Zhou Enterprise Pty Ltd v Rofael
[2019] VCC 1506
•20 September 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-18-01165
| ZHOU ENTERPRISE PTY LTD (ACN 137 929 705) | Plaintiff |
| V | |
| SKHARIA ROFAEL AND RAFE ZORA | Defendant First Non-Party |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 22, 23, 24, 25, 29, 30 July 2019 | |
DATE OF JUDGMENT: | 20 September 2019 | |
CASE MAY BE CITED AS: | Zhou Enterprise Pty Ltd v Rofael | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 1506 | |
REASONS FOR JUDGMENT
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Subject:Application for payment of costs by practitioner by reason of alleged breaches of overarching obligations
Catchwords: Civil Procedure Act 2010 sections 17, 18, 19, 21, 23, 29; whether overarching obligations breached by practitioner so as to entitle client to recover costs thrown away; County Court Act 1958 section 78A; proper quantum of proof; alleged breaches not established to necessary standard.
Legislation Cited: Transfer of Land Act 1958; Civil Procedure Act 2010; County Court Act 1958; Evidence Act 2008
Cases Cited:Briginshaw v Briginshaw (1938) 60 CLR 336; Edwards v Edwards [1958] P 235; Orchard v South Eastern Electricity Board [1987] 1 QB 565; Reid v Hubbard (No 2) [2004] FCA 180; Re The Black Stump Enterprises and Associated Companies (No 2) [2006] NSWCA 60; Ward v R (2018) 55 VR 307; Yara Australia Pty Ltd v Oswal; Carson v Oswal; ANZ Banking Group Ltd v Oswal; Apache Fertilisers Pty Ltd v Oswal (2013) 41 VR 302
Judgment: 1. Summons dismissed. 2. Liberty reserved to either of the parties to this application to seek any necessary consequential orders.
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APPEARANCES: | Counsel | Solicitors |
| For the Defendant | Mr A. C. Blair | Armour Legal |
| For the 3rd Party //First Non-Party | Mr A. Muller | Colin Biggers & Paisley |
HIS HONOUR:
Background
1 Mr Rofael is a self-employed limousine driver and has been in that business for the last 14 or 15 years. (Transcript (“T”) 142, Lines (“L”) 1-5) He was born in Iraq and is Chaldean, a Christian minority in Iraq. (T4, L12-13)
2 On 10 October 2016, Mr Rofael signed a Contract of Sale to purchase a property at Unit 34, Edward Street, Fawkner, Victoria, from Zhou Enterprise Pty Ltd as vendor. The contract showed the vendor’s conveyancer as Butterfield Conveyancing Centre Pty Ltd and the purchaser’s legal practitioner as Atlas Legal. The price was shown as $450,000 with a deposit of $45,000, being 10 percent of the price, and the balance of $405,000 being payable at settlement. Settlement was provided to occur on 6 December 2016, or earlier by mutual agreement. (Court Book (“CB”) 889-969) Zhou Enterprise Pty Ltd executed a receipt dated 11 October 2016, recording receipt from Mr Rofael of some $45,000, being the deposit on the transaction. (CB 888) Mr Qiang Zhou executed an instrument of transfer under s45 of the Transfer of Land Act 1958 on behalf of the vendor, and Mr Rofael signed on his own behalf. The transfer was dated 15 December 2016 and is registered as dealing AN420868C. (CB 970-1)
3 According to Mr Rofael’s account, this transaction was not the simple sale and purchase arrangement which it appeared to be. According to the Amended Defence, which Mr Rofael’s present solicitors filed on his behalf on 13 December 2018, Mr Rofael and Mr Zhou, whom he knew as “Jack”, entered into a partnership agreement to export wine from Australia to China in late 2015 or early 2016. Mr Zhou, it was said, failed to make the contributions he was obliged to make and/or failed to remit profits to Mr Rofael, with the result that Jack owed Mr Rofael approximately $70,000. These gentlemen were said to have agreed that Mr Zhou “would provide as security for the then outstanding monies that he owed [Mr Rofael] by transferring [the Edward Street property] into [Mr Rofael’s] name, if [Mr Rofael] would assist him with refinancing of the property and continue to provide further financial assistance”. Mr Zhou’s estranged wife was living in the unit. On this basis, Mr Rofael entered into a loan agreement with Westpac Banking Corporation, borrowing $360,000. These proceeds would be used to pay off the existing mortgage on the property and discharge other encumbrances. It was said that Mr Rofael would not be obliged to outlay any other amounts relative to the transfer and Jack “would remain responsible and liable for all repayments and outgoings in respect of the property”. These arrangements were said to have constituted a “settlement agreement” which was reached in the course of oral discussions between Mr Zhou and Mr Rofael. (Amended Defence at CB 6-18; T153, L26-T154, L10)
4 About 28 November 2017, Mr Rofael contracted to sell the Edward Street property and engaged Mr Rafe Zora, the principal of a practice known as Zora Law, to act on his behalf in the sale. Settlement was due to occur on 29 January 2018. In mid-January, Mr Rofael became aware that a caveat, AQ429868C, had been lodged against his title to the property which would prevent settlement from taking place. (CB 22, paragraph 4) This caveat had been lodged by law firm, Natoli Howell, on behalf of Zhou Enterprise Pty Ltd, the plaintiff in this proceeding, which had been the vendor under the earlier Contract of Sale. Mr Zora is, like Mr Rofael, of the Chaldean community. He speaks English and Aramaic fluently, as does Mr Rofael. According to Mr Zora, however, “The majority of our conversations were in English.” (CB 187, paragraph 5) Mr Zora had migrated to Australia in mid-1995 on a protection visa (paragraph 6). He qualified for the degree of Bachelor of Laws at Deakin University in mid‑2013. He then worked for a number of employers, including Atlas Legal. In April 2017, he established his own practice known as Zora Law “working on criminal, family, property and civil litigation matters”. (Ibid, paragraphs 8-12)
5 Instructions to prepare the Contract of Sale for the property came from real estate agency “Ray White”, and the contract provided for the sale of the property to “Joe Gurra and/or nominee” with a price of $445,000 and a 10 percent deposit. (CB 189) In the course of earlier discussions relative to the property, Mr Zora had conducted a title search on 8 August 2017 which disclosed the existence of no caveat. (CB 188, paragraph 19)
6 When Mr Rofael and Mr Zora conferred, presumably to prepare for the settlement on 29 January, Mr Zora conducted a title search and discovered the existence of the caveat lodged by Zhou Enterprise Pty Ltd. Mr Zora said that he advised Mr Rofael “regarding his options to remove the caveat”. He said that he favoured making an application to the Supreme Court at a cost of approximately $6,000 or, alternatively, serving a notice under s89A of the Transfer of Land Act, the cost of which was $300. He advised Mr Rofael that the Supreme Court application “would be quicker”, but Mr Rofael instructed that Mr Zora proceed under s89A. (CB 189, paragraph 23; CB 23, paragraph 7) In answer to queries from Mr Zora as to the basis of the caveat, Natoli Howell Lawyers, on behalf of Zhou Enterprise Pty Ltd, stated inter alia:
“4)On the settlement day, Rofael did not have enough money to pay the $90,000 deposit, conveyancing fee of $700 and stamp duty fee of $22,070. Total of: $112,770 plus interest.” (CB 236)
The caveat claimed an interest in favour of Zhou Enterprise Pty Ltd as chargee. (CB 230)
7 Meanwhile, according to Mr Zora, he repeatedly advised Mr Rofael to commence proceedings in the Supreme Court for the removal of the caveat, which would be a speedier process, but Mr Rofael rejected this advice as too expensive. (CB 190, paragraph 29) Mr Zora received an email from Natoli Howell which summarised Zhou’s position as follows:
“1.The parties were close friends and instructed Butterfield Conveyancing to act for both parties;
2.You client [sic] never paid the $90,000 deposit;
3.After adjustments, the Balance due to Vendor was ‘$360,000’;
4.However, when calculating the cheques at the foot of the adjustments, only the sum of $336,000 was calculated by the conveyancer. There is a $24,000 shortfall which was not taken into account;
5.Irrespective of settlement, your client still owes my client the sum of $114,000 pursuant to the Contract of Sale.”
