Westpac Banking Corporation v Mahabat

Case •

[2016] NSWSC 102

•

25 February 2016

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Westpac Banking Corporation v Mahabat [2016] NSWSC 102
Hearing dates:17 February 2016
Date of orders: 25 February 2016
Decision date: 25 February 2016
Jurisdiction:Common Law
Before: Davies J
Decision:

1. Prosper Property Group Pty Ltd be joined as the Second Cross Claimant to the Second Cross-Claim.

 

2. The Cross Claimants have leave to file in Court the Second Further Amended Statement of Cross Claim in the Second Cross Claim.

 

3. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $1,020,695.69 pursuant to the order of 30 September 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 (NSW) from 30 September 2013 to the date of payment is secured by the mortgage AD255978 registered over the land at 103 Kensington Park Road, Schofields referred to in order 1 of the Short Minutes of Order referred to in order 1 of the orders of Darke J made on 24 July 2015 in proceedings 2015/00155870 (“the Property”).

 

4. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $942,468.17 pursuant to the order of 17 October 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 from 17 October 2013 to the date of payment is secured by the mortgage AD255978 registered over the Property.

 

5. The Court declares that to the extent to which the sum set out in order 4 hereof is satisfied by Mahabat Mahabat and/or the sums set out in orders 3 and 4 hereof are satisfied from the interests of Rouhallah Kargarian and/or Mahabat Mahabat in the Property, Rouhallah Kargarian and Mahabat Mahabat are entitled to equality of contribution    as between each other.

 

6. The Court declares that to the extent to which the sums set out in orders 3, 4 and 5 hereof are satisfied by Rouhallah Kargarian or from his interest in the Property, he is entitled to an indemnity in respect thereof from Badi Mahabat.

 

7. The Court declares that upon completion of the sale of the Property, Badi Mahabat and Mahabat Mahabat will be indebted to Rouhallah Kargarian in the sum of $600,000 together with interest thereon at the rate of 6% per annum from 19 December 2003 to the date of the said completion.

 8. Badi Mahabat is to pay 50% of Rouhallah Kargarian’s costs of the proceedings and Mahabat Mahabat is to pay 25% of Rouhallah Kargarian’s costs of the proceedings to the intent that Rouhallah Kargarian should receive no more than 50% in total from Badi Mahabat and Mahabat Mahabat.
Catchwords: COSTS –– claim for possession and debt against borrower and two guarantors – one guarantor pays out creditor and takes transfer of mortgage – cross-claim against principal debtor and co-guarantor – claim also for loan made by guarantor to principal debtor and co-guarantor - cross-claim settled except in relation to costs – assessment of claims made –multiple issues with differing costs results - Notice to Admit Facts – facts disputed later admitted – whether Court should otherwise order under rule 42 – effect on costs of late amendment
Legislation Cited: Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] 3 NSWLR 365
Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156
Texts Cited: O’Donovan & Phillips The Modern Contract of Guarantee (3rd Edition, LBC Information Services 1996)
Category:Costs
Parties: Badi Mahabat (First Defendant/Second Cross-Defendant)
Mahabat Furdoon Mahabat (Second Defendant/First Cross-Defendant)
Rouhallah Kargarian (Third Defendant/First Cross-Claimant)
Prosper Property Group Pty Ltd (Second Cross-Claimant)
Representation:

Counsel:
J Jobson (First Defendant/Second Cross-Defendant)
P Clingan (Second Defendant /First Cross-Defendant)
A Cheshire SC & F Maghami (Third Defendant/ First and Second Cross Claimants)

  Solicitors:
Andresakis & Associates (First Defendant/Second Cross-Defendant)
The Peoples Solicitors (Second Defendant /First Cross-Defendant)
Mitry Lawyers (Third Defendant/ First & Second Cross Claimants)
File Number(s):2013/148050

Judgment

  1. This judgment concerns the costs in respect of proceedings which have otherwise been settled amongst the parties. The background is as follows.

Background

  1. In about November 2003 Rouhallah Kargarian (the Third Defendant) lent $600,000 to Badi Mahabat (the First Defendant) and Mahabat Mahabat (the Second Defendant) to assist in the purchase of a property at 103 Kensington Park Road, Schofields. The agreement was said to be that Mahabat and Badi would repay Mr Kargarian the $600,000 plus interest on the sale of the property.

