Supreme Court New South Wales Medium Neutral Citation: RHG Mortgage Corporation Limited v Rosa (aka Rosa Fioavanti) Baira RHG Mortgage Corporation Limited v Rosario Ianni [2011] NSWSC 580 Hearing dates: 9, 14 June 2011 Decision date: 17 June 2011 Jurisdiction: Common Law Before: Grove AJ Decision: Orders for possession of land and costs made Catchwords: FORMAL ORDERS Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Bullock v London General Omnibus Co [1907] 1 KB 264 Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93; [1975] 3 WLR 586 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Others (1988) 81 ALR 397 Sanderson v Blyth Theatre Co [1903] 2 KB 533 Category: Costs Parties: 08/285539 RHG Mortgage Corporation Limited (Plaintiff/1st Cross-Defendant to 1st Cross-Claim/Cross-Claimant to 2nd Cross-Claim) Rosa Baira (aka Rosa Fioavanti) (Defendant/Cross-Claimant to 1st & 4th Cross-Claims) Australian Mortgage & Business Finance Solutions Pty Limited (2nd Cross-Defendant to 1st Cross-Claim) Peter Famularo (3rd Cross-Defendant to 1st Cross-Claim) RHG Home Loans Pty Ltd (1st Cross-Defendant to 2nd Cross-Claim/ Cross- Claimant to 3rd Cross-Claim) Fast Track Finance Group Pty Ltd (5th Cross-Defendant to 3rd Cross-Claim) Joseph Ianni (1st Cross-Defendant to 4th Cross-Claim) Sandra Ianni (2nd Cross-Defendant to 4th Cross-Claim) 08/284857 RHG Mortgage Corporation Limited (Plaintiff/1st Cross-Claimant to 2nd Cross-Claim) Rosario Ianni (1st Defendant/Cross-Claimant to 1st Cross-Claim) Domenica Ianni (2nd Defendant/ Cross-Claimant to 1st Cross-Claim) RHG Home Loans Pty Ltd (1st Cross-Defendant to 1st Cross-Claim/1st Cross-Defendant to 2nd Cross-Claim/ 1st Cross-Claimant to 3rd Cross-Claim) Australian Mortgage & Business Finance Solutions Pty Limited (2nd Cross-Defendant to 1st Cross-Claim/3rd Cross-Defendant to 2nd Cross-Claim/ 2nd Cross-Defendant to 3rd Cross-Claim) Peter Famularo (3rd Cross-Defendant to 1st Cross-Claim/4th Cross-Defendant to 2nd Cross-Claim/ 3rd Cross-Defendant to 3rd Cross-Claim) Fast Track Finance Group (2nd Cross-Defendant to 2nd Cross-Claim/1st Cross-Defendant to 3rd Cross-Claim) Joseph Ianni (5th Cross-Defendant to 2nd Cross-Claim/4th Cross-Defendant to 3rd Cross-Claim) Sandra Ianni (6th Cross-Defendant to 2nd Cross-Claim/5th Cross-Defendant to 3rd Cross-Claim) Representation: Counsel: 08/285539 Mr B. Coles QC/Mr P. Newton (RHG Mortgage Corporation Limited/RHG Home Loans Pty Ltd) Mr P. Bolster (Rosa Baira) Mr G. George (Australian Mortgage & Business Finance Solutions Pty Limited/ Peter Famularo) Mr G. Curtin SC (Fast Track Finance Group Pty Ltd) Mr D. Downey (Solicitor) (Sandra Ianni) 08/284857 Mr B. Coles QC/Mr P. Newton (RHG Mortgage Corporation Limited/RHG Home Loans Pty Ltd) Mr H. Woods (Rosario & Domenica Ianni) Mr G. George (Australian Mortgage & Business Finance Solutions Pty Limited/Peter Famularo) Mr G. Curtin SC (Fast Track Finance Group Pty Ltd) Mr D. Downey (Solicitor) (Sandra Ianni) Solicitors: 08/285539 RHG Mortgage Corporation Limited/RHG Home Loans Pty Ltd (Kemp Strang) Rosa Baira (Frank Legal) Australian Mortgage & Business Finance Solutions Pty Limited/ Peter Famularo (Bransgroves Lawyers) Fast Track Finance Group Pty Ltd (Gilchrist Connell) Joseph & Sandra Ianni (Downey's Lawyers) 08/284857 RHG Mortgage Corporation Limited/RHG Home Loans Pty Ltd (Kemp Strang) Rosario & Domenica Ianni (Ai Strategic Lawyers) Australian Mortgage & Business Finance Solutions Pty Limited/Peter Famularo (Bransgroves Lawyers) Fast Track Finance Group Pty Ltd (Gilchrist Connell) Joseph & Sandra Ianni (Downey's Lawyers) File Number(s): 08/285539; 08/284857 Judgment 1GROVE AJ: In these two actions, I indicated that there should be judgment for the plaintiff for possession of land and for the amounts owing under respective loan agreements. Pursuant to direction, the plaintiff brought in draft short minutes of proposed orders including orders for costs which I had indicated would, subject to submission, follow the events. In addition to the principal claim, each action had attracted four cross claims. 2Various applications have been made for indemnity costs and the making of "Sanderson" orders. To a more than significant extent these can be dealt with along the same considerations in both cases. I will endeavour to avoid repetition and it will also be time saving to use the draft minutes for reference, copies of which I will initial and place with the papers. It will only be necessary to rule in relation to those aspects of the draft orders which have been the subject of contest. The first cross claims 3The Amended First Cross Claim (Baira) and the Further Amended First Cross Claim (Ianni) were brought by the respective defendants against the plaintiff and AMBFS and Famularo (the second and third cross defendants to this cross claim). The dispute centres upon whether the costs of those successful cross defendants should be paid by the cross claimants on an indemnity basis from 21 February 2009 (Baira) and 9 May 2009 (Ianni). 