Bendigo and Adelaide Bank Limited v Stamatis [2015] NSWSC 721
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Supreme Court
New South Wales
Medium Neutral Citation: Bendigo and Adelaide Bank Limited v Stamatis [2015] NSWSC 721
Hearing dates: 7 November 2014
Date of orders: 12 June 2015
Decision date: 12 June 2015
Before: R S Hulme AJ
Decision: 1. Publish reasons.
2. Matter adjourned until 18 June 2015.
Catchwords: Practice – Civil Procedure Act s 99 – costs against solicitors – undue duplication and irrelevance
Legislation Cited: Civil Procedure Act 2005 (NSW)
Consumer Credit Code (Cth)
Contracts Review Act 1980 (NSW)
Evidence Act 1995 (NSW)
(NSW)
Strata Schemes Management Act 1996 (NSW)
Cases Cited: Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300
National Australia Bank v Rusu (1999) 47 NSWLR 309
Ridehagh v Horsefield [1994] Ch 205
Trysams Pty Limited v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399
Category: Costs
Parties: Bendigo and Adelaide Bank Limited CAN 068 049 178 (Plaintiff)
Aristides Stamatis (First Defendant)
Maria Stamatis (Second Defendant)
Representation: Counsel:
R Bellamy (Plaintiff)
J K Taylor (First and Second Defendants)
Solicitors:
Gadens Lawyers (Plaintiff)
Hughes & Taylor (First and Second Defendants)
File Number(s): 2011/156419
Judgment
1. By Statement of Claim filed on 12 May 2011 the Plaintiff sought against the Defendants orders, inter alia, for possession of land and that the Defendants pay the Plaintiff the sum of $423,062.31.
2. The proceedings were defended. They came before me for hearing on 24-28 March 2014.
3. On 16 September 2014 I published reasons for the conclusion at which I had arrived. Although by agreement between the parties the final orders took a different form, the substance of my conclusion was that, subject to the Defendants paying the Plaintiff $6,909.00, the mortgage and loan agreement on which the Plaintiff relied should be set aside.
4. At the time of publishing my reasons I expressed disquiet at the extent and, in some respects, the nature of the evidence which had been put before me and foreshadowed the possibility that orders for costs should be made against some of the lawyers involved in the case.
5. The matter was stood over. On 30 September 2014 I made final orders as between the Plaintiff and the Defendants and directed the parties to provide to my associate and serve any evidence upon which they intended to rely bearing on:
1. the relevance of the documents attached to or exhibited to the affidavits filed in the proceedings;
2. any unnecessary inclusion or duplication of documents in the affidavits filed or in the Court Book; and
3. prolixity in, or undue length of, affidavits filed in the proceedings.
1. On 7 November 2014 affidavits were read and submissions made on the issue of costs. Supplementary submissions were later provided on behalf of Gadens, the solicitors for the Plaintiff. These reasons are concerned with whether, and if so what, orders should be made against one or more of the solicitors for the parties.
2. While it is not necessary in these reasons to canvas at length the matters dealt with in my principal reasons, some reference to the issues between the Plaintiff and Defendants is necessary. The Plaintiff alleged that the Defendants had made three applications to borrow money from the Plaintiff, that in support they had signed numerous other documents including a mortgage over their home, that in reliance on these various documents the Plaintiff had advanced moneys and that the Defendants were in default. In large part the documents incidental to each application followed the same form and emanated from the Plaintiff or a mortgage originator the Plaintiff used and who had facilitated the transactions, an organisation known as CHL. The first application made in early November 2003 was for a sum of $380,000. Before any of this sum was advanced the amount sought increased and a second application for $440,000 was made later in the same month. In August 2004 a third application, this time for $44,000 was made and when granted this sum was used to reduce the amount owing under the $440,000 facility.
Pleadings
1. There were a number of amended pleadings filed from time to time during the currency of the litigation. As of 5 January 2012, the latest versions were:
First Statement of Cross-Claim filed on 6 July 2011
Amended Statement of Claim filed on 19 September 2011
Amended Defence filed on 17 November 2011
Defence to the Statement of Cross-Claim filed on 5 January 2012
1. In the Statement of Claim the Plaintiff claimed under the loan agreement for $440,000 and the mortgage dated 11 December 2003. In their Defence, in addition to denying most of the significant allegations in the Statement of Claim, the Defendants contended that they did not enter into the agreement and alternatively, that it was void or should be set aside. They relied, inter alia, on matters asserted in a Cross-Claim.
2. In that Cross-Claim they alleged that their signatures had been forged, that the Plaintiff had been guilty of unconscionable conduct by reason, inter alia, of the Defendants' limited education and understanding, their lack of benefit flowing from the transaction, that their signatures had been procured by undue influence and knowledge of many of these matters on the part of the Plaintiff. The Defendants also relied on the Contracts Review Act 1980 (NSW) and the Consumer Credit Code (Cth).
3. In an Amended Statement of Claim filed on 19 September 2011 the Plaintiff expanded the basis of its claim to rely also on the documents and circumstances of the $380,000 and $44,000 transactions. The issues expanded in late 2012. In the Amended Statement of Cross-Claim filed in November 2012 the Defendants relied on what were asserted to be failures by the Plaintiff to follow its lending practices and guidelines. In the Defence to the Amended Cross-Claim filed on 21 December 2012 the Plaintiff indicated it placed reliance on a number of other actions of the Defendants incidental to the $440,000 loan. Later pleadings raised some additional issues but none of present significance.
4. Because reliance was placed on some of the Court procedures and orders it is convenient to refer to these now. The proceedings were issued in the Possession List and accordingly Practice Note SC CL 6 applied to them. The first directions hearing occurred on 20 July 2011 when a registrar made orders for the Plaintiff and Defendants to serve evidence on which they intended to rely by specified dates. There followed numerous other directions hearings - about 20 - dealing inter alia with the pleadings and, in effect extending time for the service of evidence. There was an interlocutory skirmish concerning the production of documents.
5. So far as the records of proceedings before the registrar goes, there seems to have been no attention given to the question whether, given the issues, proceeding by way of affidavit was appropriate. Clause 27 of SC CL 6 provides that in the circumstances contemplated by the clause the "Usual Order for Hearing" will be deemed to have been made and all parties seem to have assumed that that order applied. I am content to accept that their assumption is correct. That Usual Order is in terms:
By no later than 7 working days before the trial date the parties are to file a Court Book consisting of all pleadings, all evidence, any objections to evidence (limited to those that are essential having regard in particular to s 190(3) of the Evidence Act 1995), a clear, concise, joint statement of matters of fact and law that are really in dispute, and a short outline of submissions. The Court book is to be clearly marked on the front cover with the hearing date.
Affidavits
1. The first affidavit to which it is appropriate to refer is one of Jayne Gurney affirmed on 24 January 2012 (referred to in the Court Book as of 1 February 2012, the date it was filed). The affidavit is of 10 pages and exhibits some 86 pages of documents. Ms Gurney is the Manager, Legal and Recovery, of the Plaintiff and was not involved in the arranging or effecting of the transaction which led to the litigation. She records in the affidavit the production to her of a number of documents and summarises their apparent operation. By way of example, paragraph 5 reads:
On or about 5 November 2003 the Defendants applied to the Plaintiff for financial accommodation for future investment purposes. A copy of the application is in tab 2 in Exhibit "JG1". The defendants provided the following documents in support of the loan application…
1. Understandably, given Ms Gurney's lack of personal knowledge, the first and third of the sentences just quoted were not pressed over objection. Understandably also, for it was equally inadmissible for the same reason, counsel for the Plaintiff adopted a similar approach in respect of the vast bulk of the balance of the body of the affidavit other than the description of the documents exhibited.
2. Given that Ms Gurney had no personal knowledge of the matters referred to in the sentences quoted and not pressed, and that well before this affidavit was affirmed the pleadings made it clear that the Defendants were denying the agreement on which the Plaintiff relied, asserted that they did not enter into it, denied signing it and asserted that their signatures were forged, any half competent lawyer should have known those statements would have been objected to, were inadmissible and were not worth the paper they were written on. The same observations may be made in respect of what I have referred to as the vast bulk of the rest of the affidavit itself.
3. The documents included in Exhibit JG1 were photocopies. Objection was taken to them but was withdrawn conditional on the Plaintiff's counsel tendering the original files. He agreed to do so although as things transpired they were tendered by the Defendant's counsel without objection. In her 24 January 2012 affidavit Ms Gurney does not indicate the sources of the documents in Exhibit JG1 but a comparison with those annexed to a later affidavit shows that virtually all of the documents in Exhibit JG1 come from one or other of the files of the Bank, CHL and Galilee & Associates, solicitors who had acted for the Bank in the implementation of the loan agreements. (Between acting on the subject transaction CHL was taken over by an organisation with the initials AMO and not uncommonly that nomenclature was used in the course of proceedings before me. It will be convenient in these reasons generally to refer to the relevant documents as those of CHL.)
