Supreme Court New South Wales Medium Neutral Citation: De Varda and Tov-Lev v The Board of Directors of The Strathfield and District Hebrew Congregation Ltd & Anor (No 2) [2012] NSWSC 1442 Hearing dates: 2 and 8 November 2012 Decision date: 28 November 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Joseph de Varda and Samuel Tov-Lev pay costs of Defendants of and incidental to the Plaintiffs' motion of 11 October 2012 on the ordinary basis as agreed or as assessed. David Cliffe pay costs of Defendants of and incidental to the Plaintiffs' motion of 11 October 2012, up to 30 October 2012, as agreed or as assessed Catchwords: COSTS - Uniform Civil Procedure Rules 2005 (NSW) r 42.1 - Ordinary rule that costs follow the event - Whether reason has been shown to depart from the ordinary rule. Legislation Cited: - Civil Procedure Act 2005 (NSW) ss 98(1), 56-58 - Vexatious Proceedings Act 2008 (NSW) - Uniform Civil Procedure Rules 2005 (NSW) r 42.1, 42.2 Cases Cited: - Attorney General (NSW) v Bar-Mordecai [2009] NSWSC 558 - Attorney General (NSW) v Klewer [2003] NSWCA 295 - Barakat v Goritsas (No 2) [2012] NSWCA 36 - Briscoe-Hough v A&S Australian Venue Security Services Pty Ltd [2005] NSWSCA 51 - British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 - Dovade Pty Ltd v Westpac Banking Group (1999) 46 NSWLR 168 - Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 - Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 - Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FLR 84 - Kumaragamage v Rallis (No 2) [2001] NSWSC 710 - Livesey v New South Wales Bar Association (1983) 151 CLR 288 - Michael Wilson & Partners Ltd v Nicholls (2011) 282 ALR 685 - Milne v Attorney-General (Tas) [1956] HCA 48; (1956) 95 CLR 460 - Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 - Re JRL; Ex parte CGL (1986) 161 CLR 342 - Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 - TNT Building Trades Pty Limited v Benelong Developments Pty Limited (administrators appointed) (No 2) [2012] NSWSC 884 Category: Costs Parties: Mr J. de Varda (First Plaintiff) Rabbi Dr S. Tov-Lev (Second Plaintiff) The Board of Directors of The Strathfield and District Hebrew Congregation Ltd comprising of 9 members (First Defendant) John Joseph Lowbeer (Second Defendant) The Strathfield and District Hebrew Congregation Limited (Third Defendant) Representation: Counsel: D. Austin (sol) (First and Third Defendants, mentioned Second Defendant) Solicitors: Mr J. de Varda (in person - First Plaintiff) Rabbi Dr. S. Tov-Lev (in person - Second Plaintiff) David Austin (First and Third Defendants - mentioned Second Defendant) File Number(s): 11/212996 Judgment 1On 2 and 8 November 2012, I heard a Notice of Motion filed on 11 October 2012 by two of the nine persons named as the First Plaintiff in these proceedings, Mr Joseph de Varda and Mr David Cliffe, and by the Second Plaintiff, Rabbi Dr Samuel Tov-Lev, seeking an order extending the time for compliance with certain orders made by Hallen AsJ on 4 November 2011; leave to file amended pleadings in the proceedings and, in particular, to file a Further Amended Summons and Further Amended Statement of Claim; and an order that all previous costs orders be stayed until the determination of the proceedings. 2By the time of the hearing before me on 2 and 8 November 2012, the solicitors who had initially acted for Messrs de Varda, Cliffe and Rabbi Tov-Lev had ceased to act and only Messrs de Varda and Rabbi Tov-Lev appeared. 3I delivered judgment in respect of the motion on 15 November 2012 ("Judgment"). I held that the Notice of Motion should be dismissed and I also ordered that a Second Further Amended Summons and Second Further Amended Statement of Claim, which had been filed by Mr de Varda and Rabbi Tov-Lev on 6 November 2012 without leave of the Court, should be struck out. I noted that, in the ordinary course, costs would follow the event, but directed the parties to serve short submissions in respect of costs. I indicated I would determine the question of costs on the basis of those submissions and listed the matter for judgment on 28 November 2012. I have now received submissions as to costs from Rabbi Tov-Lev, Mr de Varda and the Defendants. Disqualification for bias or apprehended bias 4I must first address a preliminary issue as to whether I am disqualified from determining the question of costs in the proceedings. As I noted in the Judgment, between the second date of the hearing of the motion before me on 8 November 2012 and the delivery of the Judgment, Rabbi Tov-Lev filed a detailed further submission in the Registry, which attached copies of emails addressed to the Premier of New South Wales, the Attorney General and Minister for Justice and the Chief Executive of the Judicial Commission of New South Wales that raised concerns, relevantly, as to my not having acceded to Rabbi Tov-Lev's and Mr de Varda's request that the Court refer the matter to the Director of Public Prosecutions and as to the conduct of the proceedings before other judges of the Court and before me. 5When the matter was listed for judgment before me on 15 November 2012, Mr de Varda provided a further submission, signed by Rabbi Tov-Lev, to the Court. That submission indicated that Rabbi Tov-Lev had made five complaints to the Judicial Commission of