Alliance Developments Pty Ltd v Arbab (No 2)
[2020] VSC 37
•14 February 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S ECI 2019 04202
| ALLIANCE DEVELOPMENTS PTY LTD (ACN 162 911 248) | Plaintiff |
| V | |
| MAHBOOB ALI JAN ARBAB (and others in accordance with the Schedule attached) | Defendants |
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JUDGE: | GARDE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 14 February 2020 |
CASE MAY BE CITED AS: | Alliance Developments Pty Ltd v Arbab & Ors (No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 37 |
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PRACTICE AND PROCEDURE – Costs – Application for indemnity costs – Whether caveator and solicitor should pay costs – Civil Procedure Act 2010 (Vic) ss 17, 18, 20, 21; Transfer of Land Act 1958 (Vic) s 89A.
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APPEARANCES: | Counsel | Solicitors |
| No appearances |
HIS HONOUR:
On 3 October 2019, Ginnane J ordered that the Registrar of Titles (‘Registrar’) remove two caveats lodged by Pasha Legal on behalf of Mr Arbab.
On 20 December 2019, I gave judgment as to the costs of the proceeding and ordered that the plaintiff’s costs of the proceeding up to and including 3 October 2019 be paid by Mr Arbab and Ms Pasha on an indemnity basis.[1]
[1]Alliance Developments Pty Ltd v Arbab & Anor [2019] VSC 832 (‘Judgment’).
The plaintiff and Ms Pasha have subsequently made written submissions as to the costs of the proceeding after 3 October 2019. These costs include the costs of the plaintiff’s summons filed 14 October 2019 (‘summons’).
The plaintiff submits that the Court should again make indemnity costs orders against Mr Arbab and Ms Pasha. Ms Pasha submits that she should not be ordered to pay the plaintiff’s costs after 3 October 2019, and not on an indemnity basis.
Plaintiff’s submission
The plaintiff submits that:
(a)it was wholly successful in the proceeding obtaining the removal of the caveats, and an order for indemnity costs up to 3 October 2019;
(b)there is no question of mixed success or disentitling conduct on the part of the plaintiff that should interfere with the general rule that costs should follow the event;
(c)while the plaintiff’s material was voluminous, it was necessary in large part to meet the allegations contained in the affidavits filed by Pasha Legal regarding the Youlden Street property; and
(d)in the event, those allegations were found not to have the significance alleged.[2]
[2]Judgment, [71].
The plaintiff relied on the findings in the judgment that:
(a)Pashal Legal failed to act with reasonable competence, was negligent and in breach of its duties to the Court;[3] and
(b)the statements and certifications made to the Registrar were egregious.[4]
[3]Ibid [89].
[4]Ibid [90].
The plaintiff then submitted that these findings necessarily meant that Ms Pasha had breached the overarching obligations contained in the Civil Procedure Act 2010 (Vic) (‘CPA’) including:
(a)the obligation to act honestly;
(b)the requirement to have a proper basis for a civil claim; and
(c)the obligation not to mislead or deceive.[5]
[5]CPA ss 17, 18, 20, 21.
The plaintiff noted that the summons was issued at the direction of the Court in order to ensure procedural fairness to all parties, and contended that it would be illogical to limit costs liability to 3 October 2019, as the conduct identified in the judgment persisted up to the end of the hearing on 2 December 2019.
In her affidavit of 22 October 2019 (‘first affidavit’), Ms Pasha deposed:
I acknowledge that I received correspondence from Jillian Johnston. However, I did not write to the [Registrar] as is false [sic] claimed by Mr Syed in his affidavit. Upon receipt of the Johnston correspondence, I wrote back to her. The defendant then wrote directly to the Registrar of Title [sic] as a result of which the caveats were not removed.[6]
[6]First affidavit, [23].
At the hearing on 2 December 2019, the Court required Ms Pasha to produce the letter that was sent to the Registrar. The letter was dated 13 August 2018 (‘13 August 2018 letter’), written on Pasha Legal letterhead and attached a written notice in accordance with s 89A(3) of the Transfer of Land Act 1958 (Vic) (‘TLA’).
In the letter, Ms Pasha certified that she had retained the evidence supporting the caveats and had taken reasonable steps to ensure that the claims were correct. The notice was twice signed by Ms Pasha, and was to the effect that proceedings were on foot in a court of competent jurisdiction to substantiate the claim of Mr Arbab in relation to the Laverton North and California Gully properties.