4. It was also agreed that, as a matter of convenience the corresponding documents in the Court Book, which contains only photocopies, could be taken as the exhibit JG1. Documents that came into evidence following the withdrawal of the objection were the following, no significant number, if any, of which could be regarded as irrelevant:
Property loan application - $380,000 – executed 5/11/2003 (pp85-88)
CHL privacy consent annexure – executed – faxed Oct/Nov 2003 (p89)
NAB account statement 23/11/2002-22/5/2003 (p90)
Copy Aristides' and Maria's driving licence (pp91-92)
Direct debit request – executed 23/11/2003 (p93)
Borrower's certificate – executed 23/11/2003 (p94)
Authority to date & pay advance – executed 23/11/2003 (p95)
Home loan contract $440,000 – executed 8/12/2003 (pp97-112)
Lenders mortgage insurance privacy consent – executed (undated) (pp113-114)
Mortgage AA277559S – executed 11/12/2003 (pp115-116)
Registrar General memorandum 2469542R (pp117-133)
CHL advices to Defendants that loan settled 11/12/2003 (pp134-135)
Product conversion application - $44,000- executed (p136)
Home loan contract $44,000 – executed 14/9/2004 (pp137-155)
Lenders mortgage insurance privacy consent – executed (undated) (pp156-157) - Note the signatures to this privacy consent differ from those at pp113-114
Authority for regular payments – executed 14/9/2004 (p158)
Galilee letter 16/2/2011 and notices to Aristides Stamatis (pp159-164)
Galilee letter 16/2/2011 and notices to Maria Stamatis (pp165-170)
1. In the immediately preceding paragraph and others taking a similar form, I have adopted a description of some of the documents which is very abbreviated. Given the issues dealt with in these reasons, that description is sufficient for present purposes. I have also not found it necessary to refer to all of the documents, even those which are the subject of duplication. I record also that the term "executed" is intended to denote the appearance of the documents so described without consideration of whether signatures appearing thereon are genuine. The page numbers included are those in the Court Book where the relevant document is to be found.
2. It may well be also that the documents "lenders mortgage insurance privacy consent" and similar documents in other lists were in fact part of the home loan contracts referred to nearby in the lists. The possibility does not affect the substance of these reasons.
3. On 9 March 2012 a Notice of Change of Solicitor was filed recording that the Plaintiff had appointed Mr Pringle of Gadens Lawyers to act as the Plaintiff's solicitors. Prior to that the solicitors acting for the Plaintiff in these proceedings had been Galilee & Associates.
4. On 17 April 2012, Ms Lynne Hughes, the solicitor for the Defendants swore a three page affidavit to which she exhibited two bundles of documents. The first labelled LH1 consisted of some 292 pages. Included within that exhibit and arranged by Ms Hughes in chronological order were 284 pages being all of those produced by Galilee & Associates pursuant to a Notice to Produce that required the production of:
Any documents evidencing or recording correspondence between the Defendants and the Plaintiff, or otherwise referring or relating to any loans by the Plaintiff to the Defendants; in the period from 1 October 2003 to 28 February 2011, including but not limited to…
Any documents referring or relating to Mr Constantinos Stamatis or Cuir Pty Limited brought into existence in the period from 1 October 2003 to 28 February 2011…
1. Included in the documents in Annexure LH1 were:
Property loan application $380,000– executed 5/11/2003 (pp1403-1406)
CHL privacy consent annexure – executed - faxed Oct 2003 (p1407)
Property loan application $380,000 – executed 5/11/2003 (pp1408-1411)
CHL privacy consent annexure – executed – faxed Oct/Nov 2003 (p1412)
Fax note Con Stamatis to Michael Aboud re Defendants' tax returns for 2002 and 2003, probably faxed on 5/11/2003 (p1413)
Plaintiff's formal approval - $440,000 - 5/12/2003 (p1414)
Lo Doc declaration – $440,000 ($380,000 deleted) - executed 6/11/2003 (p1415)
List of CHL charges re $440,000 loan (p1416)
Consumer reports Aristiois and Maria Stamatis – 7/11/2003 (pp1417-1420)
Adelaide Bank fax – $380,000 - 10/11/2003 (p1426)
NAB account statement - 23/11/2002-22/5/2003 (p1427)
CHL valuation request - 10/11/2003 (p1428)
DTS valuation – 11/11/2003 (pp1429-1434)
Adelaide Bank fax – $380,000 - 10/11/2003 (p1440)
Plaintiff's conditional approval - $380,000 – 11/11/2003 (p1441)
Plaintiff's conditional approval - $380,000 – 11/11/2003 plus notes plus part DTS valuation (pp1444-1449)
Adelaide Bank formal approval - $380,000 – 13/11/2003 (p1452)
Home loan contract - $380,000– (unexecuted) 14/11/2003 (pp1453-1469)
Lenders mortgage insurance privacy consent (unexecuted) (pp1470-1471)
Home loan contract - $380,000 – 14/11/2003 (part only) (p1477)
Amendment request form from Aristiois to Aristides (p1478-1479)
Photocopy driving licences of Aristides and Maria Stamatis (pp1481-1482)
NAB account statement 23/11/2002-22/5/2003 (p1483)
Amendment request form - $380,000-$440,000 – faxed 4/12/2003 (pp1485-1486)
Lo doc declaration - $440,000 ($380,000 deleted) - 6/11/2003 (p1487)
CHL fee statement – faxed 4/12/2003 (p1488)
Home loan contract - $440,000 – executed 8/12/2003 (pp1489-1505)
Lenders mortgage insurance privacy consent – executed (undated) (pp1506-1507
Galilee Solicitors' certificate - 9/12/2003 - plus note "03034256" (pp1509-1511)
Galilee Solicitors' certificate - 9/12/2003 (pp1512-1513)
Settlement confirmation 12/12/2003 (p1517)
Direct debit request – executed 23/11/2003 (p1519)
Product conversion summary 25/8/2004 (p1521)
Product Conversion Application $44,000 – executed – (pp1522-1525)
Home loan contract - $44,000 – executed 14/9/2004 (pp1530-1548)
Lenders mortgage insurance privacy consent – executed (pp1
549-1550)
Mortgage Acknowledgment (p 1551)
Title Search (p 1552)
Conversion checklist (p1553)
CHL letters to Defendants 14/10/2004 (pp1555-1556)
Product conversion application and summary – $44,000 - executed 25/8/2004 (pp1559-1562)
Adelaide Bank formal approval - $44,000 – 26/8/2004 (p1563)
Correspondence and notes 2009 (pp1566-1578)
Australian Government certificate of transfer (1579-1584)
Amendment request - Aristiois to Aristidis - (pp1585-1586)
Amendment request - $380,000 to $44,000 (pp1587-1588)
Photocopy driving licences of Aristides and Maria Stamatis (pp1589-1590)
Loan statements and debit/credit summary 2/1/2004-22/7/2009 (pp1591-1635)
Plaintiff's internal notes – 29/11/2010-16/9/2011 (pp1636-1676)
Title and ASIC searches June 2011 (pp1677-1689)
1. The second bundle of document labelled Exhibit LH2 to Ms Hughes' affidavit of 17 April 2012 consists of a selection she made from a bundle of documents produced by the Plaintiff in response to a Notice to Produce requiring the production of "any documents recording or evidencing the Plaintiff's policies or procedures of the Plaintiff in relation to processing or evaluating applications for loans in force during the period from 1 July 2003 to 31 December 2004". LH2 occupied pages 1690 to 1782 of the Court Book but, apart from recognising that fact, there is no occasion in these reasons to refer to LH2 again.
2. On 17 April 2012 Aristides Stamatis, one of the Defendants, swore an affidavit of some nine pages giving his account of his involvement in the relevant transactions and what he asserted was his limited capacity to understand them. He annexed some financial records inconsistent with information in some of the documents in JG1 and dealt with the topic of his signatures to various documents. Documents falling into this latter category were identified by reference to the documents contained in Exhibits JG1 and LH1. Mr Stamatis' affidavit and annexures occupies some 55 pages.
3. Also on 17 April 2012 Maria Stamatis, the second of the Defendants, swore an affidavit of some nine pages giving her account of her involvement in the relevant transactions, what she asserted was her limited capacity to understand and dealing with the topic of her signatures to various documents. Again such documents were identified by reference to ones contained in Exhibits JG1 and LH1.
