Islamic Society of Melbourne Eastern Region Inc v Islamic Coordinating Council of Victoria Pty Ltd (Costs Ruling)
[2020] VSC 887
•24 December 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2020 03113
| ISLAMIC SOCIETY OF MELBOURNE EASTERN REGION INC | Plaintiff |
| v | |
| ISLAMIC COORDINATING COUNCIL OF VICTORIA PTY LTD (ACN 097 332 726) & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | McDONALD J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 July, 14 September and 29 October 2020; written submissions 26 November 2020, 3 December 2020 and 8 December 2020 |
DATE OF RULING: | 24 December 2020 |
CASE MAY BE CITED AS: | Islamic Society of Melbourne Eastern Region Inc v Islamic Coordinating Council of Victoria Pty Ltd & Ors (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 887 |
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COSTS — Order made without contested hearing — Whether each party should bear their own costs — Plaintiff entitled under deed of settlement to nominate a board member of first defendant — First defendant refused to accept plaintiff’s nominee — First defendant sought to appoint second defendant as board member — First defendant granted leave to play no active role in proceeding — Second to fifth defendants consented to an order acknowledging power of plaintiff’s committee of management to nominate board member — Power of plaintiff’s committee of management to nominate board member unambiguous — Defendants ordered to pay plaintiff’s costs on a standard basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Bongiorno (29 July 2020) with Mr F Badali (14 September 2020); Mr F Amirbeaggi (29 October 2020) | Amicus Lawyers; (from 20 October 2020) Yates Beaggi Lawyers |
| For the First Defendant | Mr C Shaw SC with Mr S K Morris (29 July 2020) | Russell Kennedy Lawyers |
| For the Second to Fifth Defendants | Mr T J Sowden and Ms S Fernando | Forbes, Reichman & Galasso |
HIS HONOUR:
This ruling concerns the costs of the present proceeding which was commenced by originating motion filed 29 July 2020. The genesis of the proceeding was a dispute relating to a deed of settlement in: In the matter of Islamic Coordinating Council of Victoria Pty Ltd: Islamic Society of Victoria Inc v Ozyurek & Ors S ECI 2019 001172 (‘the ISV proceeding’).
The plaintiff in the present proceeding (‘ISOMER’) was the sixth plaintiff in the ISV proceeding. The first defendant in the present proceeding (‘ICCV’) was the seventh defendant and plaintiff by counterclaim in the ISV proceeding. The ISV proceeding was settled by a deed executed on 19 July 2020.[1] The deed of settlement provided for the establishment of a new ICCV board, with one board member to be nominated by each of ICCV’s member societies. ISOMER had a right under the deed of settlement to nominate a board member.
[1]Exhibit EH–4 to the Affidavit of Ebrahim Hoosen, sworn 29 July 2020.
ICCV received two nominations from ISOMER for the position of board member. Mr Ebrahim Hoosen was nominated by ISOMER’s committee of management. Mr Rashad Evans, one of four trustees of ISOMER, was nominated by the trustees. On 27 July 2020 the solicitors for ICCV advised ISOMER’s solicitors that ‘[i]n accordance with the provisions of the ISOMER Constitution and the consent and declaration form received from its Trustees, it is appropriate for, and ICCV intends to, accept the nomination of Rashad Evans’.[2]
[2]Letter from Kennedy Guy Lawyers to Amicus Lawyers 27 July 2020, Exhibit EH–6 to the Affidavit of Ebrahim Hoosen, sworn 29 July 2020.
On 29 July 2020 the Court heard an urgent application by ISOMER seeking orders restraining ICCV from accepting the nomination of Mr Evans as an ICCV board member. The hearing on 29 July 2020 was initiated by a summons filed in the ISV proceeding. This was misconceived as the ISV proceeding was no longer on foot, having been brought to an end by the deed of settlement executed on 19 July 2020. On 29 July 2020 Mr Bongiorno, who appeared with Mr Badali for ISOMER, proffered an undertaking to commence a proceeding forthwith by originating motion naming ICCV as the first defendant and the four trustees of ISOMER as the second to fifth defendants. Mr Shaw SC, who appeared with Mr Morris for ICCV, proffered an undertaking not to take any steps prior to 4.00pm on 4 August 2020 to appoint Mr Evans as a member of the ICCV board.[3] On the basis of these undertakings the further hearing of the proceeding was adjourned to 4 August 2020.
