Supreme Court New South Wales Medium Neutral Citation: Thaler v Amzalak (No 3) [2013] NSWSC 1315 Hearing dates: 26 July 2013, 9 August 2013 Decision date: 12 September 2013 Jurisdiction: Common Law Before: Schmidt J Decision: 1. Mr Thaler and Mr Koncepolski must bear Mr Amzalak's costs of the two proceedings on an indemnity basis. 2. Enforcement of the order against Mr Koncepolski is stayed for 28 days from the date of this judgment. 3. All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined. Catchwords: PROCEDURE - costs - whether there should be any departure from the usual rule as to costs - whether successful party should be deprived of a costs order - whether indemnity costs order should be made against unsuccessful party and non-party - indemnity costs orders made PROCEDURE - costs - motion seeking order against non-party - leave granted EVIDENCE - tender of business records - question of authenticity - authenticity not established - s 69 of the Evidence Act 1995 - relevance - s 70 of Civil Procedure Act 2005 - relevance - documents not admissible Legislation Cited: Civil Procedure Act 2005 Commercial Arbitration Act 1984 (repealed) Evidence Act 1995 Uniform Civil Procedure Rules 2005 Cases Cited: Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 Blazai Pty Ltd v Maclarens (No 2) [2013] NSWSC 31 Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 Daw v Toyworld (NSW) Pty Ltd [2001] NSWCA 25; (2001) 21 NSWCCR 389 Commonwealth Bank of Australia v Saleh [2007] NSWSC 990 Diamond v Baulkham Hills Shire Council [1999] NSWCA 277 FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 In the Matter of Maiden Civil Pty Ltd [2012] NSWSC 1618 Knight v FP Special Assets Ltd [1992] HCA 92; (1992) 174 CLR 178 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1083 Timms v Commonwealth Bank [2003] NSWSC 576 Thaler v Amzalak (No 2) [2013] NSWSC 632 Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256; (2011) 288 ALR 385 Vitali v Stachnik [2001] NSWSC 303 Category: Costs Parties: Matter Number 2010/361581 Shlomo Thaler (Plaintiff) Benjamin Amzalak (also known as Binyomin Zeev Amzalak) (Defendant) Matter Number 2012/237826 Shlomo Thaler (Plaintiff) Benjamin Amzalak (also known as Binyomin Zeev Amzalak) (First Defendant) Chana Amzalak (Second Defendant) Representation: Counsel: Mr R Burton SC (Plaintiff and Mr Koncepolski) Mr G Segal with Mr M A Friedgut (Defendant) Solicitors: Peter M Wayne & Associates (Plaintiff and Mr Koncepolski) Brown Wright Stein Lawyers (Defendant) File Number(s): 2010/361581 2012/237826 Publication restriction: None Judgment 1Principal judgment was given in matter number 2010/361581 on 27 May (see Thaler v Amzalak (No 2) [2013] NSWSC 632). Mr Thaler's summons was then dismissed and the arbitral award of the Beth Din of Zablo, by which Mr Thaler had been ordered to pay Mr Amzalak some $318,000, which he sought to enforce in those proceedings, was set aside. 2Mr Thaler also commenced proceedings in July 2012, by which he sought orders extending a caveat he had placed over a property owned by Mr Amzalak, as well as a declaration that he held his interest in that property subject to an equitable charge, pursuant to a lien imposed by the Beth Din's award. An order restraining Mr Amzalak and Mrs Chana Amzalak, from dealing with the property, pending the determination of these proceedings was also sought (matter number 2012/237826). 3It was common ground between the parties that Mr Thaler having failed to enforce the Beth Din's award, the caveat proceedings should also be dismissed and that the question of the costs of the two proceedings, should be determined together. 4This judgement deals with those costs. The respective claims and how they were advanced 5Mr Amzalak seeks an indemnity costs order against both Mr Thaler and Mr Koncepolski, Mr Thaler's agent, in relation to both matters. Mr Koncepolski is not a party to the proceedings. They oppose such orders being made. Their primary position is that no orders would be made against Mr Koncepolski and that as between Mr Thaler and Mr Amzalak, each party should bear their own costs. 6Prior to the hearing Mr Amzalak had foreshadowed that he would make an application for a costs order against Mr Koncepolski. In the submissions advanced at trial for Mr Amzalak, the basis upon which that order would be pressed against Mr Koncepolski, was explained. 7When delivering judgment, I said that Mr Koncepolski had to be heard on that application. I asked the parties to confer as to what directions should be made, Mr Thaler's solicitor, Mr Wayne then raising the possibility that Mr Koncepolski might need to be separately represented; that he might wish to lead evidence; and that Mr Thaler might wish to appear for himself on the costs application, by video link. 8On 31 May, Mr Wayne again appeared for Mr Thaler, and Mr Koncepolski then represented himself. Despite the many matters then addressed, neither Mr Thaler nor Mr Koncepolski sought directions as to the filing of any further evidence on the question of costs. Mr Koncepolski was then much concerned at the time that would be taken at the further hearing in any cross-examination. Given that the directions sought did not contemplate further evidence being called, I observed that there should be no cross-examination required. 9Having heard the parties, I gave directions as to the filing of submissions, having in mind that Mr Koncepolski was not a party to the proceedings and needed to instruct legal representatives. Mr Amzalak was directed to file and serve his submissions on or before 11 June, Mr Thaler and Mr Koncepolski had to file and serve their submissions on or before 17 July, with reply submissions to be filed and served by 24 July. The matter was listed for hearing on 26 July, with the estimate given for Mr Amzalak of an hour, but Mr Koncepolski being concerned that it would take considerably longer. 10I indicated that oral addresses should be kept short, given the written submissions and that if there was any slippage in the timetable, the parties should approach. There was no such approach. Motion seeking orders against Mr Koncepolski 11On 26 July, Mr Burton SC appeared both for Mr Thaler and Mr Koncepolski. The appearance for Mr Koncepolski was initially on a conditional basis, it having been argued in the written submissions that the Court had no jurisdiction to make costs orders against him, given that he was not a party to the proceedings and the Court had not been moved by motion. That was disputed for Mr Amzalak, for reasons addressed in the submissions. 12To put the matter beyond doubt, he sought that the jurisdictional question be resolved at the outset of the hearing. Mr Amzalak was then granted leave to file in Court and move on a motion to seeking that his costs be paid by Mr Thaler and Mr Koncepolski on an indemnity basis. Mr Koncepolski's position was that for the Court to make the order sought, moving the Court by such a motion was necessary, but the leave sought was opposed. 13Having heard the parties I granted the leave sought, being satisfied that accorded with the requirements of s 56 of the Civil Procedure Act 2005, which requires the Court to exercise its discretions to facilitate the overriding purpose of the Act, the just, quick and cheap resolution of the real issues in the proceedings. 14Mr Koncepolski accepted that if the leave was granted, the Court had jurisdiction to make a costs order against him. There was no question as to the Court's well-settled power to make costs orders against non-parties under s 98 of the Civil Procedure Act (see for example Knight v FP Special Assets Ltd [1992] HCA 92; (1992) 174 CLR 178 and Diamond v Baulkham Hills Shire Council [1999] NSWCA 277). 15In the circumstances, I considered that there was no unfairness in the order sought being made and that it accorded with what the dictates of justice required. Those conclusions rested on Mr Koncepolski's involvement in the proceedings; the conclusions I had reached as to what had been revealed as to his own interest in the proceedings; that he had long had notice that Mr Amzalak would seek such an order; and that the parties had addressed their written submissions as to the merits of that claim. 16The usual order being that costs follow the event, whatever else might be ordered, an order must be made against Mr Koncepolski, in relation to this motion. Tender of Business records 17A second matter was then raised for Mr Thaler and Mr Koncepolski. They sought to advance a submission which had been served out of time, as to the nature of their dealings with each other, by way of a flow chart, which referred to a number of attached documents. Only some of them were already in evidence. Most were not. Most of the new documents had only been served very late, on the previous day and some were provided only at the hearing. 