4. On 18 April 2012 George Stamatis, a son of the Defendants, swore an affidavit consisting of some five pages and 45 pages of annexures. The affidavit is largely concerned with what might be described as background information as distinct from the transactions which were the principal subject of the litigation. None of the annexures were copies of documents on which the Plaintiff relied or purported to be signed by the Defendants.
5. On 25 May 2012 Mr Christoper Anderson swore an affidavit. Mr Anderson is a Forensic Document examiner who was engaged by the Defendants' solicitor. His affidavit itself is of two pages but annexes some 95 pages consisting of his letter of instructions, CV report, some specimen signatures and copies of nine documents bearing signatures he was asked to examine. Those documents included the Property Loan Application of 5 November 2003 and a few pages from each of the Home Loan Contracts of 8 December 2003 and 14 September 2004. The tenor of the report is that Con Stamatis wrote some of the signatures appearing to be those of his mother, viz those on a Property Loan Application of 5 November 2003 and a Home Loan Contract dated 8 December 2003. Mr Anderson is silent as to the signatures purporting to be those of Mr Aristides Stamatis on these documents. He said that he found no indications of forgery in seven other documents
6. There is no reason to criticise the affidavits of Mr and Mrs Stamatis, or those of Mr George Stamatis or Mr Anderson.
7. On 8 July 2013 Ms Gurney affirmed another affidavit which, with its annexures, totals 23 pages. In large part it concerned the affairs of Con Stamatis who, in my principal judgment, I concluded had forged the Defendants' signatures on numerous occasions in order to benefit himself. I make no criticism of this affidavit.
8. On 9 July 2013 Ms Gurney affirmed a third affidavit. In my principal judgment I expressed a view of that affidavit from which I see no reason to resile:
253 Another issue arises in relation to the affidavit of Jane Gurney of 9 July 2013. In it in the course of some 70 paragraphs she summarises or recites the very obvious nature of documents annexed. Her remarks add nothing or virtually nothing to what would be immediately apparent to any Judge on the first sighting of the documents. Many of the documents annexed seem utterly irrelevant to the issues in the case and while I accept that she often states the source of the documents, there is a far more efficient way of doing that. Paragraph 53 strikes me as a supreme example of waste.
1. Paragraph 53 of that affidavit is in the following terms:
On 15 December 2003 Louise Williams sent a letter dated "Monday, 15 November 2003" to Mr and Mrs Stamatis. I verily believe that the date typed on the letter contains a typographical error and the correct date of the letter should have read "Monday, 15 December 2003". The basis upon which I hold this belief is that:
(a) the first sentence of the letter confirms that the 2003 transaction "settled on 11/12/2003", about a month after the date of the letter; and
(b) I have carried out a search and note that 15 December 2003 was a Monday, while 15 November 2003 was a Saturday.
The letter dated 15 November 2003 is derived from the Galilee file and a copy appears behind Tab 58 of Exhibit JG2.
1. Typical of the descriptions provided in the 70 paragraphs (out of a total of 84) which I criticised are the following;
17 At 11.53 on 19 November 2003, Galilee received a facsimile of 3 pages from CHL, enclosing the following documents:
(a) fax cover sheet dated 19 November 2003 (page 1 of 3);
(b) copy of a driver's licence for Aristidis Stamatis (page 2 of 3); and
(c) copy of a passport for Maria Stamatis (page 3 of 3).
The facsimile dated 19 November 2003 is derived from the Galilee File and appears behind Tab 10 of Exhibit JG2.
21 On 23 November 2003, the following documents appear to have been executed:
(a) Home Loan Contract with disclosure date 14 November 2003. The original signed Home Loan Contract is derived from the Galilee File and a copy appears behind Tab 14 of Exhibit JG2.
(b) Warranty. The original signed warranty is derived from the Bank File and a copy appears behind Tab 15 of Exhibit JG2.
(c) Direction to pay. The original direction to pay is derived from the Gaililee File and a copy appears behind Tab 16 of Exhibit JG2.
(d) Application for Exemption from Mortgage Duty: Refinancing of Loans. The original Application for Exemption is derived from the Galilee file and a copy appears behind Tab 17 of Exhibit JG2.
(e) Authority to date and pay advance. A copy derived from the Galilee File appears behind Tab 18 of Exhibit JG2.
(f) Direct debit request. The original direct debit request is derived from the AMO File. A copy is derived from the Galilee File and a copy appears behind Tab 19 of Exhibit JG2.
(g) Borrowers certificate. A copy is derived from the Galilee File and a copy appears behind Tab 20 of Exhibit JG2.
1. The sub-paragraphs were spaced out enough such that three lines of typing could have appeared in the spaces. The affidavit thus extended to more pages than it needed to.
2. The affidavit itself is some 21 pages long and annexes 418 pages described as Exhibit JG2. Ms Gurney deposes to the source of her knowledge of the matters contained in the affidavit being derived from her 24 January 2012 affidavit, the documents in Exhibit JG1, and Exhibit JG2. She says that the documents contained in Exhibit JG2 derive from three sources, the Bank's relevant files relating to the Defendants, a file held by Galilee & Associates, the solicitor who acted for the Bank in respect of the relevant loan, and files held by Australian Mortgage Options Pty Ltd and identifies the one of these sources from which each document came. Ms Gurney deposes to having placed the documents from these three sources in chronological order and also to the fact that Australian Mortgage Options Pty Ltd had purchased the mortgage management books of Combined Home Loans Pty Ltd, a company which was the Bank's former mortgage manager and originator at the time of the transactions involving the Defendants.
3. The documents contained in Exhibit JG2 included the following:
Documents re relationship between the Plaintiff and CHL and Plaintiff and solicitors (pp216-294)
Fax note Con Stamatis to Michael Aboud re Defendants' tax returns for 2002 and 2003 (p295)
Tress Cocks & Maddox letter 7/7/2003 (p 296)
CHL Fax 30/10/03 (p 297)
Property loan application - $380,000 – executed 5/11/2003 (pp298-300)
Privacy consent annexure – executed (p301)
Adelaide Bank formal approval - $380,000 - 13/11/2003 (p304)
Property loan application - $380,000 – executed 5/11/2003 (pp305-308)
Privacy consent annexure (p309)
DTS valuation (pp310-313)
NAB account statement 23/11/2002-22/5/2003 (p314)
Consumer reports Aristiois and Maria Stamatis - 7/11/203 (pp315-318)
Title Search (p 319)
Amendment request form "Aristiois" to "Aristides" faxed 18/11/03 (pp321-322)
Photocopy driving licences Aristides and Maria Stamatis (pp324-325)
Letter Galilee to Defendants 20/11/2003 (pp326-328)
Home loan contract - $380,000 – 20/11/2003 - unexecuted (pp331-349)
Lenders Mortgage Insurance Privacy consent – unexecuted (pp350-352)
Home loan contract - $380,000 – 23/11/2003 – executed by Defendants (pp353-368)
Lenders Mortgage Insurance Privacy consent – executed (pp369-370)
Warranty by Defendants - $380,000 – executed 23/11/2003 (pp371-372)
Direction to pay – executed 23/11/2003 (p373)
Application for exemption from mortgage duty - $380,000 – executed 23/11/2003 (two copies) (pp374-379)
Authority to date advance – executed 23/11/2003 (p380)
Direct debit request – executed 23/11/2003 (p381)
Borrowers' certificate – executed 23/11/2003 (p382)
Lenders mortgage insurance privacy consent – executed (pp383-384)
Information re mortgage stamp duty – executed (pp385-386)
Authority to NAB to surrender deeds – executed (p387)
Galilee solicitors letter 23/11/2003 (p 389)
Amendment request from $380,000 to $440,000 – faxed 4/12/2003 (pp395-396)
Lo doc declaration - $440,000 ($380,000 deleted)- executed 6/11/2003 (p397)
List of CHL charges re $440,000 loan – faxed 4/12/2003 (p398)
Plaintiff's formal approval - $440,000 – 5/12/2003 (two copies) (pp399-401)
Home loan contract - $440,000 – unexecuted (pp402-417)
Lenders mortgage insurance privacy consent – unexecuted (pp418-419)
Home loan contract - $440,000 – executed 8/12/2003 (pp420-436)
Letter Galilee & Associates to Asset Conveyancing 8/12/03 (pp 437-438)
Authority to date advance – executed 23/11/2003 (p441)
Letter 9/12/2003 Tress Cocks & Maddox to Asset Conveyancing (p446)
Galilee Solicitors' certificate - $380,000 - 9/12/2003 (pp449-451)
Galilee Solicitors' certificate - $380,000 - 9/12/2003 (pp453-455)
Mortgage AA277559S in favour of Plaintiff – executed 11/12/2003 (pp476-477)
CHL Advice to Defendants re loan has settled (pp478-479)
Settlement confirmation 12/12/2003 (p480)
Certificate of title FI 7/14868 – issued 22/12/2003 (p483)
Loan statements and debit/credit summary – 14/11/03–26/12/11) (pp485-519)