New South Wales concerning the conduct of various judicial officers involved in the proceedings, including me, and purported to set out the contents of a conversation between Rabbi Tov-Lev, Mr de Varda and the Chief Executive Officer of the Judicial Commission of New South Wales on 13 November 2012 in respect of various matters raised by the Plaintiffs. Prior to the delivery of my Judgment, Mr de Varda requested that I disqualify myself from the matter, and I indicated that I had addressed the question of disqualification in the Judgment and proceeded to deliver the Judgment. I noted in the Judgment that: "It is, of course, open to a party to proceedings before the Court to raise any matter with the executive and raise any complaint as to the conduct of a Judge with the Judicial Commission. However, I do not understand the making of such a complaint, in the period between a Judge reserving his Judgment and the delivery of that Judgment, to have the effect of discharging the Judge from the obligation to deliver his or her Judgment in respect of proceedings that he or she has heard. Otherwise, any party that feared an adverse Judgment could force the costs and substantial prejudice of a rehearing upon the other party and the community by the simple expedient of making such a complaint after Judgment is reserved and prior to the delivery of Judgment." 6In further submissions as to costs, Rabbi Tov-Lev again requests that I disqualify myself from hearing the matter, for various reasons set out in the submission, and specifically points to the fact that the Plaintiffs had informed me during the proceedings that complaints were lodged with the Judicial Commission of New South Wales in respect of the handling of this matter. I was initially informed of that matter in respect of complaints made as to other Judges of this Court, and was, in the circumstances noted above, also informed in respect of that matter in respect of the complaint made about me. 7The question therefore arises as to whether I should address the question of costs in the proceedings or disqualify myself and refer that question to another Judge of the Court. The parties have not made submissions in respect of the authorities as to this question. I should nonetheless have regard to those authorities in determining whether it would be proper for me now to disqualify myself from the proceedings and refer the question of costs to another Judge of the Court. 8It is important to approach the question of disqualification on the basis that Judges are required to discharge their professional duties unless disqualified by law, and should not too readily accede to applications for disqualification, since otherwise litigants will be left in a position to effectively choose whether a Judge should or should not sit to determine their cause: Re JRL; Ex parte CGL (1986) 161 CLR 342 at 352. 9In Kumaragamage v Rallis (No 2) [2001] NSWSC 710, Austin J declined to disqualify himself where a complaint had been made to the Judicial Commission and observed at [16] that: To a large degree, the complaints to the Judicial Commission are submissions criticising my findings of fact, alleging that I failed to deal or deal adequately with the plaintiffs' submissions at the interlocutory hearing, and disagreeing with my conclusions of law. Criticisms of a judge along these lines are, of course, very common. They are the substance of appeals from judgments at first instance. In this country there can be no exception taken if the criticisms are made firmly and vigorously, provided that they do not display contempt for the Court or the judicial office. For the most part, the complaint document should be treated as a robust critique of my reasons for judgment of 6 June 2001. The complaints made by Rabbi Tov-Lev and Mr de Varda are largely of this character, although extending more widely than the hearing of the motion before me. His Honour observed that, even where a complaint to the Judicial Commission might arguably be expressed in intemperate language, it would not interfere with his assessment of the merits of the cases of the parties at a final hearing or give rise to any reasonable apprehension that he would not or might not bring an impartial or unprejudiced mind to the resolution of the questions involved in the final hearing of the case. His Honour also observed at [21] that: "The fact that intemperate arguments of this kind have been made cannot, of itself, be sufficient to require the Judge to disqualify himself or herself from hearing the complainant's case, otherwise a litigant could disqualify a Judge simply by making a complaint about that Judge to the Judicial Commission." 10The question whether a complaint to a regulatory body, in that case the Independent Commission Against Corruption, should lead a judge to disqualify himself was also considered by Levine J, in observations which were approved by Davies AJA (with whom Mason P and Meagher JA agreed) in Attorney General (NSW) v Klewer [2003] NSWCA 295 at [14], referring to his Honour's observation that: "Without doubt no litigant whether represented or otherwise should consider that the making of a complaint to an investigatory body such as ICAC or the Judicial Commission about a Judge hearing that litigant's case will automatically involve that Judge self-disqualifying. The reasons are obvious. It would be a mechanism of much mischief in the administration of justice if that course could be taken with such facility." 