New South Wales Supreme Court CITATION : Westpac Banking Corporation v Victor Warren Ollis & Ors [2007] NSWSC 1008 HEARING DATE(S) : 6/9/07 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J EX TEMPORE JUDGMENT DATE : 6 September 2007 DECISION : Indemnity costs ordered CATCHWORDS : Indemnity costs LEGISLATION CITED : Civil Procedure Act 2005 (NSW) Colgate Palmolive Co v Cussons Pty Ltd [1993] 46 FCR 225 Commonwealth Bank of Australia v Mohamad Saleh & Ors [2007] NSWSC 990 Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 CASES CITED : Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Harrison v Schipp [2001] NSWCA 13 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2) (1993) 46 IR 301 Oshlack v Richmond River Council (1998) 193 CLR 72 Ragata Developments Pty Ltd v Westpac Banking Corporation [unreported, Federal Court of Australia, Davies J, 5 March 1993] Westpac Banking Corporation (Plaintiff) PARTIES : Victor Warren Ollis (First Defendant) Gail Anne Shields (Second Defendant) Koala Development Pty Limited (Third Defendant) FILE NUMBER(S) : SC 50045/06 COUNSEL : Mr J Stevenson SC, Mr D McLure (Plaintiff) Mr CJ Dibb of counsel appeared for the Second and Third Defendant] SOLICITORS : Henry Davis York (Plaintiff) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Thursday 6 September 2007 ex tempore Revised 6 September 2007 50045/06 Westpac Banking Corporation v Victor Warren Ollis & Ors JUDGMENT 1 The reserved judgment in these proceedings was delivered on 31 August 2007: [2007] NSWSC 956. The proceedings were stood over until today for the purpose of the Court making final orders and dealing with costs. Costs 2 The plaintiff seeks an order that the defendants pay the Bank's costs on an indemnity basis. The Court found that Mr Ollis dishonestly withdrew almost $11 million from an account which he had held with the Bank. The Court also found that Ms Shields received for no consideration, a significant quantity of property and over $4.5 million in cash from Mr Ollis, knowing of the dishonest method by which he obtained it. 3 The question before the Court is whether the defendants' conduct leading to those findings, allied with their conduct of the proceedings, should give rise to an order that they pay the Bank's costs on an indemnity basis. Principles 4 Section 98 of the Civil Procedure Act 2005 confirms the Court's power to order costs, including costs on an indemnity basis. The power is an absolute and unfettered discretion, to be exercised judicially: Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 [22] per Gaudron and Gummow JJ; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400 – 401 per Woodward J. 5 The general principle is that party/party costs should be awarded to the successful litigant unless there are special circumstances to justify the making of a different order: Ragata Developments Pty Ltd v Westpac Banking Corporation [unreported, Federal Court of Australia, Davies J, 5 March 1993], [cf Commonwealth Bank of Australia v Mohamad Saleh & Ors [2007] NSWSC 990 at [3]. 6 The guiding principle in relation to whether an order for indemnity costs should be made, is whether the circumstances of the case involve some relevant delinquency on the part of the unsuccessful party or parties: Oshlack at 89 [44] per Gaudron and Gummow JJ. 7 Cases in which courts have made orders for indemnity costs in analogous circumstances are not determinative, but may be a useful guide. In Degmam Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358C and following, Holland J held that an order for indemnity costs was appropriate where an unsuccessful party had prolonged a trial, by deliberately false defences and allegations of fact. 8 In Fountain Selected Meats at 401, Woodward J held that an order for indemnity costs may be appropriate where a party pursues litigation in wilful disregard of the known facts or the clearly established law. So held French J in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2) (1993) 46 IR 301. These decisions were referred to with approval by Sheppard J in his often-cited judgment in Colgate Palmolive Co v Cussons Pty Ltd [1993] 46 FCR 225 at 233. 9 The many authorities to which references may be made include the authorities referred to with approval by Giles JA (with whom Handley and Fitzgerald JJA agreed) in Harrison v Schipp [2001] NSWCA 13 at [139]. 10 In Jeans v Bruce [2004] NSWSC 758, after referring to Degmam, the Court held at [38] that it was appropriate to order indemnity costs against the defendants, having regard to the gravity of the allegations made and the lack of reliable evidence adduced to support them. 11 In Commonwealth Bank of Australia v Saleh at [5]–[6], the Court made orders for indemnity costs against defendants who had maintained defences which, on the Court's findings, they must have known were false. Application of principle 12 In the present proceedings, the Court made comprehensive findings as to Mr Ollis' dishonesty: see [2007] NSWSC at [29], [31] – [34]. The findings as to Ms Shields' actual knowledge of Mr Ollis' dishonesty were equally comprehensive: see [2007] NSWSC at [46], [54] – [56]. 13 On the Court's findings, Mr Ollis and Ms Shields knew of his dishonesty at all material times during these proceedings. This is not a case where the Court was called on to make finely balanced judgments as to the defendants' knowledge. The evidence that Mr Ollis acted dishonestly was overwhelming and ultimately unanswered. On Mr Ollis' part, he spoke of his dishonest conduct without shame or embarrassment. When confronted by the Bank in January 2006, he said that he was "not going to look a gift horse in the mouth". In this Court, he proclaimed that if the Bank could not look after the money, it was the Bank's responsibility. Yet, Mr Ollis and Ms Shields defended these proceedings to the end. 14 Having regard to Mr Ollis' and Ms Shields' defence of these proceedings with knowledge of his dishonest conduct and in the face of the overwhelming evidence against them, the principled exercise of the relevant discretion is plainly to make the order for indemnity costs which has been sought. Their conduct par excellence constituted relevant delinquency. Order 4 15 Mr Dibb appearing for the second and third defendants sought clarification as to the proposed order 4 of the orders telegraphed as appropriate to be made in the reserved judgment and now appearing in the version of short minutes of order propounded by the plaintiff. 16 Order 4 is appropriate. Each of the properties the subject of paragraph 4 comprised properties transferred by Mr Ollis to Ms Shields without consideration and with knowledge of Mr Ollis' dishonest conduct. Each of the properties had had expended upon them Bank monies, as was evidenced by the report of Mr Williams referred to in the reserved judgment. Because Mr Ollis expended Bank money on these properties they each became subject to a charge in favour of the Bank: the quantum of the charge is determined by the total amount of money that Mr Ollis dishonestly took from the Bank. 17 Ms Shields took those properties from Mr Ollis with knowledge of the circumstances giving rise to the charge. Orders 18 The Court makes declarations in terms of paragraphs 1, 2, 3, 4, 5 and 6 of the Order which I initial and date 6 September 2007. 19 The Court makes orders in terms of paragraphs 7, 8 and 9 of the Order. Paragraph 7 reads: Judgment be entered against the first defendant in favour of the plaintiff in the amount of $14,813,160.83. Paragraph 8 reads: The proceedings be stood over to the Commercial List for further directions on 7 December 2007. Paragraph 9 reads: Order that the defendants pay the plaintiff's costs of the proceedings to date on an indemnity basis. 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.