[3]Transcript of Proceedings, T 17 L 12 – T 18 L 19 (29 July 2019).
The originating motion was filed on 29 July 2020. It sought the following relief:
1. A declaration that, by either one or both of the following:
(a)the form entitled ‘Appointment of Director and Trustee’ (being Exhibit EH-5 to Ebrahim Hoosen’s affidavit sworn on 29 July 2020); and
(b)further and alternatively, the form entitled ‘Appointment and Consent of Director of the Islamic Co-ordinating Council of Victoria Pty Ltd’ dated 28 July 2020 (served upon the first defendant’s solicitors via email on 28 July 2020 at 10.25pm);
Ebrahim Hoosen has been validly nominated by the plaintiff to be the first defendant’s director in accordance with:
(c)the ‘ISOMER Constitution’ (being Exhibit EH10 to Ebrahim Hoosen’s affidavit sworn on 29 July 2020) as well as any relevant law; and
(d)Clause 2.2(a)(i) of the ‘Deed of Settlement and Release and Members Agreement’ executed on 19 July 2020 (being Exhibit EH4 to Ebrahim Hoosen’s affidavit sworn 29 July 2020 (the Deed));
2.An order that the first defendant appoint Ebrahim Hoosen as the director nominated by the plaintiff pursuant to Clause 2.2(a)(i) of the Deed forthwith.
On 4 August 2020 Mr Reynolds appeared for ICCV. Mr Sowden and Ms Fernando appeared for the second to fifth defendants. Mr Reynolds informed the Court that ICCV wished to be excused from taking any further part in the proceeding, save for being heard on the question of costs.[4]
[4]Transcript of Proceedings, T 5 L 19–22 (4 August 2020).
On 4 August 2020 ICCV proffered an undertaking to extend its undertaking given on 29 July 2020 not to appoint Mr Evans as ISOMER’s nominee to the ICCV board until the hearing and determination of the proceeding or further order.
The trial was listed for hearing on 14 September 2020. Shortly after the commencement of the hearing on that day the parties entered into discussions. These continued throughout the course of the day. Shortly after the luncheon adjournment the Court was advised that, save for the question of costs, the parties had reached an agreement.[5] The parties made submissions as to the form of order to give effect to the agreement and agreed to submit an order for authentication.[6]
[5]Transcript of Proceedings, T 17 L 1–3 (14 September 2020).
[6]Transcript of Proceedings, T 27 L 22 – T 28 L 7 (14 September 2020).
On 16 September 2020 Mr Hoosen, the President of ISOMER, corresponded directly with my chambers and raised concerns about the form of orders and the circumstances in which the in principle agreement had been reached on 14 September 2020. In light of this correspondence I informed the parties that the Court would not make any order. The matter was re-listed for mention on 29 October 2020.
On 29 October 2020 Mr Sowden, who appeared with Ms Fernando for the second to fifth defendants, informed the Court that the defendants conceded that the committee of management did have power to nominate Mr Hoosen as the plaintiff’s representative on the ICCV board.[7] However, when asked whether the second to fifth defendants would consent to an order in the terms of [1] and [2] of the originating motion, Mr Sowden submitted:
No. At this stage no and the reason for this is simply it’s up to the Committee of Management, Your Honour, and, as I recall, there’s no evidence that the Committee of Management has actually appointed Mr Hoosen and the plaintiff in this case really is the association. There’s not that many people on the Committee of Management; it can’t be difficult to get a show of hands as to who should be the representative of ICCV. And, in my submission, it is a complete capitulation to say ‘okay, we’re happy to have a declaration that the decision to appoint a director to ICCV vests in the Committee of Management.[8]
[7]Transcript of Proceedings, T 3 L 16–30 (29 October 2020).
