Wakim v Tadros [2011] NSWSC 308 | Case summary

Supreme Court of NSW|2010-10-07|Before: Mr J, Mr P, Macready J

The application to dismiss Mr Tadros' cross claim 74It is suggested that that Tadros cross claim substantially repeats the amended statement of claim that was struck out by the Federal Court on 25 January 2008 and then dismissed on 3 June 2008 and that it is an abuse of process for Mr Tadros to continue to bring the same allegations in these proceedings with a view to obtaining a different result. Further, it appears to be a suggestion that the proposed amended cross claim raises issues of an estoppel or that the part of the claim is barred by way of res judicata . I will first deal with this matter. 75Mr Tadros submits there is a fundamental distinction between a case dismissed on its merits and one struck out by self-executing orders without a hearing on the merits for non compliance with an order to pay money. The circumstances leading up to the dismissal of the amended statement of claim are as follows. 76Mr Tadros filed an amended statement of claim on 31 July 2007 in the Federal Court. The first to fourth respondents in those proceedings (J&R Investment Services Pty Ltd, Joseph Wakim, Rita Wakim and Ben Kannan) filed a notice of motion seeking to strike out Mr Tadros' amended statement of claim. Mr Lahood, the sixth respondant in those proceedings, filed a separate notice of motion seeking security for costs against Mr Tadros. 77On 24 August 2007, Mr Tadros filed an amended notice of motion in the Federal Court seeking leave to transfer the proceedings to the Supreme Court. However, on 29 August 2007, Justice Buchanan made various orders deeming the notice of motion filed 24 August 2007 abandoned and he dismissed it. 78On 10 December 2007, Mr Tadros filed a further notice of motion seeking to stay the motions for security for costs and strike out and seeking again to transfer the proceedings to the Supreme Court. 79On 3 June 2008, Justice Buchanan made orders dismissing the application that commenced proceedings ( Tadros v J and R Investment Services Pty Ltd (No 2) [ 2008] FCA 832) pursuant to the summary judgment provisions of the Federal Court of Australia Act 1976 (Cth) (s 31A) and directed Mr Tadros to pay the costs of the first to sixth respondents. Buchanan J stated : " [1] This matter has a long, chequered and unsatisfactory history. All parties have been in breach of the Court's orders. ... The parties did not comply with the Court's directions and with relevant requirements of the Federal Court Rules. The notices of motion were not in a satisfactory position to be heard. However, the parties on that day sought some time in which to engage in immediate negotiations. Those negotiations resulted in an agreement reflected in the following orders, which I made by consent:

