Rove Estate Pty Ltd atf Lane Cove Estate Trust v Chomp Excavations & Demolition Pty Ltd

Supreme Court of NSW|2023-04-05|Before: Williams J

Solicitors: Memcorp Lawyers (Plaintiff) Mihalatos & Associates (First Defendant) McInnes Wilson Lawyers (Third Defendant) Edmond Khourey Solicitors (Fifth Defendant) Vaughn Zarb Lawyers (Seventh Defendant) Harrington Lawyers (Eight Defendant)

In person: Mr Daniel Gawidziel (Ninth Defendant)

No Appearance for: Second, Sixth, and Tenth Defendants File Number(s): 2019/381976 Publication restriction: N/A

Submissions

I have considered all of the parties' written and oral submissions in relation to costs, which may be summarised as follows.
Relying on r 42.1 of the Uniform Civil Procedure Rules, Rove submitted that the Court should order that its costs of the proceedings be paid on the ordinary basis by the defendants who defended the proceedings - Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman, and Mr Daniel Gawidziel.
Rove obtained default judgment for nominal damages in the sum of $100.00 against each of Carlo, Mr Kataieh and Mr Richard Gawidziel. Relying on cl 24 and sch 1 of the Legal Profession Uniform Law Application Regulation 2015 (NSW), Rove submitted that it is also entitled to an order that each of those defendants pay an amount of $1,596.00 for Rove's costs.
Rove did not apply for any costs order against Empire Transport, because its claims against that defendant were dismissed after Rove elected during the final hearing not to press those claims. As I have already mentioned, there is no occasion for an order requiring Rove to pay Empire Transport's costs because it was not legally represented in these proceedings.
Rove did not apply for any order in respect of its costs of the proceedings against Mr Jones, which were addressed by the terms of the notice of discontinuance filed on 7 September 2021 as referred to above.
Chomp submitted that the manner in which Rove conducted the proceedings, including prior to the commencement of the final hearing, warrants an order requiring Rove to pay Chomp's costs of the proceedings, or at least disentitles Rove to any costs order that might otherwise have been made in its favour against Chomp. That submission, which was made forcefully in writing, was pressed only faintly in oral submissions.
Alternatively, Chomp relied on r 42.34 of the Uniform Civil Procedure Rules in submitting that Rove obtained judgments totalling less than $500,000.00 against all defendants, and that the Court should therefore not make any costs order in Rove's favour unless it is satisfied that the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted.
During oral submissions, Chomp placed greatest emphasis on its second alternative submission that the Court should make an order requiring the defendants to pay only a proportion of Rove's costs. That submission also relied on certain aspects of the manner in which Rove is said to have conducted the proceedings, and considerations of proportionality between the length and costs of the final hearing on the one hand, and the modest amount of the judgments entered in Rove's favour on the other.
Haulbuild did not seek an order that Rove pay its costs, but submitted that it should not be ordered to pay Rove's costs. That submission relied on r 42.34 of the Uniform Civil Procedure Rules or, alternatively, the proportionality considerations referred to above.
If the Court were to make any order requiring Haulbuild to pay Rove's costs, Haulbuild submitted that it should only be ordered to pay a one-eighth share of Rove's costs up to 5 August 2021, on the basis that Rove succeeded in obtaining judgment against eight defendants (including Carlo, Mr Kataieh and Mr Richard Gawidziel, against whom Rove obtained default judgment for a nominal sum). The date 5 August 2021 is the date on which Haulbuild made an offer to Rove to compromise the proceedings on terms that judgment would be entered in favour of Rove against Haulbuild in the sum of $10,000.00. That is less than the sum of $23,648.52 for which judgment was ultimately entered in Rove's favour against Haulbuild. Counsel for Haulbuild did not articulate any reason why Rove should not be entitled to any costs order after the date of that offer.
Mr El Kadomi did not seek an order that Rove pay his costs, but adopted the submissions of Chomp and Haulbuild in relation to r 42.34 of the Uniform Civil Procedure Rules. Mr El Kadomi further submitted that he should not be ordered to pay any of Rove's costs because it had only "nominal success" against him. Alternatively, Mr El Kadomi submitted that any costs order made against him in favour of Rove should be limited to a sum of $15,000.00, which his solicitor described as being "based on a rough figure of one-fifth of 125". I assume that the reference to "125" is reference to the total amounts for which judgment has been entered in Rove's favour against the five defendants Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman and Mr Daniel Gawidziel. The total monetary amount of those judgments is $125,631.77. One fifth of that amount is approximately $25,000.00, not $15,000.00.
Mr Abousleiman's primary submission was that the Court should make an order requiring Rove to pay his costs of the proceedings on the ordinary basis. In support of that submission, Mr Abousleiman characterised Rove's success against him as a "pyrrhic victory", resulting in an award of damages against him in a "trivial" amount compared to the total amount of Rove's claim. On that basis, Mr Abousleiman submitted that he should be regarded as the successful party for the purpose of r 42.1 of the Uniform Civil Procedure Rules.
Alternatively, Mr Abousleiman submitted that any order requiring him to pay Rove's costs should be limited to 3.54 per cent of Rove's costs of the proceedings in order to reflect considerations of proportionality. That 3.54 per cent figure was calculated by reference to the amount of the judgment entered against Mr Abousleiman compared to the total amount claimed by Rove.
Mr Daniel Gawidziel appeared in person during the hearing that was convened for the purpose of the costs arguments. He made brief oral submissions that initially opposed any order being made that would require him to pay any of Rove's legal costs, but later accepted that some costs order should be made in Rove's favour if it had succeeded in establishing that he had trespassed on Rove's land. Rove did succeed in its claim against Mr Daniel Gawidziel, as recorded in the principal judgment. I explained to Mr Gawidziel the substance of the submissions made by the other defendants and that I would be taking all of those submissions into account.
In its oral submissions in reply, Rove submitted that the commencement and continuation of the proceedings in this Court was warranted having regard to the amount claimed, the complexity of the legal and factual issues involved, and what was described as an important matter of principle concerning illegal dumping activities that extended beyond the facts of this particular case. Rove disputed that it had conducted the proceedings in a manner that would disentitle it from any costs order that might otherwise be made in its favour in the exercise of the Court's discretion under s 98 of the Civil Procedure Act. Rove accepted that the Court should have regard to considerations of proportionality in the exercise of that discretion.
Rove also seeks orders that the Court release to Rove amounts that it previously paid into Court as security for Chomp's costs, Haulbuild's costs, and Mr Abousleiman's costs of the proceedings. That order was opposed only if and to the extent that the Court were to make an order requiring Rove to pay the costs of those defendants.

