Dal Broi v Nicholas James Lawyers Pty Ltd (Costs)
[2024] VSC 755
•4 December 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2021 00766
BETWEEN:
| NJ CAPITAL PTY LTD (ACN 604 483 409) | Plaintiff |
| - and - | |
| ANDREW JOSHUA DAL BROI (and others according to the attached Schedule) | Defendants |
AND BETWEEN:
| ANDREW JOSHUA DAL BROI | Plaintiff by first counterclaim |
| - and - | |
| NICHOLAS JAMES LAWYERS PTY LTD (ACN 601 167 220) (and others according to the attached Schedule) | Defendants by first counterclaim |
AND BETWEEN:
| BIANCA KATE DAL BROI | Plaintiff by second counterclaim |
| - and - | |
| NICHOLAS JAMES LAWYERS PTY LTD (ACN 601 167 220) (and others according to the attached Schedule) | Defendants by second counterclaim |
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JUDGE: | Quigley J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 November 2024 |
DATE OF RULING: | 4 December 2024 |
CASE MAY BE CITED AS: | Dal Broi v Nicholas James Lawyers Pty Ltd (Costs) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 755 |
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COSTS — Claim for indemnity costs due to defendants’ conduct — Compliance with trial preparation directions — Trial vacated — Allocation of responsibility for trial being vacated — Late filing of new witness statement by defendants on eve of trial — Relevant documents not discovered relied upon in new witness statement — Conduct of trial preparation where solicitor litigant — Indemnity costs ordered — Portion of costs to be paid immediately — Supreme Court Act 1986 (Vic) s 24 — Supreme Court (General Civil Procedure) Rules 2015, r 63.28 — Civil Procedure Act 2010 (Vic) Part 2.4.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff by second counterclaim | J. Evans KC | Madgwicks Lawyers |
| For the Defendants by second counterclaim | P. Noonan | Nicholas James Lawyers |
HER HONOUR:
INTRODUCTION
The trial of this proceeding (being of the second counterclaim) was scheduled to commence on 12 November 2024. At the commencement of the hearing, the plaintiff by second counterclaim made an application to vacate the trial date on the basis of the conduct of the defendants by second counterclaim in the prosecution of their defence. In particular, of significance to the issues in dispute in this trial was the production of a new witness statement of the third defendant by second counterclaim, Nikola Terziovski, filed 8 November 2024. This witness statement coming on the eve of the trial referred to and relied upon a number of undiscovered documents.
The application was supported by two affidavits. The first by Rebecca Lauren Di Rago, dated 29 October 2024 (‘Di Rago affidavit’), was an affidavit made in relation to the application before Associate Justice Gobbo on 31 October 2024. The second was an affidavit by John Peter Caridakis made 12 November 2024 (‘Caridakis affidavit’).
The primary proceeding commenced in 2021 and was brought by NJ Capital Pty Ltd (ACN 604 483 409) against three defendants; Andrew Joshua Dal Broi, his wife, Bianca Kate Dal Broi, and her mother, Helen Alexandra Merrington. At a high level, the original proceeding brought by the plaintiff company sought various declarations and orders for the repayment of money alleged to be owed to it, failing defaults by the three defendants in their loan agreements with the plaintiff company.
A counterclaim was filed by Ms Dal Broi in July 2021 and amended on 3 March 2022. The defendants by counterclaim filed a defence in August 2021 and amendments were made in March 2022 to respond to the amended counterclaim. Pleadings were effectively closed by September 2021, however, further particulars were sought and provided.
An affidavit of documents sworn by Mr Terziovski on 4 April 2022 discovered approximately 180 documents. The affidavit contains the usual statements that there were no other documents other than those discovered which were relevant to the issues in dispute. Discovery was completed by the parties by April 2022.
In April 2024 the trial was fixed for hearing in May 2025. Then in September 2024, an application was made by the third defendant supported by the plaintiff by second counterclaim for the proceeding to be expedited.[1] That application was heard by Associate Justice Gobbo on 2 October 2024 and was opposed by the defendants by counterclaim. Her Honour ordered the trial date to be expedited and fixed on 12 November 2024 the trial of the primary claim and the counterclaim.
[1]The grounds for the expedition was primarily based on the mental health of the third defendant.
