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 solicitor to take that attitude in preparing affidavits. It was Mr Diab's duty to read the affidavit of Mrs Ayoub properly and to see whether it addressed the issues with which the Court was concerned. It is not good enough to say that he simply attached it without reading it carefully. That explanation indicates an attitude generally in the preparation and presentation of the Plaintiff's case which I have taken some pains to criticise in my earlier reasons.

5 The second aspect of Mr Diab’s evidence which Mr Lucarelli criticises is the affidavit in which he attempted to explain his difficulties in complying with the Court's directions due to staff shortages. I have given, in my reasons for judgment, my views as to that evidence. It was certainly not frank. Mr Diab knew, well in advance of his consenting to the various directions with which the Plaintiff did not comply, that he would be without the staff in question at the relevant times. I think that his affidavit evidence intended to suggest otherwise: that is, that he was suddenly and unexpectedly overcome with staff shortages. That evidence given by a solicitor was not frank is an unfortunate impression for the Court to receive but I have heard nothing from Mr Diab this morning which induces me to alter that impression.

6 In those circumstances, I think that the conduct of the Motion on the part of the Plaintiff is deserving of criticism. I order that the Plaintiff pay the First Defendant’s costs of the Motion on the indemnity basis.

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