11In Attorney General (NSW) v Bar-Mordecai [2009] NSWSC 558 at [126], Schmidt AJ referred to the decisions in Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 294 and Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 338 and observed that it has long been accepted that a mere complaint about a judicial officer can not give rise to an apprehension of bias and that: "[l]itigants are not entitled to pick and choose who will hear their cases, by the making of complaints during the course of proceedings." 12Rabbi Tov-Lev and Mr de Varda do not distinguish between, on the one hand, actual bias and, on the other, apprehended bias, in the sense that a fair-minded lay observer might reasonably apprehend that the Judge might not bring an impartial and unprejudiced mind to the resolution of the question that he or she is required to decide: British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; Michael Wilson & Partners Ltd v Nicholls (2011) 282 ALR 685; Barakat v Goritsas (No 2) [2012] NSWCA 36. In Dovade Pty Ltd v Westpac Banking Group (1999) 46 NSWLR 168 at [93], the Court of Appeal observed that: A claim of apprehended bias should be considered in the context of the judicial function and the public perception of it. There is a presumption that public officers have acted with honesty and discretion (Broom's Legal Maxims 10th ed p642). In the case of a judicial officer, this is no empty form. It is reinforced by the accountability necessarily inherent in the public processes of litigation and the disappointed litigant's right of appeal. Every judge swears to "do right to all manner of people according to law without fear or favour, affection or ill-will". This public oath is not a talisman against error, but it forms the constant back-drop to the way in which each judge functions on and off the bench. The history and reach of the oath were discussed by Sir Gerard Brennan on his swearing in as Chief Justice of the High Court of Australia (see 183 CLR at px.). The level of public confidence in the judiciary is based upon experience and a general perception of the rule of law. That observation was in turn quoted by the Court of Appeal in Briscoe-Hough v A&S Australian Venue Security Services Pty Ltd [2005] NSWSCA 51 at [3]. 13I do not consider that either actual bias or apprehended bias are established in this case so as to require me to disqualify myself from determining the question of costs in the proceedings. The accountability of Judges, through the mechanism of the Judicial Commission, is an important aspect of judicial service and a fair-minded lay observer would likely consider that Judges, including me, would accept that complaints to the Judicial Commission are a proper mechanism of accountability, and will be determined on their merits in due course. I do not think that a fair-minded lay observer would apprehend that the making of a complaint to the Judicial Commission of New South Wales would prevent me bringing an impartial and unprejudiced mind to the resolution of the question of costs in the proceedings. Determination as to costs of the motion 14A substantial part of Rabbi Tov-Lev's submissions relate to substantive criticisms of the conduct of the proceedings generally, rather than specifically to the motion which was listed before me. Rabbi Tov-Lev also makes several criticisms of my findings, which may properly be matters which could be raised on an appeal from the Judgment, but do not suggest that an order for costs should not follow from the Judgment unless it is overturned on appeal. Mr de Varda's submissions as to costs substantially overlapped with those of Rabbi Tov-Lev. Again, those submissions extended well beyond the question of the costs of the motion before me, advancing substantive criticisms of the conduct of the Defendants in the matters giving rise to the proceedings and of the conduct of the proceedings generally. In my view, I must proceed to exercise my discretion as to costs of the motion heard before me having regard to the findings that I have reached in the Judgment. Should an appeal from the Judgment be brought, and be successful, then the Court of Appeal has the necessary powers to address any consequential amendment which is required in respect of costs orders which I have made consistent with the Judgment. 15I should add that Mr de Varda submits that I improperly use judicial powers to impose orders under the Vexatious Proceedings Act 2008 (NSW) to prevent evidence being heard. I should note, for good order's sake, that the Defendants have sought orders in separate proceedings in respect of Rabbi Tov-Lev under that Act. Those proceedings were mentioned, but not heard, before me and I have made no orders under that Act. 16Rabbi Tov-Lev contends that the costs incurred with the proceedings were accrued in the concealment of a corporate crime that I was unwilling to address or refer to the Director of Public Prosecutions. Mr de Varda contends that the Defendants' costs of the proceedings were in defence of an alleged corporate crime, and costs cannot follow an alleged cover up of a crime. As I noted in the Judgment, numerous allegations of criminal activity have been made by the Plaintiffs. However, the question which was before me was a narrower one, namely whether the Court should grant the orders sought in the Plaintiffs' motion and, now, the question of costs that are consequential upon the determination of that motion. 