Prime Marble & Granite Pty Ltd (ACN 077 393 938) v Mehajer

The evidence of the parties

1. The plaintiff relies upon the affidavit of Mr Teo (the sole director and shareholder of the plaintiff) sworn on 3 March 2017 as well as an expert report of Mr Zakos. Mr Zakos' lengthy report includes 420 photographs of the very extensive work carried out by the plaintiff, for which he calculates the sum of $945,516.37 as the fair and reasonable value.
2. The defendant has filed no evidence and is in breach of a self-executing order made on 19 June 2017 to put on his evidence in reply by 11 August 2017.
3. This brings me to the first application before me in relation to today's hearing, namely the application by the solicitor for the defendant to withdraw from the proceedings and to be granted leave under r 7.29 Uniform Civil Procedure Rules 2005 (NSW) to file a Notice of Ceasing to Act, notwithstanding the fact that the hearing has been listed for hearing today with a three day estimate.

Mr Mehajer's non-appearance today

1. As is noted in the orders set out below, Mr Mehajer failed to appear at the hearing today despite being served with a subpoena to appear and give evidence by the plaintiff, which is itself an unusual step for a party to take. Ms Musgrave, the defendant's solicitor, has set out the history of her difficulties in obtaining not only the costs relating to the preparation of these proceedings, but even the most fundamental of instructions from her client. The failures of the defendant identified by Ms Musgrave are: 1. Failure to response to requests for instructions; 2. Failure to the plaintiff's evidence; 3. Failure to prepare the defendant's own evidence; 4. Failure to comply with District Court Civil Practice Note No. 1 and the Standard Orders for Hearing; 5. Failure to respond to the request to attend a settlement conference in accordance with court directions, which conference could not be held as a result; 6. Failure to provide funds, including funds to retain counsel.
2. The defendant's failure to provide instructions was exacerbated by his email of 29 September 2017 foreshadowing a proposed termination of Ms Musgrave's retainer, as well as his failure to attend court today, in circumstances where, as is set out below, he instructed Ms Musgrave to inform the court that he was in Canberra "following the death of my grandmother". The relevant correspondence is set out below.