Application to stay the cross claim pending payment of costs in prior proceedings 92The second to eighth defendants have applied to have Mr Tadros' cross claim stayed pending payment of costs by Mr Tadros in Federal Court proceedings (NSD1924 of 2006). Mr Tadros was ordered to pay costs on a party/party basis as taxed if not agreed, to the second to fifth defendants (as they are identified in the matter) and to Mr Lahood. These parties, except for Mr Hawach, also seek a stay pending payment of costs in certain Supreme Court and Local Court proceedings. There is a certificate of taxation that certifies Mr Hawach's costs in the Federal Court proceedings were $13,100. It appears those costs have not been paid and the outstanding Federal Court order has now been registered as judgment in the Supreme Court for $15,891.32. This amount remains outstanding. 93The Supreme Court proceedings (4199 of 2007) involved a summons filed by Mr Tadros seeking the transfer of Local Court proceedings to the Supreme Court. Justice Palmer heard the application and delivered an ex-tempore judgement ( Tadros v J&R Investment Services Pty Ltd & Ors [2008] NSWSC 63 ) in which he succinctly explained the facts and circumstances of each matter: "[2] Mr Tadros seeks by way of consequential relief that a Cross Claim filed in the Local Court proceedings, which has been struck out by order of that Court on 31 August 2007, be reinstated in these proceedings. The Amended Summons also seeks that the Local Court proceedings be heard in the Division together with certain proceedings commenced by Elias George Wakim against Mr Tadros, proceedings 5728 of 2007. ... [4] The issues in the Local Court proceedings are quite straightforward. By their statement of claim Mr and Mrs Wakim sue Mr Tadros for arrears of rent under a written lease and for damages, being the cost of reletting the premises when the lease was allegedly terminated. The amount claimed by the plaintiffs in those proceedings is well within the jurisdictional limit of the Local Court. ... [6] ... A Cross Claim, however was filed in the Local Court proceedings which traversed the history of Mr Joseph Wakim and Mr Tadros in a series of car dealing partnerships over a considerable time. ... [8] The facts and circumstances alleged in the Cross Claim are complex, to say the least. However, what is clear is that, firstly, the Cross Claim involves a claim for a sum of money which I beyond the jurisdiction of the Local Court and secondly, that the facts and circumstances relied on in the Cross Claim are not part of the same substratum of facts relied upon by Mr and Mrs Wakim in their Local Court claim and by Mr Tadros in defence of that claim. [9] The Cross Claim in the Local Court proceedings was struck out by the learned Magistrate on the basis that the claims pleaded there in exceeded the Local Court's jurisdiction. [10] Earlier, Mr Tadros had commenced proceedings in the Federal Court against Mr Joseph Wakim and Mrs Rita Wakim pleading in substance the matters which had been set out in the Cross Claim filed in the Local Court proceedings. [11] The Federal Court has struck out the Statement of Claim filed by Mr Tadros on a number of grounds which I need not enter into but on the basis that Mr Tadros has leave to re-plead, upon payment of the costs incurred by Mr and Mrs Wakim in the Federal Court proceedings in a sum exceeding $20,000. [12] Mr Tadros has not paid those costs and the Federal Court proceedings remain in abeyance. They are still current in that no final disposition of the case has been ordered by the Federal Court. [13] In those circumstances Mr Tadros now comes to the Supreme Court seeking to start afresh, as it were, and to raise in this Court the substance of the dispute with Mr and Mrs Wakim which was pleaded in the Cross Claim in the Local Court. ... [15] In my opinion, an orderly disposition of the disputes between the parties requires that the straightforward issues delineated by the Statement of Claim and the Defence in the Local Court be heard separately and without further delay, and that the other claims between the parties be determined either in the Federal Court or in this Court if the Federal Court proceedings are transferred into this Court. [16] For those reasons, I do not think it is appropriate to bring the Local Court proceedings in to this Court..." 94His Honour dismissed the amended summons and reserved costs. There is no evidence of a subsequent order being made. The second to the sixth defendants and the eighth defendant seek a stay of the proceedings pending payment of these costs. 95The orders in the Local Court proceedings (411 of 2006) were made in favour of Joseph Wakim and Rita Wakim. Mr Tadros was ordered to pay $42,785.16 on the claim. There is no evidence of any costs order being argued or assessed. The second to the sixth defendants and the eighth defendant also seek a stay of the proceedings pending payment of the Local Court costs. However, absent any order for costs dealing with the dismissal of the cross claim in the Local Court this would not be available. 