Rahme v Benjamin & Khoury Pty Ltd

1. [1]

   This Notice of Motion (“the appeal motion”) [1] is brought by the applicant, Dana Rahme (“Mrs Rahme”), against the respondent, Benjamin & Khoury Pty Ltd (“B&K”), seeking orders to set aside a costs order made against her by Associate Justice Harrison in chambers on 16 March 2022 (varying an order made on 13 October 2021) without having had the opportunity to make submissions about it (“the 16 March 2022 costs order”).

2. [2]

   The 16 March 2022 costs order arose from a failed motion, originally brought by Mrs Rahme and her husband, Gabriel Rahme (“Mr Rahme”), but later amended to remove Mrs Rahme as an applicant, itself concerned with costs. The issue before me (putting it neutrally) was whether the 16 March 2022 costs order as against Mrs Rahme was lawful and/or appropriate.

3. [3]

   B&K first acknowledged Mrs Rahme’s lack of opportunity to make submissions in relation to the costs order on 26 April 2022 and acknowledged that Mrs Rahme should be given the opportunity to be heard. Prior to the hearing, B&K suggested that a straightforward way in which the appeal motion could be disposed of would be by a redetermination of the appropriate costs order by Harrison AsJ, affording both B&K and Mrs Rahme the opportunity to be heard. The Court was also informed that B&K made proposals to attempt to confine the appeal motion to the “real issues” to limit further costs and the imposition on the Court’s resources by the appeal motion and that those proposals were rejected by Mrs Rahme.

4. [4]

   Despite these attempts at resolution or partial resolution, the appeal motion proceeded by way of hearing before the Court on 19 October 2022 for just over half a day, involving two volumes of evidential material put before the Court by way of agreement, together with a volume of authorities. Many grounds of appeal are relied upon, with some involving an allegation of bad faith on B&K’s part.

5. [5]

   For the reasons that follow, I am of the view that the 16 March 2022 costs order made by Harrison AsJ as against Mrs Rahme should be set aside, and instead a slightly more limited costs order as against Mrs Rahme should be made.

Background Facts

1. [6]

   In around 2009, B&K (a firm of solicitors) and Mr Rahme entered into a costs agreement. On 5 October 2010, Mrs Rahme entered into a third party payer costs agreement whereby she agreed to assume responsibility for Mr Rahme’s legal costs.

2. [7]

   A costs dispute arose between B&K and both Mr and Mrs Rahme (“the Rahmes”), and an assessment was conducted.

3. [8]

   On 21 July 2014, a costs assessor determined that the fair and reasonable costs payable by the Rahmes was $168,456.96.

4. [9]

   On 5 September 2014, the assessed sum was registered as a judgment (“the 5 September 2014 judgment”). Mr Rahme was named as the first defendant and Mrs Rahme was named as the second defendant.

5. [10]

   On 8 October 2019, the NSW Court of Appeal delivered judgment in proceedings brought by the Rahmes against, inter alia, B&K. [2] In its orders, the Court of Appeal set aside the costs agreement between B&K and Mrs Rahme, set aside the 5 September 2014 judgment as between Mrs Rahme and B&K, and ordered that all sums paid by Mrs Rahme be reimbursed.

6. [11]

   Despite the order made by the Court of Appeal on 8 October 2019 relieving Mrs Rahme of any relevant liability for costs, on 9 September 2020, both the Rahmes filed a Notice of Motion (“the original motion”) seeking to set aside the 5 September 2014 judgment. An affidavit of Michael Soulos sworn 16 December 2020 was filed in support of the original motion.

7. [12]

   Submissions (dated 16 December 2020) in support of the original motion were filed by “Michael Soulos, Solicitor for the defendants”. The submissions included the following:

8. [13]

   Also included in the submissions was the following:

9. [14]

   B&K filed submissions on 12 March 2021 which were stated to be “for hearing on 25 March 2021”. (I note that at some point the 25 March 2021 hearing was vacated). Included in these submissions at [4] was the following:

10. [15]

    Mr Soulos, on behalf of the Rahmes, filed submissions in reply on 17 March 2021, which included the following at [3] – [4]:

11. [16]

    Mr Soulos’ submissions on behalf of the Rahmes further included the following at [18] – [19]:

12. [17]

    On 29 June 2021, a letter was sent by Mr Soulos to B&K’s solicitors in the following terms:

13. [18]

    The Court rejected the filing of the amended motion on 29 June 2021. The Principal Registrar wrote to Mr Soulos stating the document was returned as he needed a court order to amend the motion.