The email stated that, failing payment of the $114,000 or other satisfactory arrangement, Zhou Enterprise Pty Ltd would commence proceedings to vindicate its caveat. (CB 240)
8 Zhou Enterprise Pty Ltd commenced this proceeding on 21 March 2018 and served the Writ on Mr Zora on 22 March. Mr Zora filed an appearance on behalf of Mr Rofael as defendant on 5 April 2018. (CB 192, paragraphs 33 and 35)
9 The Statement of Claim alleged the contract as between Zhou Enterprise Pty Ltd and Mr Rofael for $450,000 with a deposit payable of $45,000. Next it alleged a further agreement reached between those parties “in about October 2016”, described as the “Deposit Agreement”, whereby it was said Mr Rofael agreed to pay to Zhou Enterprise Pty Ltd $90,000 as the deposit “to be paid by direct deposit into [Zhou Enterprise’s] bank account”. It was said that money had not been paid and that settlement of the sale and purchase proceeded on 15 December, despite Mr Rofael only having $336,000 to pay the plaintiff in lieu of the $360,000 deposit in fact payable. Then it is said that on the settlement date, 15 December 2016, the parties entered into another agreement known as the Settlement Agreement, whereby $24,000, being the shortfall between $336,000 and the full balance of purchase price of $360,000, would be paid after settlement. Neither this amount nor the $90,000 had been paid. Accordingly, $114,000 was payable and Zhou Enterprise Pty Ltd sought payment of that money and a declaration that it had an equitable interest in the property by way of vendor’s lien securing payment of the $114,000. (Supplementary (“S”) CB 1-8)
10 Mr Zora wrote a letter to Mr Rofael dated 23 March 2018 in which he enclosed a copy of the Writ and Statement of Claim, together with a Costs Agreement which he requested Mr Rofael to sign. The letter continued:
“Please contact us to arrange a meeting so that we can discuss your options and rights and to prepare your defence.” (CB 246)
11 This letter was addressed to Mr Rofael at “Unit 3, 4 Edward Street, Fawkner”. This is the address of the property which Mr Rofael had purchased from the plaintiff, Zhou Enterprise Pty Ltd, and which he was, in March 2018, seeking to sell. This property had been the residence of Mr Zhou’s estranged or former wife. However, Mr Rofael had obtained possession of the property by the end of November 2017. According to Mr Zora, he received a phone call from selling agent, Ray White, to this effect. (T424, L30 – T425, L4) Nevertheless, there was no evidence establishing that, whilst Mr Rofael had recovered vacant possession, he himself resided in the property. According to Mr Rofael, this correspondence never came to his attention.
12 Mr Zora and Mr Rofael are agreed that whatever the fate of the letter of 23 March might have been, they met to confer on these issues in late March, according to Mr Rofael. (CB 306, paragraph 10 of Mr Rofael’s Affidavit; CB 192, paragraph 36 of Mr Zora’s Affidavit). The evidence as to what transpired at this conference, whenever it took place, was conflicting.
13 According to Mr Zora, he telephoned Mr Rofael on the afternoon of 2 May, informing Mr Rofael “that he [Zach] needed to attend my office as soon as possible to finalise the Defence”, which Mr Zora said Mr Rofael agreed to do. (CB 193, paragraph 37; CB 268) Mr Rofael denies that this telephone conversation took place. In his affidavit sworn 4 February 2019, Mr Rofael said he did “not recall receiving a phone call” from Mr Zora on that day.
14 In a later affidavit sworn 16 July this year, Mr Rofael said “that Mr Zora did not speak to me or any person that I know on that occasion [viz 2 May 2018]”. (CB 803, paragraph 7)
15 Mr Zora said that Mr Rofael did not call his office, as he said he requested him to do on 3 May, but did arrive the next day, “at about 12.20pm”. At that conference, Mr Zora put Mr Rofael’s Defence into its final form – an earlier draft having been discussed at the meeting which Mr Zora says occurred on 27 April. The amendment required was to reflect a further caveat which had been lodged on behalf of Zhou Enterprise Pty Ltd. Mr Zora said that Mr Rofael approved the Defence and signed a document styled “Overarching Obligations Certificate” in Mr Zora’s presence, prepared in accordance with the Civil Procedure Act 2010. (CB 193, paragraph 38, 269) Mr Zora filed the Defence. (CB 193, paragraph 39) Mr Zora said that this filing was made “inadvertently”. He said that in submitting the document via CITEC for electronic filing at the court he:
“expected that there would be a step after uploading the document to confirm that the document was to be filed. That is the case in the Federal Court’s online filing system.” (CB 347, paragraph 11)
16 Earlier that day, he had sent a copy of the Defence, which he says was later that day approved by Mr Rofael, to Zhou’s solicitor, describing it as an “unsealed defence”. (CB 348)
17 Mr Rofael said he was ignorant of all these events or alleged events on 4 May. He said, “I deny that I had a meeting with Rafe Zora on 4 May 2018 at about 12:20pm or at any other time on this day.” (CB 306, paragraph 13)
18 Mr Zora said that he and his client, Mr Rofael, conferred again at about 12.50pm on 7 May, at which they discussed the impasse which had been reached in the attempt to sell the Edward Street unit. (CB 193-4, paragraph 40, CB 270) Mr Zora said that Mr Rofael approved a letter which he was sending on Mr Rofael’s behalf to Mr Zhou’s solicitor. Mr Rofael said he did “not recall attending this meeting … and [did] not recall providing instructions to send a letter”. (CB 310, paragraph 23)
19 Mr Zora said that he telephoned Mr Rofael at approximately 12.19pm on 14 May 2018 dealing with issues including a repetition of advice which he had previously given that an application should have been made to the Supreme Court for removal of the caveats. Mr Zora said he pressed for a signed Costs Agreement, which he was told would be forwarded shortly, and Mr Zora asked for documents to substantiate Mr Rofael’s Defence, “including bank statements and mortgage statements so that [he] could prepare an affidavit of documents”. (CB 194, paragraph 41) Mr Rofael said he did not “recall receiving a telephone conversation from Rafe Zora at this time or on this date”. (CB 310, paragraph 24)
20 Mr Zora sent an email to Mr Rofael on 16 May 2018, which attached an email from the court, a costs disclosure and a bill for costs and disbursements. The covering email stated, “Please note that if the filing fees are not paid, the documents will not be filed and you will risk having the Zhou Enterprises [sic] obtaining default judgment against you.” (CB 383)
21 The bill sought payment of some $2,645.31, and included a claim for a disbursement by way of filing fees of $851.80. Mr Rofael observed that Mr Zora’s email quoted the wrong file reference for his proceeding. He also observed that since no counterclaim had been filed on his behalf, the charge for a disbursement of $851.80 was “erroneous”. He said Mr Zora never told him that “the County Court did not charge a filing fee for only filing a Defence”. (CB 310-311, paragraphs 25 & 26)
22 Mr Zora said that he and Mr Rofael spoke “at about 1.12pm on 16 May”. Mr Rofael said he could only afford to pay some $900 and Mr Zora said that he “would only file a Defence and not a Counterclaim” until the balance of his charges were paid. He again pressed for signature of the Costs Agreement. (CB 195, paragraph 44, CB 281)
23 Mr Rofael said he recalled speaking to Mr Zora and “sent him a text message with a screenshot confirming that $900 had been paid into his account around the time of our telephone conversation”. (CB 311, paragraph 27) This telephone conversation occurred after Mr Zora had sent Mr Rofael an SMS text, asking him:
“… if you can pay the filing fee to protect yourself from default judgment. Basically, if you don’t file a defence you will loose [sic] the case by default and loose [sic] the house.