96Rule 12.3 of the UCPR was pleaded in Mr Lahood's further amended notice of motion on 7 October 2010 as a ground on which to base the claim for the stay of proceedings. This is clearly a typographical error. Rule 12.3 states that discontinuance of proceedings will not affect a plaintiff's ability to claim the same relief in fresh proceedings. This motion, like the other motions claiming the same relief, should have referred to rule 12.4. Rule 12.4 of the UCPR states: "12.4 Stay of further proceedings to secure costs of discontinued proceedings If: (a) as a consequence of the discontinuance of proceedings, a plaintiff is liable to pay the costs of another party in relation to those proceedings, and (b) before payment of the costs, the plaintiff commences further proceedings against that other party on the same or substantially the same cause of action as that on which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and may make such consequential orders as it thinks fit." 97Rule 12.10 of the UCPR states: "12.10 Stay of further proceedings to secure costs of proceedings dismissed If: (a) as a consequence of the dismissal of proceedings, a party is liable to pay the costs of another party in relation to those proceedings, and (b) before payment of the costs, the party commences further proceedings against that other party on the same or substantially the same cause of action, or for the same or substantially the same relief, as that on or for which the former proceedings were commenced, the court may stay the further proceedings until those costs are paid and make such consequential orders as it thinks fit." 98By virtue of section 67, the Civil Procedure Act 2005 ( CPA ) provides the Court with jurisdiction to stay any proceedings before it: "67 Stay of proceedings Subject to rules of court, the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day." 99By virtue of: section 4 CPA ; rule 1.5 UCPR; and Schedule 1 UCPR; rules 12.4 and 12.10 apply to NSW courts. However, there may be a question as to whether these rules can operate when the proceedings in question were discontinued or dismissed in the Federal Court. In other words, does the word "proceedings" in rr 12.4 and 12.10 only mean proceedings to which the UCPR and CPA apply (ie proceedings in NSW Courts and Tribunals), or do these rules encompass other types of proceedings such as Federal Court matters? 100The Federal Court costs were entered as a judgment in the Supreme Court, but that is not determinative. Mr Tadros submits that if the Court were to exercise its discretion to order the stay it would be acting outside its jurisdiction because it would be enforcing an order from the Federal Court. 101It is worth noting that the CPA defines "civil proceedings" as "any proceedings other than criminal proceedings" and the UCPR has adopted this definition (see the UCPR dictionary). 102If one takes, for example rule 12.10, it would be clear that the proceedings in 12.10(b) must be proceedings governed by the rules - meaning proceedings within the New South Wales Courts. However, are the proceedings in 12.10(a) restricted to New South Wales? No submissions against the making of the stay application appear to have been made on constitutional grounds and there does not seem to be any constitutional reason why the proceedings should be so restricted. The necessary nexus with this Sate is the present proceedings brought in the State. 103Are the issues in the Federal Court matter and in this matter substantially similar? Mr Rose made a comparison with Mr Tadros' cross claim in these proceedings and the amended statement of claim that was struck out in the Federal Court. The comparison shows that the only substantial changes between the two documents were: (a) a change in the description of Mr Tadros from "applicant" to "cross-claimant"; (b) a change in the description of the other parties from "respondent" to "cross-defendant"; (c) the insertion of Marie Kannan as fifth cross-defendant and the renumbering of Mr Hawach as sixth cross-defendant and Mr Lahood as seventh cross-defendant respectively (d) new paragraphs 4,12 ,29, 49, (in lieu of old paragraph 47) and 95 (two paragraphs,) 96, 97 and 98, with consequent renumbering; (e) small amendments to text in renumbered paragraphs 36, 48, 51, 54, 70, 73, and 79; (f) insertion of additional declarations and orders (a)-(k), (y)-(cc) and (ee) in the prayer for relief; and (g) the renumbering and reordering of existing prayers for relief. 104Mr Tadros has suggested alternative orders in the form of staying the operation of the order for costs in the Federal Court matter until these proceedings have been determined. Mr Tadros referred to the approach adopted by the High Court in Jennings Construction Ltd v Burgundy Royal Investments Pty Ltd (1986) 161 CLR 681, however that case concerned a consideration of the High Court's inherent jurisdiction to grant a stay pending the hearing of an application for special leave to appeal. It is not applicable to this matter and unlikely this Court would have jurisdiction to make such an order. 105Given the impecuniosity of Mr Tadros it would seem that there is good reason to order a stay until payment of the costs of the proceedings in the Federal Court as there is no doubt that the present cross claim is the same case as that struck out in the Federal Court. In case the costs are paid, I should briefly deal with the application to file the amended cross claim.