17Rabbi Tov-Lev contends that the Plaintiffs have acted in the interests of preserving the Holocaust and War Memorial Synagogue pursuant to their role as members and are indemnified against costs in these proceedings in respect of their positions as directors of the newly elected board. Mr de Varda also refers to a claim to indemnity under the Memorandum and Articles of Association of the Congregation. The Defendants contend to the contrary. It is not necessary or appropriate for me to determine that question, since any indemnity arising under the Constitution of the Congregation would apply once an order for costs had been made, rather than being a matter that is relevant to whether such an order should be made. 18As I noted in the Judgment, in the ordinary course, costs would follow the event. Section 98(1) of the Civil Procedure Act 2005 (NSW) relevantly provides that: "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, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." Rule 42.1 of the Uniform Civil Procedure Rules 2004 (NSW) ("UCPR") in turn provides that, where the Court makes an order as to costs, the Court is to order that 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. 19The parties also did not make detailed submissions as to the case law in respect of the award of costs, to which I should nonetheless refer. The principles underlying an award of costs include that costs are awarded to compensate the successful party for the expense of being put to the necessity of litigation; a wholly successful defendant should ordinarily receive its costs unless good reason is shown to the contrary; and the discretion to order costs must be exercised judicially and not against the successful party except for some reason connected with the proceedings: Milne v Attorney-General (Tas) [1956] HCA 48; (1956) 95 CLR 460 at 477; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 per McHugh J, at 129-123 per Kirby J; Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234. I am also conscious that, in Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84, Gray J observed at [17] that: "The overriding principle that costs are in the discretion of the Court can also be expressed in terms of the negative proposition that no rule or principle should be applied mechanically in the determination of the question where costs should lie in any particular case. Attention must always be paid to the particular circumstances of the individual case. The aim is to do substantial justice in relation to costs, based on the outcomes of the various issues in the proceeding, as between the entities that are parties to that proceeding." 20Rabbi Tov-Lev and Mr de Varda were unsuccessful in the motion argued before me, and it seems to me that costs should follow the event in the ordinary course, so as to compensate the successful defendants for the costs to which they have been exposed in defending the motion. Whether the Defendants should have leave to read a further affidavit 21Three further issues arise for determination in respect of the question of costs. First, the Defendants seek leave to read an affidavit of their solicitor, Mr Austin, dated 24 October 2012 filed in other proceedings. The Defendants' submissions indicate that the affidavit is intended to establish that the Defendants have incurred substantial costs in these proceedings. Having regard to ss 56-58 of the Civil Procedure Act and the overriding objective of a just, quick and cheap resolution of the real issues in dispute, I do not consider it appropriate to grant leave to read that affidavit in respect of this application, which can properly be determined having regard to the evidence already before me in the motion. In any event, the Court can readily infer that the costs of the proceedings as a whole are likely to be substantial and that the costs of the two day hearing in respect of the motion would not be insignificant. Whether indemnity costs should be ordered 22As the Defendants acknowledge, costs are normally ordered on the ordinary basis under UCPR 42.2. However, the Defendants seek an order for indemnity costs in their favour. 23In Oshlack v Richmond River Council above at [44], Gaudron and Gummow JJ observed that: "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." 24In Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20], the Full Court of the Federal Court noted that: "Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty." The Court also referred to the purpose of such an order of "compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable" that a party should have subjected the other party to the expenditure of costs. 