If you want to file the claim for urgent caveat removal I will need those filing fees and disbursements paid.
If your [sic] going to proceed with either case, I’m happy to defer most of my fees to the end.” (SCB 102)
24 On 21 May, Mr Zora said “he sought to file a further version of the Defence”. It was in fact rejected. (CB 196, paragraph 46, CB 282) A document styled “Vic County Court Filing Results” (Ibid), shows this Defence as having been rejected on 23 May. On 22 May, according to Mr Zora, (that is, the day before) “at about 2.37pm”, Mr Zora said that he telephoned Mr Rofael advising him that the Defence “had been filed and served”, suggesting that a counterclaim should be made “promptly”, which Mr Rofael declined to do because “he could not afford it”. Mr Zora said he again asked for copies of “bank statements” and the Costs Agreement. He said he warned Mr Rofael that if he [Mr Zora] did not “hear from him then [he] would not chase him up further”. (CB 196, paragraph 47, CB 283)
25 Mr Rofael said he did not “recall receiving a phone call from Rafe Zora at around this time nor on this date”. (CB 311, paragraph 29) He said he was:
“curious to know on what basis Rafe Zora allegedly advised me the further Defence had been filed when in fact he would not have received a filing confirmation notice given the further Defence was ultimately rejected.” (Ibid)
26 On Mr Zora’s account, he continued corresponding with Mr Rofael by letters addressed to Mr Rofael at the Edward Street unit, seeking documents, instructions and the signed Costs Agreement. (CB 197-198)
27 On 17 July “at about 9.30am”, Mr Zora said that he told Mr Rofael by telephone that he would no longer undertake any substantive tasks until he had been provided with the signed Costs Agreement and “documents for discovery”. (CB 198, paragraph 52, CB 289)
28 Mr Rofael generally denied these communications receipt of letters, telephone calls and so forth. (CB 312) He said that he was not, at this time, receiving communications from Mr Zora, and it was he who was pressing for updates without success. (CB 312, paragraph 35)
29 Meanwhile, the court’s commercial registry seems to have listed this proceeding for directions at the request of the plaintiff’s solicitor with the hearing fixed for 14 September 2018. The plaintiff’s solicitors had complained that discovery, which was due by 6 August 2018 with mediation scheduled for 27 August 2018, had not been completed. Mr Natoli, the plaintiff’s solicitor, told the court’s registry, “we have attempted to contact the Defendants [sic] solicitor on countless occasions by email and telephone. Despite constant attempts, we have not received any responses.” (CB 296-297)
30 Mr Zora wrote to Mr Rofael again at the Edward Street unit advising of the directions hearing, continuing:
“We reiterate that you have failed to provide a signed cost agreement, payment and discovery documents.
We shall have no alternative but to put you on notice that we shall withdraw as your solicitor on [sic] if you fail to attend to the above three matters by close of business Tuesday, 11 September 2018.” (CB 299)
31 Mr Rofael said “I do not recall receiving this letter”. (CB 312, paragraph 38) Mr Rofael engaged his present solicitors, Armour Legal, to act for him. Mr Tyler of that firm sent an email to Mr Zora announcing that his firm was acting, and requesting that the file be forwarded to their firm. (CB 300) Mr Zora replied:
“I can advise that the matter is listed for directions hearing tomorrow at 10:30 at the County Court of Australia. [sic]
Our account remains outstanding and once paid we will provide the file.
Mr. Rofael is aware of the details of the outstanding account.” (Ibid)
32 According to Mr Rofael, “We have not been in contact since”. (CB 313, paragraph 39)
33 The proceeding between Zhou Enterprise Pty Ltd and Mr Rofael came before a judicial registrar on 9 November 2018. The matter had been listed for trial on 14 November 2018. The learned judicial registrar vacated that hearing and refixed it for trial on 27 May this year, giving a lengthy series of pre-trial directions. Her Honour ordered that Mr Rofael provide a revised proposed Amended Defence and Counterclaim by 4.00pm on 16 November 2018. She ordered further that, absent a Third Party costs application by Mr Rofael filed 16 November 2018, the costs of the directions hearing and the costs thrown away by reason of the filing and service of an Amended Counterclaim should be paid by Mr Rofael “on a standard basis as agreed or taxed in default of agreement”. She ordered that such an application be filed by 4.00pm on 16 November 2018 (Order 26), and made the following specific orders inter alia:
“24. The Defendant [viz Mr Rofael] pay the Plaintiff’s costs thrown away by reason of the amendment, on a standard basis, to be taxed in default of agreement.
25. The Defendant [viz Mr Rofael] pay the Plaintiff’s costs thrown away by reason of the vacation of the trial date (including the costs of and incidental to today), on a standard basis, to be taxed in default of agreement.
…
27. All costs in the proceeding to date, including reserved costs, shall be determined in the Third Party’s application.”
34 Orders 24 and 25 were stayed until the determination of the Third Party costs application or further order (Order 28). (CB 175-178)
35 An Amended Defence and Counterclaim dated 13 December 2018 was filed and served on behalf of Mr Rofael by his present solicitor. (SCB 9-37)
This application
36 Mr Rofael’s solicitors, Armour Legal, filed a Summons dated 16 November, seeking relief against Mr Zora by way of an order under s29(1) of the Civil Procedure Act or, alternatively, s78A(2) of the County Court Act 1958, that he pay Mr Rofael:
(a) costs of and incidental to the directions hearing held on 9 November 2018;
(b) costs thrown away by reason of the leave to file and serve an Amended Defence and Counterclaim;
(c) costs thrown away by reason of the vacation of the trial date previously listed for 14 November 2018;
on a standard basis as agreed or taxed in default of agreement.