  2. At various times Mahabat and Badi worked in Mr Kargarian’s business. On 8 June 2007 Badi borrowed $562,500 from St George Bank. The loan was guaranteed by Mahabat and Mr Kargarian who signed guarantees on 22 June 2007. On 26 November 2007 the loan from St George Bank to Badi was increased to $750,000. The Schofields property was given as security for the whole loan.

  3. Badi defaulted on the loan from St George in about October 2012. After Badi failed to comply with demands served upon him, and after Mahabat and Mr Kargarian failed to comply with demands served upon them, Westpac (which by that stage had taken over St George Bank) commenced proceedings claiming possession of the Schofields land and the debt owed.

  4. On 30 September 2015 Westpac obtained default judgment against Badi for $1,013,111.10 and on 17 October 2013 it obtained default judgment against Mahabat for $942,468.17.

  5. In the meantime a defence had been filed by Mr Kargarian on 28 August 2013 and a cross-claim had been filed by Mahabat on 8 October 2013 naming Badi as the First Cross-Defendant and Mr Kargarian as the Second Cross-Defendant. The cross-claim sought declarations that the Cross-Defendants were liable to indemnify Mahabat for any liability he had to Westpac, alternatively contribution from them towards that liability.

  6. On 31 March 2014 Mr Kargarian filed a cross-claim against (relevantly) Mahabat and Badi.

  7. Mr Kargarian’s defence to the claim by Westpac was amended on 5 March 2014. In that defence he denied knowing anything about the loans or the guarantee until receipt of a letter on 7 September 2011 from HWL Ebsworth who were acting for St George Bank.

  8. On 3 December 2014 Mr Kargarian paid $975,000 to Westpac and in return took an assignment of the debt and a transfer of the mortgage. On 25 February 2015 Mr Kargarian entered into an agreement with a company called Prosper Property Group Pty Ltd whereby that company paid Mr Kargarian one dollar and in return Mr Kargarian assigned the debt he had obtained from Westpac and transferred the mortgage to Prosper.

Mr Kargarian’s Cross-Claim

  1. The arrangement with Westpac led Mr Kargarian to file a Further Amended Second Cross-Claim (hereafter called “the Cross-Claim”) against Mahabat and Badi on 4 March 2015. It is necessary, because of the issues raised in the costs argument to set out parts of the relief sought and the pleading in this Further Amended Second Cross-Claim:

RELIEF CLAIMED

1.   A declaration that Mahabat Mahabat (First Cross-Defendant) ('Mahabat") holds his interest in the property situated at 103 Kensington Park Road, Schofields NSW 2762 ('the Property"), and comprised in certificate of title folio number 5/H/712 subject to a constructive trust in favour of the cross-claimant.

2.   A declaration that Badi Mahabat (Second Cross-Defendant) (“Badi”) holds his interest in the Property subject to a constructive trust in favour of the cross-claimant.

3.   A declaration that Mahabat and Badi hold their interests in the Property on trust for the cross-claimant beneficially as to such share as may be determined by the Court.

4.   An order that the Third Defendant (the cross-claimant; is entitled to be indemnified by the First Defendant (The Second Cross-Defendant) for the amount of $975,000.00.

5.   An order that the Third Defendant is entitled to be indemnified by the Second Defendant (the First Cross-Defendant, for the amount of $975,000.00.

6. In the alternatives to orders 4 and 5 an order that the Third Defendant is entitled to contribution from the First Defendant in the sum of $975,000.00 and the Second Defendant in the sum of $487,500.00 being their respective shares of the amount of $975,000.00 paid by the Cross-Claimant to the Plaintiff.

…

7.   A money judgment in favour of the cross-claimant in the amount of $600,000 as against Mahabat and Badi.

…

PLEADING AND PARTICULARS

…

12.   On 3 December 2014 the cross-claimant paid to the Plaintiff the sum of $975,000.00 in consideration for inter alia transfer of the Mortgage registered on title to the Property the subject of the Plaintiff's claim in these proceedings

PARTICULARS

Cheque in the sum of $975,000.00 dated 3 December 20 14 in favour of St George Bank

13.   In the premises the cross-claimant has paid more than his due share of the Claim by the Plaintiff.

14.   In the premises the cross-claimant is entitled to contribution from Badi in the sum of $975,000.00.

15.   Further or in the alternative, in the premises the cross-claimant is entitled to contribution from Mahabat in the sum of $487,500.00 in respect of the payment of $975,000.00 made by the cross-claimant pursuant to the First Defendant Guarantee, the Second Defendant Guarantee and the Third Defendant Guarantee, given by the cross-claimant and Badi and Mahabat as co-sureties.

