Kayali v Koca (Costs Ruling)
[2023] VSC 177
•6 April 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2018 00562
| MEHMET KAYALI | Plaintiff |
| v | |
| SALIH KOCA | First Defendant |
| and | |
| REGISTRAR OF TITLES | Second Defendant |
| AND BETWEEN: | |
| SALIH KOCA | Plaintiff by Counterclaim |
| v | |
| MEHMET KAYALI | First Defendant by Counterclaim |
| and | |
| FILIZ KAYALI | Second Defendant by Counterclaim |
---
JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 6 April 2023 |
CASE MAY BE CITED AS: | Kayali v Koca (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 177 |
---
COSTS – Claim that the plaintiff has an interest in a property under a constructive trust dismissed – Counterclaim against the first and second defendant by counterclaim partially upheld – Whether special circumstances justify an order that costs be payable on an indemnity basis – Whether costs in respect of the primary claim be payable by a non-party – Application for costs award against non-party to the primary claim rejected – Plaintiff ordered to pay the first defendant’s costs of the claim on an indemnity basis – Plaintiff and second defendant by counterclaim ordered to pay the first defendant’s costs of the counterclaim on an indemnity basis – No costs awarded in respect of trial day adjourned for the purpose of preparing an application not subsequently made.
HIS HONOUR:
On 24 March 2023 the Court delivered judgment following a 15-day trial on various dates in October and November 2022.[1] The parties were provided with an opportunity to file submissions as to the costs of the proceeding.
[1]Kayali v Koca [2023] VSC 131.
Mr Koca successfully defended Mr Kayali’s claim that he has an interest in a property at 35 Heversham Grove, Greenvale under a constructive trust. Mr Koca also successfully defended Mr Kayali’s claim that he is indebted to Mr Kayali in the sum of $146,500. Mr Koca’s counterclaim against Mr Kayali was wholly successful. An order will be made requiring Mr Kayali to pay Mr Koca $44,900 and $7,483.39 (being the Australian dollar equivalent of 26,700 Turkish Lira).[2]
[2]Affidavit of Samli Akin Ozturk dated 30 March 2023, [5]–[6].
Mr Koca’s counterclaim against Ms Kayali succeeded in respect of his claim that Ms Kayali guaranteed repayment of a loan of $35,000 advanced by Mr Koca to Mr Kayali on 18 January 2016. Mr Koca has failed to establish that Ms Kayali is also liable to repay three further loans advanced to Mr Kayali totalling $9,900 and 26,700 Turkish Lira.
Mr Koca submits that even though Ms Kayali was not a party to the primary claim an order should be made requiring both Mr Kayali and Ms Kayali to pay Mr Koca’s costs of the primary claim. I reject this submission.
The Court has power to make a costs order against Ms Kayali in respect of the primary claim, notwithstanding the fact that she was not a party to the primary claim.[3] The making of an order for costs against a non-party is an exceptional course for a Court to take.[4]
[3]Bischof v Adams [1992] 2 VR 198, 204; Gdanski v Palms Court Management [2017] VSCA 348, [1], [69].
[4]Ibid [1].
During the trial I directed that Ms Kayali’s standing to make submissions, lead evidence and cross-examine witnesses be confined to the claims which were made against her personally by way of Mr Koca’s counterclaim for recovery of $44,900 and 26,700 Turkish Lira.[5] Having made this direction during the trial I do not consider it would be a proper exercise of the discretion to award costs against a non-party if I ordered Ms Kayali to pay the costs of the primary claim.
[5]Transcript of Proceedings, T 136 L 2 – T 138 L 14 (11 October 2022).
Mr Koca seeks an order that Mr Kayali and Ms Kayali pay his costs on an indemnity basis. I am satisfied that there are special circumstances which justify an order that:
(i) Mr Kayali pay Mr Koca’s costs of the primary claim on an indemnity basis to be taxed in default of agreement;
(ii) Mr Kayali and Ms Kayali pay Mr Koca’s costs of the counterclaim on an indemnity basis to be taxed in default of agreement.