Consideration and determination

Rove succeeded in obtaining default judgment against Carlo, Mr Kataieh, and Mr Richard Gawidziel for nominal damages. In circumstances where Rove failed to recover anything more than nominal damages because it had not adduced evidence that would enable the Court to estimate the damages that it had suffered as a result of the specific loss caused each of those defendants' separate conduct, I do not regard the "event" of the judgments for nominal damages as a successful outcome for Rove: see Anderson v Canaccord Genuity Financial Ltd (No. 2) [2022] NSWSC 649 at [35]-[36].
Contrary to Rove's submissions, cl 24 and sch 1 of the Legal Profession Uniform Law Application Regulation do not apply to Rove's costs of the applications for default judgment against Carlo, Mr Kataieh, and Mr Richard Gawidziel. Those applications were for damages in an amount to be assessed, not for a debt or liquidated sum. Senior counsel for Rove informed the Court that, if those statutory provisions did not entitle Rove to costs in the sum of $1,596.00 against each of those three defendants, then it did not seek any costs order against those defendants.
The balance of these reasons concern the costs of the proceedings as between Rove and the other defendants, who defended the proceedings and against whom Rove succeeded in obtaining an award of damages - Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman and Mr Daniel Gawidziel. The judgments entered against those defendants are the "event" for the purpose of r 42.1: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No. 2) [2014] NSWCA 219 at [15]. Contrary to Mr Abousleiman's submissions, Rove is the successful party. Indeed, Rove succeeded on each element of its causes of action in trespass against those defendants. The judgments entered in Rove's favour for compensatory damages were for amounts equivalent to a very small fraction of Rove's claim only because the Court rejected Rove's contention about the proper characterisation of the harm or loss caused by each defendant's trespass. [1] Putting pre-judgment interest to one side, the compensatory damages in respect of which judgment was entered against Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman and Mr Daniel Gawidziel represented approximately 2.06 per cent (in the case of Chomp), 2.40 per cent (in the case of Haulbuild), 1.37 per cent (in the case of Mr El Kadomi), 1.37 per cent (in the case of Mr Abousleiman) and 0.95 per cent (in the case of Mr Daniel Gawidziel of the sum of $985,705.31 compensatory damages claimed by Rove. [2] Rove also succeeded in obtaining an award of exemplary damages against Chomp and Mr Abousleiman. The proper characterisation of the harm or loss caused by each defendant's trespass was not an issue to which any of the parties devoted material time or attention during the final hearing.
By reason of r 42.1, the prima facie position is that costs will be ordered to follow the "event" of Rove's success in obtaining the judgments referred to above, unless pt 42 of the Uniform Civil Procedure Rules provides otherwise, or unless it appears to the Court that some other order should be made as to the whole or any part of the costs.
I reject the submissions made on behalf of Chomp, Haulbuild, and Mr El Kadomi that r 42.34 of the Uniform Civil Procedure Rules provides otherwise in this case. Rove claimed damages against each defendant for the whole of its remediation costs, being a sum which exceeded the $750,000.00 monetary limit of the District Court's jurisdiction at both the time that these proceedings were commenced and at the time of the final hearing. The amount claimed was clear from at least 12 February 2021, when Mr Demian's first affidavit was filed and served. As I have already mentioned, the quantum of Rove's claim was based on a particular characterisation of the harm that it suffered as a result of each defendant's trespass. Whilst Rove's submission concerning the characterisation of the harm was weak, and was ultimately held to be erroneous, it was arguable. I am therefore satisfied that the commencement and continuation of the proceedings in this Court, which had the appropriate jurisdiction for the amount of Rove's claim, was warranted. I am fortified in that conclusion by the fact that no defendant applied to transfer the proceedings to the District Court at any stage. It is not strictly necessary to address the other matters relied on by Rove as warranting the commencement and continuation of the proceedings in this Court, but I should not be taken as accepting the proposition that complexity of fact or law would have warranted the proceedings being conducted in this Court rather than the District Court if Rove's claim had not exceeded the general jurisdictional limit of the District Court.
Chomp, Haulbuild, Mr El Kadomi, and Mr Abousleiman relied on a lack of proportionality between the length and costs of the final hearing on the one hand, and the modest amounts of the judgments entered in favour of Rove on the other hand, as warranting a departure from the general position that costs should follow the event. As I have already mentioned, Rove accepts that considerations of proportionality are relevant to the exercise of the costs discretion: Shield Mercantile Pty Ltd v Citigroup Pty Ltd [2013] NSWSC 287 at [29]; McBride v Christie's Australia Pty Ltd (No. 2) [2015] NSWSC 754 at [49]; Il Vizio Corp Pty Ltd v Cashflow Finance Australia Pty Ltd [2018] NSWCA 142 at [9] and [16]-[17]; Warburton v County Construction (NSW) Pty Ltd (No. 3) [2022] NSWSC 1563 at [30]-[31].
