Commonwealth Bank of Australia v Tahiri

[2017] VCC 1160

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Restricted
Suitable for Publication

EXPEDITED LIST

Case No. CI-17-03045

COMMONWEALTH BANK Of AUSTRALIA t/as BANKWEST	Applicant
v
BETJULLA TAHIRI and VEZIRE TAHIRI	Respondents

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JUDGE:	His Honour Judge Woodward
WHERE HELD:	Melbourne
DATE OF HEARING:	23 August 2017
DATE OF RULING:	23 August 2017
CASE MAY BE CITED AS:	Commonwealth Bank of Australia v Tahiri & Anor
MEDIUM NEUTRAL CITATION:	[2017] VCC 1160

REASONS FOR RULING
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Subject:   PRACTICE AND PROCEDURE
Legislation Cited:     Civil Procedure Act 2010 (Vic)

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr B Carew	Corrs Chambers Westgarth Lawyers
For the Respondents	Mr A Silver	Madgwicks Lawyers

HIS HONOUR:

1       By an originating motion, summons and supporting affidavit filed on 26 July 2017, the applicant applied ex parte at 2.15pm that afternoon for a freezing order and associated orders for disclosure of information by the respondents concerning their assets.  The application relied in part on evidence of a sale of a modest property in Dandenong, which appeared from the material to have settled a week or more before the application was brought.  The applicant was not claiming any direct interest in the property but was seeking, somewhat belatedly, to ensure any proceeds of sale were not further dissipated.  The supporting material also deposed to difficulties confronted by the applicant in effecting service on the respondents of a bankruptcy notice, and the likelihood that the respondents were evading service.

2       I made an observation at the time of the application to the effect that the supporting material was less compelling than would ordinarily be expected on an application of this kind.  The evidence of the ongoing existence of assets (notably the proceeds of sale of the Dandenong property) that might be preserved by the proposed orders, was speculative. And satisfaction of a risk of dissipation required me to draw an inference from the evidence about evasion of service, that such conduct might also be an indication of the willingness on the part of the respondents more generally to evade responsibility of court process, including the enforcement of the applicant’s judgment.  I was nevertheless willing to make interim orders

3       It is trite that a freezing order (and any ancillary order) is a drastic remedy that is not granted lightly.  And in this particular case, the orders were made despite some obvious weaknesses in the applicant’s material.  In that sense, in making the orders, it could be said that the Court was giving the applicant the benefit of the doubt pending a response from the respondents showing that some or all of the applicant’s concerns were unwarranted.

4       In that regard, once the orders were served, the respondents promptly instructed Madgwicks solicitors, who commenced actively engaging with the solicitors for the applicant about compliance with the orders and the future conduct of the application.  Thus one of the key concerns raised at the time of the original application (namely, difficulties in engaging with the respondents because of their alleged unwillingness to respond to attempts at service) had been overcome.  Further, the applicant had at all relevant times the benefit of the freezing order itself, ensuring that any assets of substance that the respondents did retain were quarantined.

5 Against that background, the applicant’s refusal to accede to a request by Madgwicks on behalf of the respondents by letter dated 1 August 2017 for some additional time to complete the affidavit material was, in my view, a significant overreach on the part of the applicant, and not consistent with its obligation under s20 of the Civil Procedure Act 2010 (Vic). I am satisfied despite submissions on behalf of the applicant to the contrary, that the appearance by the parties on 3 August 2017 could have been avoided if the applicant had generally taken a more conciliatory approach in their initial dealings with Madgwicks.

6       At the later hearing of this matter on 14 August 2017, I expressed my view about the orders I was tentatively inclined to make as to the costs of this matter, should the parties reach a point where they are otherwise able to agree on how the proceeding should be disposed of.  I indicated that I was inclined to order that the applicant pay the respondents’ costs of the hearing on 3 August 2017 fixed at $2560 and that there otherwise be no order as to costs of the proceeding.  I gave this indication in the hope that it would prompt the parties to consent to final orders and thus avoid the further costs of a further and final hearing.

7       However, it seems that the parties were unable to agree orders to that effect.  In particular, the applicant sought to make submissions against the costs orders I had proposed both in respect of the hearing on 3 August 2017 and the costs of the proceeding generally.  As to the latter, counsel for the applicant argued that the defendant should pay the costs of the proceeding.  The basis of that application was essentially that:

·    The costs should follow the event.  Counsel for the applicant submitted that it had secured the orders sought and that the orders had been productive of information that to some extent reinforced concerns that it held and on which it relied at the time of the original application.  For example, the contract of sale in respect of the Dandenong property disclosed that the property had been sold to a person with the same last name and the same residential address as the respondents.

·    There had been a failure by the respondents to comply with dates for the provision of affidavit material and the affidavit material provided was deficient.  Among other things, this resulted in the need for a hearing on 14 August 2017 which would otherwise have been unnecessary.

·    The applicant had proposed that the hearing today could be avoided by the parties agreeing to exchange short written submissions on the question of costs, which could then be decided on the papers.

8       In response, counsel for the respondents submitted in effect that I should disregard criticisms of the adequacy of the material as a basis for any costs order.  If the applicant was unsatisfied with the material provided to date, it was within its rights to progress the proceeding.  Counsel for the respondents agreed that the hearing on 14 August could and should have been avoided, but submitted that the blame for this fell at the feet of both parties.

9       As for the costs of today, counsel for the respondents submitted that if I were to make orders consistently with the tentative view I had expressed on 14 August 2017, it follows that the appearance today could also have been avoided.  He confirmed that the evidence showed that Madgwicks had suggested this course in an email to the applicant solicitors dated 21 August 2017.  He also drew attention to the fact that the affidavit material ultimately filed by the respondents showed there was no prospect of recovery from them of any part of the applicant’s existing judgment for $1.2 million, let alone any order for costs.  Accordingly, it should have been obvious to the applicant that any further costs expended in agitating the question of costs would be wasted.

10      After hearing submissions by the parties, I pronounced orders that the applicant pay the respondents costs of the hearing on 3 August 2017 and today fixed at $5,120 (in total), but there otherwise be no order as to costs.  I made those orders essentially for the reasons submitted by counsel for the respondents.  I remain of the view expressed above that the applicant’s refusal of Madgwicks’ request on 1 August 2017 for more time, was unreasonable and resulted in the need for a hearing on 3 August 2017 that could have been avoided.

11      As to the costs of the proceeding generally, I am not persuaded that the applicant has met with success in this proceeding sufficient to justify the usual order for costs.  It secured the ex parte freezing orders, including ancillary orders for further information.  Ultimately, however, that information has shown that the respondents have no assets of substance and, accordingly, the freezing orders have done nothing to assist the applicant in enforcing its judgment against the respondents.  It will be left to rely on recovery through the Bankruptcy Court, a process which it had commenced at the time the application was brought.

12      In any event, both parties could have done more during the short life of this proceeding to cooperate in ensuring costs were not incurred unnecessarily in preparing for and attending hearings and chasing up due compliance with Court orders.  Thus I also remain of the view that, apart from the fixed costs order referred to above, the costs of the proceeding should lie where they fall.

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Certificate

I certify that these 5 pages are a true copy of the reasons for Ruling of His Honour Judge Woodward delivered on 23 August 2017.

Dated:      23 August 2017

Simon Bobko

Associate to His Honour Judge Woodward