Supreme Court New South Wales Medium Neutral Citation: Taouk v Ho (No. 2) [2018] NSWSC 1942 Hearing dates: On the papers Date of orders: 14 December 2018 Decision date: 14 December 2018 Jurisdiction: Common Law Before: Johnson J Decision: An order is made that Mr Taouk pay Ms Ho's costs of the proceedings in this Court on an indemnity basis. Catchwords: PRACTICE AND PROCEDURE – costs – application for indemnity costs by successful Defendant – unmeritorious arguments advanced by Plaintiff – failure by Plaintiff to comply with obligations under s.56 Civil Procedure Act 2005 – unreasonable conduct of Plaintiff – costs awarded on indemnity basis Legislation Cited: Civil Procedure Act 2005 Cases Cited: Taouk v Ho [2018] NSWSC 1954 Texts Cited: --- Category: Costs Parties: Joseph Taouk (Plaintiff) Yuen Min Ho (Defendant) Representation: Counsel: Mr H Ekes (Solicitor) (Plaintiff) Mr R Freeman (Defendant) Solicitors: Gardner Ekes Lawyers (Plaintiff) Scarfone & Co (Defendant) File Number(s): 2018/110582 Publication restriction: --- Judgment 1. JOHNSON J: On 6 December 2018, I gave judgment in this matter dismissing the Amended Summons and making an order that Mr Taouk pay Ms Ho's costs of the proceedings: Taouk v Ho [2018] NSWSC 1954. At the conclusion of the judgement (at [121]-[122]), I stated that if Ms Ho seeks an order for costs on a special basis (other than the ordinary basis), a written submission should be furnished in support of that application. 2. Mr Freeman, counsel for Ms Ho, has made application that Mr Taouk pay Ms Ho's costs of the proceedings on an indemnity basis. In written submissions dated 10 December 2018, Mr Freeman relied upon a number of findings and statements made by the Court in the judgment dismissing the Amended Summons. In summary, Mr Freeman submitted that costs of the appeal should be ordered on an indemnity basis in circumstances where Mr Taouk: 1. prosecuted clearly unmeritorious arguments in the appeal; 2. failed to ensure proper compliance with the appeal process; 3. had demonstrated deliberate, obstinate and flagrant breaches of the overriding purpose under s.56 Civil Procedure Act 2005 without regard to the consequences to Ms Ho or the effect upon the judicial system. 1. Mr Freeman submitted, as well, that the approach of Mr Taouk to the litigation had the effect that the overall costs bill incurred by Ms Ho was well in excess of the amount in issue. He pointed, as well, to the impact of wasted costs in the proceedings. 2. In written submissions dated 13 December 2018, Mr Ekes, solicitor for Mr Taouk, submitted that no basis had been established by Ms Ho for a costs order on an indemnity basis. It was submitted that the grounds were reasonably arguable and that there was no relevant delinquency to found an order for indemnity costs. 3. In determining one of the grounds of appeal which alleged error of law on the part of the Magistrate in ordering Mr Taouk to pay costs on an indemnity basis in the Local Court, I outlined the principles with respect to indemnity costs in Taouk v Ho at [104]-[110]: "104 The power to order indemnity costs in civil proceedings in this State is found in s.98(1)(c) Civil Procedure Act 2005 and Rules 42.1, 42.4 UCPR. 105 Costs are to be assessed on the ordinary basis unless the Court orders otherwise: Rule 42.2 UCPR. Departure from the usual practice of costs on the ordinary basis is discretionary. Beyond the need for a sufficient special or unusual feature in the case, no fixed rule can be laid down: Harrison v Schipp [2001] NSWCA 13 at [139]. 106 An order for indemnity costs may be appropriate where the case involves some relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at 89 [44]. 107 In this context, some 'relevant delinquency' does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case: White Constructions (ACT) Pty Limited (in liquidation) v White and Ors [2004] NSWSC 303 at [10]-[11]. 108 It has been said that it is necessary to demonstrate some delinquency or unreasonableness on the part of the unsuccessful party: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616. The need for unreasonableness is an underlying feature for an indemnity costs order: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [51], [57]. 109 Self-evidently, to contest and lose litigation does not of itself expose the losing party to an order for costs on an indemnity basis: Chaina v Alvaro Homes Pty Limited [2008] NSWCA 353 at [113]. 110 The power to order costs on an indemnity basis may arise in different circumstances, including the manner in which a litigant has conducted proceedings. It was open to her Honour in this case to conclude that the unreasonableness of the conduct of Mr Taouk and Edifice from December 2016 bore upon the question of costs, including indemnity costs." 1. I am satisfied that the arguments advanced for Mr Taouk on the appeal to this Court were misconceived and without merit. Added to this was the history of the proceedings and the approach of Mr Taouk to them. I said at [111]-[112]: "111 Despite the clear agreement reached between Ms Ho, Edifice and Mr Taouk, there was a rejection by Mr Taouk and Edifice of obligations to pay the sum arising from the settlement agreement which was payable by 28 February 2017. Thereafter, the approach of Mr Taouk and Edifice to the Local Court proceedings does not sit comfortably with their obligations under s.56 Civil Procedure Act 2005. It is clear that considerations of this type were central to her Honour's exercise of discretion that costs be awarded on an indemnity basis. 112 It was open to her Honour to conclude that the conduct of Mr Taouk and Edifice since December 2016, and the arguments advanced in the Local Court on behalf of Edifice and Mr Taouk were sufficiently unmeritorious (and clearly so) as to warrant a response by way of a costs order on an indemnity basis. The fact that the arguments advanced for Mr Taouk and Edifice may have been complex did not make up for their lack of strength and quality, which her Honour was entitled to take into account in exercising the discretion to order costs on an indemnity basis." 1. In my view, similar considerations operate with respect to this appeal so that Ms Ho has demonstrated a proper basis for the Court to make an order that Mr Taouk pay the costs of the proceedings in this Court on an indemnity basis. In reaching this conclusion, I have taken into account the principles with respect to indemnity costs set out earlier (at [5]). 2. This is not merely a case of litigation being contested and lost which does not, of itself, expose the losing party to an order for costs on an indemnity basis. Rather, I am satisfied that this is a case of completely unmeritorious arguments being advanced against the background of significant failures on the part of Mr Taouk to comply with his obligations under s.56 Civil Procedure Act 2005. I am satisfied that Mr Taouk has acted unreasonably prior to the commencement of this appeal, and in the conduct of the appeal itself, so as to warrant an order for costs on an indemnity basis. 3. For these reasons, I vary the costs order contained in Taouk v Ho at [122](b) and order that Mr Taouk pay Ms Ho's costs of the proceedings in this Court on an indemnity basis. ********** 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: 14 December 2018