The correspondence leading to Ms Musgrave's application

1. On 3 October 2017, the defendant's solicitor, Ms Musgrave, filed a Notice of Intention to File Notice of Ceasing to Act. Ms Musgrave caused the following letter to be sent to Mr Mehajer: "3 October 2017 Mr Salim Mehajer 14 Francis Street Lidcombe NSW 2141 By email sm.eng@sydneybuilding.net Dear Mr Mehajer, Yourself ats Prime Marble & Granite Pty Limited District Court hearing commencing 11 October 2017 Enclosed by way of service is a copy of a Notice of Intention to file a Notice of Ceasing to Act, which has been filed with the Court today. I advise that I will apply for leave to file a Notice of Ceasing to Act when this matter is before the Court on 11 October 2017. The basis of my application will be that I have just cause considering your: 1. advice to me on Friday 29 October 2017, that you were considering whether or not to terminate my retainer; 2. your failure to confirm my retainer; 3. your failure to respond to my repeated requests for instructions, most recently by 9am this morning (Tuesday 3 October 2017); and, 4. the withdrawal by you of the bulk of funds held in my trust account, leaving no funds for this matter. I confirm that arrangements had been made to hold an informal case conference with the plaintiff and its representatives on Thursday 5 October at 11am. I do not hold instructions for you to attend the hearing. If you intend appearing either by yourself, or with alternate representation, you should contact the plaintiff's solicitor as soon as possible. The contact person is Khoder Dandachli of Thurlow Fisher, phone number 9708 2222. I also confirm that the plaintiff has sent you a letter demanding a response to his offer of settlement by close of business Wednesday. As you are aware I have sought an extension of time to respond, to enable you to seek advice. I have not received a response to this request. You should proceed on the basis that the deadline has not changed. If I do not receive a response I will forward it to you or, if I am notified, to your new solicitor. Your [sic] sincerely Penny Musgrave cc. sam@sydneyprojectgroup.com.au, and Salim Mehajer c/- 77 Carlingford Road Sefton 2162"
2. On 5 October 2017, the plaintiff's solicitors sent the following email to Mr Mehajer as well as his solicitor: "Dear Mr Mehajer, Please see attached. Regards, Evan Casimatis | Solicitor Thurlow Fisher Lawyers Pty Limited" (Exhibit BB)
3. In response to this email, Mr Mehajer wrote to his solicitor on the same day in the following terms: "Hi Penny, Please advise I am in Canberra following the death of my grandmother. Regards, Salim MEHAJER" (Exhibit BB)
4. Ms Musgrave replied, on the same day, to Mr Mehajer as follows: "Dear Salim. I have filed a notice of intention to file a Notice of Ceasing to Act in this matter. This is because I was not able to get the instructions that I needed from you to defend the matter, which is listed for hearing commencing 11 October 2017. You need to instruct another firm of solicitors or represent yourself next week. Whatever happens you need to appear, first because there is a subpoena for your attendance, the second because a failure by you to appear could result in judgement [sic] being entered against you in the full amount of the claim plus costs and interest. I strongly recommend that either your new solicitor, or you, contact the plaintiff's solicitor urgently to discuss how this matter can be resolved. Regards Penny Musgrave Principal | Musgrave Legal" (Exhibit BB)
5. Later that day, Mr Mehajer wrote to Ms Musgrave as follows: "Penny, I already paid hundreds of thousands for this matter and I wish for you to continue. You cannot just "suddenly disappear". Regards, Salim"
6. On 6 October 2017, Ms Musgrave sent the following email to Mr Mehajer: "6 October 2017 Mr Salim Mehajer 14 Francis Street Lidcombe NSW 2141 By email only: sm.eng@sydneybuilding.net Dear Salim, Yourself ats Prime Marble & Granite Pty Limited District Court hearing commencing 11 October 2017 I refer to your email sent yesterday, 5 October 2017 in which you state: You have given instructions; and, You are not willing to pay more. The instructions you gave on a settlement figure were rejected by the Plaintiff by letter dated 27 September 2017, a copy of which was sent to you. You have not provided me with any other instructions, in particular the instructions I require to represent you at the hearing of this matter commencing in the District Court on 11 October. Following many requests and attempts to contact you be [sic] email, phone and via messages with your accountant and other solicitors, I asked for this information to be provided by 9am Tuesday 3 October. The instructions did not arrive. This is the reason why I must seek leave to withdraw. A further copy of my letter to you dated 3 October 2017, advising you of this, is attached. I response to your emails since then I have consistently confirmed this position. Your email also appears to advise that you would not in any event pay any further fees in this matter for either myself or Ms Catherine Gleeson of counsel who had been briefed in this matter. This is contrary to my understanding and is a further ground for my application to withdraw. I have as requested by you, resent copies of the invoices issued in this matter. Contrary to the view expressed by you in an email yesterday that 100's of thousands have been expended on this matter, the total amount charged to date is reasonable and not remotely of that magnitude. I await your advice as to whether Mr Abbas has accepted instructions in this matter. I remain, as always, more than happy to discuss the above or any concerns you may have and will assist Mr Abbas in his preparation. I urge you to call myself or Mr Abbas to discuss the above. Yours sincerely Penny Musgrave"
7. This brings me to a consideration of the course to take where a party is not present in court for the hearing of proceedings and the solicitor for that party brings an application of this nature.