…

16.   Further and in addition to the above, in about November 2003, Mahabat, Badi and the cross-claimant entered into an agreement whereby the cross-claimant would loan to Mahabat and Badi the sum of $600,000 to be applied to the purchase of the Property.

PARTICULARS

The agreement was partly oral and partly in writing. In so far as it was oral it is evidenced by the oral agreement between the cross-claimant, Mahabat and Badi made in or about late 2003. In so far as it is in writing it is evidenced by the document titled "RECEIPT", dated 20 June 2010 and executed by Mahabat.

17.   The agreement contained a term, inter alia, that Mahabat and Badi would repay to the cross-claimant that sum plus interest to the cross-claimant upon the sale of the Property.

18.   In about December 2003, Mahabat, Badi and the cross-claimant acquired the Property as tenants in the following shares:

a.   The cross-claimant: 50%

b,   Mahabat: 25%

c   Badi: 25%

19.   The cross-claimant provided $600,000 towards the purchase of the Property as agreed with Mahabat and Badi.

20.   Mahabat and Badi applied the funds advanced to them by the cross-claimant towards the purchase of the Property.

21.   On about 20 June 2010, Mahabat acknowledged receipt of $600,000 from the cross-claimant.

PARTICULARS

Document titled "RECEIPT", dated 20 June 2010 and executed by Mahabat.

22. In the premises, Mahabat and Badi hold their respective share in the property on trust for the cross-claimant until the amount payable to the cross-claimant to repay the $600,000 together with interest is satisfied.

  1. On 26 March 2015 Mahabat filed a defence to the Further Amended Second Cross-Claim. In answer to paragraphs 12 and 14 he did not plead on the basis that the paragraphs contained no allegations against him. In answer to paragraphs 13 and 15 he said that the cross-claimant acquired the rights of the Bank in the judgment of 30 September 2013 (that must have been an error because the judgment against Mahabat was 17 October 2013) but went on to say that Mr Kargarian suffered no loss from acquiring those rights.

  2. In answer to paragraphs 16 to 22 the essence of Mahabat’s defence contained in paragraphs 15 to 24 of his defence was that the loan he obtained from Mr Kargarian was $110,000.00, that the loan Badi obtained was $490,000 but that the loan of $600,000 was made to them as tenants in common in those shares. Further, the defence asserted that no money was yet due and payable to Mr Kargarian because the agreement was that it was repayable on the sale of the property.

  3. On 7 April 2015 solicitors acting for Mahabat served a Notice to Admit Facts on the solicitors for Mr Kargarian. The first three facts were these:

1.   That you signed a "Guarantee and Indemnity'" document on or about 22 June 2007 by which you provided a guarantee and indemnity to St George Bank Ltd to guarantee a Portfolio Loan Facility Number 516910 sub-account number 003629955 provided by St George Bank Ltd to the first defendant Badi Mababat.

2.   That you signed an undated mortgage registered as number AD255978U in favour of St George Bank Ltd over your share of the land described in certificate of title folio identifier 5/H/712 and known as 103 Kensington Park Road, Schofields NSW 2762.

3.   That you signed the "Low Doc Portfolio Loan - Credit Limit Increase“ document on or about 19 February 2008 for Portfolio Loan Number 516910 sub-account number 003629955 being a loan by St George Bank Ltd to the first defendant, Badi Mahabat.

  1. On 21 April 2015 solicitors acting for Mr Kargarian filed a notice disputing paragraphs 1, 2 and 3 of the Notice to Admit Facts.

  2. On 1 May 2015 Badi filed a defence to the Cross-Claim. To paragraph 12 he pleaded that Mr Kargarian had not suffered any loss. He did not admit paragraph 13. He denied paragraphs 14 and 15 and reiterated that Mr Kargarian had not suffered any loss.