37 A further order was sought pursuant to s78A(2) of the County Court Act, that the costs “between [Mr Zora] and [Mr Rofael] be disallowed and that [Mr Zora] pay to [Mr Rofael] any money paid to [Mr Zora] on account of costs”.
38 Next, there was an application for an order pursuant to s29(1) of the Civil Procedure Act that Mr Zora pay to Mr Rofael:
(a) costs thrown away by reason of the need to obtain leave to file and serve an Amended Defence and Counterclaim;
(b) costs thrown away by reason of the vacation of the trial date previously listed for 14 November 2018.
39 There was also an application for an order that Mr Zora pay the costs of the Summons. (CB 183-184)
40 When the Summons came on for hearing before me, Mr Rofael was represented by Mr Blair of counsel and Mr Zora was represented by Mr Muller. I sought clarification from Mr Blair as to the scope of his application. He confirmed that since there had been no assessment or payment of the costs ordered to be paid by Mr Rofael to Zhou Enterprise Pty Ltd, in accordance with the judicial registrar’s order, the only available relief in the circumstances would appear to be to require Mr Zora to indemnify Mr Rofael for those costs. Mr Muller agreed.
41 Further, he said that the Summons should be read as extending not only to the costs which Mr Rofael had been ordered to pay Zhou Enterprise Pty Ltd, but also to the costs which he, Mr Rofael, had incurred to his present solicitors relative to the repleading and vacation of the trial date. The costs owed by Mr Rofael to Zhou Enterprise Pty Ltd, and those incurred by him to Armour Legal, have been described in a general sense, but have not been the subject of any evidence as to quantum.
42 I was informed that the principal dispute between the plaintiff and the defendant had been resolved on undisclosed terms. Apparently, Westpac Banking Corporation, as registered mortgagee, had asserted its priority to sell the Edward Street property, and the issue as to the caveats had therefore become moot.
Statutory provisions
43 The Summons invokes the court’s jurisdiction under two separate statutory provisions which I now set out. Section 29 of the Civil Procedure Act provides as follows:
“29 Court may make certain orders
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
(b)an order that the legal costs or other costs or expenses of any person be payable immediately and be enforceable immediately;
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
(ii)an order for no interest or reduced interest;
(d)an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;
(e)an order that the person not be permitted to take specified steps in the civil proceeding;
(f)any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
(2)An order under this section may be made—
(a)on the application of—
(i)any party to the civil proceeding; or
(ii)any other person who, in the opinion of the court, has a sufficient interest in the proceeding; or
(b)on the court's own motion.
(3)This section does not limit any other power of a court to make any order, including any order as to costs.”
44 It will be seen that a requirement to enliven the court’s jurisdiction under this section is that there be a finding on the balance of probabilities that a person, presumably in this case Mr Zora, “has contravened any overarching obligation”. The overarching obligations are set out in Part 2.3 of the statute, sections 16-27. I will deal with those provisions when considering hereafter the allegation against Mr Zora of contravention of one or more of those sections.
45 Section 78A of the County Court Act 1958 was also invoked by Mr Rofael. That provision states as follows:
“78A Costs
(1) The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent the costs are to be paid.
(2) In the due exercise of the discretion conferred by subsection (1), in any proceedings before the Court, the Court may order a legal practitioner to pay the costs of the proceedings or a portion of the costs.
(3) The Court may order that the costs of, and incidental to, a proceeding in the Court be assessed, settled, taxed or reviewed by the Costs Court.”
Basis of claim by Mr Rofael
46 Mr Blair, counsel for Mr Rofael, articulated his client’s claim made under the two quoted sections, first, in a written outline filed 15 February 2019 and, secondly, in his opening and closing submissions at the hearing before me. The written outline is to be found at CB 767-771.
47 In that written outline, Mr Blair stated general principles to which I will turn presently, and summarised the factual allegations against Mr Zora. First, he said that Mr Zora “drew and filed a defence in the substantive proceedings, which Defence did not reflect and was not in accordance with, Rofael’s instructions”. (CB 770, paragraph 14) Secondly, he said that Mr Rofael’s evidence that he did not attend a conference with Mr Zora on 4 May 2018 and that he did not, in the course of such conference, sign an Overarching Obligations Certificate under the Civil Procedure Act, should be preferred to the evidence of Mr Zora that the conference took place with Mr Rofael’s approving the form of Defence which he drew, and signing the Certificate. (Ibid, paragraphs 15-17)
48 According to Mr Blair, even on Mr Zora’s account of events, “he drew and filed the Defence, in circumstances where he had not been provided any reasonably available documentary proof to support significant, positive allegations of fact”. (CB 771, paragraph 18) He said that Mr Zora “arguably acted in serious dereliction of his duty to the Court, by filing both the Defence, and Certificate that falsely certified Rofael’s understanding and acceptance of the CPA’s overarching obligations.” (Ibid, paragraph 20)
49 These matters, it was said, necessitated withdrawal of the Defence and the vacation of the trial date. (Ibid, paragraphs 21 & 22) Accordingly, it was said in the outline that the orders sought in the Summons should be made.
50 During his closing submissions, I asked Mr Blair to specify which overarching obligations had been breached by Mr Zora, according to the case he was advancing. He said the primary obligation upon which he relied was the overarching obligation requiring a proper basis for claims or responses in civil proceedings. (T587) That obligation is stated in s18 of the Act in the following terms:
“18 Overarching obligation—requirement of proper basis
A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that—
(a) is frivolous; or
(b) is vexatious; or
(c) is an abuse of process; or
(d) does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.”
51 As to the document which was filed as Mr Rofael’s Defence, Mr Blair said that there had been repeated requests for documents by Mr Zora, none of which proved fruitful. Yet the Defence was filed and served. Mr Blair referred to a number of Mr Zora’s requests for mortgage statements and bank statements demonstrating the money paid for the house. (T588-9)
52 This contention was in the nature of a “fallback” position, the primary contention being that the conference on 4 May did not occur at all, and the conference on 17 April may have occurred in slightly different form on another date, and the Defence was therefore filed without authority. (T593, L16-27)
53 As to this primary case, Mr Blair could not refer me to any authority that had applied s18, or any interstate or Federal analogue to the making of unauthorised admissions. (T594)
54 A further matter pressed by Mr Blair was that in his dealings with Mr Natoli, the solicitor for Zhou Enterprise Pty Ltd, Mr Zora had breached the overarching obligation to act honestly (s17) and not to mislead or deceive (s21). As to that, Mr Zora told Mr Natoli, when the latter was pressing him to file a Defence, that he (Mr Zora) had made an appointment to see Mr Rofael with a view to settling the form of Defence, when the fact was that, on any view, no such appointment had been made and no attempt at such an appointment was made until 63 minutes after the conversation with Mr Natoli. (T458, 595, L10-21)
55 Sections 17 and 21 provide as follows:
“17 Overarching obligation to act honestly
A person to whom the overarching obligations apply must act honestly at all times in relation to a civil proceeding.