[8]Transcript of Proceedings, T 7 L 8–19 (29 October 2020).
At the conclusion of the hearing on 29 October 2020 the parties were informed by the Court that the proceeding would be listed for trial at a date to be fixed some time prior to the end of the 2020 calendar year.
On 16 November 2020 the parties communicated with my chambers and advised that an agreement had been reached between the plaintiff and the second to fifth defendants as to a form of order resolving the proceeding. The order made on 18 November 2020 reflected that agreement, save for a condensed timetable for the filing of written submissions on the question of costs. Paragraph 1 of the order provides:
The first defendant forthwith appoint Ebrahim Hoosen as the director nominated by the plaintiff pursuant to Clause 2.2(a)(i) of the Deed of Settlement and Release and Members Agreement executed on 19 July 2020.
In ‘Other Matters’ the following is recorded:
The Court notes the parties’ agreement that by either one or both of the following:
(a)the form entitled ‘Appointment of Director and Trustee’ (being Exhibit EH5 to Ebrahim Hoosen’s affidavit sworn on 29 July 2020); and
(b)further and alternatively, the form entitled ‘Appointment and Consent of Director of the Islamic Co-ordinating Council of Victoria Pty Ltd’ dated 28 July 2020 (served upon the first defendant’s solicitors via email on 28 July 2020, at 10.25pm);
Ebrahim Hoosen has been validly nominated by the plaintiff to be the first defendant’s director in accordance with:
(c)the ‘ISOMER Constitution’ (being exhibit EH10 to Ebrahim Hoosen’s affidavit sworn on 29 July 2020) as well as any relevant law; and
(d)Clause 2.2(a)(i) of the ‘Deed of Settlement and Release and Member’s Agreement’ executed on 19 July 2020 (being exhibit EH4 to Ebrahim Hoosen’s affidavit sworn on 29 July 2020).
The plaintiff submits that the Court should order the defendants to pay its costs on an indemnity basis. In the alternative, it seeks a gross sum costs order in the sum of $198,740.36. This represents a 20 per cent discount on the legal fees (exclusive of disbursements) which the plaintiff says it has incurred.[9]
[9]Plaintiff, ‘Plaintiff’s Submissions as to Costs’, 26 November 2020, 3.
The first defendant submits that it determined at the earliest stages of the proceeding that ‘it would no longer participate in what was an internal matter for the Plaintiff’.[10] It submits that as a result of the settlement of the ISV proceeding, the composition of the board of ICCV changed. It submits that once that change had been effected the first defendant recognised that it had no appropriate role in this proceeding and advised the plaintiff that it would take no further active part in the proceeding.[11] The first defendant submits that its liability to pay any proportion of the plaintiff’s costs should be nominal and should not include costs after 4 August 2020 when the Court granted the first defendant leave to take no further part in the proceeding.[12]
[10]First Defendant, ‘First Defendant’s Submissions as to Costs’, 3 December 2020, [1].
[11]Ibid [3].
[12]Ibid [5].
The second to fifth defendants submit that the general rule is that the absence of a trial on the merits of the plaintiff’s claim means that each party to the proceeding should bear their own costs, save in exceptional circumstances.[13] In support of this proposition the second to fifth defendants cite Gribbles Pathology Pty Ltd v Health Insurance Commission[14] and Champagne View Pty Ltd v Shearwater Resort Management Pty Ltd.[15] The second to fifth defendants submit that there are no exceptional circumstances which justify a departure from the general rule.[16]
[13]Second to Fifth Defendants, ‘Outline of Submissions of the Second to Fifth Defendants on the Question of Costs’, 3 December 2020, [9].
[14](1997) 80 FCR 284.
[15][2000] VSC 214.
[16]Second to Fifth Defendants, ‘Outline of Submissions of the Second to Fifth Defendants on the Question of Costs’, 3 December 2020, [9].