18The purpose of the tender of those documents was explained to be to counter an impression that Mr Thaler was a man of straw and that he would not be able to meet a costs order, if one was made against him. 19The tender of these documents was opposed, given their late service, particularly in circumstances where Mr Koncepolski had sought and been granted seven weeks to put on his submissions, because of his need to obtain his own legal advice. On the face of the further submissions sought to be advanced, it was argued that they appeared to canvass matters already the subject of earlier argument and evidence as to the financial arrangements between Mr Thaler and Mr Koncepolski, about which Mr Koncepolski had been cross-examined. That the documents were business records, was also not accepted. 20For Mr Thaler and Mr Koncepolski it was argued to be relevant that Mr Koncepolski's cross-examination had been on what was submitted to have been 'highly selective material', focusing on Mr Thaler's position. It was also relevant that no affidavit evidence was to be advanced and that reliance was only to be placed on business records, which were submitted to speak for themselves. They were served late, it was explained, because they had to be found. Some of them were said to be of the same types as records earlier produced on subpoena by third parties, but merely going to a broader period of time. 21On the face of some of the documents, it was apparent that they were not business records. I took the view, at that point, however, that it was conceivable that some were business records relevant to a matter not yet dealt with in the proceedings, namely, the question of any costs order to be made against Mr Koncepolski. In the result I concluded that the submissions and such documents which could be shown to be business records should be received, but that Mr Amzalak had to be given an opportunity to consider and meet the case only belatedly sought to be so advanced. 22The hearing was thus adjourned to 9 August, the parties being directed to confer as to whether any common ground could be reached as to whether any of the disputed documents were business records. I declined to direct that the parties were not to be entitled to rely on any further documents, given that some of the documents were plainly extracts from what conceivably could be shown to be a business record and that Mr Amzalak could not be denied the opportunity himself to tender any further relevant documents. 23At the resumed hearing no agreement had been reached. Authenticity was in issue, Mr Thaler and Mr Koncepolski having led no evidence as to the source of any of the documents. Mr Amzalak's position remained that it had not been demonstrated that the documents were business records. It emerged that they included documents which contained handwritten notes and emails sent by non-parties to the proceedings. His case was that some documents could not be admitted, even if they were business records, given the provisions of s 69(3) of the Evidence Act 1995. Relevance was also in issue. 24Mr Thaler then sought to tender a further bundle of documents, provided to Mr Amzalak only the previous day which, it was argued, addressed his objections. Mr Amzalak also objected to the tender of those documents. 25During the course of Mr Burton's submissions, it was foreshadowed that if the documents were not admitted, Mr Thaler and Mr Koncepolski would seek leave to give evidence as to the provenance of the documents and that I would be asked to make an order under s 63 of the Evidence Act, limiting cross-examination on that affidavit. In the circumstances, I declined to permit that course, taking the view that Mr Thaler and Mr Koncepolski had been given every reasonable opportunity to advance their case and that it would be inconsistent with the requirements of s 56 and s 60 of the Civil Procedure Act and what the dictates of justice required, to permit what they had foreshadowed, which of necessity would require yet a further adjournment and additional cost, in respect of which questions of proportionality arose. 26The adjournment application was later pressed formally, given, it was said, that Mr Amzalak's objections to the documents had only been received the previous evening; the short time available to discuss them; and the prejudice which would result for Mr Thaler and Mr Koncepolski, if the adjournment was refused and the documents not received. That prompted the tender of a letter of 31 July, from Mr Amzalak's solicitor, pursuing the further documents which Mr Thaler and Mr Koncepolski had still not then supplied. It then emerged that they were finally supplied only on 6 August, with ensuing discussions not resolving the issues lying between the parties. 27In the result, these submissions did not alter my view that Mr Thaler and Mr Koncepolski had been given every reasonable opportunity to put on their evidentiary case and that justice did not permit any further adjournment, so that they could deal with the consequences of the forensic decisions which they had made to that point, not to lead any evidence as to the source of the documents they wished to rely on, or in some cases the source of their contents. 28As it later emerged the case sought to be advanced by these documents was in part directly contradictory to evidence Mr Koncepolski had himself already given, as to Mr Thaler's circumstances and his own interest in the matters the subject of these proceedings. The documents 29Having now considered the parties' submissions as to the documents in issue, I have concluded that the documents Mr Koncepolski and Mr Thaler sought to tender, are, in the most part, not admissible. 30MFI 22 was the submission which Mr Thaler and Mr Koncepolski sought to advance, to which was attached documents A to Z18, which they sought to tender on 26 July. On their face very many of these documents, the first document of annexure A, for example, were plainly not business records, that being merely page 9 of 15 of an otherwise unidentified document. 31The second document in annexure A appeared to be a third party trading account authority, directed to the Commonwealth Bank, purportedly signed by Mr Thaler and Mr Koncepolski on 6 February 2007. Given the evidence which Mr Koncepolski gave at the trial, which revealed that he had forged Mr Thaler's signature on the third document appearing at annexure A, a document purportedly witnessed by a Leib Aber on 6 February 2007, the authenticity of the second document, plainly also had to be approached with some caution. In the absence of evidence as to its provenance, it could not justly be accepted on its face as being an authentic document. 32There was also a copy of parts of a tax invoice document of 18 March 2008, apparently on a CommSec letterhead, confirming the sale of securities in Allegiance Mining NL, for net proceeds of some $1,793,480.19. This, too, was a document said to be on its face authentic. 33Annexure B1 was a copy of a share transfer, the original of which is Exhibit 18. In submissions in reply, Mr Amzalak's objection to the tender of this document was withdrawn. It was then submitted to be an example of a further attempt by Mr Koncepolski to mislead the Court. It was subsequently agreed by the parties that this document was the first page of another document sought to be tendered by Mr Thaler and Mr Koncepolski on 9 August as the original share transfer, which was marked MFI 27. Both documents, it was submitted for Mr Amzalak, were plainly a photocopy of Exhibit 18, which had been tendered in Mr Amzalak's case as the original share transfer. Mr Koncepolski had been cross-examined about that document, which he claimed was a fabrication. It will be necessary to deal with these submissions later. 34Other of the documents attached to MFI 22 were emails, for example annexure W1, an email of 24 July 2013, sent from Shosha Koncepolski to 'yankel', presumably Mr Koncepolski, providing information relating to a $6,000 payment to a bank in Jerusalem. The source of that information was not disclosed. Other emails, for example annexure Z1, were emails sent by Mr Koncepolski on 24 July to his solicitor Mr Wayne, providing information about various accounts, lines of credit and transfers of funds, the source of which was also not disclosed. 35MFI 23, the second bundle of documents sought to be tendered on 9 August, were said to be the documents which established that the documents contained in MFI 22 were business records, the originals of which were said to be available. Thus, in the case of annexure A, for example, what was sought to be tendered was page 1 of a document dated July 2013, apparently on CommSec letterhead, addressed to Mr Koncepolski. 36As to annexure W1, there was a letter of 31 July directed to Mr S Thaler, apparently from 'Access Credit'. It had an address in Jerusalem, but the letter was not addressed to Mr Thaler at any address. It was signed by an unidentified person and provided: "At your request we hereby confirm that, to the best of our knowledge, the amounts that appear on the attached statement from Access Credit Ltd, were transferred by Mr Koncepolski . We further confirm that the amounts were withdrawn by yourself, Mr S Thaler." 