Product conversion summary - 25/8/2004 (pp522)
Product Conversion Application - $44,000 – partly executed (p 523 - 526)
Product Conversion Summary – 25/8/2004 (p 528)
Product Conversion Application – $44,000 – partly executed (p529 - 532)
Plaintiff's formal approval - $44,000 - 26/8/2004 (p534)
Home loan contract - $44,000 – unexecuted (pp535-556)
Lenders mortgage insurance privacy consent – unexecuted (pp557-559)
Mortgage acknowledgment - executed 14/9/2004 (p560)
Home loan contract - $44,000 – executed 14/9/2004 (pp561-579)
Lenders mortgage insurance privacy consent – executed (pp580-581)
Application to transfer funds – executed 14/9/2004 (pp582-583)
Title Search (p 584)
Conversion Checklist (p 585)
CHL letters to Defendants 14/10/2004 (pp586-587)
Loan statements and debit/credit summary 4/1/2005-3/2/2010 (pp590-609)
Plaintiff's file notes (pp613-615)
Australian Government certificate of transfer (pp616-622)
Account summary - 11/12/2003-26/2013 (pp626-632)
1. On 10 July 2013 Ms Candece Nicholls affirmed an affidavit. The body of the affidavit occupies eight pages and there are some 57 pages of exhibited documents described as Exhibit CN1. Ms Nicholls was a bank officer who was involved in the original transactions. Her affidavit refers to documents that the Bank received, bank practices at the time and the part she and others did or would have played in consideration of the documents. I make no criticism of this affidavit save that the documents exhibited contributed to the extent of the duplication that existed in the case. Included in the documents exhibited by Ms Nicholls are the following:
Amendment request - $380,000-$440,00 (pp644-645)
Lo doc declaration - $440,000 ($380,000 deleted) - 6/11/2003 (p646)
List of CHL charges re $440,000 loan (p647)
Property loan application - $380,000 – executed 5/11/2003 (pp650-653)
CHL privacy consent annexure – executed (p654)
List of CHL charges re $380,000 loan (p655)
Consumer reports Aristiois and Maria Stamatis (pp656-659)
NAB account statement – 23/11/2002-22/5/2003 (p660)
Lo doc declaration - $380,000 – executed 6/11/2003 (p661)
Plaintiff's conditional approval - $380,000 - 11/11/2003 (p687)
Plaintiff's conditional approval - $380,000 - plus notes (p688)
DTS valuation (part) 11/11/2003 (pp689-692)
Plaintiff's formal approval - $380,000 – 13/11/2003 (p693)
Plaintiff's formal approval - $440,000 – 5/12/2003 (p697)
1. Also on 10 July 2013 Ms Tiffany Browne swore an affidavit. The body of the affidavit consists of six pages and there are some four pages of annexures. Ms Brown was also involved in the original transactions. I make no criticism of this affidavit.
2. On 12 July 2013 Ms Vanessa Magee, a solicitor of Gadens, swore a three page affidavit to which were exhibited some 423 pages marked VMM1. I shall say more about this affidavit below.
3. On 11 July 2013 Ms Michelle Novotny swore an affidavit. Ms Novotny is a forensic document and handwriting examiner. A copy of a report she had prepared, including photocopies of 19 questioned and further specimen documents was annexed and the whole occupied some 195 pages. Ms Novotny's report indicated significantly more apparent forgeries than had Mr Anderson.
4. On 27 August 2013 the Defendants swore short affidavits dealing with documents or signatures which they apparently had not seen before, at least in the course of the litigation.
5. On 27 August 2013 a partner of the solicitor for the Defendants swore an affidavit annexing copies of four short documents produced by the Plaintiff pursuant to a Notice to Produce. I make no criticism of the affidavits referred to in this paragraph or the two immediately preceding paragraphs.
6. On 7 November 2013 the two handwriting experts Mr Anderson and Ms Novotny produced a joint report. There are a number of qualifications in the report arising from the fact that some documents had not previously been seen by Mr Anderson and Ms Novotny's instructions had not included that some signatures were to be attributed to Con Stamatis. Included in the experts' conclusions was:
In summary and within the limitations of Mr Anderson having only conducted cursory inspections of the questioned signatures on the additional documents, there is no disagreement between the findings of Mr Anderson and Ms Novotny.
1. The joint report went on to conclude that a significant number of the signatures purporting to be those of the Defendants were written by their son Con.
2. To provide some context against which the individual matters to which I refer may be judged, the Court Book in all included 1998 pages distributed among four large lever-arch files and one medium sized one. The Court Book may be broken down as follows:
Description Total pages Item pages
Pleadings 72
p1-72
Plaintiff's non-handwriting evidence
p73-1134 87
including JG1 pp84-170 1062 417
including JG2 pp216-632 53
including CN1 pp642-697 422
including VMM1 pp713-1134
Plaintiff's handwriting evidence pp1135-1329 195
Defendants' affidavits pp1330-1782 391
including LH1 pp 1397-1787 453 93
including LH2 pp 1690-1782
Defendants' non-handwriting further affidavits 69
pp1783-1833, 1931-1948
Defendants' handwriting evidence 97
pp1834-1930
Joint handwriting report 9
pp1949-1957
Notices to admit/disputing 14
pp1958-1971
Defendants' submissions 24
pp1972-1995
Defendants' evidence objections 3
pp1996-1998
TOTAL: 1998
1. The Plaintiff tendered some 984 pages of the Court Book, being those identified in Exhibit A, Ms Novonty's original report which became Exhibit B, a bundle of other documents largely consisting of copies of documents produced under subpoena by the National Australia Bank and recording transactions of Mr Stamatis and which became Exhibit C. There was no Exhibit D and Exhibit E consisted of one page.
2. For completeness I refer also to the documents that were tendered in evidence by the Defendants' counsel. Exhibit 1 consisted of files of the Plaintiff including the credit assessment files relating to the $440,000 and $44,000 loans from which some of the documents copies of which are referred to Ms Gurney's 9 July affidavit, paragraph 5(a), were taken.
3. Exhibit 2 was the file of Galilee & Associates, solicitors, from which some of the documents copies of which are referred to in Ms Gurney's 9 July affidavit, paragraph 5(b), were taken. Exhibit 3 was the Australian Mortgage Options Pty Ltd file from which some of the documents, copies of which are referred to in Ms Gurney's 9 July affidavit, paragraph 5(c), were taken.
4. Exhibit 4 was a selection of documents extracted from Exhibit 1. Exhibits 5 and 6 were respectively the Plaintiff's Crimes File and part of the Plaintiff's Collections File.
5. Exhibit 7 were the originals of some of the documents included in the exhibits to Ms Hughes' affidavit and the Notices to Admit and Notices of Dispute. Exhibit 8 and 9 were copies of letters from Gadens to the Defendants' solicitors.
Consideration
1. It is appropriate to acknowledge that to some degree the scene for some of the duplication of documents that occurred in this case was the selection of documents contained in Exhibit JG1. Insofar as the Plaintiff carried the onus of proof and needed to make out its case in chief it needed no more than proof of the mortgage, the loan agreements on which the Plaintiff relied, that the loans had been made and the extent of repayments. The last two of these would have been apparent on the face of business records of the Bank with some explanation of them by a bank employee. The pieces of paper constituting the mortgage and loan agreements must also have been readily obtainable leaving only proof of the Defendants' signatures on the mortgage and loan documents.
2. It was of course open for the documentation at that stage to go further and address the other issues raised in the Defence and Cross-Claim. It may be that this is the explanation for the inclusion of further documents but, if those other issues were to be addressed, one would have expected many more documents than were annexed. However, Gadens were not acting at that stage and I need not pursue the topic further.
3. Ms Hughes' attempt in April 2012 to then provide a comprehensive record of the documents relating to the loans by the Plaintiff to the Defendants was sensible. Unfortunately, she seems to have been content to rely on photocopies at that stage. Furthermore, almost certainly through some carelessness on the part of Galilee & Associates in making the copies provided to Ms Hughes, or in the copying by or on behalf of the Defendants' solicitors for the purposes of the preparation of Exhibit LH1, a number of the documents in Exhibit LH1 are incomplete in comparison with the originals and also with those exhibited to affidavits filed on behalf of the Plaintiff. (In this connection I have not read the reference in paragraph 5 of Ms Hughes' affidavit of 17 April, "At pages 5 to 288 are the documents produced pursuant to the Notice to Produce" as referring to the actual pieces of paper produced by Galilee and Associates.) I say more about these differences below.
