Gittany v Gittany (No 2)

[2014] NSWSC 968

Supreme Court

New South Wales

Medium Neutral Citation:

Gittany v Gittany (No 2) [2014] NSWSC 968

Hearing dates:

20 June 2014

Decision date:

20 June 2014

Before:

McCallum J

Decision:

By consent the amount of the default judgment entered 25 February 2013 is varied to the sum of $1,000,721.96 effective as at that date.

The defendant is to pay the plaintiff's costs of and incidental to the defendant's Notice of Motion to set aside the default judgment as agreed or assessed on an indemnity basis.

Catchwords:

COSTS - unsuccessful application to set aside default judgment - plaintiff seeking indemnity costs - where court satisfied that the proposed defence was not raised in good faith

Category:

Costs

Parties:

Joe Gittany (plaintiff)
Charles Gittany (defendant)

Representation:

Counsel:
G Penhall (solicitor for the plaintiff)
D Ash (defendant)
Solicitors:
Penhall & Co Solicitors (plaintiff)
Joe Weller & Associates (defendant)

File Number(s):

2012/341101

Publication restriction:

None

Judgment - ex tempore

1. HER HONOUR: In these proceedings, I determined an application to set aside default judgment on 10 June 2014. I determined that the application should be dismissed. However, during the course of preparing the judgment I identified two anomalies in the calculation of the sum in which default judgment had been entered. I afforded the parties an opportunity to consider whether those were errors of calculation and stood the proceedings over to today to hear the parties on that issue and to determine the matter of costs.

1. As to the anomalies identified at paragraphs [56] and [57] of the principal judgment, the parties are agreed that the initial calculation of the debt did indeed entail two errors which have been corrected in a further affidavit affirmed by the plaintiff on 17 June 2014.

1. In the result although, in accordance with my previous determination, the application to set aside the default judgment is rejected, I consider it appropriate to vary the sum of the judgment accordingly.

1. As to costs, I have heard the parties this morning. Two issues are raised on behalf of the plaintiff. The first is that he contends he should have his costs of the application to set aside the default judgment as agreed or assessed on an indemnity basis. Mr Penhall has provided a detailed written submission in support of that application to which I have had regard.

1. The principal consideration raised in those submissions is the plaintiff's reliance upon my finding at [49] of the principal judgment. I stated that I was not persuaded that the defendant genuinely believed that the loan funds he accepted from his brother were advanced by way of loan to a company rather than to himself personally, which was the principal aspect of the defence sought to be raised in support of the application to have the default judgment set aside. I said:

I am satisfied that the contention that the loan was to the company and not to Charles Gittany personally is a deliberate confection. I am not persuaded that it is a defence raised in good faith.

1. Prima facie, that finding affords a basis for awarding costs on an indemnity basis rather than on the ordinary basis in accordance with well-known principles stated in the authorities and summarised in Mr Penhall's written submissions.

1. Mr Ash submitted, however, that there were other aspects of the preparation and hearing of the application which should be taken into account and which militate in a different direction. First, he submitted, and I accept, that, leaving aside the finding as to that aspect of the defence, the application was conducted reasonably on the part of both parties.

1. A separate consideration is the fact that the defendant also raised a different matter by way of proposed defence, which was the contention that part of the sum claimed has been repaid to the plaintiff in some form. Whilst I was not satisfied that there was any evidence to support that contention at the hearing before me, I acknowledged the possibility that it would be open to the defendant, if indeed he has proof of additional payments being made to the plaintiff not addressed in the evidence before me, to raise those claims in bankruptcy proceedings which have been commenced by the plaintiff against the defendant on the strength of the default judgment.

1. It may nonetheless be accepted that, but for the primary proposed defence, which I held had not been raised in good faith, the plaintiff would have been able to rely on the default judgment duly obtained by him in February of last year.

1. In all the circumstances, I am persuaded that this is an appropriate occasion for awarding costs on the indemnity basis.

1. The second costs application made on behalf of the plaintiff is to have, in addition to the small amount of costs awarded for entry of default judgment in the sum of $1,482, an order requiring the defendant to pay the plaintiff's additional costs incurred in the preparation of the claim and up to the point of obtaining default judgment. The plaintiff seeks those costs also on an indemnity basis.

1. I accept, as submitted on behalf of the plaintiff, that the Court has power to make such an order, but I consider it a power that should be exercised with some caution. The simple fact is that, leaving aside the subsequent conduct of the defendant after entry of the default judgment, the regulated sum is the amount to which the plaintiff was properly entitled. He has obtained the benefit of judgment by default, the defendant having failed to file a defence within the period allowed under the rules.

1. In all the circumstances, I do not consider it appropriate to revisit that aspect of the costs. I decline to make order 3 sought in the short minutes of order handed up by Mr Penhall.

**********

Decision last updated: 22 July 2014