37There was no statement attached to this letter. There was a 'Certificate of Registration of Currency Service Provider', said to be valid until 31 December 2013 in relation to Access Credit Ltd. 38As to annexure Z1, there was another email from Mr Koncepolski to Mr Wayne, forwarding other information as to lines of credit and transfers, the source of which was not apparent. As to annexure Z19 to Z20, there were documents which appeared to be 'Netbank' transfer receipts. Annexure Z22 to Z24 was documents which appeared to extract information from other unidentified documents. Annexure Z26 appeared to be an invoice on the letterhead of Lyonswood Investigations & Forensics Group. Annexure Z27 was an email of 20 June 2013 from Mr White of counsel to Mr Wayne, attaching four outstanding fee notes, said to have been adjusted to reflect a payment made by Mr Thaler on 6 June. 39Also sought to be tendered was a printed CommSec booklet, 'Boost your Investment Power' to which was attached undated, unsigned handwritten notes, created by an unidentified person. Authenticity 40In In the Matter of Maiden Civil Pty Ltd [2012] NSWSC 1618, Brereton J considered the authorities which deal with how authenticity of documents can be established and what inferences can be drawn from the source of a document. His Honour concluded at [23] - [24]: "23 As in other cases in which a Rusu objection has recently been taken before me, so in this, Needham J's judgment in Marra Developments has been in the back of my mind, and I have used this opportunity to consult it more fully in the light of Rusu. In my view, the position shortly stated is, first, that the mere production of a document cannot authenticate it; secondly, Marra establishes, although Rusu might contradict, that production on subpoena from an identified source might suffice to show that it is produced from the custody of the entity whose business it is, which would facilitate an inference that it was a business record; and thirdly, Rusu should not to be taken to limit the way in which authenticity of a document can be proven. For my part, I would respectfully doubt whether production on subpoena by the entity whose business the document is alleged to be a record of would always be insufficient to found the requisite inference; however, Rusu has been endorsed, subject to the minor qualification of the words, "save in limited circumstances" in the Court of Appeal and by Austin J in this Division, and on that basis, I should follow it. 24 In any event, even applying the wider approach of Needham J in Marra Developments, here the document is not shown to be produced from the custody of the entity whose business record it is said to be, but is merely tendered without any evidence whatsoever of its provenance. In those circumstances, I could not be satisfied that it was, as required by s 69, a document that is or forms part of, or at any time was or formed part of, the records belonging to or kept by Maiden Civil." 41Rusu was approved in Daw v Toyworld (NSW) Pty Ltd [2001] NSWCA 25 at [46] (per Heydon JA, with whom Priestley and Sheller JJA agreed). As to Rusu Brereton J earlier observed at [13] that: "In National Australia Bank Ltd v Rusu [1999] NSWSC 539; (1999) 47 NSWLR 309, Bryson J, as he then was, held that neither s 69 nor any other part of the Evidence Act had the effect of causing a document to be self-authenticating, or permitted authenticity to be established simply by inference from the form or contents of the document. In that case, his Honour held that a third party production in response to a subpoena was insufficient to authenticate a document on the balance of probabilities." 42The starting point in this case is that neither Mr Thaler, Mr Koncepolski nor anyone else gave any evidence, as they plainly could have, to explain the source or provenance of the documents which they sought to tender. There was no other authenticating evidence led. Unlike the circumstances dealt with in Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542, it was not suggested that any of the documents had been produced to the Court by a third party on subpoena, as were other documents tendered at the trial, about which Mr Koncepolski had earlier been cross-examined. 43Rather, it was submitted for Mr Thaler and Mr Koncepolski that the face of certain of the documents themselves would establish that they were business records, particularly in cases where, it was submitted, they were similar to other documents which had been produced on subpoena, which had been received without objection and about which Mr Koncepolski had been cross-examined. It was submitted that on their face such documents identified the company whose business records they were. It was also said to be relevant that the information contained in those documents related to historical matters, about which there was no issue in the proceedings. 44Those submissions do not overcome the obvious difficulty, that like the documents dealt with in In the Matter of Maiden Civil Pty Ltd, here there is no evidence that any of the documents sought to be tendered on the costs application were produced by entities or persons whose business records they were claimed to be. Nor was there evidence that they were produced from the custody of such entities. No evidence at all was led as to their provenance. In those circumstances, there can be no satisfaction that the documents formed part of the records belonging to, or kept by, any particular person or entity. 45Further, in the case of the handwritten notes on certain of the documents, there was no evidence as to whose handwriting it was, or when it was written on the documents sought to be tendered. Whose business records these documents purported to be, is not apparent. 46It was also submitted for Mr Thaler and Mr Koncepolski that some of the documents sought to be relied on were documents which Mr Thaler had not been permitted to lead in reply, which would now complete the evidentiary picture of the dealings between he and Mr Koncepolski, about which Mr Koncepolski had been cross-examined. That submission cannot be accepted. 47What was in issue in the proceedings included the question of whether Mr Thaler was in fact a party to the Beth Din proceedings, or whether Mr Koncepolski had always in truth been acting for himself and not as Mr Thaler's agent. Mr Thaler decided himself to give no evidence in the proceedings and to rely on the evidence he called from Mr Koncepolski, to meet Mr Amzalak's cross-claim. 48What was not permitted at the trial, was for evidence to be led from Mr Thaler, in circumstances where he had not served such evidence on Mr Amzalak, as the Court had earlier directed, and where that application emerged without prior notice, only after the difficulties with the evidence that Mr Koncepolski had given, had become apparent. 49Mr Koncepolski had been cross-examined about documents produced by third parties on subpoena, as well as MFI 7, a document initially sought to tendered in Mr Thaler's case, to establish Mr Thaler's interest in a margin loan account (which became part of Exhibit 31). The tender was objected to. It was then withdrawn and the document was tendered in Mr Amzalak's case. As it transpired, Mr Koncepolski revealed in cross-examination that the document had not been signed by Mr Thaler and witnessed by Rabbi Aber, as the face of the document suggested. Mr Koncepolski had forged Mr Thaler's signature. He was given a s 128 certificate and later gave evidence as to his belief that he was entitled to do so, given authority he had received from Mr Thaler. 50It follows that if the documents now sought to be tendered were in the hands of Mr Thaler or Mr Koncepolski when Mr Koncepolski gave his evidence, there was nothing which precluded them being led when Mr Koncepolski was re-examined, if that was necessary, in order to complete the documentary picture that he had been cross-examined upon, as was later claimed on the costs application. Mr Koncepolski could then have given evidence as to the provenance of those documents. That would have no doubt revealed the circumstances in which the second document at annexure A to MFI 22 came to be signed and by whom. As it transpired, of course, some of the documents sought to be tendered were only created after the costs application was listed for hearing. 51Mr Thaler or Mr Koncepolski could, of course, have sworn an affidavit to explain the source of the documents which they wished to rely on, on the costs application. Having not taken that course and not having led any evidence from someone else with knowledge as to their provenance, in my view, their authenticity cannot be accepted as having been established by the mere tender of the documents themselves, apart from one document. 