There was no evidence before the Court about the estimated amount of Rove's costs of the proceedings. However, I consider it reasonable to assume that its costs, including the costs of the seven-day final hearing in which it was represented by senior counsel instructed by a firm of solicitors, will exceed the total amount of the judgments entered in Rove's favour against Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman, and Mr Daniel Gawidziel -$125,631.77. I proceed on that basis.
Chomp submitted that Rove prolonged and increased the costs of the proceedings and the final hearing by: 1. certain aspects of its conduct prior to the final hearing, such as delay in serving its evidence, and delay in paying security that it had been ordered to pay for the defendants' costs; 2. pleading alleged breaches of ss 143 and 144AAA of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act), only to state in opening submissions on the first day of the final hearing that it did not maintain a cause of action in tort for breach of any statutory duty; 3. addressing in opening submissions a case that it had not pleaded, which resulted in most of the second day of the hearing being occupied with an unsuccessful application to amend its statement of claim to bring it in line with the case articulated in its opening; and 4. conducting the final hearing in a manner that placed particular importance on the question whether the material that the defendants dumped on Rove's land contained asbestos.
As I understood the submissions, Chomp relied on those matters as disentitling Rove to any order in respect of its costs or, alternatively, as informing the proportionality considerations that should be taken into account in making any costs order in favour of Rove in the exercise of the discretion under s 98 of the Civil Procedure Act.
I reject Chomp's submission that Rove's conduct of the proceedings prior to the commencement of the final hearing is relevant for either of those purposes. Any delay by Rove in serving its evidence or paying security for costs does not seem to me to have been likely to have increased any party's costs of the proceedings. The other pre-trial conduct referred to in Chomp's submissions was the subject of interlocutory applications, in respect of which costs orders have already been made. There is no reason why such conduct should be taken into account against Rove for a second time now, in making orders that will not interfere with those earlier costs orders.
It was not evident from the defendants' opening submissions served prior to the final hearing that any of them had paid close attention to the alleged breaches of ss 143 and 144AAA of the POEO Act referred to in Rove's pleading. The opening submissions of Chomp and Mr Abousleiman paid the most attention to those allegations, yet their written opening submissions contained only five short paragraphs relating to those allegations and failed to identify that s 144AAA of that Act did not apply at the time of the events in question. I hasten to add that this should have been identified by Rove before filing its statement of claim. The opening submissions served on behalf of Chomp and Mr Abousleiman indicated that they would rely on the same matters pleaded in their defence to the trespass claims to defend any claim for breach of ss 143 and 144AAA (if the Court had jurisdiction in respect of any such claim, which was denied) or any cause of action in tort for breach of statutory duty. I do not consider that Rove's conduct in alleging breaches of ss 143 and 144AAA, and subsequently eschewing any claim for damages for breach of those provisions or breach of statutory duty, materially increased the legal costs incurred by any of the defendants.
Rove's unsuccessful amendment application will be the subject of a costs order in favour of the defendants. It is not a basis for depriving Rove of the benefit of any order that might otherwise be made in its favour for its costs of the proceedings.
I reject the submission that Rove placed particular importance on the question whether the dumped material contained asbestos. All parties treated that as an important issue. Indeed, the defendants placed even greater emphasis on the issue than Rove, with the apparent objective of supporting their theory that the asbestos had been extracted from the Land rather than dumped there by the defendants or third parties, supporting their implied licence defences and supporting their contention that Rove had suffered no loss because it was not necessary for it to remove VENM that the defendants claimed to have dumped on the Land. Those theories, defences and contentions were rejected in the principal judgment.
For those reasons, I reject Chomp's submission that Rove should not have any order for its costs by reason of the four matters referred to above. I do not consider that Rove's conduct in relation to any of those matters has materially increased the costs of the proceedings. It follows that those matters are not relevant to the exercise of the costs discretion.
As Rove submitted, delay caused by the manner in which the defendants conducted the final hearing has some relevance to proportionality considerations. I refer in particular to: 1. Mr Daniel Gawidziel's unsuccessful application for an adjournment in order to obtain legal representation to defend the proceedings, in circumstances where the evidence established that he had been served with the statement of claim at an early stage of the proceedings and the adjournment application foreshadowed on the first day and made on the second day of the final hearing was the first step that he had taken in the proceedings. This occupied considerable time on the first and second day of the final hearing; 2. the aborted application by Chomp, on its own behalf and on behalf of other defendants, for a bench warrant for the arrest of Mr Abi Marlu, who had failed to comply with a subpoena issued by Hauldbuild; 3. the time taken by counsel for Mr Abousleiman in cross-examining Mr Demian and expert witnesses in an effort to elicit evidence supporting the defendants' theory that any asbestos in the piles had been extracted from the Land rather than dumped by the defendants or third parties - a theory that was not supported by the expert evidence, considered as a whole and having regard to the manner in which piles containing shale (which the experts agreed could not have been extracted from the Land) and asbestos were interspersed with other piles; and 4. the time taken by counsel for Mr Abousleiman in cross-examining witnesses about matters that went to mitigation rather than causation, in circumstances where no mitigation defence had been pleaded.