  3. In answer to paragraph 16 he denied the agreement alleged. He denied paragraph 17, admitted paragraph 18, did not admit paragraphs 19-21 and denied paragraph 22.

  4. The proceedings on the cross-claim by Mahabat and the Cross-Claim by Mr Kargarian were listed for hearing on 17 and 18 February 2016. On the day I gave leave to the parties to approach the Listing Manager for a hearing date (22 May 2015) I was informed by Mahabat’s then counsel about the assignment from Mr Kargarian to Prosper. The point of the matter being mentioned was that the Cross-Claim claimed relief on behalf of Mr Kargarian when he had assigned the debt and mortgage to Prosper. The solicitor for Mr Kargarian said that he would consider that aspect of the matter to see if a further amendment to the Cross-Claim was needed.

  5. No application was subsequently made to amend the Cross-Claim. However, Mr Kargarian’s solicitors filed an Notice of Motion and supporting affidavit on behalf of Prosper seeking that Prosper be substituted for Westpac as the judgment creditor in the two judgments. Those orders seem to have been made.

  6. In the written submissions forwarded on behalf of Mr Kargarian on 15 February 2016 it was acknowledged that the current pleading did not accurately reflect the assignment by Mr Kargarian to Prosper. For that purpose a proposed Second Further Amended Second Cross-Claim was attached to the submissions, such Cross-Claim pleading that further assignment.

The settlement

  1. At the outset of the hearing on 17 February 2016 I was informed that the proceedings had settled with the exception of the matter of costs. The parties agreed to seven orders contained in Short Minutes of Order as follows:

1.   Prosper Property Group Pty Ltd be joined as the Second Cross Claimant to the Second Cross-Claim.

2.   The Cross Claimants have leave to file in Court the Second Further Amended Statement of Cross Claim in the Second Cross Claim.

3. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $1,020,695.69 pursuant to the order of 30 September 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 from 30 September 2013 to the date of payment is secured by the mortgage AD255978 registered over the land at 103 Kensington Park Road, Schofields referred to in order 1 of the Short Minutes of Order referred to in order 1 of the orders of Darke J made on 24 July 2015 in proceedings 2015/00155870 (“the Property”).

4. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $942,468.17 pursuant to the order of 17 October 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 from 17 October 2013 to the date of payment is secured by the mortgage AD255978 registered over the Property.

5.   The Court declares that to the extent to which the sum set out in order 4 hereof is satisfied by Mahabat Mahabat and/or the sums set out in orders 3 and 4 hereof are satisfied from the interests of Rouhallah Kargarian and/or Mahabat Mahabat in the Property, Rouhallah Kargarian and Mahabat Mahabat are entitled to equality of contribution as between each other.

6.   The Court declares that to the extent to which the sums set out in orders 3, 4 and 5 hereof are satisfied by Rouhallah Kargarian or from his interest in the Property, he is entitled to an indemnity in respect thereof from Badi Mahabat.

7.   The Court declares that upon completion of the sale of the Property, Badi Mahabat and Mahabat Mahabat will be indebted to Rouhallah Kargarian in the sum of $600,000 together with interest thereon at the rate of 7% per annum from 19 December 2003 to the date of the said completion.

  1. I was informed that the one change to those orders was that the rate of 7% in paragraph 7 was reduced to 6%.

The submissions

  1. Mr Kargarian submitted that he should have his costs of the whole proceedings against Badi and of the cross-claims against Mahabat. He submitted that the agreed orders showed that he had been entirely successful in the proceedings. He submitted that as against Badi he should have his costs of the whole proceedings because it was Badi’s failure to repay the loan he had obtained from the Bank that drew Mr Kargarian as guarantor into the proceedings.

  2. Mahabat submitted that Mr Kargarian and Prosper Property Group should pay the costs of Mahabat and Badi thrown away by reason of the amendments contained in agreed orders 1 and 2. Those orders concern the further amendment to the Cross-Claim to join Prosper as a cross-claimant. Mahabat submitted that he should have the costs of the Cross-Claim from Mr Kargarian. Mahabat submitted also that he should be entitled to have his costs on Mr Kargarian’s Cross-Claim paid on an indemnity basis from the date of the Notice to Admit Facts up to the present time. This was because the proposed Second Further Amended Second Cross-Claim contained an admission in paragraph 3 that Mr Kargarian guaranteed the indebtedness of Badi to St George Bank whereas that fact had been denied in answer to the Notice to Admit Facts.