52That was the printed CommSec booklet. It was submitted that if the handwritten notes attached to it were not received, that the printed booklet itself would be accepted as authentic on its face. Given the nature of this document, I think that this submission can sensibly be accepted as representing one of those limited circumstances, recognised in the authorities, where the authenticity of a document is established by the document itself. 53This document was sought to be relied on to establish that more than one person could be a signatory to the margin lending account about which Mr Koncepolski had already given evidence. Mr Koncepolski has already given evidence as to who had authority to operate the account . On balance I have decided to receive this document, as confirming that such an account may be operated by more than one person. 54Otherwise, I have concluded that the authenticity of the other documents sought to be tendered, has not been established. Section 69 of the Evidence Act 1995 55It is a matter for the tendering party to establish, on the balance of probabilities, that documents sought to be tendered are business records admissible under the section. It provides: "69 Exception: business records (1) This section applies to a document that: (a) either: (i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or (ii) at any time was or formed part of such a record, and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made: (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. (3) Subsection (2) does not apply if the representation: (a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or (b) was made in connection with an investigation relating or leading to a criminal proceeding. (4) If: (a) the occurrence of an event of a particular kind is in question, and (b) in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind, the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.(5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person's knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact)." 56It was submitted for Mr Thaler and Mr Koncepolski that s 69 of the Evidence Act gave the Court a discretion as to the admission of the documents, which would be exercised consistently with the requirements of s 56 of the Civil Procedure Act, that is, it was argued, without the necessity of evidence being called as to the provenance of the documents. I do not accept that s 69 gives the Court such a discretion. The section establishes an exception to the hearsay rule. It is for the party tendering a document to establish that it is a business record falling within the section. Neither the section, nor s 56 grants the Court a discretion to dispense with such proof. 57Contrary to the submissions advanced for Mr Thaler and Mr Koncepolski, the conclusion that the documents sought to be tendered are business records, cannot properly rest on the face of these documents alone, apart from the printed CommSec document I have already dealt with. In my view, in the absence of evidence as to either provenance, or the matters dealt with in s 69(2), an inference cannot safely be drawn from the face of the documents alone, that they are business records admissible under the section. 58Also necessary to be considered is that on their face, some of the documents were recently created. They thus appeared to fall within the exception provided in s 69(3), but it was argued for Mr Thaler and Mr Koncepolski, that it would be concluded that they were not self serving documents, because it would be accepted that, in the most part, they had been prepared by independent third parties and contained historical representations, even if information about those representations was recently provided. 59It was also submitted that s 69(3) required that the person seeking to tender a document must have recognised that it had some part to play in the litigation and that the document itself must indicate a recognition that it had been prepared for the purpose of the litigation. 60This may not be accepted. Section 69(3)(a) is not concerned only with the creation of documents, it is concerned with the purpose for which a document was either prepared, or obtained. Nor does it depend upon that purpose being disclosed in the document itself. 61That some of the documents sought to be tendered were recently created, of itself, suggests that they were obtained for the purpose of conducting these proceedings and more particularly, for the purpose of conducting the costs application. No evidence was led to suggest otherwise. 62In Timms v Commonwealth Bank [2003] NSWSC 576, relied on for Mr Thaler and Mr Koncepolski, there was evidence led as to the circumstances in which various documents came to be created, at a time when litigation was in contemplation. Barrett J there concluded on the evidence, that the documents in question had not been prepared either in contemplation or in connection with the proceedings, but rather for other requirements which applied, irrespective of the legal proceedings. 63Such satisfaction is not available in relation to the recently created documents sought to be tendered in this case. In the absence of any evidence of either how they came to be created and by whom, or who obtained the documents and for what purpose, the onus which falls on Mr Thaler and Mr Koncepolski under s 69 has clearly not been met. 64It is also pertinent to have regard to Hamilton J's observations in Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2002] NSWSC 1083, at [4] - [8], where his Honour observed as to the propositions which flow from the authorities as to the proper construction of s 69 to which he earlier referred at [4] - [8]: "[4] It should also be noted that what is referred to in subss (3)(a) and (b) respectively is not the proceeding in which the tender of material is sought to be made, or a proceeding to which the investigation referred to in (b) has led, but simply a proceeding or an investigation. [5] This links with what Barrett J has said to be the policy of the section in Vitali v Stachnik supra at [12]: "The purpose of the exclusion is, as I see it, to prevent the introduction through this exception to the hearsay rule of hearsay material which is prepared in an atmosphere or context which may cause it to be self-serving in the sense of possibly being prepared to assist the proof of something known or at least apprehended to be relevant to the outcome of identifiable legal proceedings." [6] The point, as I apprehend it, is that the contemplation or existence of any proceedings may lead even persons of good intent to make purely self serving statements that may, without the exclusory provisions of subs (3), be admissible through the scheme of s 69. From this natural tendency to make self serving statements springs the policy that statements made in those circumstances ought be excluded from the ambit of s 69 which is, in general terms, generous towards the admission of statements contained in documents that meet the criteria of the section. [7] It is not, as Mr Motbey has suggested to me, a requirement of subs (3) that a conclusion be reached that the creator of the document had the purpose of making self serving statements, whether true or false. It is, rather, that the possibility, bearing in mind human nature, to make self serving statements in such circumstances, leads the Act to exclude all statements made in such circumstances as a precaution against purely, and particularly false, self serving statements being taken into evidence. [8] Whilst, as was said by Hope J in Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 548 - 549 (cited by Einstein J in Schipp v Cameron (No 3) supra), the business records provisions have the tendency to make the law of evidence approach reality, it is in the interests of reality that the old rule against self serving statements is preserved to the extent that I have indicated, even when such statements are made in business records." 65It follows that in the absence of relevant evidence led to establish that the recently created documents do not fall under s 69(3), it may not be inferred simply from the face of the documents tendered, that they do not fall within the exception. Unlike Vitali v Stachnik [2001] NSWSC 303, on which Mr Thaler and Mr Koncepolski also relied, here there was no evidence led as to who had created the various documents, or their knowledge as to their contents. In Vitali evidence was led as to the circumstances in which the documents had come to be created, after the proceedings had been commenced. In the result, Barrett J concluded at [18] that: "The fact that this litigation had begun when the content of MFI 2 was prepared and that its preparation was recognised by the defendant at the time as bearing a relevance to and as potentially playing a part in that litigation must mean, as I see it, that the "in contemplation of" aspect or the "in connection with" aspect (or each of them) is satisfied. I hold, therefore, that s.69(3)(a) precludes the operation of s.69(2) in relation to MFI 2 so that the hearsay rule applies to make that document inadmissible." 