Steven Faraday v Thomas Gabor Rappaport & 2 Ors [2007] NSWSC 253

New South Wales Supreme Court

CITATION : Steven Faraday v Thomas Gabor Rappaport & 2 Ors [2007] NSWSC 253

HEARING DATE(S) : 16/03/07

JUDGMENT DATE : 16 March 2007

JURISDICTION : Equity Division

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 16 March 2007

DECISION : 1. In proceedings 2649 of 2002, order the defendants pay one-third of the plaintiff's costs; 2. In proceedings 1684 of 2003, order the defendant to pay the plaintiff's costs of proceedings; 3. In proceedings 3668 of 2003, order that there be no order as to costs, with the intent that each party bear his or her own costs of those proceedings.

CATCHWORDS : COSTS - No question of principle.

LEGISLATION CITED : Civil Procedure Act 2005 (NSW) Uniform Procedure Rules 2005 (NSW)

Steven Faraday v Thomas Gabor Rappaport & 2 Ors [2007] NSWSC 34 CASES CITED : Oshlack v Richmond River Council (1998) 193 CLR 72 Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137; [1994] 4 All ER 464

Steven Faraday v Thomas Gabor Rappaport & 2 Ors; PARTIES : Steven Faraday v Thomas Gabor Rappaport; Rosalia Rappaport by her tutor Thomas Gabor Rappaport v Steven Faraday