  3. Part 42.8 of the Uniform Civil Procedure Rules 2005 (NSW) provides:

42.8 Dispute of fact subsequently proved or admitted

(1) In this rule:

disputing party means the party who serves a notice disputing a fact under rule 17.3 (2).

fact in dispute means the fact that is the subject of a notice served under rule 17.3 (2).

requesting party means the party who is served with a notice disputing a fact under rule 17.3 (2).

(2) Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party’s costs, assessed on an indemnity basis, being costs incurred by the requesting party:

(a) in proving the fact, or

(b) if the fact has not been proved—in preparation for the purpose of proving the fact.

(3) An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard.

  1. Badi submitted that he should have his costs of the Cross-Claim from Mr Kargarian because until the proposed present amendment to the Second Cross-Claim Mr Kargarian was liable to fail at least from the time that he assigned his interest to Prosper. Further, Badi submitted that it was not necessary to bring court proceedings in relation to the assignment of the mortgage because as a matter of law the mortgagee had the entitlement that is now reflected in paragraphs 3 and 4 of the Short Minutes of Order. As far as the claim for $600,000 is concerned, what was sought was a judgment for a money sum for that amount. Yet the agreement was, as was acknowledged by Mr Kargarian, that the money was not payable until the land was sold, and the sale has not yet been completed. Accordingly, had the case run, Mr Kargarian would have failed in respect of both matters.

  1. Mr Kargarian submitted in response to the claim for indemnity costs in relation to the Notice to Admit Facts that the costs concerned relate to the proving of the disputed facts. In that regard all evidence except one affidavit of Mr Kargarian had been served prior to the service of the Notice to Admit Facts. In response to the submissions concerning the $600,000 Mr Kargarian pointed out that there was no admission of the loan of the $600,000 but in fact a denial of it in Badi’s case and an acceptance only by Mahabat of being liable for $110,000.

Determination

  1. In my opinion the following matters are clearly established:

  1. The loan of $600,000 was not due for repayment until the land had been sold, and that has not yet happened;

  2. It follows from (1) that the claim for a money judgment of $600,000 in the Cross-Claim was misconceived and doomed to fail;

  3. From 25 February 2015 when Mr Kargarian assigned his interest in the Westpac debt and mortgage to Prosper he had no further claim in respect of those matters;

  4. It follows from (3) that the claims by Mr Kargarian for declarations and orders relating to the $975,000 paid by him to Westpac were misconceived and doomed to fail.

  1. Three relevant principles associated with costs should be noted:

  1. Ordinarily, a party given leave to amend will be ordered to pay the costs thrown away by reason of the amendment;

  2. Rule 42.8 provides for the payment of indemnity costs as there described where a fact in dispute in answer to a Notice to Admit Facts is (relevantly) subsequently admitted, unless the court otherwise orders;

  3. A guarantor who pays the debt of the principal debtor is entitled to additional damages which the guarantor has been compelled to pay by reason of the non-payment of the principal debt including costs as damages: McColl’s Wholesale Pty Ltd v State Bank of New South Wales [1984] 3 NSWLR 365 at 376ff and see O’Donovan & Phillips The Modern Contract of Guarantee (3rd Edition, LBC Information Services 1996) at 604.

  1. The matters referred to at [27(1) and (2)] above are not determinative in relation to costs. Whilst the relief sought in the Cross-Claim was for a judgment for $600,000 the affidavit evidence of Mr Kargarian was consistently to the effect that the money was lent to be repaid only on the sale of the land (Affidavit of Rouhollah Kargarian sworn 11 February 2014 paragraphs 106, 112 and Annexures “C” and “F”. Further, paragraph 17 of the Cross-Claim correctly pleaded the agreement.

  2. The error in prayer 7 of the relief claimed in the Cross-Claim must eventually have come to the attention of those acting for Mr Kargarian because in the proposed Second Further Amended Cross-Claim it was corrected in prayers 6 and 9.