The statements made in the letter were untrue. Pasha Legal did not take steps to ensure that the claims were correct. There was no proceeding on foot in court to substantiate the claims made. Mr Arbab did not write directly to the Registrar.
The plaintiff submitted that Mr Arbab and Ms Pasha had defended the application, and had been found to have acted:
(a)for an ulterior motive; and
(b)in wilful disregard of known facts or clearly established law.[7]
[7]Judgment, [62].
Ms Pasha’s submission
Ms Pasha submitted that she should not be ordered to pay the plaintiff’s costs after 3 October 2019, and not on an indemnity basis because:
(a)the plaintiff unreasonably failed to accept offers to resolve the proceeding made by Mr Arbab on 26 September 2019 and 3 October 2019, which resulted in prolonged litigation, additional legal expenses and a waste of court resources;
(b)the plaintiff’s affidavits were voluminous and contained misleading information in relation to the Youlden Street property ;
(c)the plaintiff made allegations against her that went beyond any findings in the judgment;
(d)the plaintiff adopted an uncommercial and unreasonable course in pursuing its claim for costs against her; and
(e)the Court should infer that the plaintiff pursued the non-party costs order for an ulterior purpose and because of personal antipathy.
Ms Pasha filed a further affidavit of 29 January 2020 (‘second affidavit’). In substance, she deposed that when she swore her first affidavit she did not recall the 13 August 2018 letter because of effluxion of time and because the letter was sent by email by a paralegal on her behalf. She did not dispute that the written notice attached to the letter was signed by her as an Australian legal practitioner.
The plaintiff objected to the filing and service of Ms Pasha’s second affidavit and said it required leave from the Court.
The course of the application
The summons was supported by Mr Syed’s affidavit of 14 October 2019. He deposed to the correspondence and events that had taken place and exhibited relevant documents.
In response to the summons, Ms Pasha filed her first affidavit, deposing that:
Based on the correspondence in respect to Youlden Street in late 2014, I do not believe that the present purchase by Alliance Developments is a bona fine (sic), at arm’s length transaction.
…
I am concerned that the transaction is a related party transaction possibly designed to defeat the defendant’s chances of recovery in the event of being successful in the related proceedings.[8]
[8]First affidavit, [26], [28].
Ms Pasha also filed an affidavit by Mr Raja, an associate of Mr Arbab. This affidavit was wholly directed to the proposed purchase of the Youlden Street property, and sought to show that the Court had been misled by the plaintiff.
In the judgment, I said:
The postponement of the settlement of the sale of the Youlden Street property and the nomination of that property to another person do not have the significance alleged by Mr Arbab…The caveats lodged were inherently defective and would inevitably have been removed by the Court. The postponement of the date for settlement and the nomination of that property to another person made no difference.[9]
[9]Judgment, [71].
Moreover, by the time that Ms Pasha filed her first affidavit and that of Mr Raja, orders for the removal of the caveats had been made on an unopposed basis over two weeks previously. The first affidavit had no utility in the proceeding at the time it was filed except to attack the credit of the plaintiff’s deponents, and to suggest that they had misled the Court.
It is unsurprising that the affidavits of Ms Pasha and Mr Raja provoked a strong response from the plaintiff. The plaintiff filed a number of affidavits directed at rebutting what they had said.
Mr Arbab added to the controversy in an affidavit of 1 December 2019. He deposed in substance that he would have opposed the application to remove the caveats, had he known that the Youlden Street property settlement was not to happen until 11 November 2019. He did not agree that the plaintiff should get a costs order, contending that the caveats were lodged to properly secure his interests. He maintained his position in submissions to the Court on 2 December 2019.
Relevant principles
In the judgment, I set out a number of relevant authorities and principles dealing with the award of costs in caveat removal proceedings including where indemnity costs are sought.[10] I also referred to authorities dealing with the award of costs under r 63.23 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’).[11]
[10]Ibid [56]–[59], [61]–[62].
[11]Ibid [75]-[84].
I adopt the same authorities and principles in this judgment.
Previous findings
I found that Mr Arbab should be ordered to pay the plaintiff’s costs of the proceeding on an indemnity basis up to and including 3 October 2019 for the reasons stated in the judgment. [12]
[12]Ibid [73].
I was satisfied that Ms Pasha failed to act with reasonable competence and that she was negligent and in breach of her duties to the Court. The statements and certification made to the Registrar were egregious, and resulted in the need for the plaintiff to incur the costs of the proceeding. I refer to and repeat these findings.[13]
[13]Ibid [88]–[90].