FILE NUMBER(S) : SC 2649/02; 1684/03; 3668/03

COUNSEL : Plaintiff: In Person Defendant: M A Bradford

SOLICITORS : Plaintiff: N/A Defendant: Slater & Gordon

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Friday, 16 March 2007

2649/02 Steven Faraday v Thomas Gabor Rappaport & 2 Ors 1684/03 Steven Faraday v Thomas Gabor Rappaport 3668/03 Rosalia Rappaport by her tutor Thomas Gabor Rappaport v Steven Faraday JUDGMENT 1 HIS HONOUR: I gave judgment in these proceedings on 7 March 2007. Following the delivery of reasons for judgment, I directed the service of written submissions and stood the proceedings over to today for any oral argument on the question of costs. 2 At the time I handed down my reasons for judgment, I expressed a tentative view that if it were appropriate to consider the costs of all three proceedings in a global fashion then an appropriate order may be that there be no order as to costs to the intent that each party bear his or her own costs. In saying that, I had in mind, and only had in mind, the success of the respective parties on the various issues which were litigated. 3 I received written submissions from Mr Faraday, supplemented by oral argument, and also oral submissions from Mr Bradford of counsel. 4 The position originally taken by the Rappaports was that they would be content with an order that there be no further orders as to costs in the proceedings. However, having regard to the submissions made by Mr Faraday, their position has moved somewhat, in a way I will explain. 5 Mr Faraday submits that the outcome of the proceedings is that he has preserved his house and has received an order for the payment of a sum including interest of $140,572.02. Rosalia Rappaport's claims against him have failed, save for an order that he pay her estate the sum of $11,173.52. He submits that this is an amount he had never denied. 6 However, the defence in proceedings number 3668 of 2003 did deny the claim made on behalf of Rosalia Rappaport for the amounts which included the two sums which Mr Faraday admitted receiving. The defence did not admit any liability to pay any moneys to her estate. 7 It was submitted by Mr Faraday that the general rule is that the costs follow the event, and he should be regarded as having been the successful party in the litigation. He submits that the precipitating factor for the institution of the proceedings was the refusal of Mr Thomas Rappaport to pay Mr Faraday moneys held by him, which I have found to be properly payable. This refers to a demand made in October 2000 by Mr Faraday on Thomas Rappaport when he asked for a drawdown of $50,000 to buy some term deposits. That demand was not acceded to. It led to the letter of 8 October 2000 from Mr Faraday to Thomas Rappaport to which I have referred to in paragraphs [60]-[62] of my judgment (Steven Faraday v Thomas Gabor Rappaport & 2 Ors [2007] NSWSC 34). 8 Whilst it is correct to say that in his letter Mr Faraday asserted a right to property held by Thomas Rappaport amounting to some $400,000, it is not correct to say (as was submitted for the Rappaports) that in October 2000 Mr Faraday made a demand for $400,000. 9 Mr Bradford submitted that the real precipitating factor of the litigation was Mr Faraday's dishonest refusal to return Rosalia Rappaport's possessions in 1992, and his persistent dishonest denials of having received her property. He submitted that this was the true source of the family disharmony which ultimately led to the litigation. He referred to the fact that the subsequent finding of the receipt then soured the parties' relationship, and the matter proceeded downhill from there. 10 I do not think it helpful to identify ultimate causes for the family disunity. I do, however, regard the immediate precipitating factor for the institution of the proceedings as being a relevant factor on the question of costs. 11 The question arises as to whether the costs of all three proceedings should be dealt with in globo. An order was made at the commencement of the proceedings that the evidence in one proceeding be evidence in each other proceeding, and for the proceedings to be heard together. The proceedings have not been consolidated. The proceedings raise different issues and the parties' success and failure on the different issues is itself a relevant factor in determining questions of costs. 12 On balance, I have decided that it is appropriate to consider questions of costs into three proceedings separately. 13 Section 98 of the Civil Procedure Act 2005 (NSW) confirms a wide discretion on the court in relation to orders for costs. 14 Subsection 98(1) provides: " 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid. … " 15 Rule 42.1 of the Uniform Procedure Rules 2005 provides that: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 16 The expression "follow the event" refers to the practical result of the claim. 17 These discretionary powers entitle the court to moderate costs which successful parties are otherwise entitled to receive to reflect amongst, other things, that party's degree of success on particular issues, the quantum of relief obtained, the proportion of relief obtained to the length of the hearing and the likely costs incurred by the party in the hearing, and the conduct of the successful party in the proceedings. 18 In Oshlack v Richmond River Council (1998) 193 CLR 72, McHugh J said (at 97) that: " The traditional exceptions to the usual order as to costs focus on the conduct of successful party which disentitles it to the beneficial exercise of discretion ." Costs in Proceedings 2649/02 19 One of the matters Mr Bradford raises in relation to costs is that he contends that the conduct of Mr Faraday has extended the hearing by the making of false allegations, the giving of false denials or fanciful explanations, and the tailoring or manufacturing of evidence. 20 I think there is some substance to this submission for the reasons which I have given in my reasons for judgment. However, to the extent to which the Rappaports can be regarded as successful parties, I think it is also fair to say that the length and difficulty of the hearing has been extended by false denials and explanations given by Thomas Rappaport, for the reasons which are contained in my reasons for judgment. 