  3. If application had been made to amend prayer 7 of the Cross-Claim at the outset of the hearing I have little doubt but that the amendment would have been allowed. There would have been little or no prejudice to Mahabat who had agreed in any event in his Defence to the Cross-Claim that he had borrowed part of the $600,000 and had said in paragraph 50 of his affidavit sworn 12 June 2014 that the money was to be repaid on the sale of the land. There would have been little or no prejudice to Badi who had at all times denied the agreement for the loan in any event.

  4. Had Badi acknowledged the $600,000 loan, as he has now done by agreeing to the settlement orders, but resisted payment until the property was sold, Mr Kargarian would not have been entitled to a costs order against him in respect of that part of the claim. He chose to resist any aspect of the claim about that loan. He ought to pay Mr Kargarian’s costs of that part of the claim.

  5. Mahabat is in no better position. His defence and evidence insisted that he only had liability for some portion of the loan. He now agrees that on the sale of the property the whole $600,000 is payable by him and Badi. Any division of that sum is a matter between him and Badi only. In the first instance Mr Kargarian can enforce the total amount against whomever he wishes. Accordingly, Mahabat should pay Mr Kargarian’s costs of that part of the claim.

  6. The position with regard to the matters in [27(3) and (4)] above is otherwise. From the time Mr Kargarian assigned the debt and mortgage to Prosper and gave the notice required by s 12 of the Conveyancing Act 1919 (NSW) he could not maintain that part of the proceedings dealing with the payment of the Westpac debt. Despite the Notice of Motion substituting Prosper as the judgment creditor and despite the assignment to Prosper being raised at the Directions Hearing on 22 May 2015, the Cross-Claim proceeded to a hearing with Mr Kargarian claiming the right to the declarations and orders arising out of his payment to Westpac of the $975,000.

  7. Although a few days before the hearing Mr Kargarian had given notice that he wished to amend to regularise the claim arising from the assignment to Prosper, it is by no means certain that such an amendment would have been allowed, at least without an adjournment if sought, and at least without the payment by Mr Kargarian of Mahabat’s and Badi’s legal costs probably from 25 February 2015 when the assignment was effected. I reject the submission of Mr Kargarian that costs thrown away by such an amendment would be minimal. On this issue, costs expended by Mahabat and Badi from 25 February 2015 were largely wasted because they were defending a claim by Mr Kargarian which was doomed to fail.

  8. It is doubtful that the evidence in Mr Mitry’s affidavit sworn 12 March 2015 in support of the Motion to substitute Prosper as the judgment creditor and the evidence in Mr Kargarian’s affidavit sworn 26 May 2015 would have been regarded as sufficient to prove the assignment or to amend the Cross-Claim. Hence, there may have been the need for an adjournment of the hearing.

  9. I accept that all of the evidence dealing with the background to, and the making of, the loans was complete before the payment by Mr Kargarian to Westpac. That evidence would still have had some relevance to the proceedings if Prosper was substituted as Cross-Claimant. Furthermore, Mr Kargarian undoubtedly incurred costs from the claim Westpac made against him as guarantor because Badi did not pay the debt he owed to Westpac.

  10. As far as the refusal to admit paragraphs 1 to 3 in the Notice to Admit facts is concerned, no explanation has been put forward to justify the denial and the subsequent admission. Mr Kargarian’s position in his affidavit evidence was that he had not signed the guarantees even in the face of witnesses to the signing. Maintaining the denial was odd in that Mr Kargarian voluntarily paid out the debt to Westpac at a time when he was still denying having signed the guarantees. Nevertheless, there is no reason why the Court should order otherwise under r 42.8(2).

  11. I accept the submission on behalf of Mr Kargarian that for r 42.8 purposes the costs of proving the facts or the preparation for the purpose of proving the facts are likely to be minimal. All of the evidence on both sides about the signing of the documents pre-dated the service of the Notice to Admit Facts.

  12. Whilst Badi is correct to submit that by paying out the mortgage Mr Kargarian acquired the rights of Westpac as a matter of law, it was, as it transpired, necessary for him to institute the proceedings on the Cross-Claim on that issue. I have already noted Badi’s pleading in relation to this issue ([15] above). The essential matters in paragraphs 12 to 15 of the Cross-Claim were either not admitted or denied by him.