Although I have referred to delay arising from cross-examination conducted by counsel for Mr Abousleiman, it appeared during the hearing that all of the other legally represented defendants were adopting similar positions and were content for Mr Abousleiman's counsel to take the lead in those cross-examinations.
The circumstances of this case are very different from the circumstances in Shield Mercantile Pty Ltd v Citigroup Pty Ltd, supra, in which the Court made no order as to costs after finding that the successful plaintiff had conducted the case in a manner that had caused considerable loss to the defendant by requiring it to meet multiple articulations of the plaintiff's claim, and that it would be a "rank injustice" to order the defendant to pay the plaintiff's costs with the result that the plaintiff would recover an amount far exceeding the judgment in its favour for a case that it had "never really been able to articulate".
In the present case, Rove did articulate its case and succeeded in its cause of action against each defendant. For the reasons explained above, the defendants bear most of the responsibility for prolonging the final hearing. In my opinion, it would be unjust in those circumstances to deprive Rove of any order for its costs, let alone to require it to pay some or all of the defendants' costs. However, it would be equally unjust in my opinion to make orders requiring the defendants to pay the whole of Rove's costs on the ordinary basis, which would be likely to result in Rove recovering an amount of costs exceeding the total monetary value of the judgments entered in its favour.
I reject the defendants' submissions that each individual defendant should be only severally liable for a fixed amount or proportion of Rove's costs that is determined by reference to the amount of damages awarded against that defendant, compared to the total amount of compensatory damages claimed by Rove. All of the evidence adduced by Rove was relevant to the claims against all of the defendants. Rove was served with only one expert report on which all of the legally represented defendants relied. The factual issues raised by the defendants' lay and expert evidence were not complex, and Rove's cross-examination of each of the lay witnesses was relatively short. The defendants' lay and expert evidence was adduced in aid of defences that did not differ materially between the defendants and raised essentially the same legal issues for determination. Many of the defendants adopted one another's submissions in relation to those legal issues, and Rove's submissions addressed only one set of legal issues. Although Rove obtained separate judgments in relation to each of Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman, and Mr Daniel Gawidziel - in amounts that reflected the facts found in relation to the conduct of each of those individual defendants when they entered and dumped waste material on the Land - the degree of interconnectedness between Rove's cases against each defendant and between the defences raised by each of the defendants is such that there is no reason to depart from the usual position that a costs order in favour of Rove will operate against the unsuccessful defendants jointly and severally: see Rushcutters Bay Smash Repairs v H McKenzie Netmakers [2003] NSWSC 670.
As Rove submitted, it commenced and prosecuted the proceedings to vindicate its right to possession of its Land and to exclude the defendants from entering and dumping waste on the Land without its consent. The conduct of two of the defendants was held to have displayed contumelious disregard for Rove's rights. I do not consider that it is disproportionate for a plaintiff seeking to vindicate such rights to pay legal costs in doing so that might equal the damages ultimately recovered. Aspects of Rove's conduct during the proceedings were unsatisfactory, but that did not prolong the final hearing or increase the costs of the proceedings in a manner that has not been addressed in previous costs orders. Aspects of the defendants' conduct prolonged the final hearing and thereby increased all parties' legal costs. In all the circumstances, I consider that the just outcome that is consistent with the compensatory purpose of the costs jurisdiction and with the overriding purpose in s 56 of the Civil Procedure Act is to make an order requiring Chomp, Haulbuild, Mr El Kadomi, Mr Abousleiman, and Mr Daniel Gawidziel to pay Rove's costs of the proceedings (excluding any costs that are the subject of a previous costs order and excluding the costs of Rove's unsuccessful amendment application) on the ordinary basis up to a maximum amount of $125,631.77, that being the total amount of the monetary judgments recovered by Rove.
In circumstances where the costs that Rove will be ordered to pay to the defendants in respect of its unsuccessful amendment application will not exceed the costs that the defendants will be ordered to pay to Rove, it is appropriate to make the orders sought by Rove for the release of the amounts that it previously paid into Court as security for the defendants' costs.