The application to dismiss Mr Tadros' proposed amended cross claim 106The proposed pleading is annexed to the amended notice of motion filed 24 September 2010. 107The 2 nd to 6 th defendants have submitted that Mr Tadros is limited in the proposed amended cross claim he can bring against other defendants by section 22(2) of the CPA , which provides that the relief available must be "related to" or "connected with" the subject of the plaintiff's claim. It is suggested that the plaintiff's claim only appears to be concerned with money loans by the plaintiff to Mr Tadros after 7 May 2004 and the only allegations that suggest the plaintiff has a cause of action against Mr Tadros are set out in paragraphs 46 and 56 of the proposed amended statement of claim. Paragraph 46 states: "46. On or about 7 November 2004 Tadros defaulted in the payment of the Tadros Loan." And paragraph 56 states: "56. The business ceased to trade in or about June 2005 as a result of the Tadros inability to purchase stock and Tadros has failed to make any repayments of principal or interest to the Plaintiff (with the exception of the $122, 417.00 paid by Tadros to J&R) and failed to pay the Further Loans." 108The second to sixth defendants state that the proposed pleading is unsigned, unverified and it is defective in a way that cannot be rectified by particulars. They complain that proposed amended cross claim is now 191 paragraphs in length, it names at least one cross defendant against whom no cause of action is pleaded and generally, it: (a) pleads irrelevant facts; (b) is disjointed in its allegations; (c) asserts conclusions of law without setting out the factual foundations for those assertions (d) makes outrageous allegations (e) confuses multiple alternative facts; and (f) conflates elements of multiple causes of action in individual assertions. 109It is suggested by the second to sixth defendants that the proposed amended statement of cross claim does not deal with the loans the subject of the plaintiff's claim before paragraph 107. Nor can those matters prior to paragraph 107 be said to be "related to" or connected with" the subject of the plaintiff's claim in the relevant sense. 110Mr Tadros rejects these submissions as 'baseless' and states that the amended cross claim pleads valid and arguable causes of action against all the cross defendants. He submits the cross claim is clearly connected with the subject matter of the plaintiff's claim: the plaintiff's claim goes beyond a mere loan agreement with Mr Tadros, all the pleadings contained in the proposed cross claim are against the same parties and include a claim based upon the impact of the conduct of each of those parties on Mr Tadros' inability to repay the amounts of the loan or to pay the monies properly paid by Mr Tadros to the plaintiff. 111Furthermore, Mr Tadros states that the proposed amended statement of cross claim significantly re-writes the present cross claim, but the proposition that the duties and breaches alleged raise new causes of action as opposed to particularising the nature and extent of the alleged acts and negligence overstates the breadth of the proposed amendments. 112Mr Tadros' proposed amended cross claim is clearly an updated version of the amended statement of claim that was struck out in the Federal Court. However, the issues raised in relation to the second to sixth defendants in the proposed amended cross claim do appear to be sufficiently connected to the plaintiff's claim and the causes of action can be seen to arise from the same or substantially the same facts as those in the cross claim. The other objections made by the second to sixth defendants have not been further elaborated. 113The proposed amended cross claim is not objectionable on the grounds set out by the second to sixth defendants. 114Mr Lahood raises similar objections, stating that it is almost impossible to perform a proper comparison between the facts in the existing cross claim and the facts in the proposed amended cross claim because the two documents are so different. Mr Lahood provides the example of paragraph 109 of the proposed amended cross claim and suggests that this paragraph is essential to the cause of action proposed, however, he states that fact is not in the existing cross claim, nor any fact similar to it. Paragraph 109 pleads that on 7 May 2004 Mr Tadros was induced to execute a deed of loan agreement that was drafted by Mr Lahood. It is pleaded that the loan agreement provided that Mr Tadros would borrow $500,000. 115The loan of $500,000 is mentioned at paragraphs 106 and 109 of the cross claim where it is pleaded that Mr Hawach and vicariously Mr Lahood breached their retainer partly because Mr Hawach allegedly failed to adequately explain the import of the deed of dissolution and take into account Mr Tadros liability to pay the loan. The relevant loan or loan agreement is also pleaded at paragraph 46, 58, 62. Further paragraph dd of the relief claimed in the cross claim, as against Mr Hawach and Mr Lahood, seeks an inquiry as to where the $500,000 was placed. On this basis, the new causes of action in the amended cross claim can be seen to arise from the same or substantially the same facts as those in the cross claim and they are not objectionable on the basis of Mr Lahood's submissions. 