  13. I consider that the proper approach to the various entitlements of the parties to costs is to be found in what was said by the Full Court of the Supreme Court of Queensland in Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 at 209:

While in the end the matter is largely one of impression, we consider that, whatever approach is adopted, the trial judge's apportionment of two-thirds of the costs to the plaintiff was unduly favourable having regard to the comparative success achieved by the defendants in the litigation. Out of the total of 21 imputations alleged they succeeded in proving truth in the case of 13 of them. It is not illegitimate to regard those 13 as representing the more important, and, from the standpoint of the plaintiff's public image, certainly the most serious, of the issues at the trial. In all the circumstances we consider that the discretion of the trial judge as to costs has miscarried. His order that the defendant TCN 9 should pay two-thirds of the plaintiff's costs should be set aside.

The effect of that order is to require the defendant TCN 9 to pay most of the plaintiff's costs of action while continuing to bear all of its own. As such it discounts too severely the extent of the defendant's success in the action by remitting only one-third of the plaintiff's costs of the action. Even if the defendant TCN 9 were ordered to pay only one-third instead of two-thirds of the plaintiff's costs, it would unduly favour the plaintiff by leaving the defendant burdened with payment of all of its own costs of the action. A more realistic reflection of the outcome of the litigation would be to require each party to pay the costs of the other to the extent of the latter's success in the action. Approached in this way, we think it a fair assessment of the relative victories of each party to say that the plaintiff succeeded as to one-third of his claims for defamation, whereas the defendant was successful in establishing a defence to the remaining two-thirds. The net result of such an approach would be to oblige the plaintiff to pay one-third of the costs of the defendant TCN 9. Approximate though this may be, it seems to us to be preferable to the alternative of apportioning costs according to the success of either party in relation to particular issues, which would produce a process of taxation that seems to be almost universally deplored. (emphasis added)

  1. When all of these matters are balanced I consider the appropriate order is that Badi should pay 50% of Mr Kargarian’s costs of the proceedings and Mahabat should pay 25% of Mr Kargarian’s costs of the proceedings but to the intent that Mr Kargarian should receive no more than 50% in total from Badi and Mahabat.

Conclusion

  1. Accordingly, I make the following orders:

1.   Prosper Property Group Pty Ltd be joined as the Second Cross Claimant to the Second Cross-Claim.

2.   The Cross Claimants have leave to file in Court the Second Further Amended Statement of Cross Claim in the Second Cross Claim.

3. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $1,020,695.69 pursuant to the order of 30 September 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 from 30 September 2013 to the date of payment is secured by the mortgage AD255978 registered over the land at 103 Kensington Park Road, Schofields referred to in order 1 of the Short Minutes of Order referred to in order 1 of the orders of Darke J made on 24 July 2015 in proceedings 2015/00155870 (“the Property”).

4. The Court declares that the entitlement of Prosper Property Group Pty Limited as judgment creditor for $942,468.17 pursuant to the order of 17 October 2013 as amended on 19 March 2015 together with interest thereon pursuant to section 101 of the Civil Procedure Act 2005 from 17 October 2013 to the date of payment is secured by the mortgage AD255978 registered over the Property.

5.   The Court declares that to the extent to which the sum set out in order 4 hereof is satisfied by Mahabat Mahabat and/or the sums set out in    orders 3 and 4 hereof are satisfied from the interests of Rouhallah Kargarian and/or Mahabat Mahabat in the Property, Rouhallah Kargarian and Mahabat Mahabat are entitled to equality of contribution as between each other.

6.   The Court declares that to the extent to which the sums set out in orders 3, 4 and 5 hereof are satisfied by Rouhallah Kargarian or from his interest in the Property, he is entitled to an indemnity in respect thereof from Badi Mahabat.

7.   The Court declares that upon completion of the sale of the Property, Badi Mahabat and Mahabat Mahabat will be indebted to Rouhallah   Kargarian in the sum of $600,000 together with interest thereon at the rate of 6% per annum from 19 December 2003 to the date of the said   completion.

8.   Badi Mahabat is to pay 50% of Rouhallah Kargarian’s costs of the proceedings and Mahabat Mahabat is to pay 25% of Rouhallah Kargarian’s costs of the proceedings to the intent that Rouhallah Kargarian should receive no more than 50% in total from Badi Mahabat and Mahabat Mahabat.

**********

Decision last updated: 25 February 2016

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