14. [19]

    On 2 July 2021, Mr Soulos wrote to the solicitors for B&K informing them that the Amended Notice of Motion was rejected by the Registrar, requesting their formal consent to allow the motion to amend to be “resubmitted with costs to be reserved or an agreement that B&K consent to our client amending the Notice of Motion, to avoid the cost and inconvenience of having to prepare for the hearing on the basis of the original motion, at the commencement of the hearing on 24th August 2021.” A response was sought by 12 noon on Tuesday 6 July 2021.

15. [20]

    On 21 July 2021, Mr Soulos contacted the Registry by email, still attempting to file the Amended Notice of Motion, and the document was finally effectively filed on 5 August 2021. The email concluded with the following:

16. [21]

    An email from the Registry sent on 2 August 2021 (apparently the final email in a series of emails) asked Mr Soulos “Please direct my attention to the leave granted for the filing of such [Amended Notice of Motion]?”

17. [22]

    On 7 August 2021, an affidavit was sworn by Mr Soulos (although the copy before me has no filing date) stating:

18. [23]

    The affidavit went on to detail injuries Mr Soulos had sustained as a result of a bike accident, and indicated that he was in constant pain, unable to walk without pain, or drive. He stated that he had surgery booked on 18 August 2021 and attached a medical certificate in relation to the surgery. He indicated he should be fully recovered by 1 October 2021. The affidavit continued:

19. [24]

    On 8 August 2021, Mr Soulos swore and filed an affidavit setting out some of the history of the matter, stating, inter alia:

20. [25]

    On 12 August 2021, Cavanagh J (sitting as the Common Law Duty Judge) delivered an ex tempore judgment on a Notice of Motion filed on 9 August 2021 by the “defendants” (listed as Mr Rahme as the first defendant and Mrs Rahme as the second defendant) seeking that the hearing commencing on 24 August 2021 be vacated and the matter be allocated for hearing at another time. [3] The reason for the application was the knee surgery scheduled for Mr Soulos (described as the solicitor for the defendants), although it was also noted that Mr Soulos would likely be at home by the time of the hearing. The aspect of the matter for hearing on 24 August 2021 is recorded by Cavanagh J as “a motion to set aside a judgment obtained by the plaintiff against the defendants.” The judgment records:

21. [26]

    Cavanagh J refused the application for vacation of the hearing date and dismissed the motion.

22. [27]

    Not included as part of the judgment tendered before me, but recorded as part of the JusticeLink records which are before me, Cavanagh J also made an order effectively permitting the amendment of the motion removing Mrs Rahme as an applicant, as well as the following order concerning the costs of the amendment (“Cavanagh J’s costs order”):

23. [28]

    On 24 August 2021, Harrison AsJ heard the Amended Notice of Motion and judgment was reserved.

24. [29]

    On 13 October 2021, Harrison AsJ delivered judgment dismissing the Amended Notice of Motion. [4] Her Honour made the following orders:

    1. (1)

       The first defendant’s [Mr Rahme’s] amended Notice of Motion filed 5 August 2021 is dismissed.

    2. (2)

       The first defendant is to pay the plaintiff’s costs on an ordinary basis, if the plaintiff does not seek an alternative order from the Court within 7 days. If the plaintiff does seek an alternative order I will give directions for the filing of written submissions.

25. [30]

    On 20 October 2021 at 6:47pm (that is, within 7 days of the above order, albeit outside business hours), B&K emailed the Associate of Harrison AsJ and sought an alternative costs order (the variation application). That email was copied to the solicitor, Mr Soulos, who was still apparently on the record as acting for both Mr and Mrs Rahme. Despite the confined nature of the order made by Cavanagh J on 12 August 2021 being “any costs thrown away by reason of the amendment to the Motion, if any,” the alternative order sought was more general, and was in the following terms:

    1. (1)

       Order that the first and second defendants pay the plaintiff’s costs of the application on the ordinary basis until 5 August 2021.

    2. (2)

       Order that the first defendant pay the plaintiff’s costs of the application on the ordinary basis after 5 August 2021.

26. [31]

    On 9 November 2021, Mr Rahme was made bankrupt by way of a debtor’s petition filed by him, with the Certificate of Appointment of Trustee showing the appointment of his trustee on that date to be Thyge Howard Trafford-Jones.

