Mostafa v Sherif (No 2)

[2020] VCC 1901

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION
GENERAL CASES LIST

 Revised
Not Restricted
 Suitable for Publication

Case No. CI-19-06259

SEHAM MOSTAFA	Plaintiff
v
ALIAA MOHAMMAD ELMETWALLY SHERIF	First Defendant
FARID AHMED MOHAMED MOHARRAM
Second Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	MELBOURNE
DATE OF HEARING:	The parties provided written submissions to the court on 23 and 26 November 2020
DATE OF JUDGMENT:	2 December 2020
CASE MAY BE CITED AS:	Mostafa v Sherif and Anor (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VCC 1901

REASONS FOR JUDGMENT
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Subject:   COSTS

Catchwords: Rule 63A.24

Legislation Cited:  County Court Act1958 (Vic);County Court Civil Procedure Rules 2018           (Vic)

Cases Cited:Cretazzo v Lombardi (1975) 13 SASR 4; Donald Campbell & Co v Pollak [1927] AC 732; Latoudis v Casey (1990) 170 CLR 534; McFadzean and Ors v Construction, Forestry, Mining and Energy Union and Ors(2007) 20 VR 250; Oshlack v Richmond City Council (1998) 193 CLR 72; Ritter v Godfrey (1920) 2 KB 47; Taylor v Pace Developments Pty Ltd [1991] BCC 406; Woolf v Burmon (1939) 13 ALJR 431.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Mukherji	Zouki Lawyers
For the Defendants	The defendants appeared in person

HIS HONOUR:

Introduction

1       On 13 November 2020, I delivered my reasons for judgment (“the principal reasons”) in this matter. I concluded that, by reason of their admission, Sherif and Moharram were liable to Mostafa for the amount of $28,096 in respect of the third and fourth loans. But Mostafa failed in her claims regarding the first and second loans. These latter two loans comprised the bulk of the claim as they amounted to approximately $283,000. I gave the parties until 26 November 2020 to either agree upon the form of final orders and costs or to file submissions on these matters. These reasons address the final orders and costs and use the same technology as, and assume familiarity with, the principal reasons.

2       Mostafa filed initial submissions dated 23 November 2020 and reply submissions on 26 November 2020. Sherif and Moharram filed both initial and reply submissions.

Mostafa’s submissions

3       Mostafa contended that the court should order that:

(a)  the defendants pay the plaintiff damages of $28,096;

(b)  the defendants pay the plaintiff’s costs on a standard basis.

4       Mostafa argued that:

·     she was successful in part of her claim;

·     she was required to bring the proceeding in order to secure from the defendants their admission on the second day of the trial that they were liable for the third and fourth loans;

· although the damages recovered were less than half the jurisdictional limit of the Magistrates’ Court and rule 63A.24 of the County Court Civil Procedure Rules 2018 thereby became relevant, she should not be limited to costs on the Magistrates’ Court scale. She said that the court should “otherwise order” so that she recovered costs on the County Court scale.

Defendants’ submissions

5       Sherif and Moharram argued that they should not be obliged to pay any of Mostafa’s legal costs. They claimed that most of the costs were incurred in relation to loans 1 and 2 upon which Mostafa failed. They argued that they were always willing to repay, and did in fact repay, part of the moneys advanced under loans 3 and 4.

Legal principles

6       There are some well accepted legal principles with respect to the court’s powers regarding costs:

(a)      the only immutable rule in relation to costs is that there are no immutable rules;[1]

[1]Taylor v Pace Developments Pty Ltd [1991] BCC 406.

(b)      the award of costs is within the discretion of the court or the particular judge hearing an application or trial;[2]

[2]s 78A County Court Act1958 (Vic).

(c)       the discretion must be exercised judicially.[3] It cannot be exercised arbitrarily or capriciously. Nor can it be exercised on grounds unconnected with the litigation[4] or the circumstances leading up to the litigation;[5]

[3]Donald Campbell & Co v Pollak [1927] AC 732.

[4]Cretazzo v Lombardi (1975) 13 SASR 4.

[5]Oshlack v Richmond City Council (1998) 193 CLR 72.

(d)      costs are compensatory in the sense they are awarded to indemnify the successful party against the expense to which it has been put by reason of the legal proceedings. The aim of a costs order is not to punish the unsuccessful party;[6]

[6]Latoudis v Casey (1990) 170 CLR 534.

(e)      as a general rule, costs should follow the event with the result that, in the absence of special circumstances, a successful party should obtain its costs of the proceeding even if it fails to establish some of its alternative heads of claim;[7] and

(f) rule 63A.04 of the County Court Civil Procedure Rules 2018 permits the court, in its discretion, to make an order not only as to a distinct question or issue in the pleading sense, but also to any part of the proceeding.[8]

[7]Ritter v Godfrey (1920) 2 KB 47; McFadzean and Ors v Construction, Forestry, Mining and Energy Union and Ors(2007) 20 VR 250.

[8]Woolf v Burmon (1939) 13 ALJR 431; Cretazzo v Lombardi (1975) 13 SASR 4.