21 In proceedings number 2649 of 2002 in which Mr Faraday is plaintiff, Mr Faraday has succeeded on a claim for a money sum of $84,159.53 with interest from 3 February 2000. The claim for that money sum was raised by amendment during the proceedings. The claim arose from the same factual matrix as did the claims by Mr Faraday to a beneficial interest in the three properties. Mr Bradford submitted that had Mr Faraday's claim been confined to that sum, then the proceedings would have been apt for determination in the District Court, and in any event the proceedings would have been substantially shorter. 22 Whilst I think it is correct that the proceedings would have been somewhat shorter had the claim that Mr Faraday had been confined to a money sum, I do not accept they would have been substantially shorter. 23 The reason for that is that the balance to which I have found Mr Faraday was entitled, was a balance shown in the running sheets reflecting the outcome of investments made by Mr Faraday with Thomas Rappaport. 24 Thomas Rappaport denied the authenticity of the running sheets. He denied that such investments had been made. The same factual questions as to the authenticity of documents (which I have found were under the hand of Thomas Rappaport), the disputes as to the sources of funds, and whether or not investments were made, would still have arisen had Mr Faraday's claim been so confined. 25 Mr Bradford has referred me to the decision of the Court of Appeal in Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137; [1994] 4 All ER 464. In support of his submission that as Mr Faraday has succeeded on a case which arose from a deemed late amendment that prima facie the defendants to Mr Faraday's claim ought to receive their costs to the proceedings up to the time of that amendment. Thereafter, he submits, that each party should pay his or her own costs. 26 In Beoco Ltd v Alfa Laval Co Ltd, Stuart-Smith LJ said (at 154) that: "As a general rule, where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment." 27 Here, the amendment did not substantially alter the case which the Rappaports had to meet. Rather, it was an additional claim arising out of the same factual matrix. 28 I take into account that the substantial claims made by Mr Faraday in monetary terms were to a beneficial interest in the three properties. Those claims have failed. 29 I also take into account that Mr Faraday's conduct in the litigation has, to a certain extent (the precise extent being impossible to say), extended the length and complexity of the case. 30 I also take into account that the claim on which he succeeded was raised only by a late deemed amendment. 31 In those circumstances, it would not be proper to award Mr Faraday all of the costs of proceedings 2649 of 2002. However, I am persuaded that contrary to my initial thoughts, Mr Faraday is entitled to some part of his costs of those proceedings. 32 It is appropriate to make a broad determination as to what percentage of his costs should be paid. I think the discount of his costs should be substantial. 33 I order that in proceedings 2649 of 2002, the defendants pay one-third of the plaintiff's costs. Costs in Proceedings 1684/03 34 Proceedings 1684 of 2003 are proceedings by Mr Faraday for an order for the return of the title deed to the plaintiff's house. Although it will ultimately be a matter for the costs assessor as to how much of the costs of the hearing are referable to that claim, I think I should make it clear that that claim ultimately turned upon the fate of the claims made in proceedings 3668 of 2003, brought by Rosalia Rappaport. 35 Mr Faraday succeeded in his claim for an order for the return of the title deed. I order the defendant pay his costs of proceedings 1684 of 2003. Costs in Proceedings 3668/03 36 In proceedings 3668 of 2003, Rosalia Rappaport brought five separate claims, four of which were persisted with. She, or her representative, were partially successful on the fourth and fifth claims in the amounts which, in evidence, Mr Faraday admitted having received. They failed on the balance of those claims. 37 Had Mr Faraday, in his defence, admitted receipt of $7,674.18 and paid those moneys to the executors of Rosalia Rappaport's estate, or paid the moneys into Court, then the plaintiff in those proceedings would not have been able to have the limited success on those claims taken into account on the question of costs, at least from the time of the admission or payment in. 38 However, he did not do so. It was necessary for the plaintiff's fourth and fifth claims to be heard. On those claims the plaintiff had some limited success. 39 If those were the only claims in those proceedings, the appropriate order would be for Mr Faraday to pay the plaintiff's cost of those claims. However, they were not. In proceedings 3668 of 2003, the first claim brought on behalf of Rosalia Rappaport was not pressed, although that position did not arise until late in the hearing. 40 The plaintiff failed on the second claim because I held that the moneys which Mr Faraday denied receiving were paid to him, but were paid to him as a gift and, in any event, if they had been paid as a loan, the claim would have been statute barred. 41 The third claim failed, not because I accepted Mr Faraday's denial of having received money and property of Rosalia Rappaport, but because I found that claim failed by the statute of limitations. 42 Nonetheless, the remaining claims were either abandoned or failed. 43 Having regard to all of those factors, I did not think it would be right to say that the "event" which, prima facie, should govern the outcome of a costs order in the 2003 proceedings, was that the plaintiff in those proceedings succeeded. Nor, however, is it right to say that Mr Faraday should be taken as having practically succeeded in those proceedings whose outcome is that he has to pay some money to Rosalia Rappaport's estate. In his defence, he denied any such liability. 44 In all the circumstances, I order that there be no order as to costs in proceedings 3668 of 2003, with the intent that each party bear his or her own costs of those proceedings. 45 These orders do not, of course, displace any prior costs orders.