116Mr Hawach made a second set of submissions on 5 October, which also contained an annexure B that sets out the particular defects in Mr Tadros' proposed cross claim. Mr Hawach asserts the proposed amended cross claim contains six causes of action against him, which are follows: "(a) the re-pleading of a claim against Hawach, for professional negligence in relation to a "Deed of Dissolution" executed in early May 2004, that was dismissed by the Federal Court in June 2008 (paragraphs 138 to 144 and particulars (a)-(d) to paragraph 146); (b) new allegations of professional negligence (paragraphs 142 (a), (b) and (g)) in relation to the deed of dissolution; (c) 4 new claims against Hawach (paragraphs 79-83, 129-134, 135-137 and 145-147): (i) a professional negligence claim in relation to "Articles of Joint Venture" that were executed by Mr Tadros in October 2003 (paragraphs 79-83); (ii) professional negligence and fiduciary duty claims in relation to a loan agreement that were executed by Mr Tadros in early May 2004 (paragraphs 129-134 and 135-137); (iii) a fiduciary duty claim in relation to the Deed of Dissolution that was executed by Mr Tadros in early May 2004 (paragraphs 145-147);" 117Mr Hawach suggests that a sufficient connection has not been established in relation to the plaintiff's claim against Mr Hawach and Mr Tadros' claims he now seeks to plead concerning either the 2003 articles of joint venture (paragraphs 80-83) or the March 2004 deed of dissolution (paragraphs 138 to 147) against Mr Hawach. Mr Hawach submits that those parts of the proposed cross claim should not be permitted to proceed. 118At paragraphs 78 to 83, Mr Tadros alleges that he entered into a partnership or joint venture to conduct a second hand car dealership with J&R and a person named Franco Mayer and that agreement was recorded in a document titled "articles of joint venture", which was drafted by Mr Hawach. Mr Tadros claims that the articles were negligently drafted in various ways that were unfavourable to Mr Tadros and as a consequence he entered into a loan agreement with the plaintiff, paid the rent for the premises, was deprived of his contributions to the joint venture upon its termination and entered in to a loan management agreement with J&R. Mr Tadros claims that he suffered loss and damage as a result of these events. 119Similarly, Paragraphs 138 to 147 attributes a various alleged breaches of duty owed by Mr Hawach to Mr Tradros in relation to the deed of dissolution to his default on the loan to the plaintiff. The statement of claim makes similar allegations. Paragraphs 80-83 and 138 to 147of the proposed amended cross claim against Mr Hawach arise out of the same general facts and circumstances that have brought about the plaintiff's allegations and they are sufficiently connected to the statement of claim. 120Mr Hawach made five submissions as to why leave should not be granted to file the new cross claim. The first four submissions, which relate to issues of delay, abuse of process and the interests of justice have been considered. Mr Hawach also referred to Mr Tadros' impecuniosity and suggested that Mr Hawach would not be adequately compensated by a costs award for the trouble and expense that he has been put to in defending the expanded claims in the proposed cross claim. This issue has been discussed in relation to the application for the stay of proceedings and is relevant to that matter. 121Mr Hawach's final submissions state that l eave should be withheld in respect of particular parts of the proposed cross claim on various grounds. They include: (a) paragraphs 79 to 83 and 129 to 147 do not plead proper causes of action against Mr Hawach and are liable to be struck out; (b) paragraphs 79 to 83, 129 to 137, 139, 140, 142 (a), (b) and (g) and 145 to 147 also plead new causes of action against Mr Hawach that are statute-barred and would not be maintainable. Therefore they are not necessary amendments. 122As discussed, paragraphs 79 to 83, plead that Mr Hawach owed contractual and common law duties of care to Mr Tadros in the drafting of articles of joint venture in October 2003. Paragraphs 129 to 147 plead that contractual, common law and fiduciary duties were owed to Mr Tadros in relation to the drafting of the loan agreement in April/May 2004 and drafting in the deed of dissolution in May 2004. These paragraphs make a claim of negligence and breach of fiduciary duty to Tadros in drafting the deed of dissolution in May 2004. It would appear that the particulars set out at paragraph 81 are reasonable in this type of claim. Paragraphs 129 to 137 relate to the loan agreement and Mr Hawach's retainer. Paragraphs 79 to 83 and 129 to 147 arise from the same, or substantially the same, facts as those giving rise to a cause of action and claim for relief that already exist in the current pleading and they are not objectionable. Mr Hawach's submissions as to the nature of the duties owed are something that should be ventilated at hearing. 123Mr Hawach and Mr Lahood complain that no terms of any retainer are pleaded. It is suggested that all the relevant facts and circumstances giving rise to the alleged retainer must be pleaded and cannot be implied from the facts pleaded. However, as discussed above in relation to the plaintiff's proposed amended statement of claim, this is something that is within Mr Hawach's knowledge. T he existence of a retainer can be implied from the circumstances (per Pegrum and Pegrum v Fatharly (1996) 14 WAR 92; [1996] ANZ ConvR 587 per Anderson J) and it can be determined by inference from objective facts (per Beach Petroleum NL v Abbott Tout Russell Kennedy [1999] NSWCA 408) . 124Mr Hawach's submissions on the limitation issue will be discussed.

