Supreme Court New South Wales Medium Neutral Citation: Helou v M & J Enterprises & Ors (No 2) [2016] NSWSC 1609 Hearing dates: 9 November 2016 Date of orders: 17 November 2016 Decision date: 17 November 2016 Jurisdiction: Common Law Before: Campbell J Decision: (1) The plaintiff's application for a specified gross sum costs order is refused; (2) Costs of the application are reserved Catchwords: COSTS – costs of interlocutory proceedings – costs follow event – no question of principle Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Uniform Civil Procedure Rules 2005 (NSW), r 42, 47 Cases Cited: Helou v M & J Enterprises & Ors [2016] NSWSC 1202 Category: Procedural and other rulings Parties: George Helou (Plaintiff) M & J Enterprises Australia Pty Ltd (First Defendant) Jagoda Gligorijevic (Second Defendant) Milosav Gligorijevic (Third Defendant) Representation: Counsel: E. Georges (solicitor)(Plaintiff) E. Kanaan (solicitor) (Defendant) Solicitors: Elee Luke Georges (Plaintiff) Benjamin & Khoury Solicitors and Attorneys (First-Third Defendants) File Number(s): 2016/248914 1. This litigation concerns a series of business and property transactions amongst the parties. The proceedings were listed for hearing before me on 24 August 2016 with an estimate of two days. The plaintiff's claim was for possession of certain property at Tahmoor and the recovery of what was alleged to be arrears of rent. By cross-claim the defendants seek various forms of monetary relief totalling somewhere between $570,000 and $1 million, depending upon how one calculates it, in respect of various causes of action including debt, conversion, breach of contract, and restitution of amounts paid under uncompleted contracts on termination. Issue 1. I am dealing with an application for "a specified gross sum" costs order under s 98(4) of the Civil Procedure Act 2005 (NSW). The costs, the subject of the application, are costs of an amended Notice of Motion filed for the defendants on 9 February 2015, dismissed by Harrison AsJ on 3 November 2015, which her Honour reserved, and the costs I ordered the defendants to pay on 24 August 2016. 2. For reasons I gave on 24 August 2016 (see Helou v M & J Enterprises & Ors [2016] NSWSC 1202) I entered judgment for the plaintiff for possession of the property, severed the defendant's cross-claim, gave leave to the defendants to file an amended cross-claim, and adjourned the matter for further hearing. These reasons assume familiarity with my earlier judgment. Costs orders 1. My relevant orders made on 24 August 2016 are in the following terms: (4) The defendant pay the plaintiff's costs throw away by reason by reason of the adjournment. (5) Liberty to the plaintiff to apply for a lump sum costs order on seven days' written notice. The motion before Harrison AsJ on 3 November 2015 was by the defendants seeking recovery of possession pursuant to their version of the agreement for occupation of the premises that they say they had with the plaintiff. I am putting the matter in deliberately neutral terms. The matter was unable to proceed because of the ill health of the male defendant. The defendants sought to withdraw that motion (5.10T, 3 November 2015) and her Honour dismissed it, reserving costs. The plaintiff had argued that the Notice of Motion should be dismissed because "it serves no practical purpose" and costs were sought (5.5T). Applicable rules 1. The Uniform Civil Procedure Rules 2005 (NSW) make important provision in relation to costs. The general rule of course is that costs follow the event (r 42.1), and are to be assessed on the ordinary basis (r 42.2). Reserved costs are to be paid and otherwise dealt with in the same way as the general costs of the proceedings (r 42.7(1)). The enforceability of the costs of interlocutory proceedings is postponed until the conclusion of the proceedings (r 47.7(2)). These general rules may be departed from in the exercise of judicial discretion, for good reason. Evidence and argument 1. The plaintiffs move on the affidavit of their solicitor, Elee Luke Georges, affirmed on 26 October 2016. Mr Georges is a very experienced litigation solicitor and he has attached to his affidavit, inter alia, his costs agreement with the plaintiffs, a bill of costs itemised in accordance with it and memoranda of fees due to counsel. I observe in passing that the items particularised in his bill and in the memoranda of counsel seem to cover the costs of the whole proceedings to date. Mr Georges suggests that 75% of the total costs would be a fair proportion of costs for the purpose of calculating costs on the ordinary basis. Adopting this approach, $27,000 is sought as the costs of the motion before Harrison AsJ and $46,000, as the costs thrown away by reason of the adjournment granted by me. 2. The ground on which the application is made is