In Ugly Tribe Co Pty Ltd v Sikola,[6] Harper J noted that special circumstances must exist before the Court will award costs on an indemnity basis. Those circumstances include:
[6][2001] VSC 189.
(i) The making of an allegation, known to be false, that the opposite party is guilty of fraud.
(ii) The making of an irrelevant allegation of fraud.
(iii) Conduct which causes loss of time to the Court and to other parties.
(iv) The commencement or continuation of proceedings for an ulterior motive.
(v) Conduct which amounts to a contempt of court.
(vi) The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law.
(vii) The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided the trial.[7]
[7]Ibid [7] (citations omitted) (emphasis added). See also Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233-4.
In Legal Services Commissioner v Bone,[8] Morrison JA (with whom Fraser and Gotterson JJA agreed) cited with approval the following passage from the judgment of Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (A firm):[9]
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably.[10]
[8][2014] QCA 179, [71].
[9](1998) 156 ALR 169.
[10]Ibid [236].
Mr Kayali and Ms Kayali acted unreasonably in maintaining claims and defences which had no or substantially no prospect of success. Their claims and defences were largely unsupported by any objective evidence and were largely based on fabrications. The manner in which they conducted themselves throughout the 15-day trial resulted in significant waste of court time. There are special circumstances which justify an order that they each be liable to pay Mr Koca’s costs on an indemnity basis. Mr Kayali will be ordered to pay Mr Koca’s costs both in respect of the claim and counterclaim on an indemnity basis. Ms Kayali will be ordered to pay Mr Koca’s costs of the counterclaim on an indemnity basis.
I have taken into account the fact that Ms Kayali enjoyed a measure of success in defending Mr Koca’s counterclaim against her, other than in respect of the $35,000 loan advanced to Mr Kayali on 18 January 2016. Notwithstanding this measure of success, it is appropriate that Ms Kayali be ordered to pay Mr Koca’s costs of the counterclaim and that she do so on an indemnity basis. First, the claim for $35,000 was the principal component of the counterclaim. The evidence and submissions in respect of the $35,000 loan took up considerably more court time than the issue of whether Ms Kayali was liable to repay the other three loans advanced by Mr Koca to Mr Kayali. Further, in ordering Ms Kayali to pay indemnity costs I have taken into account Ms Kayali’s conduct during the trial. As set out at paragraphs [117] to [122] of the principal judgment, Ms Kayali’s conduct throughout the trial was unacceptable. Considerable court time was wasted during the trial responding to Ms Kayali’s unacceptable behaviour.
The order that Mr Kayali and Ms Kayali pay Mr Koca’s costs on an indemnity basis is subject to one exception. On 19 October 2022, the seventh day of the trial, Mr Koca applied for and was granted an adjournment for the purpose of preparing an application for orders under the Civil Procedure Act 2010. No application was subsequently made. I do not consider it appropriate to order Mr Kayali and Ms Kayali to pay the costs of the hearing on 19 October 2022. There will be no order for costs in respect of 19 October 2022.
The Court shall make the following orders:
1. The plaintiff’s claim is dismissed.
2. The Registrar of Titles is directed to remove Caveat No. AQ257107L from Certificate of Title Volume 09458 Folio 143.
3. The first defendant and the second defendant by counterclaim are jointly liable to pay the plaintiff by counterclaim $35,000 plus interest of $16,445.21.
4. In addition to the amount prescribed by paragraph 3 hereof, the first defendant by counterclaim pay the plaintiff by counterclaim $17,383.39 plus interest of $8,167.1.
5. Subject to paragraph 7, the plaintiff pay the defendant’s costs of the proceeding, including the costs of the counterclaim, on an indemnity basis to be taxed in default of agreement.
6. Subject to paragraph 7, the second defendant by counterclaim pay the costs of the plaintiff’s costs of the counterclaim on an indemnity basis to be taxed in default of agreement.
7. There be no order in respect of the costs of the hearing on 19 October 2022.
---
0
3
0