…
21 Overarching obligation not to mislead or deceive
A person to whom the overarching obligations apply must not, in respect of a civil proceeding, engage in conduct which is—
(a) misleading or deceptive; or
(b) likely to mislead or deceive”
56 Next, Mr Blair alleged a breach of the overarching obligation “to only take steps to resolve or determine dispute” in s19 of the Act. That section states:
“19 Overarching obligation to only take steps to resolve or determine dispute
For the purpose of avoiding undue delay and expense, a person to whom the overarching obligations apply must not take any step in connection with any claim or response to any claim in a civil proceeding unless the person reasonably believes that the step is necessary to facilitate the resolution or determination of the proceeding.”
57 The contention here was that filing the unauthorised Defence sent the litigation “up a false trail”. (T599, L13-18).
58 Finally, Mr Blair said he relied on an alleged breach of s23 of the Act, which states:
“23 Overarching obligation to narrow the issues in dispute
If a person to whom the overarching obligations apply cannot resolve a dispute wholly by agreement, the person must use reasonable endeavours to—
(a) resolve by agreement any issues in dispute which can be resolved in that way; and
(b) narrow the scope of the remaining issues in dispute—
unless—
(c) it is not in the interests of justice to do so; or
(d) the dispute is of such a nature that only judicial determination is appropriate.”
Contentions on behalf of Mr Zora
59 Mr Zora was represented by Mr Muller of counsel, who likewise relied on a written outline of submissions filed on 18 February 2019 but prepared by Mr Zora’s previous counsel, Ms E. A. Bennett, and upon closing submissions made at the hearing before me.
60 According to the written outline, any finding adverse to a practitioner in these circumstances was subject to proof in accordance with the principles stated in Briginshaw v Briginshaw (1938) 60 CLR 336 and s140 of the Evidence Act 2008. The court should be mindful or, at any rate, was entitled to consider the repercussions of adverse findings against a practitioner – Edwards v Edwards [1958] P 235, 248. (CB 774, paragraph 3) It was said that no adverse orders should be made “on the basis of inference, without evidence” – Orchard v South Eastern Electricity Board [1987] 1 QB 565, 580. It was said the level of satisfaction should be high and the jurisdiction to order costs against a legal practitioner should be exercised sparingly and only in clear cases or in exceptional circumstances. (Ibid, Reid v Hubbard (No 2) [2004] FCA 180 [18]) Care needed to be taken to assess whether the problem was caused by a solicitor or client Re The Black Stump Enterprises and Associated Companies (No 2) [2006] NSWCA 60. (CB 775)
61 According to the outline, the court should find that the Defence was prepared on the basis of instructions and not in their absence, as alleged by Mr Rofael. Phone records could not be used to establish the whereabouts of a person placing a call from a mobile phone – Ward v R (2018) 55 VR 307. (CB 776)
62 Further, according to the outline, there was “absolutely no benefit to [Mr Zora] in fabricating a defence in the manner alleged”. The allegations relative to the Defence had not been made out to the applicable standard. (CB 777, paragraph 9)
63 Further, it was said Mr Rofael’s present solicitors made no early disclosure that the Defence filed was not to be relied upon. According to the outline:
“No explanation is proffered as to why the solicitors for [Mr Rofael] failed to immediately inform the solicitors for the Defendants [scil the plaintiff, Zhou Enterprise Pty Ltd] that the 4 May Defence had been incorrectly filed, or could not be relied upon. The version of events now relied upon was not deployed until November 2018. There can be no explanation for this delay, and it must be viewed as a matter which has significantly contributed to the need to vacate the trial date, or at least, significantly increased the cost burden of doing so.” (CB 777-778, paragraph 12)
64 Finally, the outline noted that no causal link was demonstrated between the alleged wrongdoing relative to the Overarching Obligation Certificate and the incurring of the costs which were now sought to be charged to Mr Zora.
Conclusions
65 In opening his client’s case, Mr Blair said:
“the dispute is a classic dispute between two people as to who said what in the absence of an independent third party. The context of the dispute is over what instructions my client gave to his erstwhile solicitor and in particular, what instructions he gave in respect of the defence that was ultimately drawn and filed by that solicitor, and whether that document properly reflected those instructions and had a proper basis in fact and law for each of the allegations of material fact contained therein. (T3, L17-28)
66 It follows, in my view, that the “main game” in this application is whether the conferences alleged by Mr Zora on 17 April and 4 May occurred as he alleged, or whether, as Mr Rofael would have it, these alleged conferences were fictional. Findings as to other matters, such as whether Mr Rofael signed the Overarching Obligations Certificate would tend to flow consequentially from the findings on these primary matters. As appears, however, there were further allegations and, if you will, “sub-plots”, pursued on behalf of Mr Rofael. I propose turning to them first before dealing with the central matters in dispute.
67 As previously noted, Mr Rofael places primary reliance upon an alleged breach or breaches of the requirement of proper basis as an overarching obligation established by s18 of the Civil Procedure Act. Mr Blair’s fallback contention is, even if the conferences occurred as Mr Zora describes them, that obligation was still breached because of a failure on the part of Mr Zora to have at hand the documentary evidence which he repeatedly sought to form a proper basis for the Defence which he filed.
68 Mr Muller submitted, in the circumstances, no breach should be found. He referred to and relied upon the Explanatory Memorandum accompanying the Civil Procedure Bill, upon its introduction to Parliament. The explanation of clause 18, in its first paragraph, paraphrases the words of the clause in the Bill. The second paragraph, however, states:
“The Commission’s [that is, the Victorian Law Reform Commission] recommendation was that participants in litigation must not make claims or make responses to claims where a reasonable person would believe that the claim or response is frivolous, vexatious, for a collateral purpose or without merit. [Italics in the original] The Advisory Group’s view was that imposing a requirement of merit may be unworkable on the basis that it is vague and may require practitioners to go to unreasonable lengths to verify their clients’ instructions. The Advisory Group instead recommended that the obligation require that allegations and non-admissions be made on a proper legal and factual basis, as set out in the Federal Court Rules 1979.”
69 In the present instance, what was attributed to Mr Rofael in the Defence relative to the payment of the deposit on the subject property was not effected by some written document. If the alleged payment were in cash, by definition, there would be no direct documentary trail. Indeed, one may consider that it is the very lack of such a documentary trail that would lead parties for their own purposes to engage in cash transactions. Doubtless, there are documentary materials which might shed light upon or support an allegation as to some form of cash transaction. For instance, the making of a cash payment might be rendered more probable, or at least partially proven, by demonstrating that the payer had withdrawn a quantity of cash from a bank account. There may be other documents which would render the ability of an individual to make a payment, whether in actual currency or otherwise, less likely. These are, however, matters of evidence which, in my view, a practitioner would be obliged to pursue only in the course of discovery or preparation for trial.