66Contrary to the case advanced for Mr Thaler and Mr Koncepolski, given the dates of the recently created documents which they sought to tender and the circumstances of their tender, the inference that they were obtained for the purpose of this litigation, seems unarguable. That makes the documents inadmissible, for the same reasons that Barrett J gave in Vitali. 67In the result, in the circumstances of this case, I am not persuaded that any of the documents remaining in issue have been proven to be admissible under s 69 as business records. 68I am not persuaded that it can properly be inferred that the documents form part of the records kept or belonging to any particular business or person, or that they were prepared or provided for requirements which applied, irrespective of these legal proceedings. 69Nor is there evidence that such historical information as the documents variously appear to contain, was prepared by a person who had or might reasonably be supposed to have had personal knowledge of the asserted facts, or on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted facts. Section 70 of the Civil Procedure Act 2005 70Reliance was also placed on s 70 of the Civil Procedure Act, which provides: "70 Informal proof and admissions (1) At any stage of the proceedings, the court: (a) may, by order, dispense with the rules of evidence for proving any matter that is not bona fide in dispute, also with such rules of evidence as may give rise to expense or delay, and (b) without limiting the generality of paragraph (a), may, by order, dispense with the proof of handwriting, documents, the identity of parties or parcels of land, or of authority, and (c) may, by order, require any party (not being a person under legal incapacity) to make admissions with respect to any document or to any question of fact, and (d) in the case of a party's refusal or neglect to make any admission required under paragraph (c), may, unless of the opinion that the refusal or neglect is reasonable, order that the costs of proof occasioned by the refusal or neglect are to be paid by the party. (2) An admission made under subsection (1) (c): (a) is to be for the purpose of the proceedings in which it is made and for no other purpose, and (b) is to be subject to all just exceptions, and (c) may, with the leave of the court, be amended or withdrawn." 71Given the conclusions which I have reached as to the authenticity of the documents and that they do not fall within s 69 of the Evidence Act, in my view the discretion granted by s 70, even if here available to be exercised, which I doubt, given the nature of the dispute between the parties, could not justly be exercised in Mr Thaler and Mr Koncepolski's favour. 72In my view the proper inference to be drawn from their failure to lead any evidence as to the provenance of the disputed documents is that it would not have assisted their case. It would have been a simple matter for an affidavit explaining the source of the documents to be put on. Mr Thaler and Mr Koncepolski had ample time to do so. Given the obvious difficulties which they confronted in seeking to tender these documents, that they made a forensic decision not to lead such evidence, so that they could not be cross-examined, is not a proper basis for exercising any discretion given by s 70 in their favour. 73In the result, the documents may not be received, other than annexure B1 to MFI 22, which I have marked Exhibit 36 and the printed CommSec booklet, which I have marked Exhibit 37. Relevance 74I should also shortly say something about the arguments which the parties directed to the question of relevance. Their relevance was explained to be that they established that Mr Thaler was not a man of straw; that he had liquidity, not asset problems, given his sale of a substantial shareholding in Allegiance Mining; that there had been a history of interpersonal loans between he and Mr Koncepolski; and that it was Mr Koncepolski who was the borrower and Mr Thaler who was the mortgagor, they both having authority to trade on the margin lending account. 75It was also submitted that Mr Koncepolski having authority to operate the account and having a power of attorney, he also had authority to sign the CommSec acknowledgments that formed part of Exhibit 31 in Mr Thaler's name, he being the principal, for which he had been wrongly criticised in the principal judgment. In the result, the money in that account was Mr Thaler's. It was loaned to Mr Koncepolski, who used it for various purposes, including buying shares and to pay for the legal expenses incurred in these proceedings. 76For Mr Amzalak the relevance of the documents was disputed. He argued that the case sought to be advanced by reference to those documents was directly contradictory to the case advanced for Mr Thaler at trial and the evidence then given by Mr Koncepolski about the purposes for which the account was used and Mr Thaler's financial circumstances. That attempt it was argued, threw further light of the way in which he and Mr Thaler had misconducted themselves in these proceedings. 77It seems to me that there is some force in Mr Amzalak's submissions. 78Mr Koncepolski's evidence at trial was not that Mr Thaler was asset-rich, but cash-poor. To the contrary, his evidence was amongst other things, that at the time of the Beth Din hearing, Mr Thaler had been in such poor financial circumstances that he could not pay for his child's wedding and that Mr Koncepolski had to send his money for food at Passover; that he had long been unable to pay legal costs of these proceedings, 90% of which had been paid by Mr Koncepolski; that at the time of the trial he was destitute; that Mr Thaler personally owned only a very small fraction of the Allegiance Mining shares, which it was now sought to be claimed that he owned in their entirety; that the proceeds of the sale of the majority of those shares went to unidentified third party investors, not to Mr Thaler; and that Mr Thaler had not made a loan to Mr Koncepolski for very many years, Mr Koncepolski said when pressed, not since maybe 2005, or 2000. 79In the result, it also seems to me that in the absence of either Mr Thaler or Mr Koncepolski giving evidence to explain how it was that on the costs application, such a factually different picture as to Mr Thaler's financial circumstances and the dealings between he and Mr Koncepolski, came to be advanced through these documents, that their relevance was questionable and that any discretion available should not be exercised in favour of their reception. Rejection of tender of a document claimed to be the original share transfer 80A notice to produce the original share transfer which Mr Koncepolski claimed he had relied on before the Beth Din, was earlier served in the proceedings. Mr Koncepolski was unable to produce such a document. At the trial Exhibit 18 was tendered in Mr Amzalak's case. Mr Koncepolski denied that this was the original share transfer. He insisted in cross-examination that it was a document which had been tampered with, particularly as to his address. 81On 26 July, another share transfer document was produced, which was marked MFI 27, it was said in compliance with Mr Thaler's ongoing obligation to answer the notice to produce. On 9 August that document was sought to be tendered on the costs application. There was no evidence led as to how it had come to be produced. 82The tender was objected to, MFI 27 appearing on its face to be but a copy of Exhibit 18. Mr Burton then explained that he had no instructions about this document, other than that it was the original share transfer and that it was to be tendered. 83I refused to receive the document. Not only was its relevance to the costs application difficult to see, on its face, it had to be accepted that MFI 27 appeared to be but a copy of Exhibit 18, which Mr Koncepolski had claimed was not authentic. In the absence of any evidence as to how it had come to be produced, I took the view that it could not be received. 84As it transpired, MFI 22 also contained annexure B1, which also appeared to be a copy of Exhibit 18, but was not identified to be such. The parties later agreed that the document at B1 was in fact a copy of the first page of MFI 27. 85In submissions in reply, Mr Amzalak submitted that the attempted tender of MFI 27 was but a part of Mr Koncepolski's ongoing attempt to mislead the Court. That led to a rejoinder for Mr Koncepolski and Mr Thaler, that none of the share transfer documents had been subjected to forensic testing and that the submissions advanced as to this document should not be received, as not properly being in reply. 86I do not accept that submission. 