4. In an affidavit sworn on 7 October 2014 Ms Hughes also said that she had caused the Defendants' affidavits to refer to the documents on Exhibit LH1 as she considered this to be more efficient and cost-effective rather than duplicating the documents. As a matter of principle I agree although it is to be observed that the Defendants also referred to documents in Exhibit JG1 which were not included in Exhibit LH1. These were the documents at pages 94, 95, and 115-6 of the Court Book. There was also a reference to the document in Exhibit JG1 appearing at page 93 of the Court Book. The version of this document appearing in Exhibit LH1 is incomplete.
5. So far as is presently relevant this then was the state of the record when the affidavits of July 2012 were sworn or affirmed on behalf of the Plaintiff.
6. Relying inter alia on Ridehagh v Horsefield [1994] Ch 205 at 238-9, in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at [92] the Court of Appeal made it clear that "The procedure to be followed in determining applications for wasted costs must be fair and 'as simple and summary as fairness permits...[h]earings should be measured in hours, and not in days or weeks...'" By parity of approach and in recognition that absolute precision in respect of any matter is impossible and excessive detail in a consideration of hundreds of pages will largely deprive the procedure of efficacy, I will engage in some approximation where that seems appropriate. However, it is impossible to avoid all detail.
7. I turn first to Ms Gurney's affidavit of 9 July 2013. Positive attributes of Ms Gurney's 9 July affidavit are that the documents exhibited from, as I have said, a number of sources have been placed in chronological order and Ms Gurney refers to their sources. The documents exhibited also seem to include a comprehensive set of those that led to the making of the loans.
8. On the other hand, there are a number of aspects meriting criticism. I have earlier referred to the body of the affidavit itself. Very many of the documents annexed are further copies of those contained in Exhibits JG1 and LH1. Given Ms Nicholls' affidavit was probably then in preparation, the question also arises why it was thought appropriate to include copies of the same document in Ms Gurney's affidavit of 9 July and also Ms Nicholls of 10 July.
9. A comparison of the documents in Exhibit JG2 and those annexed or exhibited to Ms Gurney's first affidavit, that of Ms Hughes and that of Ms Nicholls is instructive. Subject to remarks I make in the table and below concerning the incompleteness of some copies, the documents listed in the columns headed JG1, LH1, and CN1 are the same as those in the first column of the following table:
JG2 JG1 LH1 CN1 Remarks
216-294
295 1413
296 1402
297
298 85 1403 650 Fax notes greater on 305 and marginally on 298
299 86 1404 651 Fax notes a bit greater on 1404
300 88 1406 653 Fax notes greater on 1406 – important
? 87 1405 652 ? JG2 document incomplete in Court Book
301 89 1407, 1412 654
304 1452 693 304 has more fax notes
305 1408 650 Duplicate of 298 but with more fax notes than 298 and 1408
306 1410 651 Ditto mutato mutandis re 299 and 1410
307 1409 652 307 has more fax notes than 1409
308 1411 653 Duplicates 300 but with more fax notes than 300 and 1411
309 89 1412 654 Duplicates 301 but with more fax notes than 89, 301 and 1412
310-3 1430-3 689-692 310-3 have fax numbers
314 90 1427, 1483 660 314 has different fax date; 660 has none
315-6 1417-8 656-657 315-6 have (more) fax dates
317-8 1419-20 658-659 317-8 have fax dates
321-2 1478-9 1585-6
324-5 91-2 1481-2 1589-90
326-28
331-49 1453-69 Some minor differences, eg "disclosure date" and pages configured differently
350-2 1470-1 Same content but pages configured differently
353-68
369-70
371-72
373
374-79
380 95
381 93
382 94
383 Duplicate of 369-370
385-86
387
388
389
395-6 1485-6 644-5 644-5 and 1587-8 do not contain fax note
1587-8
397 1487 646 646 does not contain fax note
398 1488 647 647 does not contain fax note
399-400 697
401 1414 Duplicate of 399 plus fax note
402-17
418-19 Same content, different format from 350-352
420-36 97-112 1489-1505 "(Term Loan) Page 15" missing after p110
113-4 1506-7
445 Duplicates 439 except for fax notes and "received" stamp
449-51 1509-11 Note is missing on p1509
453-55 1512-13 Duplicate of 449-451 - page missing after 1513
476-7 115-6
478-9 134-5 1515-16 Some fax notes absent on 134-5 & 1515–6
480 1517
483
485-519 1591-1621 Large degree of duplication
522 1521
523 136 1522
524 1523
525-6 1524-25
527-32 Largely duplicates 521-526, 1520-1525 and 1558-1562
534 1563
535-56
557-9
560 1551
561-79 137-55 1530-48
580-81 156-7 1549-50
583 158
584 1552
585 1553
586-7 1555-56
590-609 1624-1634 Duplication extensive
616-622 1579-84 Page 621 is out of place
1. The table comparing the documents exhibited to the affidavits of Ms Gurney, Ms Hughes and Ms Nicolls provides an indication of the degree of duplication between those bundles. Once one puts aside the documents relevant to the relationship between CHL and the Plaintiff, viz pages 216-294, it is apparent that about 75% of the documents exhibited to Ms Gurney's affidavit of 9 July 2013 were, in effect, duplicates of documents in JG1 or LH1 or both. If those relationship documents are included the percentage drops to about 60%. The documents exhibited to Ms Nicholls' affidavit were yet further copies for which no reason is apparent. In the drafting of her affidavit, the technique used in the drafting of the Defendants' affidavits would have been decidedly preferable.
2. Those remarks must be subject to a qualification. A significant number of the documents bear fax notations at the top. Not infrequently, the fax notations have not been fully copied. Very occasionally - eg pages 298 and 1403 and pages 93 and 1519 - a bottom line has been omitted in the copying process. The point has been made by Mr Pringle, the solicitor for the Plaintiff, that this qualification means that such documents were not duplicates. He is, of course, correct. Documents are not strictly duplicates if one contains transmission information or hand markings or other contents and the second document does not.
3. On the other hand, the mere fact of a difference between two copies of a document provides no grounds for including a second copy unless the difference is, or is arguably, significant. In this case, with the exception of a limited number of documents – see my principal reasons circa [20], [27-34], [49] and [61] - limited attention was paid to the fax notes during the hearing and none, or virtually none, on differences. The same may be said of other differences between versions of the same document.
4. Furthermore, the extent to which the fax notes on the documents in Exhibits JG2 and CN1 are incomplete indicates that no attention was given to that factor at the time those exhibits were prepared and that the further copies were not exhibited because they overcame the deficiencies in Exhibit LH1. A comparison with the original documents tendered by counsel for the Defendants argues persuasively in the same direction.
5. One extraordinary feature of JG2 is the inclusion of unexecuted copies of the home loan contracts in circumstances where executed copies were also included. In my principal reasons I raised the question of the relevance of such unexecuted copies. I can answer that question now by saying that they were irrelevant and I am unable to comprehend how, given the existence of executed copies, anyone could have thought the unexecuted copies were relevant.
6. Of course Ms Hughes also annexed an unexecuted copy of the $380,000 loan agreement but given that she was attempting to set out exhaustively what was in the possession of the Bank or those who had acted for it, and the number of pages in one copy is relatively small, what I see as unnecessary in this regard can reasonably be ignored.
7. In my principal judgment I remarked on the fact that each home loan contract took the same or virtually the same printed form of about 22 pages and that there were 19 copies of that document in evidence. Some were executed and some were not and, of course, some were differentiated by the loan amounts in them. It has been has pointed out that three I had counted twice, four were annexed to reports of the handwriting experts and five, one of which consisted of only one page, were included in Exhibit LH1. Be that as it may, in the exhibit to her affidavit of 9 July Ms Gurney added to the number otherwise in evidence six further copies, one executed and one unexecuted in each of the amounts of $380,000, $440,000 and $44,000 – see Court Book pages 331, 353, 402, 420, 535 and 561. Copies of executed contracts for $440,000 and $44,000 had been exhibits to both Ms Gurney's prior affidavit and Ms Hughes' affidavit.
8. Another feature of Ms Gurney's affidavit of 9 July 2012, albeit not involving many pages, are duplicate copies of a number of documents, apparently because some were sent by CHL and others were in a file or some were clean copies and others had notations (of no possible significance) on them -see, eg Court Book pages 393-4, 442-3, 447-8, 459-63 and 521-532.
9. The affidavit also included a number of title searches and a deal of correspondence concerning settlement of the loans and mortgage arrangements and details of how the loan funds were or were to be disbursed eg pages 447–484. Some of that was relevant but much was duplication or otherwise irrelevant.