70 There is nothing in s18 or elsewhere which would require the practitioner for a party to assume the fact finding role of a judge or jury. On the face of it, a practitioner should generally be entitled, at least at the pleading stage, to accept the word of his client, as Mr Zora alleged he did here. The absence of a proper basis to make a claim or a response in pleadings, should be understood in the context in which it is stated, which includes references to matters which are frivolous and vexatious. A lack of proper basis must necessarily be fairly clear rather than being no more than, for instance, reason to be dubious about a client’s factual assertions.
71 This situation is quite different from one where, for instance, a defendant filed a Defence claiming to hold a Deed of Release from the cause of action alleged against him. It may be that a solicitor who filed such a Defence might be under an obligation to sight the alleged Deed of Release or, if it was not available, have some very good explanation as to why. But that is not this case. There is no breach of the s18 obligation based on the lack of bank statements and mortgage statements. The court’s rules require pleadings to be filed at the outset of the litigious process. A gathering of evidence can properly be regarded as posterior to the pleading process. The filing of a defence by force of the court’s rules must occur early and within a tighter time limit.
72 I turn next to the alleged breach of the obligation to act honestly, or the obligation not to mislead or deceive. When Mr Zora was speaking to the plaintiff’s solicitor, he was being pressured with threats of default relief being sought against his client. He admitted the inaccuracy which implied that the process of finalisation of the Defence was further advanced than in fact it was. This should, in the circumstances, be regarded as “a white lie”. This lack of candour is not to be encouraged and cannot be applauded. In the context of the much more serious allegations of litigious misconduct made here, it is a comparative triviality. I put it to one side.
73 Next, I turn to the alleged breach of the obligation to narrow the issues in dispute. The argument here seems to be that, in paragraph 2 of the Defence dated 4 May 2018, the Defence denied the allegation of paragraph 5 of the Statement of Claim that, in about October 2016, Zhou Enterprise Pty Ltd and Mr Rofael agreed, by an agreement described as the Deposit Agreement, to accept the sum of $90,000 as the deposit for the purchase of the land “to be paid by direct deposit into the Plaintiff’s bank account”. Paragraph 5, however, gave an elaborate account of an agreement between the parties which was said to be “in answer to the whole of the Statement of Claim”. The effect, according to Mr Blair, was that there was an embarrassing ambiguity which failed to narrow the issues in the proceeding.
74 Neither counsel referred me to any authorities upon this overarching obligation. Uninstructed by any authority on the subject, I would have seen the obligation as one to avoid the pursuit of collateral issues, including those deriving from personal animus between litigants and legal practitioners, and the engagement in “one-upmanship”.
75 In my experience, it is a well-established and hallowed mode of pleading to respond to a factual allegation: “save that the defendant admits … he otherwise denies the allegation in paragraph …”. In substance, that is what the two paragraphs of the Defence boil down to, though they are somewhat different in form. As such, they are not, in my view, objectionable. If paragraph 5 reflected the defendant’s instructions to Mr Zora – the central question before me – I would not regard these two paragraphs as offending s23 of the Civil Procedure Act.
76 Mr Blair did not dissent from the submissions made on behalf of Mr Zora that a finding against Mr Zora needed to be established “to the Briginshaw standard”. In Briginshaw v Briginshaw (1938) 60 CLR 336, the High Court considered an appeal from the dismissal of a divorce petition on the ground of adultery by Martin J in the Supreme Court of Victoria. The contention was that his Honour had applied the wrong standard or quantum of proof in reaching his decision. In that era, adultery was regarded as a grave moral breach. The appellant petitioner argued that Martin J had applied the criminal burden of proof, namely, proof beyond reasonable doubt, and had thus fallen into legal error.
77 The High Court decided that in civil proceedings, even where the allegation was one of grave moral fault or the commission of a crime, the quantum of proof was, on the balance of probabilities, as in other issues in civil litigation. Nevertheless, where grave allegations were made, satisfaction of the occurrence of the relevant event required clear evidence. In what has been treated since as a classic exposition on this subject, Dixon J (as he then was) said:
“The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality.” [(1938) 60 CLR 336, 361]
78 Later in the judgment, his Honour said:
“But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency.” (1938) 60 CLR 336, 362
79 Finally, in a much-quoted passage, his Honour said:
“When, in a civil proceeding, a question arises whether a crime has been committed, the standard of persuasion is, according to the better opinion, the same as upon other civil issues … But, consistently with this opinion, weight is given to the presumption of innocence and exactness of proof is expected.” (1938) 60 CLR 336, 363
80 Briginshaw is invariably quoted and pressed in professional disciplinary proceedings.
81 These principles might be thought now to be codified in s140 of the Evidence Act, which provides:
“140 Civil proceedings—standard of proof
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account—
(a)the nature of the cause of action or defence; and
(b)the nature of the subject-matter of the proceeding; and
(c)the gravity of the matters alleged.”
82 This is uniform legislation adopted at the Commonwealth level and in most states, yet Briginshaw continues to be cited regularly, presuming, therefore, that it has continued operation despite its codification. Informed by these principles, I now turn to the central and most difficult issues in this application, namely whether Mr Rofael conferred with Mr Zora at his office on 4 May – as Mr Zora said he did – approved the Defence and signed the Overarching Obligations Certificate there on that occasion.
83 The two issues are related but distinct. Nevertheless, as I think both counsel agreed, a finding that the conference did take place would probably lead to an acceptance of Mr Zora’s evidence that the Certificate was signed in his presence. Contrary-wise, a finding that the conference did not take place would inevitably lead to the conclusion that the Certificate was not signed by Mr Rofael.
84 The account of his dealings with Mr Rofael given by Mr Zora, at least on its face, is comprehensive and coherent. It is supported by a number of diary notes generated by Mr Zora’s LEAP computer system. Competent management of solicitors’ legal practice requires proper record-keeping which, on the face of Mr Zora’s material, he has created and retained. In contrast, the nature of Mr Rofael’s business as a limousine driver no doubt requires him to keep detailed records of the jobs which he undertakes but not of the hundred or so phone calls which he receives in that capacity every day. (T246, L8-12)
85 In his third affidavit sworn on 21 February this year, Mr Rofael swore:
“Based on my review of exhibits marked RZ-9 and RZ-10 [exhibits to affidavits by Mr Zora] I believe that I received a total of seven phone calls during the period between 25 December 2017-12 September 2018. These seven phone calls originated from either Zora’s mobile or Zora’s office and took place on the following dates:
…
(b) 2 May 2018 at 2.31pm.” (CB 782, paragraph 15)
86 This is the call in which Mr Zora said he summoned the conference which ultimately occurred on 4 May. Mr Rofael now denies that this telephone call occurred. A more rigorous perusal of the record indicated that whilst the number called from Mr Zora’s office landline was similar to Mr Rofael’s, it was not in fact his number. (CB 639)
87 Mr Zora’s evidence was ultimately that, having failed to reach Mr Rofael by landline, he telephoned via his office mobile at 2.32pm on 2 May. (SCB 110). This mobile, despite Mr Zora’s description of it as an office mobile, was billed to his sister, Ms Lara Zora, who he said acts as his receptionist. I will have more to say on these issues presently. For the moment, it is sufficient to note that the progress of Mr Rofael’s evidence indicates that he has no independent recollection of what telephone calls he has or has not received. Therefore, his statements in a number of places to the effect that he does not recall having received phone calls might be thought to be of limited probative value.