Is the proposed amended cross claim statute barred? 125Mr Hawach submits that any cause of action ran from the date of the breach, which at the latest was October 2003, as that was the date the articles of joint venture were entered into. 126Mr Tadros contends that none of the causes of action pleaded in the proposed amendments are statute barred pursuant to s 65 CPA or s 55 of the Limitation Act 1969 . He submits that he never began to suspect fraud and he did not know the identity of any alleged fraudsters until 19 January 2005. 127Section 55 of the Limitation Act 1969 states: "55 Fraud and deceit (1) Subject to subsection (3) where: (a) there is a cause of action based on fraud or deceit, or (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment." 128It would appear that in relation to section 55 of the Limitation Act , there is no specific allegation of fraud in the proposed pleading that operates to defer any limitation period on any alleged cause of action between Mr Tadros and Mr Hawach 129The retainer between Mr Tadros and Mr Hawach and its requisite duties is pleaded in the current statement of cross claim and these new causes of action arise from the same or substantially the same facts as those giving rise to the existing cause of action and claim for relief set out in the cross claim. Therefore the proposed amended statement of cross claim is not statute barred pursuant to s 65 CPA.

Orders 130I direct the parties to bring in short minutes and argue costs. The short minutes should provide for: (1) Each party to pay their own costs in relation to the plaintiff's motion filed 10 July 2008, seeking to restrain Mr Lahood from acting as solicitor for the other defendants in the proceedings. (2) The plaintiff is granted leave to file an amended statement of claim in the form attached to the Affidavit of Mr Ling dated 14 May 2010 and filed 20 May 2010. (3) The second to eighth defendants' motions to strike out or have dismissed for want of prosecution, the plaintiff's statement of claim and Mr Tadros' cross claim, pursuant to rules 12.7 and 14.28 of the Uniform Civil Procedure Rules 2005 (UCPR) are dismissed. (4) The cross claim is stayed pending payment of costs of the Federal Court (NSD1924 of 2006) proceedings that are now registered as a judgment in this court in the amount of $15,891.32. (5) Directions as to the further conduct of the matter.

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: 15 April 2011

Port of Melbourne Authority v Anshun Pty Ltd (Anshun case) [1981] HCA 45 Re Minister for Immigration and Ethnic Affairs; ex Parte QIN [1997] HCA 6 Rogers v The Queen [1994] 181 CLR 251 Simundic v University of Newcastle [2007] FCAFC 144 State of Queensland v JL Holdings [1997] HCA 1 Tadros v J&R Investment Services Pty Ltd & Ors [2008] NSWSC 63 Tadros v J and R Investment Services Pty Ltd (No 2) [2008] FCA 832 Texts Cited: Australian Civil Procedure (B Cairns, 7th ed, (2007)) Category: Interlocutory applications Parties: Elias George Wakim v Anthony Tadros Representation: Counsel: Mr J Simpkins SC for plaintiff Mr P Beale for 1st defendant Mr C Robinson for 2nd - 6th defendants Mr JA Rose (Solicitor) for 7th defendant Mr D Lloyd for 8th defendant Solicitors: Mee Ling Solicitors for plaintiff Morgan Ardino & Co. Solicitors for 1st defendant Cambridge Law Group for 2nd to 6th defendants Middletons for 7th defendant Mullane & Lindsay for 8th defendant File Number(s): 2007/00257897

The plaintiff's notice of motion filed 10 July 2008 to restrain Mr Lahood from acting as solicitor for any other defendants 19As I have already mentioned, the relief in this motion has been otiose from earlier last year. 20The plaintiff seeks an order that Mr Lahood pay the costs of the motion. Mr Lahood claims there should not be an order as to costs. 21It is useful to know what is the proper approach of the Court when determining such matters. The principles normally applied in these circumstances were summarised by Hill J in Australian Securities Commission v Aust-Home Investments Limited 44 FCR 194. At page 201 his Honour summarised the cases in the following way: "1. Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford ( JT Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547; Lone Star Exploration NL v Corporate Affairs Commission (1988) 6 ACLC 1108 ) and the SEQUEB case ( The South East Queensland Electricity Board v Australian Telecommunications Commission (unreported, Fed C of A, Pincus J, 10 February 1989)) . 2. It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the cost of the proceedings should be borne to endeavour to determine for itself the case on the merits, or, as it might be put, to determine the outcome of a hypothetical trial; Stratford . This will particularly be the case where a retrial of the merits would involve complex factual matters, where credit could be an issue. 3. In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them ( SEQUEB ). 4. In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v Macintosh (1933) 33 SR (NSW) 371. 5. Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd (1973) 1 NSWLR 603 at 606, a case which, however, depended upon the specific working of the statute under consideration." 22Some of these principles have been approved by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex Parte QIN [1997] HCA 6, (1997) 186 CLR 622. His Honour noted that when the Court does not determine a matter, it is deprived of the result, which is a factor that usually determines whether or how it will make a costs order. He then went on to say: "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action ( Australian Securities Commission (1993) 44 FCR 194 at 201; 116 ALR 523 at 530). In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13 , the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission Fed C of A, 10 February 1989, unreported where his Honour ordered the respondent to pay 80% of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. " 23Recently in One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270, Burchett J had reason to comment on the above two cases. In paragraph 6 he said: " [6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. ..." 24In the present case there are only pleadings. There is no evidence dealing with the matter. Without evidence it would be difficult to know whether there was an obvious conflict that would prevent Mr Lahood from acting for the other defendants. These issues are substantially bound up with issues in the proceedings as to who was acting for whom. 25In these circumstances, I do not think I can form a view as to whether it was reasonable to file the motion. Accordingly, I order that each party pay their own costs.

