Pogorzelska v Bechara (No.2)

[2015] NSWSC 93

Supreme Court

New South Wales

Medium Neutral Citation:	Pogorzelska v Bechara (No.2) [2015] NSWSC 93
Hearing dates:	16 February 2015 and 17 February 2015
Decision date:	17 February 2015
Jurisdiction:	Equity Division
Before:	McDougall J
Decision:	Order first defendant to pay plaintiff’s costs. No order as between plaintiff and second defendant. No order as to costs of notice of motion.
Catchwords:	COSTS - general rule that costs follow event - whether conduct of first defendant provided exception to the general rule - ordinary consequences follow for first defendant - where second defendant could also have taken action to mitigate the issues giving rise to proceedings - whether that disentitled second defendant to have its costs
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	MG Charley Pty Limited v FH Wells Pty Limited [1963] NSWSR 22 Roberts v Death (1881) 8 QBD 319
Category:	Costs
Parties:	Nina Pogorzelska (Plaintiff) Maria Bechara (First Defendant) Westpac Banking Corporation Limited (Second Defendant)
Representation:	Counsel: J E Armfield (Plaintiff) P Holmes (Second Defendant) Solicitors: Lane & O’Rourke (Plaintiff) M Bechara (First Defendant) (In person) AJL Legal (Second Defendant)
File Number(s):	2015/46110

Judgment   (ex tempore – revised 17 february 2015)

1. HIS HONOUR: Nina seeks an order that her costs of the application with which I have just dealt be paid by Ms Bechara, and that there be no order as to costs made between her and Westpac. Nina does not seek costs against the executor and AAP in respect of their application to be joined.

2. Ms Bechara opposes the costs order sought against her and submits indeed that she should have her costs.

3. Westpac submits that it should have its costs as against Nina. It made no application for costs in respect of the application to be joined. I should have noted that Ms Bechara sought an order that the applicants (the executor and AAP) pay her costs of that application.

4. So far as I can tell, Ms Bechara's submissions in respect of costs repeated and reinforced the submissions that I have dealt with already, namely that she was a judgment creditor who was entitled to enforce her judgment. However, those submissions overlook a number of fundamental matters.

5. The first is that the accounts that she sought to attach through the garnishee order were trust accounts.

6. The second is that it is Nina's claim that, as a result of the agreement recorded by White J, she was beneficially entitled to those accounts.

7. The third is that, as Rein J ordered on 1 October 2014, the executor and AAP were not to make any further withdrawals from AAP's accounts with Westpac or otherwise to disburse or deal with the assets of AAP in its capacity as trustee of the Superannuation Fund.

8. In those circumstances, Ms Bechara must have appreciated that what she was seeking to do was to enforce a judgment recovered by her against AAP by garnisheeing accounts held by it as trustee. True it is, as I have noted, that Ms Bechara claimed that AAP was entitled to be indemnified out of the trust assets. But it simply does not follow, unless and until Nina's claims are adjudicated upon, that AAP in fact has such a right in all the circumstances that may be proved.

9. In my view, the relevant “event” is that Nina sought and obtained relief against Ms Bechara effectively to preserve the status quo in respect of the Superannuation Fund assets, so that (should she succeed in the principal litigation), those assets would be available to her in full. Ms Bechara opposed that relief. To my mind, the ordinary consequences should follow.

10. I do not know on what basis Ms Bechara is entitled to costs in respect of the notice of motion to be joined, except on the basis that the application was made and did not succeed. In circumstances where it cannot be said that the hearing was in any way prolonged or that additional costs have been incurred of any assessable quantity, I see no reason to make any order as between Ms Bechara and the applicants.

11. As between Nina and Westpac, the question is more difficult. Westpac's position – that it should not have been put in a position of being exposed to conflicting orders – has been upheld. However, there can be no doubt that Westpac was put on notice of the claim made by Nina, in the sense that it was given a copy of the orders made by Rein J on 1 October 2014. They were served on Westpac on 4 February 2015. Westpac took the view that there was nothing in those orders that relieved it of its obligation to comply with the District Court garnishee order. I do not agree.

12. In the circumstances, it seems to me that there was more than enough material before Westpac to put it on notice of a claim that the legal interest that AAP had in the accounts, might not be accompanied by any beneficial interest. To put it less obscurely, I think that Westpac was clearly put on notice of Nina's claim that it was she who had the beneficial entitlement to the proceeds of those accounts.

13. In those circumstances, it was open to Westpac to notify the District Court pursuant to UCPR r 39.41 of the claim asserted by Nina. It did not do so. Instead, it chose to take the position (as an email from its "Legal Notices Officer" makes clear) that unless the garnishee orders were set aside, it would comply with them.

14. There is a real question as to whether someone in Nina's position has standing to apply to set aside the garnishee orders. English cases such as Roberts v Death, to which I referred earlier, suggest that she would have standing. However, a decision of Jacobs J in this Court makes it clear that she does not. That decision is MG Charley Pty Limited v FH Wells Pty Limited [1963] NSWR 22. His Honour's conclusion is set out sufficiently in the headnote and I will not repeat it.

15. I accept, as Mr Holmes submitted, that it was not compulsory for Westpac to make an application under r 39.41. I accept, further, that it could not be said that Westpac should have been required in some way to adjudicate between the competing claims on the funds in the accounts in question. But it is to avoid that second course that r 39.41 was prescribed. Westpac had the remedy. It did not take it. In a real sense, it is as much as Ms Bechara an author of the situation that has arisen.

16. In those circumstances, and bearing in mind the nature of the costs order sought by Nina, I think that sufficient justice is achieved by making no order as to costs as between her and Westpac.

17. Accordingly I order the first defendant to pay the plaintiff's costs of the application for interlocutory relief. I make no order as to costs as between the plaintiff and the second defendant. I make no order as to costs of the application made by notice of motion filed in court yesterday to be joined as parties.

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Decision last updated: 23 February 2015