88 On this topic, I note that in his affidavit of 4 February 2019 (his second), Mr Rofael denies the occurrence of a number of meetings and phone calls deposed to by Mr Zora in his affidavit of 19 December 2018. He did not recall a meeting at 1.59pm approximately on 9 February 2018 (CB 305, paragraph 6), or a meeting on 17 April 2018. (CB 306, paragraph 10) In paragraph 12 of that affidavit, he did not recall the phone call or alleged phone call on 2 May 2018. (Ibid, paragraph 12)
89 It follows that, assuming both gentlemen were doing their best to put together a narrative of their dealings in the months in the first half of 2018, Mr Zora’s account would be the more reliable. He has created and retained what purports to be a record of these dealings, whilst Mr Rofael has not. Rejection of Mr Zora’s account necessarily entails a finding of deliberate dishonesty on his part and a willingness to fabricate corroborating material such as diary notes.
90 The times and dates shown on the documents produced as diary notes are computer-generated. A handwritten diary note created by a fraudster can bear whatever time and date suits the fraudster’s purposes. Nevertheless, the computer-generated times and dates are not inscribed by the “Hand of God”. They are capable of manipulation.
91 Mr Pena-Rees, the principal of Armour Legal (Mr Rofael’s present solicitor), described a test carried out by one of his employees using similar software which disclosed the steps necessary to manipulate the date and time stamps on the file notes. (CB 823-829)
92 The call made from a mobile phone, apparently in Mr Zora’s office on 2 May, was for one minute only. (SCB 110) An analysis of texts at SCB 97-103, made from Mr Rofael’s mobile phone, demonstrates that “missed calls” show up on billing records as having a one minute duration. It follows that the call made at 2.32pm on 2 May from the mobile in Mr Zora’s office may have been merely a missed call which was never returned. On the other hand, merely to request a conference “ASAP”, as Mr Zora said that he did, could be completed within a one minute timeframe. It follows that the call record at SCB 110 is ultimately equivocal.
93 The file note of the conference or alleged conference on 4 May 2018 (CB 269) is said to have occurred at 12.20 (presumably pm). Mr Zora was asked about the process he undertook to create these file notes. He replied:
“So I opened up the file for this matter, Rofael v Zhou Enterprises, and then I clicked a tab, as it is, which creates a file note and - - -
HIS HONOUR: Do you click on something that says, ‘Create file note’? Is it as straightforward as that?---You click a tab that says, ‘Create document’ and then you select ‘File note.’
Right. I see?---Then the computer generates everything you see on that page up until the word ‘Note’. So everything above that is computer generated automatically. So once I get to that stage I then type in my file note. I type it in at the same time that the meeting or the telephone call is occurring and then when I've concluded I click another tab that saves it and closes that file note. The time that's displayed on the file note is a reflection of the time that I click the button ‘Save and close’ on the document. That is the date.” (T341, L27-T342, L14)
94 In closing submissions, Mr Muller on behalf of Mr Zora, by reference to Mr Rofael’s phone records at CB 784.166, said there was a window of opportunity for Mr Rofael to have attended a conference at the office of Mr Zora in Roxburgh Park between 11.15am and 11.45am “where he [Mr Rofael] doesn’t make any telephone calls”. (T543, L8-10)
95 There is also a gap between 11.53am and 12.30pm shown in these records which, on its face, would appear to indicate a window of opportunity in conformity with the time stamp on the file notes. Both calls, however, are shown as having originated in West Melbourne and, if one supposed that Mr Rofael was in West Melbourne when he made both calls, it would have been impossible for him in that timeframe to have travelled to Roxburgh Park, completed the conference, and returned to West Melbourne. However, as previously noted, the Court of Appeal has ruled in Ward v R (2018) 55 VR 307, that telephone records cannot be used for the purpose of determining with certainty the place from which the call was made.
96 A fellow limousine driver, Mr Chris Abraham, swore in an affidavit dated 4 February 2019, that he had lunch with Mr Rofael and Mr Mazin Mati at Sushi Noodle Town in North Melbourne between 12.35pm and 1.30pm on 4 May. (CB 340, paragraph 11) Mr Mati, another limousine driver, confirmed this account. (CB 344, paragraph 12) In a later affidavit sworn 18 July 2019, Mr Abraham said he recalled that Mr Rofael had a fare scheduled for collection at 2.00pm in Notting Hill “which at that time of day would be a transit by road of approximately 45 to 60 minutes”. (CB 809, paragraph 11). Mr Mati agreed that, whilst his lunch extended to 1.30pm, Mr Rofael “left the lunch a little earlier than that”. He said he remembered Mr Rofael being in a hurry to collect a fare at Ringwood or Notting Hill “at around 2:30pm”. (CB 815, paragraphs 12 and 13)
97 If the conference took place, as suggested by Mr Muller, between 11.15am and 11.45am, it is difficult to see why the file would have been left open until 12.30pm, long after Mr Rofael would have left the office.
98 In an email to Mr Lachlan Tyler of Armour Legal, Mr Zora described a conference on 4 May as “a long meeting”, after which he said the Defence and the Overarching Obligations Certificate “were signed and filed”. (CB 163) Given the suggested window of opportunity for a conference, based on the telephone records, and allowing for some travel time to and from Mr Zora’s office, it is difficult to see that there was time for “a long meeting”.
99 Aside from these matters which give substantive grounds for scepticism as to the reliability of Mr Zora’s account, there were a number of matters which emerged adverse to Mr Zora’s credit. These matters were relied on as credit issues. There was no attempt to press them as tendency evidence.
100 Describing the circumstances in which he filed the Notice of Appearance on behalf of Mr Rofael, Mr Zora said:
“I filed two notices of appearance that day in person. It was quite difficult to actually get them downstairs [viz in the registry] to file it. You had to do it on CITEC but they allowed the exemption this one time.” (T428, L10-17)
101 This was done by the registry as a special favour.
102 Despite this apparent clear and specific recollection of his personal attendance at the court registry, in answer to a complaint that the sealed copy of the Notice of Appearance had not been served on the plaintiff’s solicitors, Mr Zora had sent an email to them on 23 April 2018 stating that the appearance “was paper filed and I haven’t received the documents back yet from my agents”. (CB 371)
103 Then there were the texts threatening Mr Rofael with the risk of a default judgment against him, absent the payment of a filing fee of $871.50 on the Defence, some weeks after that Defence had been filed with the court without any filing fees being charged. That exchange is referred to above, as is Mr Zora’s email to Mr Natoli claiming to have arranged a conference with his client when, upon his own narrative, he had not yet made contact with Mr Rofael to arrange a conference to finalise the Defence.
104 After Armour Legal took over conduct of the proceeding from Mr Rofael, they pressed Mr Zora to explain the circumstances surrounding the Defence and the Overarching Obligations Certificate.