87It is difficult to see the purpose of the attempted tender of MFI 27, without any explanation as to how it had come to be located, or how it came to be in the same form as Exhibit 18, despite Mr Koncepolski's evidence as to that document having been tampered with. 88How MFI 27 could conceivably be the original document, is impossible to see, given Mr Koncepolski's earlier evidence as to how he believed that Exhibit 18 had been tampered, including as to his address. Despite that evidence, MFI 27 appeared on its face to be but a copy of that document, including the disputed address. 89For reasons which I explained in the judgment, I concluded that Mr Koncepolski's evidence was not always honestly given and that it had to be approached with caution. I concluded on the evidence led at trial that Exhibit 18 was the original and that Mr Koncepolski did not have the original share transfer to produce to the Beth Din. 90Had it been considered necessary at any time to have either Exhibit 18 or MFI 27 forensically tested to establish which was the original, that no doubt would have been pursued. That it was not, does not assist the case advanced for Mr Thaler and Mr Koncepolski. 91In the circumstances, it seems to me that the proper inference to be drawn is that any evidence which Mr Koncepolski and Mr Thaler could have led about MFI 27, would not have assisted their case on costs. Costs 92Mr Thaler resides in Jerusalem and Mr Amzalak in Australia. Mr Koncepolski is Mr Thaler's agent in Australia and on his evidence operated Mr Thaler's margin lending account in Australia, for his benefit. In cross-examination it was shown that the account was also operated for his personal benefit. He represented Mr Thaler in the negotiations with Mr Amzalak as to his purchase of certain shares, which became the subject of the Beth Din proceedings. Mr Koncepolski appeared at the Beth Din and later instructed the solicitors and counsel engaged to conduct this litigation on Mr Thaler's behalf. He also gave the evidence on which Mr Thaler relied, both in advancing the case which he brought and in resisting Mr Amzalak's cross-claim. His evidence was shown to be untruthful, in various respects. 93Mr Amzalak not only successfully resisted the case which Mr Thaler brought against him, he also succeeded on his cross-claim. He sought that an indemnity costs order be made in his favour against both Mr Thaler and Mr Koncepolski, on a joint and several basis, on the basis of proven misconduct in the proceedings. 94Their case was that no order would be made against Mr Koncepolski and that each party should bear their own costs of the proceedings. If that were not accepted, Mr Amzalak should not be awarded costs for time spent in cross-examination of Mr Koncepolski on the matters on which he did not succeed and that otherwise, there would be no departure from the usual order. Further, if orders were to be made against Mr Koncepolski, they should be timed so that Mr Thaler was given an opportunity to meet those costs, before Mr Koncepolski could be pursued. The case against Mr Amzalak 95I can see no basis upon which it could be justly concluded that Mr Amzalak should be deprived of a costs order in his favour. 96Costs are not awarded to punish an unsuccessful party, but to indemnify the successful party for expenses which would not have been incurred, if the unsuccessful litigation had not been pursued (see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 543). They usually follow the event (see Rule 42.1 of the Uniform Civil Procedure Rules 2005). 97Nor will a successful party usually be deprived of part of their costs, in respect of issues on which they failed. In Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256; (2011) 288 ALR 385, it was explained at [97] - [100]: "97 In Oshlack v Richmond River Council (1998) 193 CLR 72 McHugh J said, at [69], 97-98: "In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874, Devlin J formulated the relevant principle as follows: 'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.' 'Misconduct' in this context means misconduct relating to the litigation: King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812, or the circumstances leading up to the litigation: Bostock v Ramsey Urban District Council [1900] 2 QB 616. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation: Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627; unnecessarily protracts the proceedings: Forbes v Samuel [1913] 3 KB 706; succeeds on a point not argued before a lower court: Armstrong v Boulton [1990] VR 215 at 223; prosecutes the matter solely for the purpose of increasing the costs recoverable: Hobbs v Marlowe [1978] AC 16; or obtains relief which the unsuccessful party had already offered in settlement of the dispute: Jenkins v Hope [1896] 1 Ch 278." 98 Though McHugh J's judgment was a dissenting judgment, I did not see anything in the joint judgment of Gaudron and Gummow JJ or in the judgment of Kirby J (all three of whom made up the majority) that is to the contrary. Its statement of principle seems to me, with respect, to be correct as far as it goes. However, because it states when the court may properly depart from the usual order as to costs it still leaves a discretion as to whether, in any particular case that falls within the scope of the examples that McHugh J gives, it is appropriate for the court actually to depart from the usual order as to costs. Further, the list of examples that McHugh J gives does not purport to be an exhaustive listing of the circumstances in which an overall successful party ought not receive costs, or ought bear costs of the other side. Nor does his Honour seek to differentiate the sort of circumstances in which an overall successful party should not receive costs (with the effect that each side bears its own costs) from the circumstances in which the overall successful party should pay the costs of the loser. 99 In Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81 at 84 Keely J said that: "[T]he Court's power to order a successful applicant to pay the costs in respect of an issue raised by the applicant, on which the applicant has failed, ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of that issue by the applicant was so unreasonable that it is just and fair to make the order." 100 In Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615 Mason P (with whom Clarke AJA agreed) held that "no such principle exists in the sense of a fixed proposition of law. In a proper case ... the party that is successful over all [sic] may be ordered to pay the costs of a discrete issue" . Even so, the unreasonableness of the raising of an issue is a relevant matter to take into account in deciding whether to order an overall successful party to pay the costs of a particular issue, as opposed to leaving the overall successful party to bear its own costs concerning that issue. The extensive written submissions of the Sayer Interests on costs do not include any contention that the raising of any particular issue by the Tomanovic Interests was unreasonable." 98The only issue on which Mr Thaler enjoyed a measure of success in the proceedings was that I accepted that he was a party to the Beth Din proceedings and that his involvement there and in these proceedings, had not merely been as a front for Mr Koncepolski, who had sought to perpetrate a fraud on Mr Amzalak, it being he alone who had an interest in the shares the subject of the proceedings. That was a conclusion which I reached in circumstances where I had refused a late application made by Mr Thaler to lead evidence. In the result Mr Thaler succeeded on this point, I having given Mr Koncepolski the benefit of certain doubts, as I explained in the judgment at [155] to [165]. 99I thus came to the view that fraudulent conduct could not be found against Mr Koncepolski, in part, because that inevitably would involve a finding that Mr Thaler had also engaged in such conduct. 100The cross-examination of Mr Koncepolski on this issue was, however, not only relevant to the determination of that issue. It established that he had not given truthful evidence about relevant matters in contention. For example, the margin lending account opened in his name, which on Mr Koncepolski's evidence was in truth Mr Thaler's account and operated for his benefit, was shown by the evidence he gave in cross-examination to have also been operated for Mr Koncepolski's personal benefit, even at a time when he claimed that funds were not available to make payments due to be made by Mr Thaler, for outstanding shares he had purchased. 101On the basis of what was established by his cross-examination, I concluded that Mr Koncepolski had an interest in the proceedings which had not been disclosed (see at [164]) and that in the event of conflict, his evidence could not be preferred over that of Mr Amzalak (see at [81]). 