10. In the affidavit Ms Gurney observes that the documents in Exhibit JG1 to her earlier affidavit did not comprise all of the documents which related to the 2003 transaction and said that that she set out the further documents that related to that transaction. Ms Gurney made similar statements in respect of the 2004 transaction. Both statements were wrong.
11. In fact, in respect of the 2003 transaction Ms Gurney reproduced all of the documents exhibited to her earlier affidavit with the exception of the standard mortgage memorandum lodged with the Registrar General by Adelaide Bank Limited and notices and other documents consequent on the Defendants' default. In respect of the 2004 transaction again Ms Gurney reproduced the earlier documents
12. Ms Gurney's affidavit of 9 July creates the firm impression that it was prepared on the basis that documents were included and referred to because they were on a file and without any regard to issues of either relevance or duplication.
13. During the course of the hearing on the issue of costs, an affidavit by Mr Kevin Pringle, a partner of Gadens, was read. Mr Pringle deposes to having been a solicitor since 1994 and a partner at Gadens for five years. His views are therefore entitled to respect. I do not find it necessary to deal with all of the matters referred to by Mr Pringle but that said there are a number which I am unable to accept.
14. Mr Pringle expressed the view that Ms Gurney's affidavit of 24 January 2012 was "not inappropriate, irrelevant or unreasonable when assessed as a step in the proof of the Plaintiff's case in chief". This view is at odds with the conclusions expressed above as to the inadmissibility of what Ms Gurney had to say and, given the denial in the defence then current of the Defendant's execution of the relevant documents, went nowhere in proof of the fact that they had in fact executed the documents. I have commented on the choice of documents annexed.
15. It must be accepted that the references in the affidavits of the Defendants to three documents in JG1, consisting of four pages in total, meant that that exhibit could not be entirely discarded without other steps being taken. The inclusion in the exhibit of the mortgage, Adelaide Bank's Registrar-General memorandum and default notices, amounting to some 41 pages, argue in the same direction. However that hardly provides a reason for Ms Gurney in her 9 July 2013 affidavit duplicating all or nearly all of the remaining 40 odd pages in the exhibit.
16. Mr Pringle made a number of other points. He asserted that "the nature of this case meant that the parties were required to examine each and every document, derived from various sources to identify: (a) the author of the document, (b) the intended recipient [and] (c) the date the document was created or executed".
17. I agree. Such is an incident of proper preparation of a case such as this one but it is not a reason for including in evidence or in exhibits to affidavits documents not arguably relevant to the issues or unnecessary copies of relevant documents. And the examination to which Mr Pringle referred should have identified what, if anything, any document added, or at least arguably added, to the case.
18. Mr Pringle also asserted that, given that the Defendants had raised issues of:
Whether the Plaintiff had verified the Defendants' identities as signatories,
Whether the Plaintiff had failed to comply with its own guidelines,
Whether the Plaintiff was aware of special disadvantages suffered by the Defendants,
Whether the Defendants had signed all of the relevant loan documents, and
Whether the Defendants understood the nature of the mortgage,
the provenance and authenticity of documents had to be proved and he could not assume that the Defendants would tender documents nor refrain from taking such objections to authenticity or source as was open to them. Secondly, he asserted that prudence demanded that all documents in the files of the Bank, Galilee & Associates and AMO be annexed to an affidavit identifying the documents, their source and placing them in an order "so that the events of the transaction could be presented in an ordered and succinct fashion".
1. Certainly it would have been reasonable to take the view that the provenance and authenticity of relevant documents had to be proved. However, the proposition that all documents in the files of the Bank, Galilee & Associates and AMO be treated as Mr Pringle suggests "so that [all] the events of the transaction could be presented in an ordered and succinct fashion" must be rejected. As I have pointed out many documents were duplicated and one only has to note their description to see that many were irrelevant: The approach suggested is an extravagantly wasteful way of conducting litigation, and suggests a failure to come to grips with the issues. It might usefully be contrasted with remarks quoted below from Trysams Pty Limited v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399. But even if one accepted Mr Pringle's approach, the course adopted of having Ms Gurney also describe each document was, as I said in [253] of my principal reasons quoted above, itself pointless.
2. And though I do not need to, and do not in fact, rely on it, as I pointed out earlier, proof of the Plaintiff's case in chief required no more than a few documents and proof of the Defendants' signatures on a few of them. The Defendants bore the onus of proof of the matters raised in their cross-claim and if they tendered no documents, as a practical matter their cross-claim was bound to fail. It seems to me that Mr Pringle could assume that documents at least from the Bank's file would be tendered by the Defendants.
3. In opposition to the making of any order against Gadens attention was drawn to the Practice Note SC CL 6 and particularly to the "Usual Order for Hearing" referred to in that Practice Note and which required the filing of a Court Book. It was pointed out that certain judges in this Division have reminded parties on a number of occasions of the importance of compliance with the Practice Notice insofar as it refers to the timely submission of a Court Book. It was submitted that it would be an exceptional case where costs would be imposed on a practitioner where he followed a Practice Note or for not seeking instructions to move the Court for some variation to the practice so laid down or otherwise the subject of directions or for acting in a reasonable belief that what was being done was necessary to forestall successful objection to the admission of evidence thought necessary or desirable. It was pointed out that objection was in fact taken on the basis that the authenticity of documents had not been proved. Attention was drawn also to the fact that the Plaintiff was not likely to be an uninformed end user.
4. I have no difficulty in accepting the last proposition but I do not regard it as of significant weight in this case. For a variety of reasons parties may not wish to seek orders for costs against lawyers acting for or against them and the Court has both its own interests and the interests of the public to consider in relation to costs incurred improperly or unreasonably.
5. I do not regard the other objections at [80] as necessarily correct. Practice Notes exist for general guidance, not to be slavishly followed without thought. In any event those objections rather miss the point. It may be accepted that once affidavits have been sworn and were intended to be used at a hearing, the Practice Note required that copies of them be included in the Court Book. That says nothing about whether they should have been drafted as they were or whether any intention to rely on them should have continued without qualification. For example, if it was thought necessary at the time of preparation of Ms Gurney's affidavit of 9 July to provide evidence of where the documents annexed to her earlier affidavit had come from and annex further copies of those documents, reliance on her earlier affidavit or the appropriate parts of it should have been then disclaimed. If it was not, a similar stance should have been taken at or prior to the preparation of the Court Book.
6. Of course, there will be cases where such a course would be more trouble and cost than it was worth. However, given what I have said as to the extent of duplication between those affidavits in this case and the wholesale inadmissibility of all or almost all of the body of the affidavit of 24 January 2012, the trouble and cost would not have been wasted. In any event, the affidavit of Ms Gurney of 9 July did not solve the problem of admissibility apparent on the face of her earlier affidavit. Her affidavit of 9 July was largely secondary evidence in a case where the originals of documents and their provenance were likely to be important. Indeed the latter point was recognised in an affidavit by the Plaintiff's solicitor read in the course of the hearing in relation to costs.
7. There is one further argument I should address. Con Stamatis was arrested on 30 May 2009 and in due course sentenced in respect of a number of serious drug charges. It would seem that he was not conveniently available to swear or affirm affidavits. He gave evidence orally, a course that is likely to have been anticipated. It was submitted that one of the reasons for the number of documents exhibited to Ms Gurney's affidavit was to enable Con to be cross-examined on them. Particular documents were not identified in this connection although they would presumably have included those on which signatures purporting to be those of the Defendants appear. There may well have been others but even so, this did not justify the duplication or many of the other matters I have criticised.
Magee
1. I referred above to an affidavit of 9 July 2013 by Ms Vanessa Magee. The substance of that affidavit was that on 24 June 2003 Gadens had issued a subpoena to Tresscox Lawyers (Tresscox) and Tresscox had produced documents. Tresscox were the successors to a firm of solicitors Tress Cocks & Maddox who had acted for Con Stamatis in connection with the property transactions in which he had engaged and toward which some of the funds lent by the Plaintiff had been diverted. The schedule of documents required to be produced identified two conveyancing files and occupied less than one third of a page but a copy of the full subpoena, occupying some seven pages was annexed. Also annexed were copies of the documents produced in response to the subpoena. These occupied some 41 pages.
2. A few of the documents annexed to this affidavit were relevant as indicating Con's need for funds and the use to which the $440,000 received was put but the vast bulk, probably in excess of 90%, were not even conceivably relevant. For example, included were:
Details of the Strata Plan encompassing the property Con (or a company associated with him) was purchasing,
Amendments to the by-laws of that Strata Plan,
Correspondence concerning connections to the Telstra network,
A Fire Safety Engineering Assessment,
Planning Certificates issued under s 149(2) of the Environmental Planning and Assessment Act, 1979,
Numerous title searches,
Certificates under s 109 of the Strata Schemes Management Act, 1996.
