NAB v Sgargetta

[2014] VCC 113

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

CIVIL DIVISION
COMMERCIAL LIST
BANKING AND FINANCE DIVISION

Case No. CI-12-02770

NATIONAL AUSTRALIA BANK LTD (ACN 004 044 937)	Plaintiff
v
ELLIOT DANIEL SGARGETTA	Defendant

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	26-29 August 2013
DATE OF JUDGMENT:	17 February 2014 (revised 20 February 2014)
CASE MAY BE CITED AS:	NAB v Sgargetta
MEDIUM NEUTRAL CITATION:	[2014] VCC 113

REASONS FOR RULING
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Subject:COSTS; PRACTICE AND PROCEDURE

Catchwords:             COSTS – plaintiff recovered costs on solicitor and own client basis and indemnity basis

PRACTICE AND PROCEDURE – further hearing required after final judgment – plaintiff required to pay defendant’s costs of further hearing

Cases Cited:Taree Pty Ltd v Bob Jane Corporation Pty Ltd [2008] VSC 228; Citibank Savings Ltd v Nicholson [1998] ANZ ConvR 442

Judgment:                 Plaintiff awarded costs partly on a solicitor and own client basis and partly on indemnity basis. Plaintiff to pay the Defendant’s costs of  the further hearing.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Adam Segal	Gadens Lawyers
For the Defendant	Mr Elliot Sgargetta (in person)

HIS HONOUR:

1       In this proceeding, the plaintiff (“NAB”) has sought costs against the defendant (“Sgargetta”) partly on a solicitor and own client basis and partly on an indemnity basis. 

2       Insofar as the NAB seeks costs on a solicitor and own basis, it relies upon the terms of the security documentation which governed the relationship between the parties.  It appears to be a well-established principle in the case law that the discretion to award costs in a case where there is a contractual right to those costs will ordinarily be exercised to reflect that contractual right.  Vickery J accepted this in Taree Pty Ltd v Bob Jane Corporation Pty Ltd[1]. His Honour noted there that:

“The principles are that –

(a)  an order for the payment of costs of proceedings by one party to another is always a discretionary order;

(b)  where there is a contractual right to the costs, the discretion should ordinarily be exercised so as to reflect that contractual right.”

[1][2008] VSC 228 at [43] – [44]. This approach is consistent with the approach of the Court of Appeal in Gomba Holdings (UK) Ltd v Minories Finance Ltd [1993] Ch 171 and other cases.

3       His Honour also referred to the decision of the Full Court of the Supreme Court of South Australia in Citibank Savings Ltd v Nicholson[2], where the court said that:

“The terms of any costs order in favour of a successful mortgagee should ordinarily reflect the terms of any special bargain contained in the mortgage contract.”

[2][1998] ANZ ConvR 442

4       Accordingly, having regard to:

(a) the terms of the documentation entered into by the parties; and

(b) the absence of any contrary submissions by Sgargetta

it is appropriate that the NAB recover its costs on a solicitor and own client basis. 

5       In addition, the NAB also produced an offer of compromise made to Sgargetta on 26 March 2013 by which it agreed to accept $329,583.44 inclusive of costs in full and final settlement of the proceedings, including the counterclaim.  The offer was stated to be made pursuant to Order 26.02 of the County Court Civil Procedure Rules.  The offer was open for acceptance until 12 April 2013.

6       The bank has succeeded in obtaining a judgment on terms which are no less favourable than the terms of the offer it made.  Sgargetta made no submissions about why the usual consequences specified in Order 26.08 should not apply.  In the circumstances, it is appropriate that the NAB recover its costs on an indemnity basis for the period after the making of the offer of compromise.

7       When judgment was given on 7 February 2014, the NAB could not give the court the relevant interest figure to include in the final order either in accordance with the security documentation or pursuant to statute.  Nor could the NAB prove that the interest rate claimed in the certificate tendered at trial, and upon which they now relied, had not changed since late August 2013.  I considered this important because Sgargetta ought not to have been charged interest at a rate higher than the rate from time to time calculated in accordance with the security documentation.

8       Further, it was only after I stood the matter down at one point on 7 February 2014, that the bank appeared to realise it had made an offer of compromise in March 2013.  Before that point, no mention had been made of such of an offer.  The NAB could not prove at the time that Sgargetta had received the offer.  I therefore adjourned the matter until 14 February 2014, and the matter was subsequently further adjourned by consent to 17 February 2014. 

9       In my view, had the NAB been properly prepared with the necessary information and proofs on 7 February 2014, the final orders, including costs orders, could have been made at that time.  Because the NAB was not in a position to proceed, another hearing was required.  Having regard to the bank’s conduct, I consider it appropriate that the bank should pay Sgargetta’s costs of and incidental to the court hearing on 17 February 2014.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge Cosgrave delivered on 17 February 2014.

Dated: 20 February 2014

Monika Paszkiewicz     

Associate to His Honour Judge Cosgrave