Chateau Constructions (Aust) Ltd v Zepinic; Zepinic v Chateau Constructions (Aust) Ltd

[2018] NSWSC 963

Supreme Court

New South Wales

Medium Neutral Citation:	Chateau Constructions (Aust) Ltd v Zepinic; Zepinic v Chateau Constructions (Aust) Ltd [2018] NSWSC 963
Hearing dates:	18 May 2018
Date of orders:	18 May 2018
Decision date:	18 May 2018
Jurisdiction:	Equity
Before:	Robb J
Decision:	See pars 12 - 14
Catchwords:	COSTS — Gross sum costs orders — Gross sum costs orders made in respect of two notices of motion
Category:	Costs
Parties:	Chateau Constructions (Australia) Ltd (plaintiff) Milla Zepinic (first defendant) Vito Zepinic (second defendant)   Nina Zepinic (first plaintiff) Vito Zepinic (second plaintiff) Chateau Constructions (Aust) Ltd (defendant)
Representation:	Counsel:   Solicitors: Toomey Pegg (plaintiff)
File Number(s):	2009/290598; 2016/97515

EX TEMPORE Judgment

1. On 6 March 2018 I published reasons for judgment in two proceedings involving the plaintiff Chateau Constructions (Aust) Limited in proceedings 2009/00290598, which is also the defendant in proceedings 2016/00097515, and various members of the Zepinic family, as defendants in the first-mentioned proceedings and as plaintiff in the second: See [2018] NSWSC 246.

2. There was an unfortunate delay in my determination of the issues before the Court which involved four notices of motion by Chateau seeking orders in respect of its entitlement to costs, generally on the indemnity basis and in gross sum amounts. That delay, in part, was excused by the fact that I was not the judge who had determined the relevant applications and made costs orders in favour of Chateau. Relevantly I found myself able to determine some aspects of the application but, as explained at [32]-[36] of the reasons for judgment, my lack of familiarity with the matter prevented me from ruling on Chateau's claim for indemnity costs on its two notices of motion wherein it succeeded in obtaining vexatious litigant orders against various of the Zepinics. My concern was as to why two notices of motion were necessary as, that gave rise to the possibility that there had been unnecessary duplication.

3. Secondly, the total amount of the costs sought for the two notices of motion was $136,002.84 split $66,855 as to one and $69,147.84 as to the other. Because of my uncertainty I invited Chateau at [36] to supply my Associate any additional evidence and submissions upon which it may wish to rely and to arrange with my Associate a further hearing at which I would seek to finally resolve the outstanding issues. Chateau has availed itself of that invitation and prepared affidavit evidence and submissions, and the hearing to complete Chateau's application has been fixed for today.

4. At the hearing Mr Andrew Loel, the solicitor for Chateau, has appeared, as was the case at the original costs hearing. When the matter was called outside court no appearance for any member of the Zepinic family was made. The application has accordingly been determined in the absence of the Zepinics. Chateau has provided an affidavit of service of Mr Loel, which demonstrates that the affidavits upon which Chateau has relied, as well as its submissions were served electronically on the Zepinics yesterday at certain email addresses. One of the email addresses used was an email address included by Vito Zepinic in an unsolicited email dated 12 March 2008 sent to my Associate.

5. Of the two matters as to which I expressed concern in my earlier judgment, the first was the fact that vexatious litigant relief had been sought by Chateau by two separate notices of motion. I am satisfied on the basis of Mr Loel's evidence that Chateau had reason to believe that it was invited by the judge of this Court who dealt with the substantive applications to make applications by way of separate notices of motion in the two proceedings. Further, the parties to proceedings included different members of the Zepinic family. There had been a history of difficulty in serving the Zepinics with the Court's process, and there had also been problems with one or more members of the family asserting, incorrectly, that they had not been given notice of Court proceedings when they had in fact been given notice. That concern was part of the reason why Chateau served two notices of motion. More importantly, the evidence before the Court now explains that a careful effort was made to ensure that there was no duplication of costs and that the costs were distributed on a rational basis between the two notices of motion.