1. Even if some of these were part of the contract of purchase pursuant to which funds were needed, there was no conceivable reason for them to be included. It is difficult to believe that any objection would have been taken to the tendering of only the basic contract but even if it was, providing the original was available – and it was – the objection could have been overcome by the tendering of the original. No judge would contemplate not allowing such a course.
2. In his affidavit of 7 October 2014 Mr Pringle also sought to justify the 12 July 2003 affidavit of Ms Magee and its annexures, saying:
27 …the documents (produced under subpoena by Tresscox) were relevant to prove the following matters:
(a) That Charles Xuereb a solicitor of Tresscox had provided legal advice with respect to what was described as a 'warranty document' as referenced in a tax invoice issued by Tresscox (CB 735). Nowhere in the Tresscox file did Mr Xuereb advise on a 'warranty document' relating to the Miranda Property acquisition. The file was relevant in providing that 'warranty document' was a reference to the warranty signed by the defendants in the loan transaction. In order to prove that the warranty document was not relevant to any part of the Miranda conveyance, the whole file was exhibited to the Magee affidavit.
(b) That Con Stamatis had asked Mr Xuereb to provide legal advice to the defendants as referenced in a file note in the Tresscox file. That evidence was relevant to the fact that Con Stamatis never intended for the fraud to be concealed from the defendants, a critical point in the plaintiff's case.
1. A number of points might be made. Firstly, the documents are photocopies of a file said to have been produced by Tresscox pursuant to a subpoena. That is not sufficient to prove either the authenticity of the documents or that they are all that there were in the relevant [Tress Cocks & Maddox] file - see National Australia Bank v Rusu (1999) 47 NSWLR 309 to which submissions made on behalf of Gadens referred me.
2. Secondly, a reference in a file relating to the purchase of the Miranda property by Con, would be an extraordinary place to find some charge for advising on a document relating to a loan to the Defendants and a mortgage by them to the Plaintiff. Thirdly, page 735 referred to by Mr Pringle is a bill of costs for acting on the purchase. The relevant entry is:
25 Nov 03 Reading Warranty document/Review Contracts of Insurance.
1. 25 November 2003 is three days after the warranty in favour of the Plaintiff was signed, a circumstance that, on its own, makes it unlikely that the advice had anything to do with the warranty signed by the Defendants.
2. Fourthly, there are a number of other references in the Tresscox documents to Insurance or Warranty advice. "Insurance" or "Insurance adjustment" is referred to on Court Book pages 728, 758, 775, 820 and 823. At pages 732 and 739 there are tax invoices dated respectively 30 and 29 December 2003 referring to "to our professional costs of acting on purchase, including providing Insurance and Warranty advice". Insurance is also referred to on pages 881 and 889 of the Court Book.
3. Fifthly, warranties have been a not uncommon feature of insurance contracts, a type of contract with which the Defendants had no relevant connection. Sixthly, even if it was thought desirable to include the documents that referred to warranty, and others that might have been thought necessary to provide context, there was no rational basis for including the enormous bulk of material that was attached.
4. Seventhly, although I do not need to rely on this, there was no attempt to rely on Ms Magee's affidavit in the proceedings.
5. In light of the first five of these factors it strikes me as utterly unrealistic to think that the reference in the Tress Cocks & Maddox documents to "warranty" could have anything to do with the warranty signed by the Defendants or an indication that they, or Con on their behalf, received advice in respect of that document. The fact that the Tress Cocks & Maddox file did not contain any "warranty document" - nor did it contain an "insurance document" - does not provide evidence that whatever the warranty was that was the subject of advice, it was a warranty involving the Defendants. However, even if there was a thought such as that referred to, there was no justification for including the vast bulk of material that was annexed.
6. I should also return to the copy of the subpoena that was attached to Ms Magee's affidavit. It amounted to only six or so wasted pages and, if it was the only problem would not merit attention. However the inclusion of those six pages provides further support for the view that Ms Magee exercised no reasonable judgment as to what was needed.
7. In summary:
1. The vast bulk – I estimate at least 90% - of the 415 pages of documentation exhibited to the affidavit of Vanessa Magee was irrelevant, and this even if one takes the view that some of it was justified on the ground that it contained references to a "warranty".
2. I make no criticism of the body of Ms Magee's affidavit of 3 pages.
3. At least 75% of the body of the 9 July 2013 21 page affidavit of Ms Gurney contained nothing of use.
4. At least 60% of the 417 pages of documentation exhibited to the 9 July 2013 affidavit of Ms Gurney, Exhibit JG2, was duplication of documents in Exhibit JG1 and/or Exhibit LH1 More of that documentation was irrelevant or duplicated within Exhibit JG2 itself.
5. The documents exhibited to the affidavit of Ms Nicholls, some 53 pages, were almost wholly further duplication.
1. I am not unconscious that in dealing with the matter as I have, in some respects I have descended into what might be thought to be unfortunate detail. However, I know of no other way of fairly summarising the material for present purposes and indicating the magnitude of what I see as unnecessary documentation.
2. The material I have criticised amounted to a substantial proportion of the paper in this case – about one-third of the 1998 pages in the Court Book and a greater proportion of the original affidavits reflected in that Book. The drafting of that material or its inclusion in exhibits meant that it had to be photocopied for consideration by others and then read and considered by all of those in the case. It was copied again for inclusion in the Court Book, and in that form, further copies no doubt provided for counsel and one suspects, solicitors.
The Defendants' solicitors
1. So far I have concentrated on the actions of Gadens, the solicitors for the Plaintiff. The question also arises whether the Defendants' solicitors are to be criticised for any of the documentation in the case. In that regard an affidavit of Ms Hughes of 7 October 2014 was read. If I may say so that affidavit displays a very thoughtful and responsible approach to the preparation of the litigation.
2. Despite that I do think that Ms Hughes erred in including in Exhibit LH1 documents that were incomplete, particularly in the fax notes, but otherwise I see no reason to criticise any of the affidavits prepared on behalf of the Defendants. As things transpired the incompleteness in the documents included in Exhibit LH1 does not seem to have resulted in any waste of, or increase in, costs.
3. The question does arise whether Ms Hughes should be criticised for not taking a more robust approach to the preparation of the Court Book and taken steps to ensure it did not contain the duplication it did. In her affidavit Ms Hughes deposes to having consulted counsel and been advised that it was necessary for Exhibit LH1 to be included. She took account also of the fact that it included documents to which the Defendants had referred in their affidavits and expresses the view that to have prepared the Court Book by taking all of the documents out of their exhibits and placing them in chronological order with cross-referencing would have increased the parties' costs.
4. I am disposed to agree with this last statement and having regard also to the other matters to which I have just referred, it was not unreasonable for Ms Hughes to have the Court Book include Exhibit LH1.
5. It was principally a matter for the Plaintiff's solicitors what of their evidence the Court Book contained and, given the potential costs of a reorganisation exercise, Ms Hughes is not to be criticised for the inclusion in the Book of the affidavits prepared on behalf of the Plaintiff. Indeed Ms Hughes in fact wrote to Gadens querying whether, in light of Ms Gurney's affidavit of 9 July 2013, and Ms Hughes' view that large parts of the affidavit of 24 January 2011 were inadmissible, the Plaintiff still intended to rely on the earlier document.
6. Against this background, I turn to the matters referred to in [5] above and to what seem to me to be the relevant principles. A starting point is the Civil Procedure Act 2005. So far as is presently relevant sections 56 and 99 of that Act provide:
56(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
99 Liability of legal practitioner for unnecessary costs
(1) This section applies if it appears to the court that costs have been incurred:
(a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
(b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
(2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:
(a) it may, by order, disallow the whole or any part of the costs in the proceedings:
(i) …
(ii) in the case of a solicitor, as between the solicitor and the client,
(b) it may, by order, direct the legal practitioner:
(i) …
(ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,
(c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.
(3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 3.2 of the Legal Profession Act 2004) for inquiry and report.
(4) The court may direct that notice of any proceedings or order under this section with respect to a legal practitioner be given:
(a) …
(b) in the case of a solicitor, to the client.
(5) The court may give ancillary directions to give full effect to an order under this section, including directions to a legal practitioner to provide a bill of costs in assessable form:
(a) to the court, or
(b) to a party to the proceedings, or
(c) …, or
(d) in the case of a solicitor, to the client.
(6) A party's legal practitioner is not entitled to demand, recover or accept:
(a) …
(b) in the case of a solicitor, from the client,
any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2)(c).