Orders

For all of the above reasons, the orders of the Court are as follows: 1. Note that the proceedings were discontinued against the seventh defendant (Mr Paul Jones) on 7 September 2021 on terms that the plaintiff and the seventh defendant would each pay their own costs of the proceedings insofar as they concern the plaintiff's claim against the seventh defendant. 2. Order the plaintiff to pay the costs incurred by the defendants (other than the seventh defendant) of the plaintiff's unsuccessful application for leave amend that was heard and determined on 31 August 2021 on the ordinary basis, as agreed or assessed. 3. Order that the plaintiff's costs of the proceedings, to the extent that they are not the subject of orders 1 and 2 above or costs orders made prior to the date of these orders, are to be paid by the first defendant (Chomp Excavation & Demolition Pty Ltd), the third defendant (Haulbuild Pty Ltd), the fifth defendant (Mr Ahmad El Kadomi), the eighth defendant (Mr George Abousleiman), and the ninth defendant (Mr Daniel Gawidziel), jointly and severally, on the ordinary basis in such amount as may be agreed or assessed up to a maximum amount of $125,631.77. 4. Order that all sums paid into court by the plaintiff be immediately released to the plaintiff: 1. the sum of $98,512.50 paid on 7 March 2021 as security for the costs of the third defendant, pursuant to an order made by Stevenson J on 18 December 2020; 2. the sum of $99,975.00 paid on 7 March 2021 as security for the costs of the eighth defendant, pursuant to an order made by Stevenson J on 18 December 2020; 3. the sum of $50,000.00 paid on 19 March 2021 as security for the costs of the first defendant, pursuant to an order made by Hammerschlag J on 8 March 2021.

Endnotes

Principal judgment at [264]-[267].
Principal judgment at [151]-[157], [277]-[280] and [284]. 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: 17 April 2023

Environment Operations Act 1997(NSW)ss 143, 144AAA

Legal Profession Uniform Law Application Regulation 2015(NSW)

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