Applications to dismiss the proceedings for want of prosecution or to strike out the statement of claim 26The debate in respect of the motions seeking to strike out the plaintiff's statement of claim and Mr Tadros' cross claim were debated before me with reference to the terms of the documents that were proposed as new statements of claim or cross claim. 27The application is pursuant to rules 12.7 and 14.28 of the UCPR, which provides: "12.7 Dismissal of proceedings etc for want of due despatch (1) If a plaintiff does not prosecute the proceedings with due despatch, the court may order that the proceedings be dismissed or make such other order as the court thinks fit. (2) If the defendant does not conduct the defence with due despatch, the court may strike out the defence, either in whole or in part, or make such other order as the court thinks fit." and "14.28 Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. (2) The court may receive evidence on the hearing of an application for an order under subrule (1)." 28In exercising this power, the Court must to take into consideration the particular circumstances causing the delay and consider the overriding purpose of the CPA and the UCPR, that is, the just, quick and cheap resolution of the real issues in the proceedings (section 56 CPA ). The court must also have regard to the CPA 's complementary provisions, namely the objects of case management (section 57) and the dictates of justice (section 58): "58 Court to follow dictates of justice (1) In deciding: (a) whether to make any order or direction for the management of proceedings, including: ... (iii)any other order of a procedural nature, and ... (2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case." 29In Hoser v Hartcher [ 1999] NSWSC 527, Simpson J noted a number of principles that may be considered in an application to dismiss for want of prosecution. These include: "[20] (1.) the ultimate question is whether, on balancing the prejudice to the respective parties by making or not making an order, justice demands that the action be dismissed: Stollznow v Calvert (1980) 2 NSWLR 749 at 751 F (Court of Appeal); Razvan v Berechet , unreported Court of Appeal, 23 February 1990; Vilo v John Fairfax and Sons Ltd , unreported, 19 November 1995, per Sperling J; [21] (2.) the discretion should be exercised only in a clear case where it is manifestly warranted; Razvan , per Kirby P; as is generally the case with discretionary decisions, each case depends upon its own facts. Rigid formulae should not be applied to the exercise of the discretion: Stollznow v Calvert at 751 D; [22] (3.) any explanation offered by the plaintiff for the delay in proceeding must be considered: Burke v TCN Channel Nine Pty Ltd , unreported, 16 December 1994, per Levine J; [23] (4.) personal blamelessness on the part of a plaintiff (as distinct from any tardiness or other fault on the part of his/her/its legal representative) is relevant: Stollznow v Calvert (1980) 2 NSWLR 749 at 751 F (Court of Appeal), p73. [24] (5.) a defendant who takes no steps to secure progress in the proceedings, or to activate an apparently inactive plaintiff or who stands by in the hope that the passage of time will ensure the quiet death of the proceedings or that the longer delay will strengthen the case for striking out, runs the risk that that very behaviour will operate to his/her/its disadvantage. A defendant has two choices: to attempt to prod the plaintiff into action, or to stand by, doing nothing, trusting that time will bring about the slow death of the action. Either choice represents something of a gamble, dependent upon future events that the defendant is unable with any degree of confidence to predict. If the defendant opts for the former course, of prodding the plaintiff into action, it may succeed in doing so, precluding an application to strike out. On the other hand, if the plaintiff remains inert, the defendant's case for striking out strengthens with passing time. If the defendant chooses the latter option and takes no action, the plaintiff may take no further steps, or may take no further steps until such irremediable prejudice is caused to the defendant that the application to strike out will succeed; if, however, some other event galvanises the plaintiff into action the defendant, having done nothing to progress the matter, can hardly be heard to complain of the plaintiff's earlier inactivity: Calvert v Stollznow , 1 April 1980, Ritchie's Supreme Court Procedure , (NSW) Vol 2, para13,022, per Cross J (at first instance); and in the Court of Appeal per Moffitt J, p753; Vilo v John Fairfax and Sons Ltd , unreported, 19 November 1995, per Sperling J, p10; McBride v Australian Broadcasting Corporation , unreported 6 November 1998, per Levine J; Bass v TCN Channel Nine Ltd , unreported 25 July 1997, per Levine J; Hart v Herron , unreported, 3 June 1993, Court of Appeal per Priestley JA; [25] (6.) delay between the date the cause of action arose and the commencement of the proceedings may be a relevant factor: Calvert v Stollznow , per Cross J; Burke v TCN Channel Nine Pty Ltd , unreported, 16 December 1994, per Levine J. But in my view, this circumstance must be treated with some caution. The weight that can be accorded to that delay is limited. Where an action is commenced within the period provided for by an applicable statute of limitations, it would not ordinarily be appropriate to take that period into account. However, if a plaintiff has delayed significantly in the commencement of the proceedings, and that delay is followed by further lethargy in the advancement of the proceedings, the effect of the initial (but permissible) delay is compounded. The real question is not the length of the delay, but the impact that delay has upon the defendant's capacity properly to defend the plaintiff's claim. That will be a question of fact in each case. While there may be some prejudice presumed by reason of the passage of time, much will depend upon the nature of the proceedings, and the identification of the issues involved in the litigation. Where, for example, at the close of pleadings it can be seen that there are disputed questions of fact dependent upon the oral evidence of witnesses, or their recollections, the prejudice will plainly be greater than in cases that depend essentially upon the application of legal principle to largely undisputed facts, or upon disputed questions of fact that will be resolved by reference to documentary or other objective evidence not likely to be affected by the effluxion of time; [26] (7) the onus lies on the defendant to establish any prejudice upon which reliance is placed. The disappearance or death of witnesses, the fading of their recollections, or the destruction of records, are some obvious examples of the kind of prejudice that might arise; [27] (8) prejudice to a defendant caused by delay has to be balanced against prejudice to a plaintiff deprived of an otherwise valid claim; delay in the commencement of proceedings by a plaintiff is sometimes taken as evidence contra-indicating prejudice to the plaintiff in the sense that he/she/it has evinced no interest in his/her/its own case: Burke , supra. Such an inference may be contra indicated by explanatory evidence; in this regard the plaintiff's personal responsibility for the delay is an important factor as is any explanation provided for the delay; [28] (9) what the defendant has (or has not) done by way of preparation for trial may be a factor. This is a distinct question from that concerning any steps taken (or not taken) by the defendant in prompting the plaintiff to action. A defendant who has not interviewed witnesses, taken statements or collected documents, after being served with the claim, has a less meritorious complaint about the effect of prejudice caused or presumed by reason of delay: McBride v ABC , unreported, 6 November 1998, per Levine J; [29] (10) the plaintiff's prospects of success is a relevant factor. If it appears that the prospects are minimal, the discretion is more likely to be exercised in favour of the defendant. Conversely, where the plaintiff's case is strong (absent the kind of prejudice to the defendant to which I have referred) it is less likely that justice will be done by striking the action out: Razvan, per Kirby P; ..." 30Simpson J went on to refer to State of Queensland v JL Holdings [1997] HCA 1 but the case has been distinguished by the next case to which I will refer. 31The High Court's recent decision in Aon Risk Services Australia v Australian National University [2009] HCA 27 dealt with the Court Rules of the Supreme Court of the ACT and the general principles set out in that case clearly apply in this matter. In their joint judgment Gummow, Hayne, Crennan, Kiefel and Bell JJ discussed the significant burden a party carries when seeking to justify why they should be granted leave to amend pleadings. 32Their Honours identified relevant considerations to be the proper use of public resources and the effect that delay may have on the public's confidence in the Court system; the nature and importance of the amendments; the extent of the delay; prejudice to the other side; the interests of other litigants; the point the litigation has reached when the amendments are sought; and whether the application is made in good faith. 33Although Aon concerned an amendment, the general principles are relevant to this application to dismiss for want of prosecution and of course, to the plaintiff's application for leave to file a further amended statement of claim. At [98] to [103] they stated: "[98] ... what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. [100] The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd [1987] AC 89 at 220, that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, are also now generally accepted. In Bomanite Pty Ltd v Slatex Corp Aust French J said of Bowen LJ's statements in Cropper v Smith : ... That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary. [101] In Ketteman Lord Griffiths recognised, as did the plurality in J L Holdings , that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings. ... [103] The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 152. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case." [citations omitted] 34However, care should be taken to construe the principles elucidated in Aon within the context of the facts and circumstances of the matter before the Court. As Keane CJ, Gilmour and Logan JJ in Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101 note: "[51] Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application."