Rather than take the necessary steps for trial preparation, the defendants by counterclaim sought leave to discontinue the original proceeding. Some discussions about the terms of the discontinuance and costs occurred and the question of the continuation of the trial by counterclaim arose. There was a contested hearing before Associate Justice Gobbo on 31 October 2024 where the defendants by counterclaim sought to have the trial vacated. Her Honour refused to vacate the trial of the second counterclaim and orders were made in respect of the outstanding steps needed to be taken prior to the trial.
The Di Rago affidavit sets out what occurred in the preparation of the matter for trial between 2 and 29 October 2024. The Caridakis affidavit sets out the steps taken between 8 and 12 November 2024 immediately preceding the trial.
The plaintiff by second counterclaim submitted that the late filing of a further witness statement which annexed over 30 documents which had not previously been discovered is the latest in a course of dilatory conduct of the defendants and the direct catalyst for the trial needing to be vacated. The alternative position of proceeding with the trial and refusing leave to rely on the further witness statement was not supported.
The vacation of the trial date as being the appropriate course[2] was not opposed by the defendants by counterclaim. Orders were made vacating the trial date and referring the proceeding for further directions. The need for repleading and further discovery were identified as requiring consideration of the parties.[3]
[2]Transcript of Proceedings, NJ Capital Pty Ltd v Dal Broi & Ors (Supreme Court of Victoria), S ECI 2021 00766, Justice Quigley, 12 November 2024, 35 (‘Transcript’).
[3]Transcript, 36.
The issue strongly contested by the parties was the cost consequences of this course. The plaintiff by second counterclaim sought her costs on an indemnity basis with all or part of those costs to be paid forthwith. The defendants by second counterclaim opposed any costs order against them.
COSTS
The plaintiff by second counterclaim argued that it was the behaviour and default of the defendants by second counterclaim which directly caused the trial date to be displaced. Moreover, as a solicitor, Mr Terziovski (the third defendant by second counterclaim) is expected to conduct all litigation in accordance with his professional obligations as a practitioner and the duties owed to the Court under the Civil Procedure Act 2010 (Vic) (the ‘Civil Procedure Act’).
It was submitted that the actions of the third defendant by second counterclaim were deliberate or, at their most generous, negligent and below the standard expected of a legal practitioner. The delay to the trial and the new matters raised in the witness statement together with the additional undiscovered documents led directly to the trial being unable to proceed. Counsel for the plaintiff by second counterclaim gave an example of the claim made for $200,000 by the plaintiff which is addressed in the new witness statement. It is said now that this money is the subject of a separate transaction and that there is a file held by the third defendant in respect of it. These documents were not discovered but are now sought to be relied upon.[4] It was submitted by Counsel for the plaintiff that ‘a more egregious breach of the obligations to produce documents and to co‑operate in the conduct of litigation is difficult to imagine.’[5]
[4]Transcript, 17–18.
[5]Transcript, 17–18.
The plaintiff by second counterclaim had incurred costs in the preparation for the trial in the amount of $254,887.29 which was argued to be thrown away by the adjournment.[6] It was argued that there was now a need to prepare the case afresh for trial and, effectively, the trial preparation to date had been wasted. The financial jeopardy that the aborted trial would cause together with the need to reprepare the plaintiff’s case was unacceptable and unfair and warranted a special costs order.
[6]Affidavit of Rebecca Lauren Di Rago (filed 30 October 2024 in S ECI 2021 00766, Supreme Court of Victoria), [21].
It was submitted that there were ’practically no costs that have already been incurred which will not need to be effectively reincurred or will not be wholly wasted by virtue of the defendants by counterclaim’s conduct in relation to this proceeding’.[7] In those circumstances, it was submitted initially that the appropriate costs orders were that costs since 31 August or September 2021 when the counterclaim was filed be paid on an indemnity basis and forthwith. A request for 60% of the costs identified were sought. Further submissions made on behalf of the plaintiff by counterclaim submitted that ‘on any view the costs incurred since May 2024 in the proceeding by the plaintiff by counterclaim have been wasted and will be wasted’.[8] It was submitted that a complete reworking of the case in light of the late evidence including additional pleadings and discovery would be required and that, in the circumstances, the Court should show its concern that the plaintiff be compensated in respect of the ‘enormous wastage of costs which will have occurred’,[9] and make an appropriate costs order.
