New South Wales Supreme Court CITATION : David & Anor v Abdishou & Ors [2007] NSWSC 890 HEARING DATE(S) : 23/07/07; 24/07/07; 25/07/07; 26/07/07; 27/07/07; 30/07/07; 02/08/07 JUDGMENT DATE : 16 August 2007 JURISDICTION : Common Law Division Defamation List JUDGMENT OF : Hidden J at 1 DECISION : Plaintiffs to pay defendants' costs thrown away by adjournment and amendment - payable forthwith CATCHWORDS : COSTS - Defamation - s7A trial adjourned - late amendment - whether plaintiffs should pay costs of proceedings to date - whether costs should be on indemnity basis - whether costs should be payable forthwith - whether proceedings should be stayed until costs payed LEGISLATION CITED : Uniform Civil Procedure Rules Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 Murrihy v Radio 2UE Sydney Pty Ltd [2000] NSWSC 318 Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 CASES CITED : Oshlack v Richmond River Council (1998) 193 CLR 72 Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 Koh v Murchison Metals Ltd [2007] NSWSC 765 Wentworth v Rogers [1999] NSWCCA 403 Fred David (1st plaintiff) Suzy David (2nd plaintiff) Youeil Abdishou (1st defendant) Eddy Simon David (2nd defendant) PARTIES : Joseph Saliba Dadisho (3rd defendant) Charles Kouchou (4th defendant) Fudor Manso (5th defendant) (sixth defendant never served) Henrick Isaac (7th defendant) FILE NUMBER(S) : SC 2006/20117 S Littlemore QC with C Dibb (plaintiffs) COUNSEL : R Weaver (defendants 1,2,3 & 5) A Dawson (defendant 7) Fourth Defendant in Person Hal Lawyers (plaintiffs) SOLICITORS : McMahons National Lawyers (defendants 1,2,3, & 5) DLA Phillips Fox (defendant 7) Fourth Defendant in Person IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST HIDDEN J Thursday 16 August 2007 2006/20117 Fred David & Anor v Youeil Abdishou & Ors JUDGMENT – (On costs after adjournment) 1 HIS HONOUR: This matter was listed for s7A trial on Monday, 23 July 2007. The first three days of that week were taken up with various applications and submissions concerning the conduct of the trial. Towards the middle of the day on Wednesday, 25 July I adjourned the matter to the following day, so that Mr Dibb, junior counsel for the plaintiffs, could have Mr Littlemore QC lead him in a voir dire examination. I ordered the plaintiffs to pay the costs of that day, although I reserved liberty to the parties to apply about the basis upon which those costs should be paid. 2 Mr Littlemore QC appeared on Thursday, 26 July and the voir dire commenced. The evidence of one witness, the fourth defendant, was embarked upon but not completed that day. On the following day, Friday, 27 July, Mr Littlemore sought an adjournment of the trial, so as to have an opportunity to amend the statement of claim by recasting and amplifying the imputations pleaded. The voir dire did not continue and I reserved judgment on the adjournment application until the following Monday. On that day, 30 July, I granted the application for adjournment and decided that it was inappropriate to continue the voir dire. It was agreed that the question of the costs occasioned by the adjournment should be considered on another day. 3 On Thursday, 2 August, I received affidavit evidence bearing upon that question and submissions, written and oral. The issue was argued at considerable length. I shall deal with the matters raised as succinctly as I can. The fourth defendant, who was unrepresented, was present that day but did not wish to be heard. 4 The remaining defendants seek the costs of the proceedings to date on an indemnity basis. From that they would except the costs of the application for amendment dealt with by Adams J on 18 July. His Honour made an order for costs on that day, which I am not asked to revisit. The defendants also seek orders that the costs be payable forthwith and that the proceedings be stayed until they are paid. Subject to that, they do not oppose the grant of leave to the plaintiffs to file a further amended statement of claim (without prejudice to any challenge which might be made to the new imputations pleaded). In addition, Mr Dawson, for the seventh defendant, seeks an order for interest on the costs. 5 As to Thursday and Friday, 26 and 27 July, the plaintiffs accept that they should pay the costs thrown away by the adjournment. However, their position is that the costs of Monday and Tuesday, 23 and 24 July should be costs in the cause. Of course, they oppose the other orders sought by the defendants, including the payment of any of the costs on an indemnity basis. 6 The plaintiffs rely upon an affidavit of their solicitor, Mr Khosravi, which sets out the history of the proceedings from December 2006 until the end of July 2007. Put shortly, the effect of that material is that there was a deal of delay and expense over that period occasioned by the default of the defendants. It is said that they were dilatory in filing defences and failed adequately to respond to interrogatories. 