Commonwealth Bank of Australia v Saleh

[2007] NSWSC 990

CITATION:	Commonwealth Bank of Australia v Mohamad Saleh & Ors [2007] NSWSC 990
HEARING DATE(S):	29/8/07
JUDGMENT DATE :	5 September 2007
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Indemnity costs ordered.
CATCHWORDS:	Indemnity costs - Delinquency
CASES CITED:	Colgate Palmolive Co & Anor v Cussons Pty Ltd [1993] 118 ALR 248 Harrison v Schipp [2001] NSWCA 13 Ragata Developments Pty Ltd v Westpac Banking Corporation [unreported, Federal Court of Australia, Davies J, 5 March 1993].
PARTIES:	Commonwealth Bank of Australia (Plaintiff) Mohamad Saleh (First Defendant) Neil Petts (Second Defendant) Zia UI-Islam Qureshi (Third Defendant) Australia and New Zealand Banking Group (Fourth Defendant) Hassanien Saleh (Fifth Defendant) Perpetual Trustees Australia Limited (Sixth Defendant) Quaid Real Estate Pty Limited (Eighth Defendant) William Lowe Edge (Tenth Defendant) Qureshi & Associates (Eleventh Defendant) Abdullah Saleh (Twelfth Defendant) Faowzi Saleh (Thirteenth Defendant) Khadige Saleh (Fourteenth Defendant) Fatima Saleh (Sixteenth Defendant)
FILE NUMBER(S):	SC 50149/05
COUNSEL:	Mr A Henskens, Mr A Zahra (Plaintiff) Mr M Newman (Tenth Defendant) Mr Z Qureshi (appeared in person) (Third Defendant)
SOLICITORS:	Henry Davis York (Plaintiff) Newman & Associates (Tenth Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Wednesday 5 September 2007

50149/05 Commonwealth Bank of Australia v Mohamad Saleh & Ors

JUDGMENT – Indemnity Costs

1 On the 29th August 2007 orders were made for indemnity costs to be paid to the plaintiff by a number of defendants. The orders were as follows:

“Order that

(a) the First, Third, Fifth and Tenth Defendants pay the Plaintiff’s costs of the proceedings on an indemnity basis;

(b) the Twelfth, Thirteenth, Fourteenth and Sixteenth Defendants pay a segment of the Bank’s indemnity costs subject to a proviso:

The proviso limits the amount of indemnity costs to be paid by each of these Defendants to the Bank’s costs of meeting the respective defensive cases of such Defendants.”

2 The reasons for making these orders were reserved. The occasion for this judgment is to furnish those reasons.

The principles

3 It is trite that a departure from the settled practice of ordering costs on a party and party basis requires the need for a sufficient special or unusual feature. In that regard the categories for the award of indemnity costs are not rigid as was made plain by Davies J in Ragata Developments Pty Ltd v Westpac Banking Corporation [unreported, Federal Court of Australia, Davies J, 5 March 1993]. There his Honour reiterated that each case must be considered on its own facts, having regard to the general principle that the usual award of party/party costs to the successful party should be made unless there are special circumstances to justify the making of a different order.

4 The many authorities to which reference may be made include those identified by Sheppard J in Colgate Palmolive Co & Anor v Cussons Pty Ltd [1993] 118 ALR 248: referred to with approval by Giles JA [with whom Handley and Fitzgerald JJ agreed] in Harrison v Schipp [2001] NSWCA 13 at [139].

5 There is no doubt but that the Bank is entitled to an indemnity costs order against Mr Edge. Not only was he one of the fraudulent conspirators but significantly he sought to rely in the proceedings on documents which were found to be fabricated. He persisted throughout the whole of the hearing in denying the bank's allegations in respect of his fraud: knowing those allegations to be true. This conduct par excellence constituted relevant delinquency. The case for a indemnity costs against him is plainly a fortiori.

6 Likewise the case for ordering indemnity costs against Mr Qureshi is clearly made out. He also relied upon invoices and time sheets which have been found to have been fabricated and were at the very heart of his defence. He also persisted throughout the whole of the hearing in denying the bank's allegations in respect of his fraud: knowing those allegations to be true. Additionally he persisted in frustrating the Bank's attempts to obtain access to documents required to be produced by the litigious process : see the judgment in respect of the ultimate obtaining of access to the deep memory of the computer and the circumstances in which only during the hearing when in the witness box [initially as part of the voire dire to ascertain the enquiries which he had made in relation to the existence of material documents] did he come forward with the important information concerning how the moneys which he had received had been expended. This was delinquent conduct. The case for a indemnity costs against him is also a fortiori.

7 The cases for indemnity costs orders against Mr Mohamad Saleh and Mr Hassanien Saleh are also quite clear. Although they were not any longer represented during the hearing, their pleadings denying the fraud were before the Court and the Bank was required to prove the fraud. Their denial of the fraudulent allegations which they knew to be correctly made and the vast expense which the Bank was required to undertake to prove its case against them clearly mandates an indemnity costs order being made against each of them.

8 The position of the the 12th, 13th, 14th and 16th defendants [being the parents and the brother and sister of Mohamad Saleh and Hassanien Saleh] is somewhat different. They initially filed submitting appearances. Later they sought to defend the proceedings. Only shortly before the proceedings were to be heard were notices of ceasing to act filed. However their pleadings remained before the Court. Under the rules, once a defence is filed a plaintiff is not able to apply from summary judgment but must proceed to an ex parte hearing. That is what here occurred. It should also be noted that the defence of these family members was to be found in the very same document as Mohamad Saleh and Hassanien Saleh were relying upon. In those circumstances the Bank was put to the expense of proving its case against each of them. However in my view the amount of court time devoted to considering their defences and dealing with them was really minimal. I should have thought it would be highly likely that on taxation, the Bank would not be entitled to more than a very small amount in terms of what were the costs likely suffered by the Bank in having to prove its case against these particular family members. The principled exercise of the discretion was therefore to limit the amount of indemnity costs to be paid by each of these family members to the Bank's costs of meeting the respective defensive cases of such defendants.