The relevant legislation

1. Rule 7.29 Uniform Civil Procedure Rules 2005 (NSW) provides: "7.29 Withdrawal of solicitor (1) A solicitor who ceases to act for a party in any proceedings may file notice of the change and serve the notice on the parties. (2) Except by leave of the court, a solicitor may not file or serve notice of the change unless he or she has filed and served on the client a notice of intention to file and serve the notice of change: (a) in the case of proceedings for which a date for trial has been fixed, at least 28 days before doing so, or (b) in any other case, at least 7 days before doing so. (3) Unless notice of the change is filed with the leave of the court, a solicitor filing such a notice must include in the notice a statement as to the date on which service of the notice of intention required by subrule (2) was effected. (4) A solicitor may serve a notice of change or notice of intention under this rule on the former client by posting it to the former client at the residential or business address of the former client last known to the solicitor."
2. I also note the provisions of UCPR r 29.7, set out in more detail in the section of this judgment which relates to the hearing of the plaintiff's claim.
3. Rule 13 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) provides: "13 Completion or termination of engagement 13.1 A solicitor with designated responsibility for a client's matter must ensure completion of the legal services for that matter UNLESS: 13.1.1 the client has otherwise agreed, 13.1.2 the law practice is discharged from the engagement by the client, 13.1.3 the law practice terminates the engagement for just cause and on reasonable notice, or 13.1.4 the engagement comes to an end by operation of law. 13.2 Where a client is required to stand trial for a serious criminal offence, the client's failure to make satisfactory arrangements for the payment of costs will not normally justify termination of the engagement UNLESS the solicitor or law practice has: 13.2.1 served written notice on the client of the solicitor's intention, a reasonable time before the date appointed for commencement of the trial or the commencement of the sittings of the court in which the trial is listed, providing the client at least 7 days to make satisfactory arrangements for payment of the solicitor's costs, and 13.2.2 given appropriate notice to the registrar of the court in which the trial is listed to commence. 13.3 Where a client is legally assisted and the grant of aid is withdrawn or otherwise terminated, a solicitor or law practice may terminate the engagement by giving reasonable notice in writing to the client, such that the client has a reasonable opportunity to make other satisfactory arrangements for payment of costs which would be incurred if the engagement continued."
4. As is confirmed in P. Taylor, Dr E. Elms, M. Meek SC, The Hon Justice G. Bellew, Ritchie's Uniform Civil Procedure NSW (LexisNexis, Australia), citing Super 1000 Pty Ltd v Pacific General Securities Ltd [2007] NSWSC 171, courts exercise the utmost caution in relation to applications by a solicitor to withdraw if made on the day of the hearing. Applications have been refused in a number of cases: see Cha v Oh (No 21) (2009) 9 DCLR (NSW) 67.
5. In the present case, however, the solicitor for the defendant is in an impossible position. She has no instructions as to how to conduct the matter, her client has failed to attend court and there has been a breach of a self-executing order, which would make her task of conducting the hearing extremely difficult.
6. Perhaps the most important reason it is uncertain whether Ms Musgrave is in fact still retained, having regard to the defendant's email of 29 September 2017.
7. Finally, I note that this application comes as no surprise to the defendant, as it was foreshadowed a week ago.
8. It was for these reasons that I made orders permitting her to withdraw from the proceedings, which orders are set out below.
9. However, Ms Musgrave kindly agreed to my request to remain in court to assist me in relation to the conduct of the hearing, which has been set down for three days commencing today. I have had the benefit of her assistance in circumstances where it was important for me to ensure that her former client's case was accurately and fairly presented.
10. The first issue is the correct approach for the court to take in circumstances where one of the parties has elected not to attend court for the hearing of proceedings.

Rule 29.7 Uniform Civil Procedure Rules 2005 (NSW)

1. Rule 29.7 Uniform Civil Procedure Rules 2005 (NSW) provides: "29.7 Procedure to be followed if party is absent (1) This rule applies when a trial is called on. (2) If any party is absent, the court: (a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or (b) may adjourn the trial. (3) If, in relation to a liquidated claim, the plaintiff appears, but a defendant does not appear, the court may, without proceeding to trial, give judgment against that defendant on evidence of: (a) the amount then due to the plaintiff in respect of the cause of action for which the proceedings were commenced, and (b) any payments made or credits accrued since the commencement of the proceedings in reduction of the amount of the plaintiff's claim or costs. (4) If, in relation to any proceedings, the defendant appears, but the plaintiff does not appear, the court may dismiss the proceedings. (5) Subrules (3) and (4) do not limit the court's powers under subrule (2)."
2. In Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365, Barrett J considered the role that the Court should take when dealing with proceedings where a party has not attended. The Court's obligations to that missing party require the Court to ensure that the missing party has had full and proper notice of the hearing date, to ensure a level playing field and to have careful regard to the evidence so that the relevant issues are considered in a manner that is fair to the missing party.
3. There can be no doubt that the defendant is well aware of the hearing date. He provides no details to explain his failure to comply with the self-executing orders, or of the reasons why his grandmother's recent death requires him to remain in the Australian Capital Territory.