The plaintiff's proposed amended statement of claim 59Mr Hawach has advanced three grounds for disallowing the amendment. They are:

Defects in the pleading.
Parts of the pleading are not necessary to determine the real issues.
Some parts of the pleading refer to claims against the seventh defendant that are statute barred. 60I will deal with each of these in turn. The first complaint is in relation to particular defects that are set out in annexure B to Mr Hawach's submissions dated 5 October 2010. Paragraphs 23 to 25 of the proposed amended statement of claim state that Mr Hawach was retained as the solicitor for the plaintiff and that Mr Joseph Wakim entered into that retainer on the plaintiff's behalf. It is suggested that the pleading fails to deal with the factual basis on which the plaintiff alleges that Mr Joseph Wakim was acting on the plaintiff's behalf, the legal basis of the agency, the factual basis upon which the plaintiff alleges that Mr Joseph Wakim retained Mr Hawach and facts relating to the implied term of the retainer in paragraphs 24 and 25. 61In is current form paragraph 20(f) states that there was a representation by Joseph Wakim that he would arrange for the solicitors to prepare the loan and contract. It would be reasonable to assume that the plaintiff, having accepted the representation, would not know the precise detail of what might have been said by Joseph Wakim to the seventh defendant. However, such information is within the knowledge of Mr Hawach and in due course probably, as a result of discovery or interrogatories, there will be more information available to the plaintiff about an event that clearly did happen and in which Mr Hawach was engaged. 62In my view, paragraph 23 is sufficient to give notice to Mr Hawach of the alleged retainer and there is nothing in the implied terms, referred to in paragraphs 24 to 25, which are unusual - even if the retainer was simply an oral agreement that the seventh defendant would act in the most general way on behalf of the plaintiff. I would not at this stage strike out those paragraphs. 63The next matter is to do with paragraphs 24, 25 and 27. There are amendments in these paragraphs that add new allegations of a duty that were not in the existing statement of claim. The allegations of duty are to "not act in the event of any conflict of duty without the fully informed consent of GW [the plaintiff]". It is conceded that the current pleading asserts a duty to warn of conflicts and nothing more. However, a limitation point has been taken in respect of this amendment as the loan agreement was entered into on 7 May 2004. These amendments add a different implied term based upon the same retainer but in my view the amendment is within s 65 (2)(c) of the CPA , which states: "65 Amendment of originating process after expiry of limitation period ... (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1) (b), amend the originating process so as: ... (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. ... " 64These amendments are based upon the same facts as those giving rise to the existing cause of action. It is the same retainer. It was also submitted that like some other amendments it is not necessary within the terms of s 64(2) of the CPA , which provides that, "Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings." In my view in order to properly raise the questions that might arise on the facts, these amendments are necessary. 65The next matter of complaint is said to be paragraph 26(d) to (f). The paragraph is part of an alternative contractual claim against Mr Hawach. They raise questions firstly about Mr Hawach's knowledge that plaintiff's interests would be endangered if the loan to Mr Tadros was unsecured, secondly whether the plaintiff could suffer loss if Mr Hawach failed to obtain appropriate instructions on the security and thirdly, whether Mr Hawach ought to have known that the plaintiff might act on the belief that the solicitors were acting for him. 66All these pleadings seem to put a slightly different angle on what might be the retainer. This is a matter that, as I have pointed out above, in the circumstances, is something within Mr Hawach's knowledge and not presently within the plaintiff's knowledge. Once again, it seems to me that these allegations arise from the same, or substantially the same, facts as those giving rise to the causes action in the existing statement of claim. The existing statement of claim dealt with the events surrounding and arising from the retainer of Mr Hawach by the plaintiff and those are still the facts that are the basis for the present claims. 67The next matter for complaint is found in paragraphs 28 and 42. Paragraph 28 pleads, for the first time, a breach of fiduciary duty against the solicitors in respect of their actions in acting without a fully informed consent. Paragraph 42 states that the solicitors breached their fiduciary duty by not obtaining fully informed consent and by a failure to disclose a number of material matters. 68Mr Hawach made reference to various statements that suggest that it is often inappropriate to combine fiduciary claims with claims for common law duties arising out of the same facts, see Breen v Williams [1996] HCA 7; (1996) 186 CLR 71 at 110 and Blythe v Northwood [2005] NSWCA 221; (2005) 63 NSWLR 531 at [209] where Bryson JA at [209] referred to the proceedings which related to a solicitor's alleged breach of fiduciary duty as " beset with an array of purported bases for equitable claims, presented with contrived complexity so as to be markedly difficult to deal with forensically. " His Honour further stated at [210] to [211]: " [210] Equitable claims arising out of fiduciary relationships are so encrusted with diffuse scholarship as to give colour to claims with little discernible relationship to the deeply underlying basis of jurisdiction in equity, in which the court has power to prevent reliance on legal rights and to remedy consequences of so doing in cases where such reliance is unconscionable. Outside well-worn paths of equitable relief this power is only available for exercise to redress enormities. Idiosyncratic or otherwise excessively ready exercises of the power threaten its existence. [211] Designation of a relationship as fiduciary is not a signal for exercise of judicial bounty. Fiduciaries characteristically have areas of responsibility which have boundaries, and are free to act in their own interests in all matters outside those boundaries." 69There is nothing unusual, in this case, about solicitors owing fiduciary duties. Given that we are talking about the same circumstance, namely, the retainer of the solicitors and their duties arising from the retainer, it is appropriate to give leave to amend. It must be remembered that s 65(2)(c) of the CPA specifically gives authority to add, or substitute in, any new cause of action, the only limitation is that the cause of action arises from the same, or substantially the same, facts as those giving rise to an existing cause of action. 70The next matter raised is a request for more detail in respect of one of the matters I have already dealt with, which is whether the plaintiff took adequate security. This is raised in a number of paragraphs. As I have already dealt with it, further consideration is not necessary. 71The final complaint is about paragraphs 41 (c), (h) and (i). Paragraph 41 deals with the particulars of breach of the retainer and the fiduciary duty arising from it. Having regard to my earlier conclusions this should also be allowed. 72I should also mention there is an additional argument in respect of the cause of action that is said to be statute barred. There is a question as to when the cause of action arose in the period expiring after the first entry into the loan agreement. Paragraph 60 of the amended statement of claim alleges that the plaintiff lost money as a result of entering into the loan agreement. Arguably no loss occurred until the plaintiff failed to recover the full amount of the loan and interest and no doubt the evidence would show that to be sometime later. 73In these circumstances, this would be the type of case where it would be appropriate to stand over the question of when the cause of action arose and the amendment until the hearing.

Wakim v Tadros

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Judgment (6 paragraphs)

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Cases Cited (43)

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