party's costs on an indemnity basis. It is necessary to have regard to all of the circumstances of the case in determining whether they are sufficiently unusual or special to warrant a departure from the usual course of an order for costs on the ordinary basis. However, the fact that the dismissal has flowed from an abuse of process or the operation of the doctrine of Anshun estoppel will undoubtedly be relevant to the exercise of the costs discretion as the Court of Appeal recognised in CG Maloney v Noon, supra.
3. I reject the plaintiff's submission that an indemnity costs order will not be warranted in any case where the unsuccessful party's abuse of process consists of conduct that is oppressive to the successful party and/or brings the administration of justice into disrepute, as opposed to the use of the court's process for an improper purpose. This submission seeks to impose a general constraint on the exercise of the costs discretion that, in my opinion, is unwarranted, finds no support in the authority and is contrary to the well-established approach that the exercise of the discretion to award indemnity costs turns on all of the relevant circumstances of the particular case.
4. In my opinion, this is a case in which the plaintiff should have known that his application for leave to file the verified pleading had no chance of success, and he has unduly prolonged these proceedings by seeking prosecute groundless claims to set aside previous costs orders.
5. The plaintiff had achieved substantial success in the proceedings on the limited basis determined by Slattery J in November 2017. Summarised in the briefest possible terms, what the plaintiff sought to do by seeking leave to file the verified pleading boiled down to this: the plaintiff won this case on a narrow basis. Had he not won on that basis, he says that he would have won on a different basis which it was not necessary for the Court to determine, and also on a basis that he never articulated during the course of the proceedings and/or on a basis that he conceded during the proceedings but he now wants to withdraw that concession. The plaintiff wishes to have the Court determine all of those matters (which are based on ancient factual allegations) so that he can now demonstrate that his commencement of these proceedings in 1993 was caused by the defendants' wrongdoing. He says that he would not have incurred any costs in these proceedings at all but for that wrongdoing, and so all of the costs orders made against him reflecting his lack of success and his conduct of these proceedings at various stages since 1993 should be set aside. The sole purpose of the exercise was for the plaintiff to achieve a potentially better outcome in his application for an order that the defendants pay his costs of the proceedings in a gross sum: see principal judgment at [331]-[338]. The plaintiff, properly advised, should have known that that he had no chance of obtaining leave to file the verified pleading and embark on this exercise. If he did not know, this must be presumed to be attributable to wilful disregard of the effect that it would have on the administration of justice if the plaintiff were permitted to pursue the claims in the verified pleading. I do not consider that the plaintiff required the defendants' submissions in opposition to the leave application in order to appreciate these matters.
6. Moreover, the claims to set aside the previous costs orders were so untenable that they could not possibly succeed for the reasons explained in the principal judgment at [354]-[396]. I reject the plaintiff's submission that the principal judgment suggests that his claim under UCPR r 36.16(3) was arguable. I reached the opposite conclusion, despite assuming (in the plaintiff's favour) that the factual allegations underpinning that claim were arguable. The factual allegations, if proved, did not give rise to a tenable argument that the interests of justice favoured the setting aside of the previous costs orders under r 36.15(1) or r 36.16(3) even assuming (again, in the plaintiff's favour) that it was not necessary for the purpose of the claim under r 36.15(1) to demonstrate a new discovery of something material since the making of the costs orders in question: see principal judgment at [371]- [396].
7. It is the combination of the circumstances in [34] and [35] above that leads me to the conclusion that this case is sufficiently unusual or special to warrant an order for indemnity costs.
8. Although the refusal of leave to file the verified pleading on the grounds of Anshun estoppel would ordinarily be another factor that would weigh in favour of an indemnity costs order, I do not take that into account in this case having regard to the fact that the defendants raised Anshun estoppel only at the eleventh hour.
9. For completeness, I record that I do not consider that the fourth reason relied on by the defendants is an independent matter relevant to the exercise of the costs discretion. The unreasonableness of the plaintiff's conduct was one of the matters that contributed to the conclusions that the claims in the verified pleading were an abuse of process and were precluded by the doctrine of Anshun estoppel.
10. The fifth reason relied on by the defendants amounted, in substance, to a complaint about the twists and turns that these proceedings have taken over the very long course of their history. To the extent that those twists and turns involved failed applications by the plaintiff, they have either already been the subject of costs orders or will be the subject of the parties' submissions in relation to the remaining costs of the 1993 proceeding. [5] To the extent that they involve the plaintiffs' abandonment of the costs assessment process commenced pursuant to orders made in the 1993 proceeding, that is a consequence of the very long delay in the costs assessment process and the plaintiff's subsequent success in relation to the limitation issues determined by Slattery J in November 2017. The reasons for the delays attending the costs assessment are addressed in my recitation of the history of the proceedings in the principal judgment. As I remarked in the principal judgment, both parties bear responsibility for that delay. [6]
11. For those reasons, and for the reasons at [398]-[403] of the principal judgment, I make the following orders and notations: Proceeding 1993/23395 1. Order that the defendants' costs of and incidental to the notice of motion filed on 25 October 2019, including: 1. the costs of the notice of motion filed by the plaintiffs on 15 November 2018 and referred to in Preston v Nikolaidis [2021] NSWSC 36 at [105]; and 2. all points of claim or statements of claim served, or filed and served, by the plaintiff (whether in draft or final form) during the period between 15 November 2018 and 25 October 2019, including those referred to in Preston v Nikolaidis [2021] NSWSC 36 at [116]-[120], be paid by the plaintiff on an indemnity basis. 1. Note that the matter is listed for directions at 9.00am on 5 March 2021 for the purpose recorded in order 8 made on 2 February 2021. Proceeding 2015/331795 1. Note order 1 made in proceeding 1993/23395 on this date. 2. Note that the matter is listed for directions at 9.00am on 5 March 2021. Proceeding 2018/96873 1. Note order 1 made in proceeding 1993/23395 on this date. 2. Note that the matter is listed for directions at 9.00am on 5 March 2021.

Endnotes

1. Principal judgment at [354]-[396].
2. Principal judgment at [331]-[353].
3. Principal judgment at [270]-[299].
4. Principle judgment at [280]-[296], [332] and [351].
5. See principal judgment at [100] and [403].
6. See principal judgment at [322] and [331].

Amendments 04 March 2021 - Formatting issue. 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: 04 March 2021