4Exhibited to the affidavits of Rachael Gabrael sworn 9 June 2011 are Calderbank letters offering not to press for costs if the cross claims against AMBFS and Famularo were to be discontinued. The Baira letter is dated 13 February 2009 and the offer open to 20 February 2009 and the Ianni letter is dated 1 May 2009 and the offer open until 8 May 2009. 5In the Baira action the offer was made prior to filing a defence to the cross claim. It has been pointed out that the first affidavit by Famularo (whose interests are identical with those of AMBFS) was not sworn until 11 November 2009. In the Ianni action the cross claim against the second and third cross defendants was filed on 27 March 2009 and a defence to that cross claim was first filed on 11 June 2009, that is, after the expiry of the time for acceptance of the offer. 6It is observed that offers in each case to the same substantial effect were made expressly in accordance with Rules of Court by email on Friday 29 April 2011 with an acceptance time expiring at 10am on Monday 2 May 2011, the first scheduled day of hearing. I do not regard these offers as being open for a reasonable time. Given the times of despatch, I would conclude that these offers were designed simply to try to trigger a claim for indemnity costs. 7In support of the claims for indemnity costs, counsel referred to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Others (1988) 81 ALR 397 where it was said to be appropriate to order indemnity costs when the party subject to order should have known that there was no chance of success. It should be remembered that the critical findings leading to the results in these cases were rejections of the credibility of the defendants Baira and Rosario Ianni as witnesses. Those findings were, of course, based upon the civil onus of proof and do not represent determinations of absolute truth. It can hardly be the case that, when in hindsight it is known that failure significantly emerged from adverse findings as to credibility, the losing party should have known that he or she had "no chance of success" in the sense of the authority quoted. 8Whether an order should be made consequent upon the Calderbank offers, needs to be gauged in the context of the situation as at the times when the offers were open for acceptance. 9In the whole of the circumstances I am not satisfied that the successful cross defendants have shown that the non acceptance of the offers by the cross claimants at the times they were open were unreasonable and the cross defendants should have an ordinary order for costs referable to the cross claim. Thus the proposed costs orders in paragraphs 6 and 8 of each of the draft minutes will be amended to delete the reference to payment of costs on an indemnity basis. The second cross claims 10The Amended Second Cross Claim in each action is brought by the plaintiff and, for present purposes, can be looked at in respect of claims against the second cross defendant (Fast Track) the third and fourth cross defendants (AMBFS and Famularo) and the sixth cross defendant (Sandra Ianni). 11Paragraphs 11 and 12 of the draft minutes provide that there be no order for costs in favour of the third and fourth cross defendants. An assumption that this was by consent was said by counsel to be incorrect and, in accordance with the indication at the time of principal judgment, an ordinary order for costs should follow the events. 12In paragraph 10 of each set of draft minutes, it is proposed that the second cross defendant have an order for costs on an ordinary basis up to 7 April 2010 and on an indemnity basis from 8 April 2010. Those dates refer to offers made and I do not understand the making of an order for indemnity costs in those terms is in contest. 13What is in contest is the proposal that "Sanderson" orders be made that those costs be paid by Baira and Ianni in each instance. 14I note that an alternative on behalf of the second defendant in relation to a "Bullock" order was advanced but, in the light of the conclusion which I have reached, it will not be necessary to deal with that alternative. 15The second cross defendant is what is known in the industry as an "aggregator". As such, it has contractual arrangements with brokers and with money lenders, in this instance, RHG Mortgage through its agent, RHG Home Loans. 