[7]Transcript, 20.
[8]Transcript, 41–42.
[9]Transcript, 42.
The defendants by second counterclaim submitted that whilst it was unfortunate that the trial date would be required to be vacated, the lack of compliance with the trial preparation timetable was minor and there had also been delay by the plaintiff by second counterclaim.
Of greater relevance, it was argued by the defendants by second counterclaim that many of the documents which were now sought to be relied upon by the defendants were documents to which the plaintiff by second counterclaim was a party and they should have been discovered by her. I was urged to take the view that the lack of discovery of these documents was deliberate and that they were documents which were not helpful to the plaintiff’s case. Any default was a joint default in this regard.
Counsel for the defendants by second counterclaim also indicated that he had recently come into the case and he had looked anew at the final trial preparation.
Counsel for the defendants by second counterclaim submitted that a dispassionate and calm analysis of what had occurred needed to be taken. The plaintiff by second counterclaim’s allegations made against his clients in the pleadings essentially arise from her claim that money was paid out of trust without her authority, which is acknowledged to be a serious allegation to make.
It was submitted that a number of the documents attached to the new witness statement reference an email address which was an email address of Ms Dal Broi.[10] The submission was that the parties were in this position because of default by both parties as to discovery. He was critical of the plaintiff by second counterclaim, suggesting that her documents had been selectively discovered. Similar submissions as to documents were made in respect of the plaintiff by second counterclaim’s claim for $500,000.[11]
[10]Transcript, 26–29.
[11]Transcript, 31–33.
As against this, counsel for the plaintiff by second counterclaim offered to put on evidence of the circumstances of Ms Dal Broi’s access to her emails accounts. I have not chosen to seek that evidence as, in my view, the catalyst for the delay in the trial squarely falls on the new witness statement sought to be relied upon on the eve of the trial. Proper consideration to the relevant documents, particularly if they are to form a key part of the defence, ought to have been discovered and considered well before now.
PRINCIPLES APPLICABLE TO SPECIAL COSTS ORDERS
Section 24 of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’) gives the Court a broad discretion to award costs, including on an indemnity basis.[12] The usual order is the payment of costs to the successful party on a standard basis. The Court may also impose sanctions under Part 2.4 of the Civil Procedure Act where there has been a breach of the overarching obligations, which can include an order for payment of costs.[13] Recourse to the Civil Procedure Act has been said to provide ‘a further separate and independent basis for awarding indemnity costs’.[14]
[12]Supreme Court (General Civil Procedure) Rules 2015, r 63.28.
[13]Civil Procedure Act 2010 (Vic), s 29(1)(a).
[14]MacFellis Pty Ltd v Bank of Queensland Ltd [2015] VSC 20, [17]-[19]; Yara Australia Pty Ltd v Oswal (2013) 41 VR 302, [27], [56]; Sunland Waterfront (BVI) v Prudentia Investments Pty Ltd [2013] VSCA 237, [553]-[554]; PCCEF Pty Ltd v Geelong Football Club Ltd [2018] VSC 258, [57]-[58].
CONSIDERATION
In conjunction with the dilatoriness in compliance with the court ordered trial preparation identified above by the defendants by second counterclaim, I have formed the view that there is substance to the submissions made on behalf of Ms Dal Broi. I have formed this view looking dispassionately at the material before me and considering the submissions made by counsel for both parties (including putting to one side the energy and indignation with which counsel for Ms Dal Broi made his client’s case). Taking into account the trajectory of the trial preparation and the lateness of a new witness statement prepared by a practising solicitor party to the litigation, I am satisfied that the fault for the vacation of the trial at the midnight hour falls at the feet of the defendants by second counterclaim. I agree that the actions, or inaction and dilatory approach to timetable compliance by the defendants by second counterclaim, warrant a cost order in favour of the plaintiff by second counterclaim and that some part of the costs should be paid immediately.
I am not persuaded that it lies well in the mouth of a litigant, who is a practising solicitor, to point to a potential breach of another’s discovery obligations as a defence to the circumstances here. This course of conduct has led to, late on the eve of trial, a further witness statement being sought to be relied upon and one which annexes and relies upon many documents not previously discovered which, on their face, appear relevant to the issues in dispute. Such dilatoriness has arisen well after pleadings are closed and discovery complete, and after there have been two recent directions hearings before Associate Justice Gobbo which led to the final trial timetable being set.