27. [32]

    On 23 December 2021, B&K received by post, from the solicitors for Mrs Rahme, three statutory demands relating to costs orders for $186,339.84, $393,108.08 and $81,441.17 respectively. In an affidavit filed in the Federal Court of Australia sworn on 12 January 2022 for B&K, it was stated that there was a genuine dispute in relation to each of the amounts in question, and further stated the following:

28. [33]

    On 15 March 2022 at 12:07pm, B&K sent a second email to the Associate of Harrison AsJ. That email was, again, copied to Mr Soulos. The terms of that email were:

29. [34]

    In Mr Soulos’ affidavit sworn 11 April 2022, whilst he states that he received the email from B&K dated 15 March 2022 requesting that Harrison AsJ address the question of costs and requested a timetable, he qualifies this by stating:

30. [35]

    It can be observed that this does not explain why the email was not seen on 15 March 2022 (which was a Tuesday) or indeed before or after court (if indeed that is what was intended to be conveyed). It is also of note that Mr Soulos states in his affidavit of 11 April 2022 that if he had been aware of a hearing on 16 March 2022, he “would have taken steps to obtain instructions from Dana Rahme”.

31. [36]

    On 16 March 2022, Harrison AsJ delivered a short judgment making the alternative orders proposed by B&K on 20 October 2021. [5] It is conceded that Mrs Rahme had not been invited to make submissions in response to B&K’s submissions.

32. [37]

    On 27 March 2022, Mr Soulos emailed B&K’s solicitors complaining about the email sent on 15 March 2022 to Harrison AsJ, stating that it was “unprofessional conduct to communicate with a judicial officer without the consent of all other parties to the proceeding”; contending that it was “professional misconduct” that the email “was never sent to Mr Gabriel Rahme, the first defendant, who has been self-represented in the proceeding since his bankruptcy last year”; stating that “as far as we are aware” Harrison AsJ is functus officio in this proceeding; and stating that “my firm’s client, Mrs Dana Rahme, reserves the right to bring this regrettable conduct of […] the responsible legal practitioner, in this matter to the attention of the Legal Services Commissioner in due […] course.” B&K’s solicitors responded on 29 March 2022 denying the allegations and stating, “You and your firm have always been copied into all correspondence with the Court.”

33. [38]

    It is conceded that Mrs Rahme was not sent the email.

34. [39]

    Mr Soulos also indicates in his affidavit of 11 April 2022 that he was not aware of the 16 March 2022 costs order until 4 April 2022 following receipt of an affidavit filed on behalf of B&K in the Federal Court proceedings, which (apparently) caused him to conduct a search of his email. He stated the email was not in his inbox. The implication is that the email from the Associate of Harrison AsJ was somewhere in his junk email.

35. [40]

    On 12 April 2022, Mrs Rahme filed the appeal motion seeking to set aside the 16 March 2022 costs order. In an email of that date to B&K’s solicitors from Mr Soulos, he stated that he was filing the appeal motion “on behalf of Dana Rahme who has reinstructed us to act on her behalf in this matter.” Mr Soulos filed an affidavit in support, sworn 11 April 2022.

36. [41]

    Included in that affidavit at [17] was the following statement:

37. [42]

    As to that statement, it can be observed that it is incorrect on its face given that whilst Mrs Rahme ceased to be an applicant in the motion, she was still a “party” given that she was the “second respondent”.

38. [43]

    On 26 April 2022, B&K’s solicitors wrote to Mr Soulos. In that letter, it was contended that an appeal properly lay to the Court of Appeal (albeit only if leave was granted). It appears that this issue is no longer a live one so the arguments included in this letter in relation to this issue will not be further set out.

39. [44]

    The letter continued, effectively acknowledging that Mrs Rahme was erroneously denied an opportunity to make submissions in response to B&K’s submissions dated 20 October 2021 and proposed the following compromise in order to dispose of this “wasteful satellite litigation”:

40. [45]

    In a further letter from B&K’s solicitors to Mr Soulos dated 3 June 2022, they stated:

41. [46]

    It further noted that the procedural issue identified in their letter dated 26 April 2022 had not been satisfactorily responded to, and continued:

42. [47]

    A further letter dated 15 September 2022 providing a proposal for the resolution of the dispute was sent by B&K’s solicitors to Mr Soulos, proposing that the 16 March 2022 costs order be set aside by consent, the question of an alternative costs order be reopened and redetermined by Harrison AsJ and a timetable be set for submissions.

Core issues for determination

1. [48]

   Mrs Rahme relies on many grounds of appeal, which I will deal with below. However, it is worth recording the core issues which appear to emerge as the key issues for determination.