Decision
I accept the plaintiff’s submission in the present application that:
(a)it was wholly successful in the proceeding in obtaining the removal of the caveats and an order for indemnity costs up to 3 October 2019;
(b)there is no issue of mixed success or of disentitling conduct on the part of the plaintiff that interferes with the general rule that costs follow the event; and
(c)the findings made in the judgment inevitably mean that Ms Pasha acted contrary to the overarching principles set out in the CPA, including at least the obligation to act honestly, the requirement to have a proper basis for a civil claim, and the obligation not to mislead or deceive.
I have serious concerns about Ms Pasha’s reliance on para [23] of her first affidavit throughout the hearing on 2 December 2019. If the Court had not insisted on the production of the 13 August 2018 letter, the true position would never have been revealed. The Court would have accepted the statements made by Ms Pasha in her first affidavit.
Ms Pasha’s second affidavit does little to advance her cause. She does not accept personal responsibility for what occurred, and attributes her inability to recall the 13 August 2018 letter to effluxion of time, and the fact that the letter was sent by a paralegal at her firm. She does not explain how she came to sign the written notice annexed to the letter, or how her personal signature block including her name, firm address and standing as ‘An Australian Legal Practitioner within the meaning of the Legal Profession Uniform Law (Victoria)’ came to appear on the notice.
While it is true that on 26 September 2019 Ms Pasha sent an email to the plaintiff setting out Mr Arbab’s agreement to pay the costs of the application to remove the caveat, there is no reference to indemnity costs. The reference in that email to the costs of the application would ordinarily be taken to mean the costs of the application taxed on the standard basis.[14]
[14]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.31.
Mr Arbab’s email of 3 October 2019 agreed to the minute of consent orders previously sent to him ‘except that [he] agree[s] to pay the costs of the plaintiff on an indemnity basis as agreed or otherwise taxed’. The email expresses concern with the incurrence of $16,500 in legal fees.
When Ginnane J made orders for the removal of caveats on 3 October 2019, no practitioner appeared for Mr Arbab to consent to a costs order. The result was that Ginnane J gave directions for a fresh summons seeking an indemnity costs order and supporting affidavits to be filed and served by the plaintiff.
The summons was vigorously defended by Ms Pasha and Mr Arbab. No offer to pay costs was made by Ms Pasha. I do not accept that the plaintiff’s conduct caused unnecessary expense having regard to the correspondence.
I also reject the submission that the plaintiff’s affidavits were unduly voluminous. It was Ms Pasha’s first affidavit, Mr Raja’s affidavit and Mr Arbab’s affidavit of 1 December 2019 that pressed criticisms of the plaintiff’s evidence concerning the Youlden Street purchase. The plaintiff’s subsequent material is directed at a rebuttal of statements made in these affidavits.
The volume of affidavit material filed by the plaintiff in support of the summons is considerable. However, this is a consequence of the way that Mr Arbab and Ms Pasha conducted their case much more than it is the responsibility of the plaintiff, which was required to apply to the Court to have the caveats removed and then to press a contested costs application.
I am not satisfied that allegations made by the plaintiff, but not ultimately found by the Court, had any significant effect in increasing the volume of the material that had to be filed by the plaintiff.
Finally, Ms Pasha contends that the plaintiff pursued the non-party costs order against her for an ulterior purpose, and acted in an uncommercial and unreasonable manner. I reject this submission. The plaintiff was directed by the Court to issue a summons if it was to recover its costs from Mr Arbab and Ms Pasha. The Court made this order to ensure that Mr Arbab and Ms Pasha were afforded procedural fairness. The course the plaintiff took cannot be ascribed to ulterior purposes, or to uncommercial or unreasonable conduct. Rather, the prosecution of the summons was essential if its costs of the caveat removal application were to be recovered.
Conclusion
Having reviewed the submissions and material filed with the Court, I conclude that it is appropriate for the same costs orders as were made by the Court on 20 December 2019 to extend and apply to the proceeding after 3 October 2019 and to the costs of the summons.
The Court will make orders for the plaintiff’s costs of the proceeding after 3 October 2019 including the costs of the summons to be taxed on an indemnity basis by the Costs Court and when taxed paid by Mr Arbab and Ms Pasha. They will be jointly and severally liable for the costs that are ordered.
SCHEDULE OF PARTIES
ALLIANCE DEVELOPMENTS PTY LTD (ACN 162 911 248) Plaintiff MAHBOOB ALI JAN ARBAB First Defendant THE REGISTRAR OF TITLES Second Defendant HINA PASHA Third Defendant
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