Zheng v Ianni & Ors (No.4) [2021] NSWDC 559

District Court New South Wales

Medium Neutral Citation: Zheng v Ianni & Ors (No.4) [2021] NSWDC 559 Hearing dates: On the papers Date of orders: 18 October 2021 Decision date: 18 October 2021 Jurisdiction: Civil Before: Abadee DCJ Decision: See paragraph 23 Catchwords: COSTS – application for indemnity costs – rules offer and calderbank offer – gross lump sum costs order Legislation Cited: Civil Procedure Act 2005 (NSW) ss 60, 98 Uniform Civil Procedure Rules (NSW) rr 17.4, 20.26, 42.8, 42.14 Cases Cited: Bechara (t/as Bechara and Company) v Bates [2016] NSWCA 294 Hamod v New South Wales [2011] NSWCA 375 Maylord Equity Management Pty Ltd v Nauer (No.2) [2017] NSWSC 1467 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 Zheng v Ianni (No.3) [2021] NSWDC 521 Category: Costs Parties: Buzhong Zheng (plaintiff) Najib Daoud (third defendant) Leila Daoud (fourth defendant) Fred Daoud (fifth defendant) Representation: Counsel: Mr J Phillips SC with Mr L Robison for the plaintiff Ms F Sinclair for the third and fourth defendants No appearance for the fifth defendant

Solicitors: MGL Lawyers for the plaintiff George Khoury & Co for the third and fourth defendants File Number(s): 2019/00181425

Judgment

BACKGROUND 1. On 30 September 2021, following a hearing that ran for 8 days, I delivered reasons for judgment on the substantive issues in the proceeding and determined, relevantly, that the plaintiff should obtain judgment (jointly) against the third, fourth and fifth defendants for the sum of $317,180 [1] . I also ordered that the third, fourth and fifth defendants pay the plaintiff's costs, as agreed or assessed; although I granted the plaintiff liberty to apply to vary that costs order. 2. As noted in My Reasons, shortly before the hearing, the plaintiff had settled his claim against the first and second defendants [2] and had obtained a default judgment against the fifth defendant, with damages to be assessed. Ultimately, only the third and fourth defendants were active in resisting the plaintiff's claim against them. 3. The plaintiff has now invoked leave granted to apply to vary the costs orders. The plaintiff now agitates for the following variations, each expressed as alternatives: 1. a partial order for indemnity costs from 24 August 2021, being the day after a rules offer was made to (and later rejected) by the third and fourth defendants after the plaintiff obtained a judgment on terms which were no less favourable to the plaintiff than those in the 'rules offer' pursuant to r 42.14 of the Uniform Civil Procedure Rules 2005 (NSW) [3] ('UCPR'); or a Calderbank offer expressed in substantially the same terms; or 2. a gross lump sum costs order pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW) ('the CP Act'). 1. The third and fourth defendants were all supplied, by Court direction, the opportunity to supply written submissions in response to the plaintiff's submissions. However, through an email message sent to my Associate, the solicitor for those defendants indicated that he had no instructions to make such submissions. The Court was informed that the plaintiff treated his application for costs as against the fifth defendant as being made ex parte. The Court therefore proceeds on the basis that the fifth defendant is unaware of the applications for indemnity costs or lump sum orders brought against him. 2. The plaintiff, who I will henceforth refer to as the applicant, relied upon two affidavits from his solicitor, Mr Tony Ko, both affirmed on 30 September 2021. One of those affidavits proved the costs of the plaintiff's legal representatives, including Counsel. The other mainly proved the rules offer and Calderbank offer and dispute regarding the authenticity of documents. 3. As the applicant's Counsel's written submissions acknowledge, the third and fourth defendants are pensioners and their legal representatives agreed to act for them pro bono. The financial position and circumstances of the fifth defendant have never been made apparent. 4. Before drilling into the merits of the claim, it is pertinent to observe two features. First, in his submissions, the applicant does not discriminate in his treatment of the fifth defendant, in comparison with the third and fourth defendants, against whom he obtained default judgment. This was inapposite. There was nothing proven in Mr Ko's affidavits to support a partial order for indemnity costs order against the fifth defendant. The plaintiff acknowledged, for example, that no rules offer was served on the fifth defendant. 5. The second feature is that Mr Ko's "longer" affidavit essentially exhibits what appears to resemble a large subset of the documentary tender that the applicant relied upon during the hearing. That this large documentary tender was the subject of a notice under r 17.4 of the UCPR was also inapposite. Rule 17.4 doubtless plays a helpful role in serving to reduce disputes about the authenticity of documents where there is some doubt about the authenticity of a document; via a costs sanction. But the reference in the rule to authenticity indicates that the relevant dispute is about whether a document is what it purports to be. A party should not be able to garner for itself a potential costs advantage by annexing what is, in effect, a tender bundle behind a notice to dispute the authenticity of documents, simply because no response to the notice is received within the stipulated time period. 6. To some degree, it is true, Mr Nick Daoud disputed that he applied his signature to certain documents at the hearing – but certainly nowhere near the volume of documents incorporated, by reference in the notices to dispute the authenticity of documents ie disputing that they were what they purported to be. He also said that he did not recognise or was aware of certain documents which went out under his and the fourth defendants' letterhead. This, it will be recalled, was part of a vigorous dispute over whether the fifth defendant, who generated documents on the letterhead of the third and fourth defendants (who conducted a business), acted as their agent. As a cursory review of My Reasons will indicate, the questions of agency, and continued agency (after December 2018) were key battleground issues at the hearing and it was not a foregone conclusion that the plaintiff would succeed on them (certainly not after December 2018). At any rate, such disputes as there were about documents were not about their authenticity. Mr Nick Daoud was not in a position to seriously dispute that an invoice on his letterhead was an invoice purportedly rendered by his business. What he did dispute was either his son's, (the fifth defendant) authority to raise it or the consequences for the latter of his doing so. To test all of this, the question would be raised what costs savings would have been made had the third and fourth defendants admitted the authenticity of each of the documents? Answer: practically nothing. The admissions would be limited only to the authenticity of the respective documents. The tender would have proceeded, nonetheless, for the purpose (generally) of proving the truth of what was contained in the documents. 7. Accordingly, albeit for a different reason to that acknowledged by the applicant in his Counsel's written submissions, I would not be disposed to making a partial order for indemnity costs on the basis of the notices to admit documents.