   1. (1)

      First, were there any costs incurred by B&K which were more than de minimis as a result of Mrs Rahme’s misconceived claim, that is, being named as a joint applicant in the original motion, with her role as joint applicant being discontinued on 5 August 2021. In my view, it can be reasonably inferred on the basis of the evidence before me that the answer is yes.

   2. (2)

      Was the new unquantified costs order made on 16 March 2022 sought for the “ulterior purpose” of being available to be set-off by B&K against the quantified judgment debts entered against it for unpaid damages and costs that had been awarded against B&K. I am of the view that a simple consideration of the chronology does not permit this inference to be made.

   3. (3)

      Leaving aside the conceded lack of opportunity to make submissions, given the confined nature of Cavanagh J’s order, was it appropriate (assuming the requisite power) for Harrison AsJ to make the 16 March 2021 costs order. I am of the view that it was not, and that a more confined order should be made instead.

2. [49]

   As indicated above, although a jurisdictional issue was raised in the course of correspondence in the lead up to the hearing, I understand it is no longer pressed and I will not deal with it further.

3. [50]

   It is convenient now to turn to the 14 grounds of appeal. In written submissions on behalf of Mrs Rahme, the 14 grounds of appeal are addressed in 5 separate categories, and B&K have also approached the grounds in this way. Accordingly, the same approach will be taken by me.

Nature of the appeal before me

1. [51]

   The matter the subject of the appeal was not the subject of a hearing before Harrison AsJ, but rather was done on the papers. The evidence put before me to found the basis of my decision on appeal was agreed. The agreed material included material which was not before Harrison AsJ. I accept that the appeal is a hearing de novo, and it is appropriate for me to consider the agreed material put before me.

Appeal grounds 3, 8, 9, 10 and 12 (First appeal issue)

1. [52]

   The first appeal grounds concern, in one way or another, the denial of procedural fairness to Mrs Rahme. Although only Mrs Rahme is the applicant on the appeal motion, Mrs Rahme also raises issues which go beyond her position and point to the alleged denial of procedural fairness to Mr Rahme’s trustee in bankruptcy and “jurisdictional error in respect of identity of parties”. The rather lengthy appeal grounds for the first appeal issue are as follows:

2. [53]

   Mrs Rahme contends that she ceased to be a party to the deemed proceeding created by the filing of the Certificate of Determination, which occurred to register it as a judgment of this Court on 5 September 2014, upon the making by the Court of Appeal of its order on 8 October 2019 setting aside, as against her, the registration judgment.

3. [54]

   Mrs Rahme acknowledges she became a party to the original motion filed to set aside the registration judgment but contends she ceased to be a party from 29 June 2021 when she served the amended motion (albeit leave to file the amended motion was not provided until 12 August 2021).

4. [55]

   Mrs Rahme contends that Harrison AsJ denied her procedural fairness – which was “compounded by the complete invalidity of any proceedings against Mr Rahme in respect of any relief being determined by her Honour after 9 November 2021 without a grant of leave from the Federal Court of Australia”.

5. [56]

   Mrs Rahme argues that B&K’s submission that Mrs Rahme was still represented by her solicitor on the record, Mr Soulos, is untenable. Mrs Rahme argues that Mr Soulos’ affidavit of 5 August 2021 states he ceased acting for Mrs Rahme on 5 August 2021. Mrs Rahme also argues that neither Mr Soulos nor counsel appearing for Mr Rahme could have acted on both sides of the record.

6. [57]

   Mrs Rahme argues that given Mr Rahme’s bankruptcy on 9 November 2021, it is contended that B&K only had “two viable options available to it […] as the costs applicant in the original costs order made on 20 October 2021 [sic: should be 13 October 2021]” against Mr Rahme:

7. [58]

   In short, Mrs Rahme contends that B&K had no right to make any ex parte application to vary the original costs order on 20 October 2021, or again on 15 March 2022, without notice to Mrs Rahme or the trustee in bankruptcy of Mr Rahme and without the leave of the Federal Court. This combination of denials of procedural fairness and lack of jurisdiction are fundamental errors of law.

8. [59]

   B&K state there are two elements to these appeal grounds:

   1. (1)

      Mrs Rahme was not party to the proceedings or the motion after 5 August 2021; and

   2. (2)

      Relief was not available against Mr Rahme because he had been made bankrupt on 9 November 2021.

9. [60]

   They contend that neither of those propositions are soundly based.