1. I accept that the provision is not intended to have any punitive purpose. I accept also that ss (2) contains a discretion. Although I am not sure that it properly reflects the terms of s 99, I accept the principle recorded in Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300 at [92] that "the jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised with care and discretion and only in clear cases". I accept also that, as was said in Ridehagh v Horsefield [1994] Ch 205 at 222, conduct is not unreasonable simply because others would have acted differently or if that conduct permits of a reasonable explanation.
2. During the course of submissions I intimated that I did not regard s 99(1)(a) as relevant. The question is whether any of the circumstances fall within s 99(1)(b).
3. Litigation is notoriously expensive. It has been for centuries. Part of the reason lies in the fact that it commonly involves consideration of a large mass of unorganised factual material, by persons who, by community standards, are relatively highly paid. Furthermore, there can be no doubt that with the advent of the photocopier and the ease with which records and copies of records are made, the volume of documents needing to be considered has expanded greatly. And often this adds to the cost. As a general proposition it takes longer to read and appreciate 200 pages than 10 pages. Turning over a bundle of 200, 300 or 400 pages to reach a later document commonly takes longer than if the bundle is appreciably smaller. When it becomes necessary to move from one large lever-arch file to another, again relatively unproductive time is consumed.
4. In this connection I would respectfully embrace remarks of McDougall J in Trysams Pty Limited v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 at [102] – [103], viz:
102 Having regard to my conclusions, it is not necessary to consider whether some special costs order should be made to take account of what in my view is the pointless and wasteful duplication of material. However, I wish to make it clear that parties are required to exercise some degree of intellectual judgment in choosing the material that they put before the Court. There is no reason why the opposing party should be burdened with the cost of considering a vast amount of irrelevant material. There is no reason why the Court's record should be cluttered with a vast amount of irrelevant material. There is no reason why, in an appropriate case, the service and tender of a vast amount of irrelevant material should not be recognised by moulding appropriate orders as to costs.
103 Litigation is to be conducted in such a way as to facilitate the just, quick and cheap resolutions of the real issues in dispute. See s56(1) of the Civil Procedure Act 2005. Parties to civil proceedings have a duty to assist the court to further the achievement of that process. See s56(3). Their lawyers are bound to assist them. See s56(4). To my mind, the application of those principles requires, among other things, that parties and their legal representatives give proper consideration to the issues in the case and to what they need to prove. I do not regard the indiscriminate wholesale tender of documents, to which quite clearly no sufficient intellectual analysis has been applied to consider their relevance and significance, as an appropriate way to approach the discharge of the duties set out in s56.
1. Part of the skill to be expected of those who involve themselves professionally in litigation, particularly in the higher courts, is that they can and will apply themselves to sorting the relevant from the irrelevant and avoid unnecessary duplication. I say "unnecessary" because I accept that some time duplication may be necessary. It may also be an efficient way of dealing with documents, particularly with their identification. I accept also that at times the determination of what is relevant may not be easy and it is appropriate to allow some latitude to those who are required to undertake the task in the course of preparation of a case. Both on the issues of relevance and duplication questions of judgment and degree do arise.
2. However in this case the extent to which irrelevant or duplicated material was included in affidavits prepared on the Plaintiff's side of the record went well beyond anything that was reasonable either in quantity or justification. The firm conclusion at which I have arrived is that no sufficient intellectual analysis, if indeed in the case of some of the material, any such analysis at all, has been applied to much of the material. I am satisfied that costs have been incurred without reasonable cause, in circumstances for which a legal practitioner is responsible
3. That is not the end of the matter for s 99(2) gives the court a discretion whether to make an order against the relevant solicitor at all, and if so, the extent of the relevant costs that the solicitor should be ordered to pay. Accepting the existence of that discretion I am nevertheless of the view that an order should be made against Gadens and that the order should, subject to the avoidance of undue complexity in its implementation, extend to the whole of the unnecessary costs. Principally motivating that conclusion is the extent of the material that was unjustified and the degree to which the inclusion of that material involved a departure from the reasonable and efficient preparation of the case.
4. However, there is also another factor that has weight in influencing the exercise of my discretion. It is the extent to which in litigation generally it has become the habit of practitioners to include large quantities of unnecessary paper. Trolleys are now commonly needed to hold files or briefs that years ago could be carried in one hand and while of course cases are individual, and there were always cases involving a large volume of material, it is relatively rare these days to find cases that don't. Costs have blown out in a similar fashion and in the interests of the Court and litigants generally, it is important that if costs are incurred without reasonable cause, those responsible should bear them.
5. For reasons I have indicated earlier, I see no basis upon which an order should be made against the Defendants' solicitors, Hughes & Taylor.
6. The conclusions at which I have arrived lead to the question of how to formulate and/or quantify an order that is fair both to Gadens and their client and to do so without forcing the incurring of yet more avoidable costs. It is a reasonable assumption that the costs and time involved in the preparation of the affidavits to which I have taken exception have been identified and quantified or that such steps can readily be effected. Significantly more difficult will be any attempt to value the time expended through the consideration by both the Plaintiff's and the Defendants' lawyers of duplicate or otherwise wasteful material and this even if one is accepts, as I do, that precision is not possible..
7. During the hearing on the question of the form of any orders was not canvassed. In these circumstances, I believe I should formulate the orders that presently appeal to me as best calculated to effect the result that Gadens pay or bear the costs incurred as a result of their unreasonable actions but provide to the parties the opportunity of making any submissions they wish as to the form of those orders. In formulating the orders that presently appeal I have sought to reflect the usefulness of affidavit material, and a view that the time and cost involved in drafting the body of an affidavit is likely to be substantially greater than collating and exhibiting a bundle of documents of a similar size. I have also sought to simplify the identification or quantification of the costs the subject of the orders, albeit recognising that by so doing I may not be doing complete justice to the Plaintiff. I acknowledge that in seeking to give effect to the considerations I have mentioned I have departed from percentages I have earlier referred to and indulged in a degree of approximation.
8. The orders that seem to me appropriate will involve disallowing some of the costs charged by Gadens, probably ordering a refund of costs paid by the Plaintiff to Gadens, and ordering Gadens to pay to the Plaintiff a portion of the costs that the Plaintiff has presumably paid the Defendants pursuant an order made in that regard.
9. In order to ensure that the result is just I believe I should at this stage refer certain issues to a costs assessor and direct both firms of solicitors to provide to the Court and to the assessor a bill of costs in assessable form covering all of their costs of the proceedings. Accordingly I am disposed to now:
1. Order that Gadens Lawyers provide to the Court a bill of costs in assessable form covering the Plaintiff's costs of the proceedings.
2. Order that Messrs Hughes & Taylor provide to the Court a bill of costs in assessable form covering the Defendants' costs of the proceedings.
3. Refer to a costs assessor for inquiry and report the question of the extent to which:
1. the costs of preparation and copying of the Court Book are likely to have been increased by reason of it being the size it is instead of two-thirds that size;
2. the costs of the Plaintiff of and incidental to the hearing are likely to have been increased by reason of the Court Book being the size it is instead of two-thirds that size;
3. the costs of the Defendants of and incidental to the hearing are likely to have been increased by reason of the Court Book being the size it is instead of two-thirds that size and the affidavits reflected in it also being in total 50% longer than they should have been.
1. Subject to any matter that may arise in the interim, the orders that seem to me appropriate to be made eventually will be to the following effect:
1. Disallow as between Gadens and the Plaintiff the following costs:
1. 80% of the costs of and incidental to the preparation, drafting and settling (whether by Gadens or counsel), and copying by or on behalf of Gadens (otherwise than as an incident of the preparation or use of the Court Book) of the affidavit of Vanessa Magee;
2. 60% of the costs of and incidental to the preparation, drafting and settling (whether by Gadens or counsel), and copying by or on behalf of Gadens (otherwise than as an incident of the preparation or use of the Court Book) of the affidavit of Jayne Gurney of 9 July 2013; and
3. 25% of the costs of and incidental to the preparation, drafting and settling (whether by Gadens or counsel), and copying by or on behalf of Gadens (otherwise than as an incident of the preparation or use of the Court Book) of the affidavit of Candece Nicholls.
4. $XX [the amount found by the costs assessor as the extent to which:
1. the costs of preparation and copying of the Court Book are likely to have been increased by reason of it being the size it is instead of two-thirds that size; and
2. the costs of the Plaintiff of and incidental to the hearing are likely to have been increased by reason of the Court Book being the size it is instead of two-thirds that size.]
1. Order Gadens to pay to the Plaintiff $XX [the amount found by the costs assessor as the extent to which the costs of the Defendants of and incidental to the hearing are likely to have been increased by reason of the Court Book being the size it is instead of two-thirds that size and the affidavits reflected in it also being in total 50% longer than they should have been].
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Decision last updated: 18 June 2015