The relief claimed in the plaintiff’s originating motion raises a narrow question of construction of the ISOMER constitution. In particular, the question of whether the committee of management had the power to nominate Ebrahim Hoosen to be its nominee as a member of the board of ICCV in accordance with clause 2.2(a)(i) of the deed of settlement executed 19 July 2020. The Court’s order of 18 November 2020 records in ‘Other Matters’ the agreement of the parties that Mr Hoosen was validly nominated by the plaintiff to be a director of the plaintiff, in accordance with the Constitution of ISOMER.
There has not been a hearing in relation to the committee of management’s power to nominate Mr Hoosen as a director of ICCV. Nevertheless, I do not consider it appropriate in the circumstances of the present case to order that the parties bear their own costs.
Prior to the commencement of the proceedings the first defendant adopted a partisan position in relation to the validity of Mr Hoosen’s appointment to the board of ICCV. ICCV’s solicitors contended that the nomination of Mr Evans was authorised by ISOMER’s constitution. It has not sought to justify this course of action, other than pointing to the fact that the board of ICCV had a different composition prior to 4 August 2020. Once the composition of the board changed ICCV recognised that it had no appropriate role in the proceeding and that the issue of who should be ISOMER’s nominee to the board of ICCV was an internal matter for ISOMER. Nevertheless, by initially preferring the nomination of Mr Evans to that of Mr Hoosen, ICCV placed ISOMER in a position where, prior to 29 July 2020, it had no choice other than to commence legal proceedings.
The first defendant will be ordered to pay the plaintiff’s costs up to and including 29 July 2020. These costs shall be on the standard basis, to be taxed in default of agreement. Subsequent to 4 August 2020 the defendant has played no active role in the proceeding. The defendant will be ordered to pay 50 per cent of any costs incurred by the plaintiff between 30 July 2020 and 4 August 2020 inclusive, on a standard basis to be taxed in default of agreement. The second to fifth defendants will be ordered to pay the remaining 50 per cent of any costs incurred by the plaintiff between 30 July 2020 and 4 August 2020. These costs will be on the standard basis, to be taxed in default of agreement.
The question then arises whether the second to fifth defendants should be liable for the costs incurred by the plaintiff subsequent to 4 August 2020. In Champagne View Pty Ltd v Shearwater Resort Management Pty Ltd[17] Gillard J stated:
I would not go as far as His Honour has, in stating that any order other than each party bear its own costs can only be made ‘in special circumstances’. Each case must depend upon its own circumstances. As a general proposition if there is no other material before the court other than the pleadings then it would be extremely difficult to make any order other than each party bear its own costs.
However, there may be circumstances which justify an order being made in favour of a party.
Even where there are only pleadings before the court, evidence may be adduced which establishes with some degree of certainty the likely outcome of the trial. Of course the evidence must be confined and not venture into areas of disputed fact. But the circumstances may be such that in a brief and succinct way a court can draw a conclusion as to the likely outcome. In the present matter the court has the benefit of not only the pleadings but also a considerable number of affidavits supporting and contesting the plaintiff’s case. Much of the evidence is uncontestable.[18]
[17][2000] VSC 214.
[18]Ibid [47]–[49].
Notwithstanding the absence of a contested hearing I have a high degree of certainty that Mr Hoosen was validly nominated by ISOMER’s committee of management. It is clear from the terms of ISOMER’s constitution that the committee of management did have the power to nominate Mr Hoosen as the plaintiff’s nominee to the board of ICCV. In particular, clause 14(b)(i) of the ISOMER Constitution provides:
The Committee shall, subject to these rules, have the following powers and duties: —
(i)Except when the Annual General Meeting or a Special General Meeting is in session, to manage the affairs and conduct of the business of the Organisation, to administer the rules and to do all acts or things as the Annual General Meeting.
The power conferred on the committee of management by clause 14(b)(i) empowered the committee to nominate Mr Hoosen as the plaintiff’s representative on the ICCV board.