10. [61]

    It is submitted that Mrs Rahme was a party to the 16 March 2022 costs order as:

    1. (1)

       She was an applicant on the motion from 9 September 2020 to 5 August 2021;

    2. (2)

       After 5 August 2021, she was a respondent on the motion;

    3. (3)

       The amended Notice of Motion filed 5 August 2021 provides: “NOTICE TO PARTIES AFFECTED BY THE MOTION: If you do not attend, the court may hear the application and make the orders sought in this notice of motion. The court may make orders for the payment of costs.”

    4. (4)

       After 5 August 2021, Mrs Rahme was still represented by her solicitor on the record, Mr Soulos. On 8 August 2021, Mr Soulos said on oath: “I am the solicitor on the record for the Applicant in the Notice of Motion, Gabriel Rahme, and also the solicitor on the record for the Second Defendant in the Notice of Motion seeking the principal relief filed on 9th September 2020.”

    5. (5)

       Mrs Rahme was expressly subject to a potential costs order by Order 4 made by Cavanagh J on 12 August 2021. That order was made in view of the express contention by Mrs Rahme’s solicitor, by letter dated 29 June 2021, that questions of costs arising from the amendment to the motion should be dealt with at the conclusion of the hearing.

11. [62]

    B&K further contend that the “underlying fallacy as regards Mr Rahme is that the orders affect him.” B&K submit that they do not. Whether or not a costs order is made against Mrs Rahme, Mr Rahme is liable for the full amount of costs. The possibility that some of his liability is joint with Mrs Rahme does not affect his position as against B&K. His creditors stood to benefit from an order making Mrs Rahme jointly liable for part of his debts.

Consideration of the First appeal issue

1. [63]

   The First appeal issue concerns in part an allegation regarding lack of service of the variation application and lack of notice given by Harrison AsJ to either Mrs Rahme or Mr Rahme’s trustee in bankruptcy before making the 16 March 2022 costs order. Given the lack of notice to Mrs Rahme to make submissions prior to the making of the 16 March 2022 costs order which affected her is properly conceded by B&K, it is unnecessary to deal further with the first part of this argument. As to whether Mr Rahme’s trustee in bankruptcy needed to be given notice, I am of the view that it is not clear that s 58(3)(b) of the Bankruptcy Act 1966 (Cth) is enlivened in this case, that is whether the submissions as they affected Mr Rahme in truth were a “fresh step” in the proceedings against him. Indeed, it would appear if it were the case that a costs order to be made in relation to Mrs Rahme in this matter could be seen potentially to constitute a “fresh step” it would have been appropriate for Mrs Rahme to join Mr Rahme’s trustee in bankruptcy in the hearing of the appeal motion, but such a course has not been considered appropriate.

2. [64]

   It is alleged further that Mrs Rahme was no longer a party to the proceedings or the motion after 5 August 2021. Given the lack of notice to Mrs Rahme has been conceded by B&K, this point has little work to do, but in any event, this contention cannot be made out. The documentation comprising the amended Notice of Motion filed in the Court on 5 August 2021 (which contains some errors on its face, it is noted) still can be seen to be filed for “Gabby Rahme, First Defendant” and shows, amongst other things, the following:

   1. (1)

      B&K is listed as the plaintiff;

   2. (2)

      Mr Rahme is listed as the first defendant, and Mrs Rahme is listed as the second defendant;

   3. (3)

      Further down the page, under the heading “Persons to be served”, B&K is listed as the first respondent and Mrs Rahme is listed as the second respondent;

   4. (4)

      Under the heading “Orders Sought”, it is apparent that the document has been amended with certain underlining indicating alterations from a previous version with the current version reading “The First Defendants” (previously “The Defendants”) will move the Court for orders that [etc]”;

   5. (5)

      On the third page, it can be seen that “and Dana” has been crossed out;

   6. (6)

      Mr Soulos is listed as the “applicants’ legal representative” and he is listed as agreeing to electronic service; and

   7. (7)

      Under the heading “Respondents” – Mrs Rahme is listed as the second respondent and her name and street address are given.

3. [65]

   This, together with the matters noted above, make it clear that Mrs Rahme was still a party to the proceedings from 5 August 2021, albeit no longer as an applicant, but as second respondent. In any event, it is clear that Mrs Rahme should have been invited to make written submissions prior to the 16 March 2022 costs order. To the limited extent that the First appeal issue raises the lack of opportunity to make submissions prior to the 16 March 2022 costs order, as conceded by B&K, the appeal grounds are made out. It must be noted, however, that in the course of having to deal with this clear conceded issue, wordy and unnecessarily complex appeal grounds were raised. This is regrettable.