102In the result, I am satisfied that it has not been established that the issue on which Mr Thaler succeeded was raised unreasonably by Mr Amzalak, or that it was pursued in an unreasonable way, so as to improperly increase the length and cost of this litigation. To the contrary, it seems to me that much time was wasted as the result of Mr Koncepolski's approach to the litigation and the evidence he gave, which was repeatedly shown through cross-examination, not to have been given truthfully, as it ought to have been. 103In my assessment the discretion which Mr Thaler and Mr Koncepolski seek to have exercised in their favour, to deprive Mr Amzalak of all or any part of his costs, may not so be justly exercised in their favour, in these circumstances. The case against Mr Thaler 104There was no issue as to the Court's power to award costs on an indemnity basis under s 98 of the Civil Procedure Act. Whether that discretion should be exercised, rests on a consideration of the conduct of these proceedings, not what occurred before the Beth Din. 105Mr Amzalak sought an indemnity costs order for reasons which included that the caveat proceedings were shown to have been entirely unsupportable, resting as they did on the Beth Din's award; that Mr Thaler's case as to the Beth Din's award was obviously untenable, given the terms of the award itself, which failed in any way to address or deal with the fundamental agency defence which Mr Amzalak had raised; and where his defence of Mr Amzalak's case also clearly had no prospects of success, given that misconduct and resting as it did on an entirely false premise before the Beth Din, that Mr Koncepolski had the original share transfer. The untruthful evidence given by Mr Koncepolski about various matters was submitted to provide a further foundation for an indemnity costs order, as were his repeated attempts to inject scurrilous and irrelevant matters into the proceedings, in order to prejudice Mr Amzalak. Mr Thaler's approach to the litigation, including on the costs application, which unnecessarily added to the costs of the litigation, was also relied on. 106Those orders were opposed by Mr Thaler and Mr Koncepolski, who submitted that the question of proportionality of costs also had to be considered, given the provisions of s 60 and s 62(5)(g) of the Civil Procedure Act 2005 and r 42.15 of the Uniform Civil Procedure Rules. 107I am satisfied that an indemnity costs order is warranted, as a matter of justice in these proceedings. 108It is well settled that an indemnity costs order may be made when a party has maintained proceedings that they should have known had no real prospects of success (see for example the decision in Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353). In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400 - 401, Woodward J, referred to the case where an action had been commenced or continued in circumstances where "the applicant, properly advised, should have known that he had no chance of success". He said at 401: "In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law." 109Other circumstances in which an indemnity costs order may be made were discussed by Sheppard J in Colgate-Palmolive Co. v Cussons Pty Ltd (1993) 46 FCR 225, at pages 233 - 234: "... it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis." 110I am satisfied that this is a case where Mr Thaler should have known that realistically, he had no prospects of success in either enforcing the Beth Din's award or having the orders sought in the caveat proceedings made, resting as they did on the Beth Din's award. 111At trial Mr Thaler accepted the onus which fell on him to establish that reasons for the Beth Din's decision were given in accordance with the requirements of s 29(1)(c) of the Commercial Arbitration Act 1984 (repealed), which required that 'a statement of the reasons for making the award' be given. It is well settled that such reasons required there to be at least a rudimentary explanation given to the parties in the reasons provided as to why the Beth Din had rejected Mr Amzalak's defence (see the judgment at [139] to [143]). His defence was that he had not entered any contract with Mr Thaler and had acted as Mr Tan's agent. In the short reasons given by the Beth Din, that defence was neither referred to, nor was any explanation for its rejection given. 112In the result, in my view, it must be concluded that Mr Thaler's case that the Beth Din's award was enforceable under s 33 of the Commercial Arbitration Act, was not realistically arguable. Further, the Beth Din's failure to give reasons also established misconduct under s 42 of that Act, on which Mr Amzalak relied in his cross-claim. It follows that Mr Thaler's defence of the cross-claim was also not realistically available, on that basis alone, without any of the other misconduct on which Mr Amzalak successfully relied, being established. 113In the result it is apparent that Mr Thaler properly advised, should have known that neither his case, nor his resistance of Mr Amzalak's cross-claim, had any chance of success. 114Perhaps these simply insuperable difficulties help explain Mr Koncepolski's conduct of the proceedings, as the agent Mr Thaler appointed to conduct them and the evidence which he gave, when called as the witness on whose evidence, both Mr Thaler's application and his defence of Mr Amzalak's case, rested. For reasons which I have already explained, that involved such obvious misconduct of the kind discussed by Shepherd J in Colgate-Palmolive Co, that I am satisfied that an indemnity costs order being made in Mr Amzalak's favour against Mr Thaler, is also thereby well warranted. 115Not only did Mr Koncepolski give affidavit evidence as to various matters which he revealed in cross-examination was not accurate, he actively sought to mislead the Court as to his interest in the margin lending account opened in his name, both through the evidence which he gave and through tender of Exhibit 31, put forward as a document which on its face Mr Thaler had signed, in the presence of a witness, Rabbi Aber. As it emerged, only after refusal of an application to set aside a subpoena addressed to Rabbi Aber and Mr Thaler, Mr Koncepolski had forged Mr Thaler's signature. Whether an offence of forgery was thereby committed by Mr Koncepolski, does not arise for determination in these proceedings. 116The submissions advanced on the costs application about Mr Koncepolski's authority, do not overcome the fact that the tender of this document was designed to advance a case that Mr Koncepolski himself had no interest in the margin lending account. It was eventually revealed, by his own evidence in cross-examination, that the account had in fact been operated for both the benefit of Mr Thaler and that of Mr Koncepolski himself. 117It is also unarguable that the case was unquestionably unduly prolonged by Mr Koncepolski's repeated refusal to give direct, or honest answers, to various questions asked of him about relevant matters, answers which were proven to be false, after he was further pursued in cross-examination and by evidence given by other witnesses called in Mr Thaler's case. 118That the other allegations of misconduct which Mr Amzalak advanced in his cross-claim case, depended on the evidence of other witnesses and were contestable, does not overcome these fundamental difficulties with the case which Mr Thaler advanced and how the proceedings were conducted. 119Nor did the other submissions advanced, for example, that the Court took a different view to that taken by the Beth Din of the importance of the share transfer and as to concessions made by Mr Amzalak in his cross-examination in these proceedings. It must not be overlooked that the subject matter of the underlying dispute did not arise for determination in these proceedings. What was in issue was whether the requirements of s 29(1)(c) had been met by the award given by the Beth Din and whether the misconduct Mr Amzalak alleged had been established. 120In the result, I am well satisfied that the Court's discretion to make an indemnity costs order in Mr Amzalak's favour must be exercised, so far as Mr Thaler is concerned. Mr Koncepolski 121While Mr Koncepolski is not a party to the proceedings, in the circumstances, a costs order may be made against him. As Mason CJ and Deane J in Knight v FP Special Assets Ltd observed as to orders made against non-parties at [34]: "For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made." 122In FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 34, it was observed at [210] as to such orders that: "...What is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria: (a) the unsuccessful party to the proceedings was the moving party and not the defendant; (b) the source of funds for the litigation was the non-party or its principal; (c) the conduct of the litigation was unreasonable or improper; (d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest, and (e) the unsuccessful party was insolvent or could otherwise be described as a person of straw." 