7 Rule 63A.24 in substance provides that where, in a proceeding for debt or damages, the plaintiff recovers an amount not exceeding $50,000 (being half the jurisdiction of the Magistrates’ Court in civil proceedings), the plaintiff shall, unless the court otherwise orders, be entitled only to the costs to which it would have been entitled had it brought the proceeding in the Magistrates’ Court. Courts have identified various factors which can be taken into account in determining how to exercise the discretion about costs in the context of that rule. The factors include:[9] 

[9]Dal Pont, Law of Costs, [12.15].

·     the amount claimed and the reasons for this;

·     the amount actually recovered and the reasons for this;

·     the difficulty or otherwise of assessing the likely damages awarded;

·     the complexity or otherwise of the case, factually and/or legally;

·     the nature of the proceedings in question and how this impacts, if at all, upon the need to proceed in the higher or specialist court; and

·     the conduct and attitude of the parties to the litigation.

8       Here, Mostafa’s claim, as set out in the statement of claim endorsed on the writ, exceeded $300,000. In addition, she claimed interest and costs. Having regard to the nature of the claim, it was appropriate to initiate proceedings in the County Court. The damages which Mostafa claimed significantly exceeded the jurisdiction of the Magistrates’ Court. It is undeniable that Mostafa had some success at trial and that, as a result, she is arguably entitled to some costs.

9       However, Mostafa failed on the major claims which she made. But for the defendants being self-represented litigants, they could have mounted a sound argument that Mostafa was liable to pay their costs of successfully defending the major claims.

10      Further, I note that I found in my principal reasons major problems with Mostafa’s evidence. Apart from the important matter of credibility, I found that she did not provide a detailed chronology of the main events, and significant aspects of her evidence were unintelligible and lacked coherence. If Mostafa’s evidence in court was in any way reflected in the conferences conducted with her lawyers outside of court, the problems with her evidence and their consequential impact upon her case should have been apparent to her legal advisors.

11      In relation to the defendants, I do not accept that they conducted themselves as if they were always liable for loans 3 and 4. There was no unqualified  concession made in favour of Mostafa to this effect. The defendants did not consent at any point before trial to a partial entry of judgment against them. Such loan repayments as they made were intermittent and they intentionally stopped making payments once Mostafa issued proceedings.

12      In my view, the trial was taken up primarily with the first and second loans. During Mostafa’s evidence on the first day of trial, her counsel was asking  questions about the third and fourth loans when Moharram interrupted. He asked why the court was devoting so much time to those loans when the defendants admitted receiving that money. I suggested that the defendants should perhaps seek to take advantage of the presence of Mr Mazloum as pro bono counsel to discuss whether they opposed Mostafa’s claims in respect of those loans.

13      Mr Mazloum subsequently advised the court that, during a brief adjournment around the middle of the afternoon court session on the first day of trial, he spoke with the defendants about the third and fourth loans. He said that the defendants conceded that the amounts sought by Mostafa were now due. He said further that the defendants had no present capacity to repay the moneys admittedly due. Mr Mazloum said that he suggested to the defendants that they talk to the self-represented litigants’ coordinator at the court to discuss such matters as an application for instalment orders.

14      I said that, before embarking on such matters, the defendants needed to consider overnight the exact amount of indebtedness which they acknowledged pursuant to the third and fourth loans.

15      On the following morning, before the evidence resumed, Mr Mazloum announced that his clients accepted liability under the third and fourth loans in the amount of $28,096 including interest and fees.

16      Hence, without the issues raised by the first and second loans, the case would have concluded on the morning of the second day of the hearing. Instead, the trial ran over four days.

17      The claim which Mostafa advanced was not inherently complicated. It was a simple loan recovery case. Many such cases are issued each year throughout Australia. However, the presentation of the case was not simple.

18      Because the case concerned loans allegedly made, the question of damages and their assessment was relatively easy. If the court found the defendants had borrowed money from the plaintiff and failed to repay the borrowings in accordance with the terms of the agreement which the plaintiff relied upon, then the defendants were liable for the principal and interest claimed. If the court found there was no liability, obviously no damages would be payable.

19      In circumstances where:

·     Mostafa was successful on only a small part of her claim;

·     the defendants were successful on the two major loans;

·     there were no issues of substantial legal or factual complexity in the case which required the attention of a higher court;

·     the issue of damages for the appropriate relief for a successful plaintiff was not complicated;

·     there were obvious problems with Mostafa’s case; and

·     issues regarding the first and second loans took up the bulk of the hearing and only a minimal amount of time was devoted to the third and fourth loans;

it is appropriate to exercise the court’s discretion as to costs by limiting Mostafa’s recovery of costs. I direct that the defendants pay 35% of Mostafa’s costs of the proceeding, such costs to be taxed on a standard basis on the applicable Magistrates’ Court scale. In my opinion, such an order fairly reflects the justice of the case where Mostafa had some success but lost on those issues which occupied most of the time at trial.

Conclusion

20      I order that:

(a)  The defendants pay the plaintiff damages, inclusive of interest, in the sum of $28,096.

(b)  The defendants pay 35% of the plaintiff’s costs of the proceeding, such costs to be taxed on a standard basis on the applicable Magistrates’ Court scale.