105 This matter was first raised by Armour Legal in an email of 10 October 2018 (CB 141), and was repeatedly followed up. (CB 143, 149, 153, 155, 159, 161) Eventually, on 2 November 2018, Mr Zora advised by email that the Defence and the Certificate were signed after a “long meeting”. (CB 163) He was requested to provide the relevant file notes. (CB 164) By an email of 2 November 2018, he promised to furnish the notes when he returned from personal leave the following week. (CB 167)
106 He was again pressed by Armour Legal (CB 169) in an email dated 7 November 2018, and the following day reversed himself, stating “I will not be providing any file notes. The allegations made are without merit.” By this correspondence, Mr Zora created the appearance that he had something to hide. The total effect is to leave Mr Zora’s credit as a witness significantly impaired.
107 On the other hand, so too was the reliability of Mr Rofael’s evidence. In his first affidavit sworn 8 November 2018, Mr Rofael said that he had a conference with Mr Zora “in or about March 2018”. This seems to be the conference that Mr Zora placed on 17 April 2018. The affidavit continued, stating that Mr Rofael “discussed some of the contents of the plaintiff’s Statement of Claim with Rafe Zora”. (CB 23, paragraph 11) When he was taken to this paragraph in cross-examination, he said that the Statement of Claim he was referring to was the Contract of Sale. (T184, L3-7)
108 When I sought to clarify Mr Rofael’s evidence on this point, the exchange was as follows:
“So just to make sure I'm understanding, you say that because the contract of sale made a claim on you, you regarded it as a statement of claim. Have I understood that right?‑‑‑Your Honour, that's what they claim, that's when they put the caveat, Rafi send them a letter, say why, on what basis they put a caveat on. So these people came back to use, they send this paper through so the purpose of that meeting was one day, so I can see what these papers are and I told Rafi that these papers is only, it's only contract of sale, it doesn't mean anything, it's not - it's not a legal document so they've got no right to put a caveat there for that, Your Honour. So I thought I'd put it in a way that they claim it from me, this - this money, so that's why, that's how I put it, that's (indistinct words). (T185, L19-T186, L2)
109 I found this answer incoherent. It betokens either such muddled thinking relative to these matters that one would need to be cautious about taking Mr Rofael’s account literally or attaching weight to the details of it, or else it was an attempt at deliberate obfuscation. In either event, it leads one to treat his evidence with some caution.
110 There is the further consideration that the rationale for the transaction entered into with Zhou Enterprise Pty Ltd from Mr Rofael’s standpoint has never been clear to me as a commercial transaction, particularly when one has regard to the fact that it entailed incurring liability for stamp duty at conveyance rates upon the full value of the Edward Street unit. Mr Rofael’s case on this point seems to have been elaborately pleaded in his Amended Defence, clause 2H (SCB 12-13). Yet, even this account did not seem to hang together entirely. The premise was that there was sufficient money left over from the transaction to establish a $24,000 offset account.
111 Mr Rofael’s answer to this, when pressed in cross-examination and in a question from me, was that this amount was to be funded from the sale of a unit in Antwerp Street. As I understand clause 2H, the offset account is referred to in clause 2H(c), which appears to assume that the $24,000 would represent the balance of the borrowing from Westpac in the sum of $360,000 on the security of the Edward Street property. I was left to wonder whether this was not a case where Mr Rofael had a clear Defence which only needed to be elicited, or where he did not have a full Defence at all, and his account of events therefore varied over time. These matters are additional to Mr Rofael’s lack of any file or diary notes of his dealings with Mr Zora.
112 As to the Overarching Obligations Certificate signature, Mr Rofael was disposed to concede that the signature did not look much like Mr Rofael’s known signature on other documents.
113 Mr Ganas offered expert evidence to the effect that it was probable that Mr Rofael was not the signatory of the Overarching Obligations Certificate, though it was possible that he did write the signature. Mr Ganas stepped back from a more definitive opinion that he did not. (T289-90)
114 In the end, I find myself in the same state of perplexity as the primary judge in Briginshaw v Briginshaw. In dismissing the divorce petition, Martin J said:
“The case depends entirely on various conversations. There is no written admission, and no writing of any sort. I have read the evidence several times, and the more I read it the more difficult the case seems … I do not know what to believe. I have been very troubled … I have done my best to decide, but the petitioner must satisfy me that his story is true.” (1938) 60 CLR 336-37
115 In this state of perplexity, for the same reasons as Martin J, I feel I must dismiss the allegations in the Summons.
116 No separate argument was addressed relative to s78A of the County Court Act 1958. Since it was common ground that the Court’s powers under the Civil Procedure Act 2010 are more ample than those under the County Court Act, the failure of the claim based on the Civil Procedure Act necessarily entails the rejection of the one made under the County Court Act.
117 For the sake of completeness, I should say something about the argument advanced on behalf of Mr Zora based on the issue of causation. An application such as the present would, before the enactment of the Civil Procedure Act, have been brought under the “wasted costs” jurisdiction of the court in which it was, by definition, necessary to prove that the practitioner’s acts or defaults were causative of the waste of the costs. Mr Blair referred me to the analysis of the Court of Appeal (Redlich and Priest JJA and Macaulay AJA in Yara Australia Pty Ltd v Oswal; Carson v Oswal; ANZ Banking Group Ltd v Oswal; Apache Fertilisers Pty Ltd v Oswal (2013) 41 VR 302. In the end, no relief was given against the relevant practitioner, but the court did provide valuable guidance as to the scope of the court’s power under s29 of the Civil Procedure Act. Their Honours said that the Act was not merely a re-enactment or a reaffirmation of existing inherent powers, but:
“… a powerful indication of the will of the Parliament about the values sought to be achieved by the way in which cases are managed in the courts and the balances that have to be struck.” (2013) 41 VR 302, 310 [22]
118 The court’s powers were said to be more ample than those given by the pre-existing rules ((2013) 41 VR 302, 311 [25]). Mr Blair submitted that Oswal’s case stood for the proposition that powers under s29 could be exercised for disciplinary purposes against a legal practitioner, not merely for the purposes of compensation. That is, that proof of a causal link between the waste of costs and the breach of the relevant overarching obligations was not a necessary requirement for success. In any event, in Oswal’s case, no orders were made and the occasion did not arise, therefore, for the court to propound some other relationship between costs wasted and a breach by a practitioner or practitioners of the overarching obligations other than a causal one. I did not read the court’s analysis to entail the view that no relationship between the two subject matters needed to be demonstrated, aside from the coincidence in the same proceeding of wasted costs and breaches of the overarching obligations. It seemed that no relationship other than mere coincidence was pressed here, though a more elaborate argument might have established a causal link. At any rate, based upon the evidence and the arguments that were pressed, there is much to be said for the arguments put in the written outline filed on behalf of Mr Zora that timely action by Mr Rofael’s present legal advisers could have minimised the costs thrown away by reason of the trial dates having to be vacated almost on the eve of trial. There was also no indication as to whether the learned judicial registrar was referred to Rule 63A.17 of the Rules, which might have pointed away from the form of wasted costs order, which she ultimately made. In the end, however, given the conclusions I have reached upon the underlying facts, it is unnecessary to pursue these matters further.
119 The Summons should be dismissed. I will hear the parties on any consequential orders.
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