123So approaching this application, I am satisfied that this is a case where the Court's jurisdiction to make a costs order should be exercised against Mr Koncepolski. That conclusion rests on the way in which Mr Thaler's untenable claim was pursued by Mr Koncepolski and Mr Amzalak's cross-claim resisted. Not only did he have Mr Thaler's complete authority as to the conduct of the Beth Din proceedings on his behalf, but also the conduct of these proceedings. There is no question that Mr Koncepolski exercised that authority, albeit with some reference to Mr Thaler, in the way I have already discussed. 124It follows that it must have been even more apparent to Mr Koncepolski than to Mr Thaler, that Mr Thaler's claims and his defence of Mr Amzalak's case, had no reasonable prospects of success. 125The pursuit of Mr Thaler's case has to be considered in light of the fact that Mr Koncepolski himself was also shown to have a real interest in the subject of the proceedings, which he had not previously disclosed. That was amply revealed by the evidence which he gave about his failure to register the shares in issue and by what his cross-examination revealed as to him having used the margin lending account to pay his personal expenses, even at a time when payments had to be made for Mr Thaler's purchase of outstanding shares. 126Also to be considered is that Mr Koncepolski's evidence at trial was that Mr Thaler was destitute and that as a result, he had personally funded some 90% of the litigation. By the submissions later advanced on costs, however, Mr Thaler and Mr Koncepolski sought to establish that this was not so, by tender of the documents I have already dealt with. In the circumstances, while an evidentiary basis for the submission that Mr Thaler was a man of means and that it was he, not Mr Koncepolski, who was in truth paying the costs of the proceedings, has not been established, it appears from the case sought to be advanced on costs, that Mr Thaler does not agree with the evidence which Mr Koncepolski gave as to his financial circumstances. 127It follows from this alteration in course, that if Mr Amzalak had made a security for costs application, as Mr Thaler and Mr Koncepolski submitted he ought to have made, if a costs order was to be pressed against Mr Koncepolski, that Mr Thaler would have resisted it. Such an application was not made and on the costs application, Mr Thaler has not led evidence which establishes that he is a man who has means, sufficient to meet the order now sought against Mr Koncepolski. 128That situation may not be overlooked, it seems to me, in resolving this aspect of the case. In the circumstances, the failure to pursue a security for costs application, on which Mr Koncepolski relied to resit an order being made against him, in my view that is not a basis upon which to refuse a costs order against Mr Koncepolski. 129As discussed by Adamson J in Blazai Pty Ltd v Maclarens (No 2) [2013] NSWSC 31 at [26] - [27]: "26 There are dicta that stress the importance of an antecedent application for security for costs before an order for costs will be made against a non-party principal of a company: see Shawnelle Pty Limited v SR Juice Pty Limited (20 August 1993, unreported, Federal Court, Gummow J). However, it is always a matter of discretion: Knight at 190-191. The importance of this factor is necessarily diminished where such an application was unlikely to be successful, as in Oasis at [30]. 27 There are dicta to the effect that whether an application has been foreshadowed is germane to the exercise of the discretion: see the authorities cited in Offstage Support Association Inc 9894945 v Time of My Life Pty Limited (No 2) [2011] FCA 1183; 284 ALR 362, at [44]. However, there is no requirement for notice before the discretion to award costs against a non-party will be exercised. Indeed such a requirement would be inconsistent with the wording of s 98." 130In this case, in my assessment the failure to pursue a security for costs application, particularly given that Mr Koncepolski was put on notice that this application would be pursued, is not a basis upon which a costs order can justly be refused. 131That conclusion is reinforced by the attempted tender of MFI 27 on the costs application. 132Mr Koncepolski's evidence had earlier been that Exhibit 18 had been tampered with, by the application of whiteout and his personal address there being written in by a person whose handwriting he did not recognise. Yet MFI 27, tendered to resist the costs application, was claimed to be the original, despite appearing on its face to be a copy of Exhibit 18. Mr Koncepolski led no evidence to explain this tender. It was submitted for Mr Koncepolski, that the allegations of fraud which he had repeatedly earlier made against Mr Amzalak in relation to Exhibit 18, were shown by the attempted tender of MFI 27, to have been false and unjustified. 133This was disputed by Mr Koncepolski, for whom it was submitted that there was no finding that he had given deliberately false evidence in relation to Exhibit 18, or that had sought to mislead the Beth Din or the Court, unlike the circumstances dealt with by Einstein J in Commonwealth Bank of Australia v Saleh [2007] NSWSC 990. There one of the defendants was found to be '[not only] one of the fraudulent conspirators but significantly he sought to rely in the proceedings on documents which were found to be fabricated' (at [5]). Another defendant was found to have 'persisted throughout the whole of the hearing in denying the bank's allegations in respect of his fraud: knowing those allegations to be true. Additionally he persisted in frustrating the Bank's attempts to obtain access to documents required to be produced by the litigious process' (at [6]). 134In this case, I concluded not only that Mr Koncepolski had forged Mr Thaler's signature on Exhibit 31, a matter which he had not intended to reveal (see para [68] - [76]), I also concluded that, contrary to his evidence, the margin lending account was used not only for Mr Thaler's benefit, it had also been used for his own benefit, including at a time when he wrongly claimed that Mr Thaler did not have sufficient funds to make a payment due on the shares he had purchased (see at [77] - [79]). I also came to the view that he had resiled from his affidavit evidence as to what had happened to the recordings of the Beth Din proceedings (see at [80]); that he never had the original signed share transfer form at the Beth Din (see at [130]); that he was not truthful before the Beth Din (see at [133]); that he had an interest in the proceedings before the Beth Din and these proceedings not previously disclosed (see at [164]); and that his evidence that the recording of the Beth Din proceedings did not capture what had occurred during the afternoon could not be accepted (see at [172]). In the result, I concluded that in the event of conflict, Mr Amzalak's evidence had to be favoured over his (see at [81]). 135That I did not come to the conclusion that Mr Koncepolski had sought to perpetrate a fraud, as was urged for Mr Amzalak, was in large measure to give him the benefit of certain doubts, bearing in mind the consequences for Mr Thaler, of the conclusion urged for Mr Amzalak (see at [164]). 136That does not mean, however, that no foundation for a costs order against Mr Koncepolski was thereby established. To the contrary, I am well satisfied that in the circumstances, the interests of justice do demand that such an order be made against him, on an indemnity basis, given the misconduct established. Form of the orders 137While it was explained that it was sought to be demonstrated that Mr Thaler was not a man of straw, he gave no undertaking that if a costs order was made against him, that it would be paid. What he sought was an opportunity to pay any costs order, before Mr Koncepolski was pursued. 138His real difficulty, it was submitted was one of liquidity, rather than impecuniosity. That submission flew in the face of the evidence given by Mr Koncepolski at the trial, as to Mr Thaler's circumstances, as I have explained. 139Nevertheless, I can see no reason in justice why Mr Thaler should not be given the benefit of any doubt, so as to be given the opportunity to pay the costs of the proceedings he brought against Mr Amzalak, if he wishes, before Mr Koncepolski is pursued. In the circumstances, I am satisfied that it is reasonable to give him 28 days to do so. Orders 140For the reasons given I order that: 1. Mr Thaler and Mr Koncepolski must bear Mr Amzalak's costs of the two proceedings on an indemnity basis. 2. Enforcement of the order against Mr Koncepolski is stayed for 28 days from the date of this judgment. 3. All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined. ********** 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: 12 September 2013