Riverwood Legion and Community Club Ltd v Repaja and Co Pty Ltd
[2015] NSWSC 550
•12 May 2015
Supreme Court
New South Wales
Medium Neutral Citation: Riverwood Legion & Community Club Ltd v Repaja & Co Pty Ltd [2015] NSWSC 550 Hearing dates: 6 May 2015; submissions received 7 May 2015 Decision date: 12 May 2015 Jurisdiction: Equity Division Before: Stevenson J Decision: Fifth defendant to pay half of plaintiff’s costs
Catchwords: COSTS – assessment – whether Plaintiff should only have costs from the date of amendment of its statement of claim – whether fifth defendant should pay full costs of plaintiff in circumstances where much of those costs were incurred establishing fraudulent activity in which the fifth defendant had no involvement Cases Cited: Riverwood Legion & Community Club Ltd v Repaja & Co Pty Ltd [2015] NSWSC 383
Sze Tu v Lowe [2014] NSWCA 462
Tsu v Nemeth [2012] NSWCA 29Texts Cited: [2015] NSWSC 383
Sze Tu v Lowe [2014] NSWCA 462
Tsu v Nemeth [2012] NSWCA 29Category: Costs Parties: Riverwood Legion & Community Club Ltd (Plaintiff)
Repaja & Co Pty Ltd (First Defendant)
Divna Repaja (Second Defendant)
Simon de Munck (Fourth Defendant)
Tina Fistar (Fifth Defendant)Representation: Counsel:
Solicitors:
H N Newton (Plaintiff)
N Obrart (Fifth Defendant)
Thomson Geer Lawyers (Plaintiff)
Jordan Djundja Lawyers (Fourth and Fifth Defendants)
File Number(s): SC 2014/92560
Judgment
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I gave judgment in this matter on 9 April 2015: Riverwood Legion & Community Club Ltd v Repaja & Co Pty Ltd [2015] NSWSC 383.
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I shall in these reasons adopt the abbreviations used in that judgment.
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My conclusion was that the Club was entitled to judgment against each of the fraudsters, Mr de Munck and Ms Repaja, in the sum of $800,000 together with interest.
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I also concluded that the Club was entitled to judgment against Ms Fistar in the sum of $481,189.75 together with interest.
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Accordingly, on 6 May 2015 I entered judgment in favour of the Club against Mr de Munck and Ms Repaja in the sum of $862,257.53 and against Ms Fistar in the sum of $518,551.17.
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I also ordered that Mr de Munck and Ms Repaja pay the Club’s costs.
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In my judgment of 9 April 2015, I stated at [224] that the Club was entitled to judgment against Repaja & Co. That was an error. Repaja & Co is in liquidation (as I mentioned at [4] of the judgment) and, so far as the evidence reveals, the Club has not sought or obtained leave to proceed against it. Accordingly, I have not entered judgment against Repaja & Co.
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These reasons deal with the dispute that has arisen between the Club and Ms Fistar as to what costs order should be made against her.
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The dispute arises out of two aspects of the case.
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The first is that, up to the day of the hearing, the only case pleaded by the Club against Ms Fistar was for proprietary relief in respect of the Dolls Point property. One of the Club’s prayers for relief sought an order that Ms Fistar pay the Club $599,999.99 (being the sum that the Club then contended represented the extent to which funds stolen from it by Mr de Munck had been used by Ms Fistar to purchase the Dolls Point property). However, the statement of claim did not include a pleading referable to that prayer.
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As I mentioned at [17] of my judgment of 9 April 2015, in opening submissions, Mr Newton, who appeared for the plaintiff, drew my attention to the decision of the Court of Appeal in Sze Tu v Lowe [2014] NSWCA 462 and accepted that, as Ms Fistar obtained indefeasible title to the Dolls Point property prior to receiving notice of the Club’s claim, the Club could not maintain a proprietary claim against her.
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In those circumstances, the Club sought leave on the day of the hearing to amend its statement of claim to plead a personal claim for unjust enrichment against Ms Fistar. That was the claim on which the Club ultimately succeeded.