Appeal grounds 1, 4, 5 and 6 (Second appeal issue)

1. [66]

   These grounds are said by Mrs Rahme to go to an error in misconstruing and misapplying the reservation of jurisdiction over costs made by Cavanagh J on 12 August 2021 – grounds 1, 4, 5 and 6. These read as follows:

2. [67]

   Mrs Rahme contends that although Harrison AsJ recited the terms of the reservation of costs question by Cavanagh J, her order went beyond it. Mrs Rahme contends that the amended motion filed on 5 August 2021 was in truth a different application, and Harrison AsJ had no jurisdiction over the original motion except for the jurisdiction given to her by Cavanagh J. As noted above, the costs question reserved by Cavanagh J, sitting as Duty Judge, related to “any costs thrown away by reason of the amendment to the Motion, if any”. Her Honour’s more general order in relation to costs exceeded her statutory powers constituting a “fundamental jurisdictional error”.

3. [68]

   Further, Cavanagh J’s order in relation to costs posed a threshold question as to whether there was a material amount of costs thrown away as a result of the amendment. This threshold question needed to be determined “before the discretion to determine which party is liable for those ‘costs thrown away’ could be exercised”. Mrs Rahme contends that there is merely a de minimis amount of costs incurred by B&K, and thus Harrison AsJ, if her Honour conducted the exercise appropriately, would have dismissed the costs application as frivolous and vexatious.

4. [69]

   Mrs Rahme contends that the only costs which would have been thrown away were reading the abandoned original motion which would have taken an experienced solicitor 10 minutes and reading the letter from Mrs Rahme’s solicitor dated 29 June 2021 withdrawing the original motion and serving the amended motion, again another 10 minutes.

5. [70]

   B&K submit that the order of Cavanagh J on 12 August 2021 which is in terms of “costs thrown away” by reason of the amendment to the motion is in truth not so confined. It submits that on its proper reading, Order 4 reserved the question of the appropriate order as to the costs of the amendment until the final disposition of the motion.

Consideration of the Second appeal issue

1. [71]

   First, it can be noted that Mrs Rahme’s contention that the amended motion was in truth a “different application” cannot be sustained. An amended application is just that, an amended application, and it shows the amendments by way of marked up words in the document. That point, however, does not determine the issue. The two questions are:

   1. (1)

      Whether Cavanagh J’s reservation of the costs issue should have properly circumscribed or confined what Harrison AsJ determined in relation to costs, and

   2. (2)

      Whether the costs were de minimis.

2. [72]

   As to the first question, I am of the view that whilst Harrison AsJ otherwise had power to make the order her Honour did, in the particular circumstances of this case that power must be considered in light of the order made by Cavanagh J. A common sense reading of Cavanagh J’s reservation of costs order did, or should have, circumscribed or confined Harrison AsJ’s determination of costs to costs thrown away, if any, as a result of the amendment to the original motion. B&K’s argument that Cavanagh J’s order does not indicate any such confinement is not sustainable.

3. [73]

   However, I am also of the view that it cannot be seen, on the material available to me, that the costs “thrown away” are de minimis. In Mrs Rahme’s analysis of what the costs are likely to have been (amounting to essentially 20 minutes of work by an experienced solicitor), she has failed to account for the exchange of written submissions, some of which have been extracted above at [12] – [16]. Those written submissions indicate to me what work, both directly and by implication, must have been done. It can be seen from the above extracts of the written submissions that Mrs Rahme’s involvement was the subject of the Rahmes’ written submissions dated 16 December 2020 at [12] and [13] above; which were considered and responded to on 12 March 2021 by B&K at [14] above; and were relevantly responded to in some detail by the Rahmes in relation to Mrs Rahme’s involvement in the motion on 17 March 2021 at [15] – [16] above. It can reasonably be inferred that this 17 March 2021 response, at the very least, would have to have been properly considered by B&K, and a response by B&K researched (or at least carefully considered) and prepared. On the basis of the evidence before me, I am of the view that it is reasonable to infer that this would have involved work which resulted in more than de minimis costs.

4. [74]

   I also note that the hearing (prior to its vacation) was originally listed for 25 March 2021, and then subsequently listed for hearing (which went ahead after the unsuccessful application before Cavanagh J on 12 August 2021 to vacate the date) on 24 August 2021. B&K were not notified that there would be an amended motion removing Mrs Rahme as one of the applicants until 29 June 2021. In all of the circumstances, I cannot find that the costs associated with Mrs Rahme’s initial involvement as an applicant up until 29 June 2021 (when B&K were first notified of her removal as an applicant) or up until 5 August 2021 (when the amended application was filed) were de minimis.