7 Affidavits by each of the first, second, third and fifth defendants disclose that the four men conduct their own businesses, that the proceedings have placed considerable strain upon them and they are anxious to see them finalised, that their attention to their businesses has been compromised, and that their attendance at Court for the aborted trial has caused them loss of income. The affidavit of the fifth defendant, Mr Manso, also attests to the deleterious effect of the costs of the proceedings upon an already strained financial position. Their solicitor, Mr Moulis, deposes in an affidavit that costs and disbursements incurred so far exceed $130,000. 8 The seventh defendant, Mr Isaac, is a solicitor in sole practice. An affidavit by his solicitor in these proceedings, Mr Finnigan, reveals that his attendance at Court for the adjourned trial caused him difficulty in managing his practice, and asserts that he has incurred costs and disbursements so far in an amount exceeding $150,000. 9 Mr Littlemore did not object to any of these affidavits being read but did not concede their relevance. Some of the material in them relates more to the application for the adjournment, which I have already granted, than to costs. However, they appear to me to be relevant to what I now have to decide insofar as they deal with the financial impact of the proceedings upon the defendants. 10 For the defendants, it is submitted that the costs occasioned by the adjournment amount to the costs of the proceedings to date. Counsel referred to Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137, in which the trial judge had allowed a very significant amendment to the plaintiff's claim on the first day of the trial. It was held on appeal that the defendant was entitled to the costs of the action to the date of the amendment. Stuart-Smith LJ said at 154: 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. Studdert J adopted that approach in Murrihy v Radio 2UE Sydney Pty Ltd [2000] NSWSC 318, a s7A case which proceeded to trial after his Honour allowed an amendment pleading fresh imputations. 11 Counsel for the defendants argue that that authority is applicable here, because the plaintiffs have effectively abandoned the imputations pleaded and seek to make out a new case based on fresh imputations. All that has occurred in the proceedings thus far, it is said, has now been set at nought. Indeed, Mr Dawson submitted that the adjournment amounts to a discontinuance of the existing claim. If the plaintiffs had taken that course, they would ordinarily have had to pay the defendants' costs of the discontinued claim: r 42.19 of the Uniform Civil Procedure Rules. Mr Dawson argued that the matter should be approached in that way. 12 As to costs on an indemnity basis, counsel referred to the familiar exposition of the principles governing the award of costs on that basis by Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 256-7, and to the following passage in the judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at [44]: It may be true in a general sense that costs orders are not made to punish an unsuccessful party. However, in the particular circumstance of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a "solicitor and client" basis* or on an indemnity basis*. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part. (*footnotes omitted) 13 For the defendants, it is put that there is relevant delinquency on the plaintiffs' part because their conduct of the proceedings has caused unreasonable delay and expense. Reference was made to Wentworth v Rogers [1999] NSWCCA 403 at [83]-[85], where the Court sketched the extraordinarily protracted hearing which gave rise to that appeal. Counsel referred to the inevitable delay occasioned by the adjournment, such that, after further interlocutory hearings, the s7A trial would be unlikely to take place before the end of this year or early in 2008. It was put, correctly, that the plaintiffs had had ample time to settle the case they wished to present. As to recent events, it was put: * that the plaintiffs did not seek an adjournment of the trial before 23 July, even though the amendment allowed by Adams J had significantly expanded their case on publication; * that 23, 24, & 25 July were occupied by applications on their behalf which were either rejected or withdrawn; * that, notwithstanding the problems posed by the amendment allowed by Adams J, they had by 25 July elected to proceed with the trial; * that the voir dire commenced on 26 July, Mr Littlemore QC having come into the matter, with no more than a veiled hint at the end of that day that they might not wish the trial to proceed; * that it was not until the following day, 27 July, that the application for adjournment was made. 14 Counsel referred to Koh v Murchison Metals Ltd [2007] NSWSC 765, in which Palmer J made an order for indemnity costs after adjourning a matter which was conceded to be in "a hopeless state of preparation" despite an earlier assurance by the plaintiffs' solicitor that it was ready to proceed. Palmer J observed at [13] that the Court's time and resources, and those of the defendant, had been "wasted without excuse". Counsel argued that the same could be said of this case, and the defendants were entitled to be put in the position they would have been if the plaintiffs had commenced the proceedings in the form in which they now wished to pursue them. This could be achieved, it was said, only by an order for costs of the proceedings on an indemnity basis. 