During the hearing on 14 September 2020 Mr Sowden submitted that it would be a ‘complete capitulation’ if the second to fifth defendants consented to an order in the terms of the plaintiff’s originating motion.[19] Ultimately, this is what the second to fifth defendants have agreed to by consenting to the terms of the order made on 18 November 2020.
[19]Transcript of Proceedings, T 7 L 17 (29 October 2020).
The plaintiff has been put to the expense of obtaining an order from the Court to validate its nomination of Mr Hoosen as its representative on the ICCV board. It is entitled to be compensated for the costs which it has occurred. However, I do not consider that a special costs order is warranted.
The principles governing the award of indemnity costs are well established. Pursuant to s 24(1) of the Supreme Court Act 1986 (Vic), the Court has ‘full power to determine by whom and to what extent the costs are to be paid’. The usual order as to costs is an award to the successful party on a standard basis.[20] In order for there to be a departure from the usual practice of costs on a standard basis, there must be some special or unusual feature of the case justifying such a departure.[21] A number of authorities have identified categories of conduct which might enliven the discretion to order indemnity costs.[22] The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a standard basis.[23] I do not consider there to be a special or unusual feature of the present case which justifies the departure from the usual practice of awarding costs on a standard basis. Further, the quantum of the costs claimed by the plaintiff is substantial: $226,729.16. It is appropriate that, in the absence of agreement between the parties, the plaintiff should establish that these costs have been reasonably incurred and are of reasonable amount.
[20]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.31.
[21]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]–[8].
[22]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233–4; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]–[8].
[23]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 234.
I do not consider that the rejection by the second to fifth defendants of offers of settlement warrants an indemnity costs order. An offer of settlement on 18 September 2020 sought the defendants’ agreement to sign a joint letter to the Australian Charities and Not for Profit Commission (‘ACNC’) nominating Messrs Hoosen and Anwar Ibrahim to be registered as the ‘Responsible Persons’ with the ACNC. It also sought agreement that the President would chair the Annual General Meeting and any Special General Meeting and that the Secretary would be responsible for any election process at these meetings. Neither of these issues form part of the matters for determination in the current proceedings. It was not unreasonable for the defendants not to agree to these matters.
A further offer of settlement dated 2 October 2020 sought agreement that the defendants provide a signed joint letter to the ACNC consenting to Mr Hoosen being registered as the ‘Responsible Person’ within 72 hours. Again, as this was not an issue raised in the relief claimed in the originating motion, the defendant’s failure to agree to the proposal does not justify an order for indemnity costs.
In light of my finding that costs should be awarded on a standard basis, it is unnecessary to consider the plaintiff’s application for a gross sum costs order. For the sake of completeness, I record my conclusion that I do not consider this to be an appropriate cost for a gross sum costs order. Absent agreement between the parties the plaintiff should be required to demonstrate that its costs were reasonably incurred and of a reasonable amount.
The orders of the Court shall be:
1.The first defendant pay the plaintiff’s costs up to and inclusive of 29 July 2020 on a standard basis to be taxed in default of agreement, and 50 per cent of the plaintiff’s costs between 30 July 2020 and 4 August 2020 inclusive on a standard basis to be taxed in default of agreement.
2.The second to fifth defendants pay 50 per cent of the plaintiff’s costs incurred between 30 July 2020 and 4 August 2020 inclusive on a standard basis to be taxed in default of agreement, and pay the plaintiff’s costs incurred thereafter on a standard basis to be taxed in default of agreement.
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SCHEDULE OF PARTIES
S ECI 2020 03113
BETWEEN:
| ISLAMIC SOCIETY OF MELBOURNE EASTERN REGION INC (A0000943U) | Plaintiff |
| - and - | |
| ISLAMIC COORDINATING COUNCIL OF VICTORIA PTY LTD (ACN 097 332 726) | First Defendant |
| RASHAD EVANS | Second Defendant |
| HAKIM GASSIEP | Third Defendant |
| HOSEIN EVANS | Fourth Defendant |
| YUSOEF DAVIES | Fifth Defendant |
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