5. [75]

   Accordingly, on the basis of these two findings, I am of the view that there were costs thrown away as a result of the amendment of the motion removing Mrs Rahme as an applicant, and which could have properly been the subject of a confined costs order, in accordance with the order made by Cavanagh J on 12 August 2021. As such, I am of the view that it would be appropriate to award costs thrown away as a result of the amendment of the motion removing Mrs Rahme as an applicant, as agreed or assessed.

Appeal grounds 2, 7 and 11 (Third appeal issue)

1. [76]

   These grounds concern the contention that Harrison AsJ misapplied her own order granting liberty to apply within 7 days of 13 October 2021 to vary the original costs order. In essence, it is contended that the 7 days expired at 5:00pm on 20 October 2021, and the email B&K sent to her Honour was sent at 6:47pm, therefore one hour and 47 minutes outside the permissible time.

2. [77]

   The appeal grounds are as follows:

3. [78]

   To the extent that the Third appeal issue deals with the failure to provide Mrs Rahme with an opportunity to make submissions in relation to the variation application made on 20 October 2021, this has been dealt with above.

4. [79]

   The remaining aspect of the Third appeal issue is whether the variation application had to be made by 5:00pm on 20 October 2021, given Harrison AsJ’s order and in light of the UCPR. Mrs Rahme points to r 1.11(4) of the UCPR which she contends measures time by the hours of operation of the Court’s Registry which she states are 9:00am to 5:00pm. For context, r 1.11 of the UCPR reads in full as follows:

5. [80]

   B&K argue that there is no mention of 5:00pm in the relevant order, and even if there had been, r 36.16 of the UCPR provides a period of 14 days from 13 October 2021 for B&K to seek a different costs order.

Consideration of the Third appeal issue

1. [81]

   I do not read r 1.11(4) of the UCPR as supporting Mrs Rahme’s proposition. It expressly deals with the issue of “days”. It simply indicates that for the purpose of construing judgments or orders which involve any period of time, if the last day for doing something is a day on which the registry is closed (for instance, a weekend, or a public holiday), the thing may be done on the next day on which the registry is open. The rule does not deal with hours within a day, or a time on a day by which something must be done.

2. [82]

   Further, as noted by B&K, 5:00pm is not specified in the order of 13 October 2021. I note the point made by B&K that r 36.16 of the UCPR does provide mechanisms for altering the order within 14 days. However, given the circumstances, that rule does not need to be invoked to answer the grounds of appeal. These grounds must fail.

Appeal ground 13 (Fourth appeal issue)

1. [83]

   This ground reads as follows:

2. [84]

   Mrs Rahme contends that had Harrison AsJ invited Mrs Rahme to make submissions in relation to the costs variation application, Mrs Rahme would have submitted that her Honour should draw inferences about ulterior purposes for B&K making the application for a costs order against Mrs Rahme. This would have included that the de minimis value of the costs of B&K thrown away by the filing of the amended motion on 5 August 2021 would have enabled the costs variation application to be characterised as frivolous and vexatious, thereby rending it an abuse of process.

3. [85]

   Mrs Rahme contends there are two available inferences which can be drawn for seeking a varied costs order:

4. [86]

   Mrs Rahme claims there is “not a scintilla of evidence that B&K incurred any costs whatsoever which were ‘thrown away’ in consequence of the filing of the Amended Motion on 5 August 2021.” Mrs Rahme points to the failure of B&K to swear an affidavit, and points to the “very brief” written submissions filed by B&K.

5. [87]

   Mrs Rahme also submits that the ulterior forensic purpose is to be gleaned by B&K’s failure to seek costs of its application to vary the original costs order, stating:

6. [88]

   Included in the lengthy written submissions, Mrs Rahme states:

7. [89]

   B&K submits that the ground is baseless, and that B&K wishes to obtain a costs order against Mrs Rahme because “she abandoned her claim against them on the motion and they wish to be compensated for their legal costs.”

