Rahme v Benjamin & Khoury Pty Ltd

Court of Appeal (NSW)|2019-10-08|Before: Bathurst CJ, Macfarlan JA, McCallum JA, Dieb P

Solicitors: Kekatos Lawyers (Appellants) Sparke Helmore (Respondents) File Number(s): CA 2018/379022 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Division Citation: [2018] NSWSC 1753 Date of Decision: 21 November 2018 Before: Emmett AJA File Number(s): SC 2015/300814

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

The quantum of the judgment in favour of Mrs Rahme

B&K first submits that $33,759.18 should be deducted from the amount of $302,040.30 for which Mrs Rahme contends that judgment should be entered in her favour. It does this on the basis that that judgment amount includes the $33,759.18 as an amount expended by Mrs Rahme when it was in fact an expenditure of Mr Rahme. We reject this submission as, in its closing written submissions at first instance, B&K expressly admitted that the full amount had been paid by Mrs Rahme to B&K.
Secondly, B&K contends that Mrs Rahme's costs, calculated on a full indemnity basis, incurred by her in proceedings for the removal of a caveat lodged by B&K should not be included in the monetary judgment in her favour. Again, we reject this submission. As the agreements between Mrs Rahme and B&K were, on the basis of the Court's judgment on the appeal, entered into in breach of B&K's fiduciary duty, B&K's caveat was not properly lodged and Mrs Rahme was entitled to take proceedings to have it removed. The costs she incurred in doing so were therefore consequential on B&K's breach of fiduciary duty.
Thirdly, B&K submits that the monetary judgment claimed by Mrs Rahme should be reduced by an amount of $100,000, reflecting monies paid to Mr and Mrs Rahme by Mr Soulos, solicitor, in settlement of their claim against him. For the following reasons, the payment cannot however be characterised as a payment made to Mrs Rahme in respect of her claim against Mr Soulos which related to the same loss as Mrs Rahme's claim against B&K and which therefore reduced that loss: (1) In accordance with the "Deed of Settlement, Release and Indemnity" entered into between Mr and Mrs Rahme and Mr Soulos the payment was made to both Mr and Mrs Rahme, and not simply to Mrs Rahme. (2) The payment was "inclusive of costs" to which Mr and Mrs Rahme were entitled as against Mr Soulos and the extent of those costs cannot be identified. (3) According to cll 3 and 4 and Recital P of the Deed, the payment was made in settlement of a variety of claims, apparently going beyond those claims of Mrs Rahme against Mr Soulos that related to the same loss as Mrs Rahme's claims against B&K.

Mrs Rahme's costs recoverable from B&K

About two weeks prior to the hearing in this Court, Mr and Mrs Rahme's solicitors conveyed to the respondents' solicitors a Calderbank offer containing the following terms: "Our clients' have instructed our office to propose the following settlement offer: 1. The Court of Appeal matter be dismissed 2. No order as to costs for the Court of Appeal matter. 3. Your client releases our clients from its claim for costs arising from the Supreme Court matter, being Supreme Court case number 2015/300814. 4. A complete mutual release for all claims available between our clients, inclusive of the Judgments enforceable and any other claims available. The above will be [e]ffected by way of a deed of release which will be drafted by our office. This offer is made pursuant to the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 and is made on a 'without prejudice save as to costs basis'. This offer expires at 5:00PM on 4 June 2019."
We do not accept that the making of this offer justifies a departure from the usual rule that costs follow the event and are awarded on the ordinary basis. In particular, the offer is not one that B&K alone could have accepted as it appears to have been made jointly to B&K and Mr Khoury. Moreover, it was not simply an offer made on behalf of Mrs Rahme. It was also made on behalf of Mr Rahme and acceptance of it by B&K would have involved B&K foregoing the judgment against Mr Rahme which it had, and which it was found by this Court to be entitled to retain. It is not therefore possible to conclude that acceptance of the offer would have put B&K in a better position than it subsequently achieved under this Court's judgment.

The costs of the proceedings against Mr Khoury

As indicated in the judgment of 30 August 2019, no order should be made as to the costs of the appeal relating to the claims against Mr Khoury as there was an almost complete lack of advertence to them on appeal. He however remains entitled to his costs as ordered at first instance.

The costs of Mr Rahme's appeal

As there was also virtually no advertence before this Court to Mr Rahme's appeal, there should be no order as to the costs of that appeal. The costs orders made at first instance should however remain operative.

The Court's orders on the appeal

For the above reasons and those given in the judgment of 30 August 2019, the Court makes the following orders: 1. Allow the appeal in respect of the dismissal of Mrs Rahme's claim against Benjamin & Khoury Pty Ltd ("B&K"). 2. Dismiss the appeal in relation to the rejection of Mrs Rahme's claim against Mr Dieb Khoury. 3. Dismiss Mr Rahme's appeal. 4. Set aside: 1. As between Mrs Rahme and B&K only: 1. the judgment in the Court below (proceedings 2015/300814) entered on 21 November 2018; 2. the judgment in proceedings 2014/262387 entered on 5 September 2014 (Judgment consequent on an assessment of costs). 1. (As between all parties in the court below) the judgment in the Court below (proceedings 2015/300814) entered on 7 March 2019 (the Indemnity Costs Order). 2. (As between all parties to proceedings 2015/363098) the order made on 14 June 2016 in proceedings 2015/363098 (the Costs Order in the Caveat Proceedings). 3. (As between all parties to the judgment) the judgment in proceedings 2017/374241 entered on 11 December 2017 (Judgment consequent on filing an assessment of the Costs Order in the Caveat Proceedings). 1. In lieu thereof: As between Mrs Rahme and B&K: 1. Judgment for Mrs Rahme against B&K in the sum of $302,040.30 including interest to 6 September 2019 on which date this judgment is to take effect. 2. Order that, as between Mrs Rahme and B&K, the Deed of Equitable Charge Over Land dated 13 September 2010 as varied by Deeds dated 13 September 2010, 5 October 2010 and 14 October 2010 be set aside. 3. Order that, as between Mrs Rahme and B&K only, the Costs Agreement dated 5 October 2010 be set aside. 4. Order that B&K pay the costs of Mrs Rahme (but not of Mr Rahme) of the proceedings in the court below on the ordinary basis. 1. Order that B&K pay the costs of Mrs Rahme of the proceedings in the Court of Appeal on the ordinary basis. 2. Note that there is no order for costs in the Court of Appeal as between Mrs Rahme and Mr Khoury. 3. Note that there is no order for costs in the Court of Appeal as between Mr Rahme, B&K and Mr Khoury.

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