15 As to an order that the costs be payable forthwith, counsel referred to the helpful review of the law on that procedure in the judgment of Barrett J in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 at [8]ff. Drawing upon the line of authority to which his Honour referred, they argued that the proceedings so far should be regarded as self contained and detached from what is to come, that there has been unreasonable conduct on the part of the plaintiffs, and that it is likely that a significant period of time will elapse before the proceedings can be finally disposed of. 16 In support of an order that the proceedings be stayed until the costs are paid, counsel submitted that, given the history of the matter so far, one could not be confident that the plaintiffs would maintain the claim as they currently foreshadow it or that it would be prosecuted with diligence. Further reference was made to Koh v Murchison Metals, in which Palmer J also ordered that the costs thrown away by the adjournment be paid before the plaintiffs be allowed to take any further step in the proceedings. His Honour said at [14] that such an order was necessary "in the interests of justice to protect the Defendant from further dilatory and wasteful conduct on the part of the Plaintiffs in prosecuting their claim". 17 The plaintiffs must, of course, suffer an order for costs, but I do not propose to order that any part of those costs be paid on an indemnity basis. The course which the proceedings have taken is undoubtedly unfortunate, but I do not find in the plaintiffs' conduct such delinquency as might give rise to an order for costs on that basis. In that respect, the present case is significantly different from Koh v Murchison Metals. I am mindful of the confirmation by Sheppard J in Colgate Palmolive v Cussons (at 257) that the category of circumstances in which indemnity costs might be awarded is not closed, but I approach the matter upon the basis, affirmed by his Honour at 256, that an award of costs on a party and party basis is the ordinary rule. 18 Of course, I am also mindful of the financial impact of these proceedings upon the defendants and of the fact that there will be significant delay before they are brought to finality. It may well be that another s7A trial cannot be mounted until early in the new year and, if the plaintiffs are successful in that trial, there will be further delay before the remaining issues in the case can be disposed of. For those reasons, I will order that the costs, as assessed or agreed, be payable forthwith. However, that being so, I do not accede to Mr Dawson's application for an order for interest on the costs. 19 I do not think it appropriate to order a stay of the proceedings until the costs are paid. In so saying, I assume that the plaintiffs will maintain the amended case they now seek to make and will pursue it with reasonable diligence. If that proves not to be the case, of course, the question of a stay (and, perhaps, of indemnity costs) may have to be revisited. 20 The plaintiffs must pay the costs thrown away by the adjournment. In my view, that embraces the costs of each of the days on which the matter has been before me. To the costs of 25 July, which I have already ordered, there must be added the costs of 23, 24, 26, 27, and 30 July, together with 2 August. 21 The defendants' application for an order for the costs of the proceedings to date is founded upon authority for such an order in a situation where a late amendment substantially alters the case the defendant has to meet. As I observed when I granted the adjournment, while the new imputations recast and expand those already pleaded, some of them are to much the same effect as the existing imputations. That being so, it may be that not every step in the proceedings thus far has been wasted. That is not something which I could determine. I do not think that the interests of justice require an order in the terms sought by the defendants. I propose simply to order that the plaintiffs pay the costs thrown away by the amendment. 22 Accordingly, I make the following orders: (1) The plaintiffs are to pay the costs thrown away by the adjournment, being the costs of the days which I have specified. (2) The plaintiffs have leave to file a further amended statement of claim within 14 days, and are to pay the costs thrown away by the amendment. (3) The costs, as assessed or agreed, are to be paid forthwith. Lest there be any ambiguity in those orders, or any difficulty in their implementation, I reserve liberty to the parties to apply. ********** 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. 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