Chahwan v Euphoric Pty Ltd (No 3) - [2010] NSWSC 1107

CITATION: Chahwan v Euphoric Pty Ltd & Ors (No 3) [2010] NSWSC 1107

HEARING DATE(S): 23 September 2010

JUDGMENT DATE :
23 September 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Palmer J

EX TEMPORE JUDGMENT DATE: 23 September 2010

DECISION: Order the Plaintiff to pay the First Defendant’s costs of the Notice of Motion on the indemnity basis.

CATCHWORDS: PRACTICE AND PROCEDURE – INDEMNITY COSTS – Plaintiff’s Motion dismissed – evidence given by Plaintiff’s solicitor in support of Motion not frank – conduct of Motion by Plaintiff deserving of criticism.

CATEGORY: Consequential orders

CASES CITED: - Chahwan v Euphoric Pty Ltd & Ors (No 2) [2010] NSWSC 1062
- Chahwan v Euphoric Pty Ltd & Ors [2010] NSWSC 445

PARTIES: Elie Chahwan (Plaintiff)
Euphoric Pty Ltd t/as Clay & Michel (First Defendant)
Bycoon (in liq) Pty Ltd (Seventh Defendant)

FILE NUMBER(S): SC 2005/258267

COUNSEL: S. Diab (Sol) (Plaintiff)
G. Lucarelli (Defendant)

SOLICITORS: Simon Diab & Assoc (Plaintiff)
Blake Dawson (Defendant)

2005/258267 Chahwan v Euphoric Pty Ltd & Ors (No 3)

JUDGMENT – Ex tempore on application for indemnity costs

23 September, 2010

1 On 17 September 2010 I dismissed the Plaintiff’s Motion to revoke the order which I had made on 10.05.10 dismissing the Plaintiff’s proceedings on several grounds: Chahwan v Euphoric Pty Ltd & Ors (No 2) [2010] NSWSC 1062, Chahwan v Euphoric Pty Ltd & Ors [2010] NSWSC 445. The costs of the Motion are now in dispute. Mr Lucarelli of Counsel, who appears for the First Defendant, seeks costs on the indemnity basis. Mr Diab, the solicitor for the Plaintiff, does not oppose an order on the party/party basis, but opposes an order on the indemnity basis.

2 Mr Lucarelli says that the Motion, although not in itself an abuse of process, was supported by evidence in Mr Diab’s affidavits which, to use Mr Lucarelli's term, was disingenuous. He points to two instances. First, Mr Diab attached to one affidavit an affidavit of Mrs Ayoub sworn much earlier in the proceedings. He wished the Court to accept that he had forgotten about that affidavit in the course of his cross examination on the Motion for dismissal of the proceedings. He suggested that, if he had remembered to mention Mrs Ayoub’s affidavit, that might have cast in a different light his evidence explaining the Plaintiff’s failure to prosecute diligently the case against Euphoric for participation in Mrs Ayoub’s breach of fiduciary duty as a director of Bycoon.

3 In the reasons for judgment, I have explained that that affidavit of Mrs Ayoub had nothing to do with the issues framed by the Plaintiff against Euphoric for participation in breach of fiduciary duty. I am of the view that Mr Diab must have been aware of that circumstance, although he now says that he did not read Mrs Ayoub’s affidavit closely enough when he attached it to his own affidavit in support of the Motion.

4 I do not think that it is right for a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 1107
Decision Date: 23 September 2010

CaseChat Overview and Summary

Chahwan v Euphoric Pty Ltd (No 3) involved a dispute between Chahwan and Euphoric Pty Ltd, with Chahwan seeking indemnity costs against Euphoric. The matter was heard in the Federal Court of Australia. Chahwan filed a motion for indemnity costs, which was subsequently dismissed by the Court. The key issue before the Court was whether Chahwan was entitled to indemnity costs and, if so, the appropriate amount.

The Court held that Chahwan was not entitled to indemnity costs, primarily because the evidence provided by Chahwan's solicitor was not deemed frank. Additionally, the conduct of the motion by Chahwan was considered deserving of criticism. The Court emphasised the importance of frankness and integrity in legal proceedings, particularly when seeking indemnity costs. The Court's decision was influenced by the unsatisfactory manner in which the motion was conducted, leading to the dismissal of Chahwan's motion for indemnity costs.

The Court's reasoning was grounded in the principles of fairness and the integrity of the legal process. The decision underscores the necessity for parties and their representatives to adhere to the highest standards of conduct and truthfulness when making applications for costs. The Court's ruling highlights the potential consequences of failing to meet these standards, particularly in cases involving indemnity costs. The orders made by the Court reflect its determination that Chahwan was not entitled to the relief sought and that the conduct of the motion warranted criticism.

Orders