16Neither Baira nor Ianni dealt with the second cross defendant, nor by their pleadings did they make any claim against it. There was no suggestion that the defendants (Baira and Ianni) had any knowledge of the agreements involving Fast Track or, indeed, whether they were aware of its existence and its participation in the chain of mortgage arrangements. 17In my view it is plain in the circumstances that the second defendant should recover its costs against the cross claimant which brought it into the litigation. To the extent that it was submitted that the cross claimant was relying upon allegations made by Baira and Ianni and that the cross claim was contingent upon their success, the submission must fail when there were in fact no allegations by Baira and Ianni against Fast Track. 18The draft minutes also propose a "Sanderson" order that the defendants pay the costs of the successful sixth cross defendant (Sandra Ianni). 19I interpolate that application is made on behalf of Sandra Ianni that the costs payable to her as a successful cross defendant in the second, third and fourth cross claims and be assessed on an indemnity basis from 30 April 2011. Offers of compromise proposing verdicts in favour of Sandra Ianni on those three cross claims with each party to pay his, her or its own costs were made in the form appropriate to the Rules on Friday 29 April 2011, such offers to remain open for acceptance until 10am on 2 May 2011. For the reasons given in respect of other similar claims, I regard them as simply designed as an attempt to trigger a purported entitlement to indemnity costs and I decline to make such orders. 20The issue of a "Sanderson" order against defendants (Baira and Ianni) in respect of the costs recoverable by the sixth cross defendant needs to be considered in the light of the stances taken by those defendants. Eventually, of course, they sought relief against Sandra Ianni in their respective fourth cross claims which failed, essentially, for lack of evidence supporting the pleaded allegations. Baira and Ianni sought to agitate matters of complaint against Sandra Ianni and, in my view, it cannot be concluded that it was unreasonable for the cross claimant to join her, given the identifiable uncertainties at the time joinder was made, and to the extent that it might be thought relevant, since then. The defendants should be ordered to pay the costs referable to the joinder of Sandra Ianni in these cross claims. The third cross claims 21These cross claims were brought by RHG Home Loans as distinct from RHG Mortgage but the consequences as to costs, for the same reasons, should follow the pattern as those in respect of the second cross claims. The fourth cross claims 22As I understand it, the only issue of controversy in relation to these is the claim for indemnity costs by Sandra Ianni from (Saturday) 30 April 2011. For reasons given in relation to other proposals made on the eve of hearing, I reject these claims. Orders Baira proceedings 23I make the orders: 1. The defendant give the plaintiff possession of the land comprised in Certificate of Title Folio Identifier 1/320802 being the land situated at and known as 319 Livingstone Road, MARRICKVILLE NSW 2204. 2. Leave to issue a writ of possession forthwith. 3. Verdict and judgment for the plaintiff against the defendant for $846,114.16 plus costs pursuant to the Loan Agreement made 28 February 2006. 4. Verdict and judgment for the first cross defendant (RHG) against the cross claimant on the Amended First Cross Claim. 5. Verdict and judgment for the second cross defendant (AMBFS) against the cross claimant on the Amended First Cross Claim. 6. The cross claimant on the Amended First Cross Claim pay the second cross defendant's costs of the proceedings on the cross claim on the ordinary basis. 7. Verdict and judgment for the third cross defendant (Mr Famularo) against the cross claimant on the Amended First Cross Claim. 8. The cross claimant on the Amended First Cross Claim pay the third cross defendant's costs of the proceedings on the cross claim on the ordinary basis. 9. Verdict and judgment for the first cross defendant (RHG Home Loans) against the cross claimant on the Amended Second Cross Claim with no order as to costs. 10. Verdict and judgment for the second cross defendant (FAST Track) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis up to 7 April, 2010 and on the indemnity basis from 8 April 2010. 