6. In the circumstances I am satisfied that any additional costs that may have been incurred as a result of there being two notices of motion were relatively insignificant in relation to the total quantum of the costs claimed.

7. So far as the total amount of the costs is concerned, being $136,002.84 as I have noted above, Chateau has accepted that at first glance the amount is large given the nature of the relief claimed and the length of the hearing that was required on the application for vexatious litigant orders. However, Chateau points to the exceptional nature of this case primarily by reference to the long list of tasks that were required to be undertaken by Chateau's legal representatives set out in par 14 of Mr Loel's substantive affidavit of 17 May 2018. I will let that list speak for itself, but note that the Zepinics have been involved in so many different proceedings that it is reasonably apparent from the list of tasks that an exceptional amount of time would have been required for the examination of the evidence of all of those proceedings in order to justify the taking of the relatively extreme step of seeking vexatious litigant relief against the Zepinics.

8. Furthermore, I am satisfied that at every step of the way Chateau has been meticulous to notify and warn the Zepinics of the exceptional nature of the application and that the costs would be substantial. Effectively, the Zepinics have not responded in any way designed to protect their own position and plainly have not appeared at the hearing that led to my initial judgment or today.

9. In those circumstances it would not, in my view, be fair or rational for the Court to reject the genuineness of the costs claim made by Chateau. While the amount is, in relative terms, apparently substantial, it is not by any means self-evidently excessive. As it has not been challenged by the Zepinics, there is no good reason for the Court to doubt the evidence provided in support of the claim on behalf of Chateau.

10. At the hearing today, Chateau asked the Court to re-consider a finding that was made in the initial judgment that Chateau should be awarded its costs on the ordinary basis rather than the indemnity basis. I have not entertained that application, primarily because of my view that further notice would be required to be given to the Zepinics before that application was considered. Chateau responded by submitting that, in that event, the Court should award costs on the ordinary basis at the upper end of the range that Chateau's evidence suggested was generally the outcome of an assessment of costs on the ordinary basis. That range is, as supported by the evidence, 82% to 87%. Chateau supported that submission by pointing out that essentially in the interests of finality, it was not claiming any costs for legal work done after the conclusion of the hearing that led to my initial judgment, including the costs of the application today. I accept that, simply by looking at the material that has been prepared and put before the Court, those additional costs would not be insubstantial.

11. I accordingly accept the submission and would quantify the costs subject to the issue of determining an appropriate lump sum at 85%, $56,826.75 and $58,775.66 respectively, in relation to the amounts of the two claims. Rounding those amounts would give $56,825.00 and $58,775 respectively. As occurred in relation to the other claims for gross sum costs that have already been dealt with, it would be usual to reduce those amounts by a further amount to reflect the fact of the general uncertainty of the process and that Chateau will be spared the costs and delay of an assessment. On the other hand, as I have indicated above, it is appropriate to have regard to the fact that there are additional costs of some significance that Chateau is foregoing.

12. In my view it will be appropriate to award costs in respect of the two notices of motion in gross sums of $56,000.00 and $58,000.00 respectively.

13. As there are different parties to the two notices of motion the subject of this costs application, Chateau is invited to provide to my Associate separate orders so that the final orders may be made in chambers. The amounts provided for in those orders should respectively be $56,000 and $58,000, and the interest to be payable should be calculated in the same manner as has been calculated by Chateau in respect of other costs orders made today in accordance with my earlier reasons for judgment, and supported by appropriate affidavits.

14. My final order, which I think is 10, is that draft orders giving effect to the ex tempore reasons for judgment made in respect of the outstanding notices of motion should be delivered by the applicant to the Associate to Robb J as soon as is convenient for the purpose of final orders being made in chambers.

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Decision last updated: 25 June 2018