set out in paragraph [8] of Mr Georges' affidavit. His clients are relatively impecunious and have been unable to pay tax invoices for costs when they have fallen due. Rather they have been paying by instalment. The plaintiff informed Mr Georges, and he verily believes, that he borrowed the funds to pay the costs charged for the adjourned hearing. Absent recovery at this time, it is feared that the plaintiff and cross-defendants will be unable to continue to fund the litigation. Mr Georges also points out that the process of assessment of costs would involve additional charges and delay. It is also said that the defendants' "urgent" application for possession by motion was misconceived from the start and that this was forensic delinquency engaging the discretion to grant the plaintiff relief for costs now. 3. The defendants oppose the application. They say that they too are impecunious, having been deprived of real property and other assets by the machinations of the plaintiff, and cross defendants. It is implicit that they would be unable to satisfy the order sought by the plaintiff/cross-defendants and the making of the order would stultify their cross-claim. Decision 1. I am not persuaded that the general rules I have referred to should be displaced in this case. It's not clear to me that bringing the motion dismissed by consent by Harrison AsJ was relevantly forensic delinquency of the kind put forward by the plaintiff. That her Honour reserved costs, when one considers the terms of r 42.7(1), suggests that she thought the ultimate conclusion of the litigation hung in the balance. I see no reason to anticipate the natural course of the proceedings. True it is that I entered judgment for possession in favour of the plaintiff. But this too, was by consent. As my previous reasons explain, the plaintiff is the registered proprietor; had evicted the defendants; and now enjoys actual possession of the property. The order was made to regularise that situation in circumstances where the only entitlement to possession asserted by the defendants was their claim for specific performance of the contract for sale of the Tahmoor property to them, which was terminated by the plaintiff when they failed, under notice, to complete. The remedy of specific performance was abandoned at the hearing before me. 2. This does not mean however that judgment for possession renders the final outcome of the proceedings is now predictable. The main issue remains the conduct of the plaintiff (and the second cross-defendant) in relation to the various dealings between, and amongst, the parties. As I said at [21] of my reasons of 24 August 2016, the entry of judgment for possession: "is without prejudice to the rights of the defendants to fully ventilate the issues they wish to further in their cross‑claim, including those issues in relation to the contract for the sale of land." 1. As I also observed at [11], the upshot of the various contractual maneuverings of the parties is that the plaintiff was able to retain: the Tahmoor property he had agreed to sell to the defendants; a Marrickville property previously owned by the defendants; and the benefit of loans and credits advanced by the defendants to the plaintiff or to an entity controlled by him. According to the defendants these amounts totalled $570,000. 2. I am satisfied that the orders sought by the plaintiff would have the result of stultifying the defendants' prosecution of their cross-claim. On its face, the cross-claim does not seem devoid of merit or propounded as a mere device to delay an inevitable victory for the plaintiff. I am satisfied that the defendants genuinely wish to proceed with it. 3. I accept that the plaintiff and second cross-defendant are finding the litigation expensive. Most individuals in their position would experience the same hardship. They are at least in a position where they are left in possession of substantial property and have received substantial cash from their dealings with the defendants. In the circumstances of the case, I do not regard it as appropriate at this interlocutory stage to order payment of past costs to provide a fighting fund for the continuation of the litigation on the part of the plaintiff and cross defendants. 4. In my opinion, the interests of justice as embodied in the overriding purpose of civil proceedings favours the application of the general costs rules to resolve the current dispute. In my judgment, the enforcement of the costs reserved by Harrison AsJ and the costs ordered to be paid by me on 24 August 2016 ought to be postponed until the proceedings are finalised. Orders 1. My orders are: 1. The plaintiff's application for a specified gross sum costs order is refused; 2. Costs of the application are reserved. ********* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 November 2016