25In TNT Building Trades Pty Limited v Benelong Developments Pty Limited (administrators appointed) (No 2) [2012] NSWSC 884 at [15], in a passage to which the Defendants referred in submissions, I observed that: "It is not necessary to repeat the principles applicable to an order for indemnity costs at length. Those principles were summarised by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248 at 256-257 and by McDougall J in White Constructions (ACT) Pty Ltd (in liq) v G B White [2004] NSWSC 303 at [5]-[11] in a passage subsequently quoted in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24]. The summary of principles in Colgate-Palmolive Co v Cussons Pty Ltd above was in turn applied in Lahoud v Lahoud [2006] NSWSC 126 at [11] and in Ng v Chong [2010] NSWSC 127 at [18]. In Liverpool City Council v Estephan [2009] NSWCA 161 at [100], Giles JA observed that s 56 of the Civil Procedure Act adds emphasis to the occasion to depart from costs on an ordinary basis where a failure to properly conduct the proceedings has caused costs to be incurred unnecessarily, but does not override the need for a rational connection between the reason for that departure and the extent of that departure." 26The Defendants contend that an order for indemnity costs should be made in their favour, first, because the motion amounted to an abuse of process, in that it had a collateral purpose of prolonging Rabbi Tov-Lev's residence in the premises which he had previously occupied and this was not a proper purpose for the bringing of the motion. I would not draw that inference, particularly in circumstances where it has not been put to Rabbi Tov-Lev in cross-examination in respect of his affidavits sworn in support of the motion. I did not form the view that Rabbi Tov-Lev did not hold a real and genuine sense of grievance in respect of the matters in issue or was bringing the proceedings only in order to prolong his residency of those premises, as distinct from seeking to right the wrongs which he believes have occurred. 27Second, the Defendants contend that the motion, as framed, sought simply to circumvent existing orders of the Court and was doomed from the outset to failure. There is, in my view, some force in this submission. However, the motion called for the exercise of a judicial discretion and I do not think it could be said to be hopeless. No submission is made that an order for indemnity costs should be made on the basis of any improper conduct of the proceedings by Mr de Varda or Rabbi Tov-Lev and it is therefore not necessary for me to address any such submission. I do not consider that the claim for costs on an indemnity basis is established. Whether an order for costs should be made against Mr Cliffe 28The third question which needs to be determined is whether an order for costs should also be made against Mr Cliffe, who was one of the two persons of the nine persons named as First Plaintiff who filed the motion determined by the Judgment. The Defendants point out that the motion was initially filed by Mr Cliffe, as well as by Mr de Varda and Rabbi Tov-Lev, at a time when he was represented by solicitors and those solicitors continued to act for him until 30 October 2012. Mr Cliffe then did not appear at the hearing on either 2 November 2012 or 8 November 2012, and I declined to treat Mr de Varda as appearing for Mr Cliffe, on the basis that it would be unfair to expose Mr Cliffe to a potential liability for costs arising from any such representation. 29The Defendants submit that: "... If the Court stays its hand in awarding costs against Mr Cliffe, given the history of this matter such course can only give encouragement of some sort to one or more of the Plaintiffs to embark on some further excursion." I do not accept that submission. An order for costs should not be made against Mr Cliffe as some form of deterrent against future access to the Court whether by Mr Cliffe or the Plaintiffs generally. Nonetheless, albeit without the benefit of submissions by Mr Cliffe, I consider that Mr Cliffe must be treated as liable for costs incurred in respect of the motion filed on his behalf, up to the point at which his solicitors ceased to act for him and he was no longer represented in the proceedings. If that approach were not adopted, Rabbi Tov-Lev and Mr de Varda would potentially be left to bear a disproportionate share of the costs for the period prior to 30 October 2012 when three plaintiffs, not two, were active in the proceedings. The costs of the Defendants' motion 30The Defendants submit that they should have their costs of their motion of 24 October 2012 and the affidavit of Mr Austin of that date, on the basis that they were necessary and incidental to the proper defence of the Plaintiffs' motion. It was ultimately not necessary to determine that motion, because the substantive issues were determined by reference to the Plaintiffs' motion seeking the orders to which I have referred above. On balance, I do not think I should order costs of that motion against Rabbi Tov-Lev and Messrs de Varda and Cliffe, where it has not been determined in these proceedings. Orders 31Accordingly, I make the following orders: 1. Mr Joseph de Varda and Rabbi Dr Samuel Tov-Lev pay the costs of the Defendants of and incidental to the Plaintiffs' motion of 11 October 2012 on the ordinary basis as agreed or as assessed. 2. Mr David Cliffe pay the costs of the Defendants of and incidental to the Plaintiffs' motion of 11 October 2012 up to 30 October 2012 on the ordinary basis as agreed or as assessed. ********** 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: 05 December 2012