In my view, the fault for the vacation of the trial falls squarely at the feet of the defendants by second counterclaim and especially the third defendant by second counterclaim, who should, as a practising solicitor, know better given his obligations to the Court. I have formed the view that such actions or defaults fall short of what is expected from a registered practitioner. The actions are inconsistent with the overarching obligations of the Civil Procedure Act.
One of the documents exhibited to the Caridakis affidavit is a letter sent on 11 November 2024 responding to the witness statement sent by email on the previous business day (Friday, 8 November 2024). It set out in some detail the plaintiff by second counterclaim’s complaints as to the co-operation of the defendants by second counterclaim in preparing the matters for trial and the late service of the witness statement. At paragraph 19 of that letter, the solicitors for the plaintiff conclude that the most appropriate course is to vacate the trial date, the defendants have an opportunity to replead their defence, proper discovery be made and they sought the whole of the plaintiff’s costs from August 2021 on an indemnity basis and immediately, as they sought before the Court.
I am also persuaded that there should be a special costs order to properly recompense the plaintiff by second counterclaim for the defendants by second counterclaim’s actions and dilatoriness. However, I am not prepared in all the circumstances, particularly with questions of the extent of repleading and consequent discovery still to be undertaken, to award a special costs order in the terms sought by the plaintiff.
I am of the view that the interests of justice demand that more than a standard costs order be made in favour of the plaintiff by second counterclaim.
QUANTUM OF COSTS
The plaintiff by second counterclaim has claimed the costs expended are in the vicinity of $254,887.29.[15] Figures around this were quoted in the letter dated 11 November 2024 referred to above.[16]
[15]Affidavit of John Peter Caridakis (filed 12 November 2024 in S ECI 2021 00766, Supreme Court of Victoria) [21] (‘Caridakis affidavit’).
[16]Caridakis affidavit, 31 at [19] notes $228,129.22, and at [20] an estimate of costs at $253,476.92 are noted.
Apart from these global figures, I have not been provided with copies of invoices or a further breakdown of costs so I am not in a position to order a specific sum. I am however prepared in all the circumstances to make an indemnity costs order for the costs thrown away by reason of the adjournment of the trial. These costs will include the interlocutory work which will need to be redone (any repleading and discovery) and the trial preparation for the new trial date which will also need to be redone.
I have made an assessment of an amount which I consider to be justifiable and fair based on the amounts quoted above and will order an amount of $120,000.00 to be paid on account forthwith, with the balance of the costs to be paid by the defendants by second counterclaim to be taxed in default of agreement having taking in to account the exercise of discretion under the Supreme Court Act and the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and the overarching obligations of the Civil Procedure Act.
ORDERS
The defendants by second counterclaim pay the plaintiff by second counterclaim her costs thrown away by reason of the adjournment of the trial and the need to undertake further interlocutory work and trial preparation, such costs to be taxed in default of agreement.
Further, the defendants by second counterclaim pay an amount of $120,000.00 to the plaintiff by second counterclaim in part payment of the costs order made above within 14 days.
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SCHEDULE OF PARTIES
S ECI 2021 00766
BETWEEN:
NJ CAPITAL PTY LTD (ACN 604 483 409)
Plaintiff
- and -
ANDREW JOSHUA DAL BROI
First defendant
BIANCA KATE DAL BROI
Second defendant
HELEN ALEXANDRA MERRINGTON
Third defendant
AND BETWEEN:
ANDREW JOSHUA DAL BROI
Plaintiff by first counterclaim
- and –
NICHOLAS JAMES LAWYERS PTY LTD
(ACN 601 167 220)
First defendant by first counterclaim
NJ CAPITAL PTY LTD (ACN 604 483 409)
Second defendant by first counterclaim
NIKOLA TERZIOVSKI
Third defendant by first counterclaim
AND BETWEEN:
BIANCA KATE DAL BROI
Plaintiff by second counterclaim
- and –
NICHOLAS JAMES LAWYERS PTY LTD
(ACN 601 167 220)
First defendant by second counterclaim
NJ CAPITAL PTY LTD (ACN 604 483 409)
Second defendant by second counterclaim
NIKOLA TERZIOVSKI
Third defendant by second counterclaim
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