11. Verdict and judgment for the third cross defendant (AMBFS) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis. 12. Verdict and judgment for the fourth cross defendant (Mr Famularo) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis. 13. Verdict and judgment for the sixth cross defendant (Sandra Ianni) against the cross claimant on the Amended Second Cross Claim with a Sanderson Order that the defendant (Mrs Baira) pay the sixth cross defendant's costs of the Amended Second Cross Claim. 14. Verdict and judgment for the first cross defendant (FAST Track) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on an ordinary basis up to 7 April, 2010 and on the indemnity basis from 8 April, 2010. 15. Verdict and judgment for the second cross defendant (AMBFS) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on the ordinary basis. 16. Verdict and judgment for the third cross defendant (Mr Famularo) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on the ordinary basis. 17. Verdict and judgment for the fifth cross defendant (Sandra Ianni) against the cross claimant on the Amended Third Cross Claim with a Sanderson Order that the defendant (Mrs Baira) pay the fifth cross defendant's costs of the Amended Third Cross Claim. 18. Verdict and judgment for the second cross defendant (Sandra Ianni) against the cross claimant on the Fourth Cross Claim with an order that the cross claimant to the Fourth Cross Claim (Mrs Baira) pay the second cross defendant's costs of the proceedings. Ianni proceedings 24I make the orders: 1. The defendants give the plaintiff possession of the land comprised in Certificate of Title Folio Identifier 30/4514 being the land situated at and known as 159 Thompson Street, DRUMMOYNE NSW 2047. 2. Leave to issue a writ of possession forthwith. 3. Verdict and judgment for the plaintiff against the defendants for $1,225,393.43 plus costs pursuant to the Loan Agreement made 11 October 2005. 4. Verdict and judgment for the first cross defendant (RHG) against the cross claimants on the Further Amended First Cross Claim. 5. Verdict and judgment for the second cross defendant (AMBFS) against the cross claimants on the Further Amended First Cross Claim. 6. The cross claimants on the Further Amended First Cross Claim pay the second cross defendant's cost of the proceedings on the cross claim on the ordinary basis. 7. Verdict and judgment for the third cross defendant (Mr Famularo) against the cross claimants on the Further Amended First Cross Claim. 8. The cross claimants on the Further Amended First Cross Claim pay the third cross defendant's cost of the proceedings on the cross claim on the ordinary basis. 9. Verdict and judgment for the first cross defendant (RHG Home Loans) against the cross claimant on the Amended Second Cross Claim with no order as to costs. 10. Verdict and judgment for the second cross defendant (FAST Track) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis up to 7 April, 2010 and on the indemnity basis from 8 April, 2010. 11. Verdict and judgment for the third cross defendant (AMBFS) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis. 12. Verdict and judgment for the fourth cross defendant (Mr Famularo) against the cross claimant on the Amended Second Cross Claim with costs against the cross claimant on the ordinary basis. 13. Verdict and judgment for the sixth cross defendant (Sandra Ianni) against the cross claimant on the Amended Second Cross Claim with a Sanderson Order that the defendants (Mr and Mrs Ianni) pay the sixth cross defendant's costs of the Amended Second Cross Claim. 14. Verdict and judgment for the first cross defendant (FAST Track) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on an ordinary basis up to 7 April, 2010 and on the indemnity basis from 8 April, 2010. 15. Verdict and judgment for the second cross defendant (AMBFS) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on the ordinary basis. 16. Verdict and judgment for the third cross defendant (Mr Famularo) against the cross claimant on the Amended Third Cross Claim with costs against the cross claimant on the ordinary basis. 17. Verdict and judgment for the fifth cross defendant (Sandra Ianni) against the cross claimant on the Amended Third Cross Claim with a Sanderson Order that the defendants (Mr and Mrs Ianni) pay the fifth cross defendant's costs of the Amended Third Cross Claim. 18. Verdict and judgment for the second cross defendant (Sandra Ianni) against the cross claimants on the Fourth Cross Claim with an order that the cross claimants to the Fourth Cross Claim (Mr and Mrs Ianni) pay the second cross defendant's costs of the proceedings. ********** 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: 17 June 2011