The evidence

1. The evidence of Mr Teo sets out the following facts and matters: 1. In about March 2014, Mr Mehajer offered to sell Mr Teo units in a project he was building at 40-44 John Street Lidcombe for around $620,000; 2. In about early April 2014, Mr Mehajer agreed orally to sell Mr Teo, and Mr Teo agreed to buy, Lot 56 in an unregistered Strata Plan relating to the project for $620,000; 3. Soon after, on about 25 April 2014, Mr Mehajer asked Mr Teo to do some work at 14 Frances Street, Lidcombe. It was agreed that Mr Teo could offset the price of the work against the price of any units he bought in the project; 4. Between about 28 April 2014 and 8 July 2015, Prime Marble manufactured, supplied and installed stone work at the property; 5. On about 2 September 2014, Mr Teo entered into a Contract for the Sale of Land to purchase Lot 56 from Sydney Project Group Pty Ltd and Mr Mehajer. On the same day, Mr Teo paid a $62,000 deposit for the unit; 6. On about 18 July 2015, Mr Teo agreed (orally) to purchase another unit (Lot 108) from Mr Mehajer off the plan (within the Project) for $630,000; 7. It was agreed that Mr Teo could offset the value of the stone work done at the property against the combined purchase price of Lots 56 and 108; 8. On about 8 August 2015, Prime Marble issued a tax invoice in the sum of $596,178.00 for the works undertaken at the property; 9. The purchase of Lot 56 did not complete - on about 3 August 2016, Mr Teo was informed that a change to the Strata Plan meant that Lot 56 no longer formed part of the project and the Contract for Sale of Land had therefore been frustrated; 10. No Contract for the Sale of Land was entered in relation to Lot 108; 11. Mr Mehajer has not made any payment in respect of the stone work carried out by Prime Marble at the property.
2. The informal nature of the parties' agreement is understandable in such a context. The terms of that agreement were clear.
3. As to quantum, the massive (indeed palatial) nature and extent of the works is set out in great detail in Mr Zakos' report. His estimate is slightly less than double the amount sought by the plaintiff.
4. The defendant appears to have had the benefit of a bargain of some magnitude. I note that there is no challenge to the adequacy of the work performed.
5. In circumstances where the defendant has failed to file any evidence in reply and challenges the entitlement of the plaintiff to be paid only on the limited grounds set out in the defence, the defendant's challenges on liability and quantum must be dismissed and judgment for the claimed sum plus interest must be entered for the plaintiff.

Costs

1. The plaintiff seeks an order for indemnity costs for the whole of the proceedings having regard to the contumelious failure of the defendant to comply with court orders including a self-executing order. Alternatively, the plaintiff seeks indemnity costs from the date of a Calderbank offer dated 27 September 2017 for $350,000 with each party bearing his or its own costs of the proceedings.
2. I am satisfied that indemnity costs should be awarded having regard to the reasonableness of the Calderbank offer.
3. Ordinarily, that is where the plaintiff's entitlement to indemnity costs should stop. However, the failure of the defendant to comply with the numerous extensions of time granted since the plaintiff's evidence was served in February 2017, despite a self-executing order, amounts to a cavalier disregard for ss 56 - 62 Civil Procedure Act 2005 (NSW). In addition, the defendant's case as pleaded was a largely technical one. The plaintiff constructed a marble palace in accordance with the defendant's instructions, the exquisiteness of which is not in dispute. This is one of those rare cases where the court should make an order for indemnity costs of the proceedings, not to punish the defendant, but in response to the wholly unsatisfactory way in which the defendant has conducted the case at all relevant times.
4. Accordingly, the plaintiff's entitlement to indemnity costs will cover the whole of the proceedings and not be restricted to the date of the Calderbank offer.

Orders 1. The defendant called outside Court 13D three times at 9:55am - No appearance. 2. The defendant called outside the Court three times on the ground floor of the John Maddison Tower at 10:10am - No appearance. 3. The defendant called outside the List Judge's Court three times at 10:12am - No appearance. 4. Pursuant to r 7.29 Uniform Civil Procedure Rules 2005 (NSW) and noting the contents of r 13 Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW), grant Ms Musgrave, the solicitor for the defendant, leave to withdraw from and to file a Notice of Ceasing to Act as the defendant's legal representative in these proceedings. 5. Judgment for the plaintiff against the defendant for the sum of $668,276.76 (inclusive of interest to today's date). 6. Defendant pay the plaintiff's costs of the proceedings on an indemnity basis. 7. The Registry to provide this judgment to the defendant at the address set out in the Notice of Ceasing to Act.

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: 11 October 2017