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In those circumstances, Ms Obrart, who appeared for Ms Fistar, submitted that the Club should only have its costs from the date of the amendment: 11 February 2015.
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I do not accept that submission.
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It is true that the Club could not have succeeded against Ms Fistar on the claim originally pleaded, and has only succeeded against Ms Fistar on the claim as amended at the outset of the hearing.
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However, Ms Obrart did not object to the making of the amendment and, more importantly, most, if not all, of the costs that the Club incurred prior to 11 February 2015 are as referable to the case it ultimately propounded against Ms Fistar as to the case it abandoned.
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I propose to order that the Club pay Ms Fistar the costs thrown away by its amendment, but otherwise do not consider this factor to be relevant to the question of costs.
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The second aspect of the matter said to be relevant to the costs order I should make is that although the Club alleged (and I have found) that Mr de Munck and Ms Repaja were fraudsters, it made no suggestion that Ms Fistar was involved in the fraud. The Club accepted that she was the innocent recipient of part of the funds misappropriated from it by Mr de Munck; albeit, as I have found, as a volunteer.
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In those circumstances, Ms Obrart submitted that the Club should not have all of its costs against Ms Fistar, as a good deal of those costs were incurred by the Club in proving the existence of the fraud practised upon it which, whilst necessary to make out its claim against Ms Fistar, did not involve any allegation of wrongdoing by Ms Fistar.
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On the other hand, as Mr Newton pointed out, the evidence required to prove the Club’s claims against Mr de Munck and Ms Repaja was also required to prove its claim against Ms Fistar. In her defence, Ms Fistar, for obvious reasons, did not admit, and thus put the Club to proof of, the Club’s allegations of fraud concerning Mr de Munck and Ms Repaja. Ms Fistar also denied that Ms Repaja and Repaja & Co had used the Club’s funds to purchase the bank cheque used by Ms Fistar to purchase the Dolls Point property.
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Mr Newton submitted:
“Given those non-admissions and denials it was necessary for [the Club] to prove its case against [Ms Repaja] and [Mr de Munck] in order to make good its case against [Ms Fistar]. Accordingly, the expense in pleading and proving those allegations was referable to the claim against [Ms Fistar]”.
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In that regard, Mr Newton drew my attention to the observations of Handley AJA in Tsu v Nemeth [2012] NSWCA 29 at [70] where his Honour said (albeit in a very different factual context than in this case):
“There was a common substratum of fact in this case and issues relating to the culpability…of each defendant were relevant to the claims against the others. There were in truth no separate issues. The claim against each defendant depended in part upon the claim against the others.”
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I see substance in the submissions advanced by both Mr Newton and Ms Obrart.
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This is a very hard case for Ms Fistar. As I said at [30] of my judgment of 9 April 2015, in substance the matter for determination in these proceedings was which of two innocent parties (the Club and Ms Fistar) must bear the loss caused by the fraudulent conduct of Mr de Munck and Ms Repaja.
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Ms Fistar had no option but to put the Club to proof of its claim against Mr de Munck and Ms Repaja. She had no knowledge of, or involvement in, their fraudulent activities. It was not, in my opinion, unreasonable of her to not admit those matters. The Club had to establish those matters in any event, in order to succeed against the fraudsters. As I have said, she did deny that her purchase of the Dolls Point property was funded by the monies misappropriated from the Club, and she has lost on that issue; so she must bear some of the Club’s costs. And the Club has orders for costs against the fraudsters.
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In all the circumstances, my opinion is that the appropriate order for costs, so far as concerns Ms Fistar, is that she pays 50 per cent of the Club’s costs.
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I make the following orders:
Order that the plaintiff pay the costs of the fifth defendant thrown away by the amendment to the statement of claim of 11 February 2015.
Subject to order 1, I order that the fifth defendant pay one half of the plaintiff’s costs.
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Decision last updated: 12 May 2015
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