8. [90]

   In oral submissions, B&K stated as to the first so-called ulterior purpose:

9. [91]

   As to the second so-called ulterior purpose, B&K submitted orally as follows:

Consideration of the Fourth appeal issue

1. [92]

   This appeal ground fails for the following reasons:

   1. (1)

      For the reasons set out above at [73], I do not accept that the costs incurred as a result of the withdrawal from the Notice of Motion of Mrs Rahme as a party were de minimis;

   2. (2)

      I accept the submissions of B&K that if it is the case that Mr Rahme was seen to be likely to be bankrupt in the short term, and it was otherwise proper to seek costs against Mrs Rahme, that is not conduct which is to be impugned;

   3. (3)

      The chronology makes it clear that the so-called ulterior motive of the seeking of the altered costs order so as to allow B&K to be able to deploy an unquantified set-off against the statutory demands cannot be sustained. The submission should not have been made. To claim something has been done for an “ulterior purpose” is in essence to claim bad faith on the part of a party – and is an allegation that should not be made lightly. The application to vary the costs order was made by B&K on 20 October 2021. That was before the statutory demands were made against B&K in late December 2021. Accordingly, it is simply not logical to suggest that the application was made for the ulterior purpose of creating an unquantified set-off against a statutory demand which had not yet been made.

2. [93]

   In my view, there is no basis for finding there was an “ulterior purpose” (or purposes) behind the application for the altered costs order. This ground must fail.

Appeal ground 14 (Fifth appeal issue)

1. [94]

   This ground reads as follows:

2. [95]

   Mrs Rahme contends that the 16 March 2022 costs order and judgment should have been forwarded to Mrs Rahme and Mr Rahme’s trustee in bankruptcy. Although it was forwarded to Mr Soulos, Mrs Rahme contends that he was on the record only for Mr Rahme after 5 August 2021, and his retainer ceased when Mr Rahme became bankrupt on 9 November 2021. It is contended that Harrison AsJ “must have known” that Mr Solous had formerly acted for Mr Rahme alone and that Mr Soulos had ceased to act for Mrs Rahme on his filing of the amended motion on 5 August 2021. So much is recorded, it is submitted, in the appearances in the Associate Judge’s substantive and costs judgments.

3. [96]

   It is contended that the failure on the part of Harrison AsJ to send the 16 March 2022 costs order and judgment to Mrs Rahme and Mr Rahme’s trustee in bankruptcy deprived them of the opportunity to vacate the orders rather than appeal the decision as has occurred in this case.

4. [97]

   It is further submitted that Mr Werrdan Khoury “exacerbated the problem” by his conduct in “keeping up his sleeve” the fact of the publication of the costs judgment after that date, no doubt in the hope or expectation that Mr Soulos had not become aware of the email sent to him by her Honour’s Associate on 16 March 2022. It is contended that Mr Khoury did not send the costs judgment to Mr Soulos (deliberately) until 4 April 2022 when he served his affidavit in the Federal Court sworn on 1 April 2022. It is put that “No doubt that date was chosen because it was five clear days after the expiry of the deadline imposed by rule 36.16(3A) for Mrs Rahme to apply to her Honour to vacate the costs judgment and the varied orders as to costs made on 16 March 2022.”

5. [98]

   B&K summarise the ground as one which alleges that Harrison AsJ failed to email the judgment to the parties. It is contended that this is not a matter that could be characterised as an appellable error in relation to the judgment. In any case, it is submitted that this ground is not soundly based as the judgment was emailed to Mr Soulos, the solicitor on the record.

Consideration of the Fifth appeal issue

1. [99]

   The issue of whether or not the judgment was emailed to Mrs Rahme, is difficult to characterise as an appellable error in relation to the judgment, and in my view this ground of appeal cannot be made out.

2. [100]

   I also note that it is most unfortunate that the situation was such that it can now be said it is not clear who was acting as solicitor for Mrs Rahme or Mr Rahme. However in a practical sense, I observe that both judgments of Harrison AsJ of 13 October 2021 and 16 March 2022 record on the cover page Solon Lawyers (the firm of Mr Soulos) as solicitors for the Defendants (plural) and I also note the sworn statement of Mr Soulos (of Solon Lawyers) set out at [35] above where he stated in his affidavit of 11 April 2022 that if he had been aware of a hearing on 16 March 2022 he “would have taken steps to obtain instructions from Dana Rahme”. In light of this statement, together with the agreed fact that the judgment was in fact emailed to Mr Soulos on 16 March 2022, it can be seen that the failure of the email to come to the attention of Mr Soulos (and accordingly Mrs Rahme) can only be understood as a result of an unfortunate series of events. It can be seen that Mr Soulos appeared to be the solicitor on the record at the relevant time and was in fact emailed the judgment. The Court must be entitled to rely on the record for such details, and to be reasonably informed if that is no longer the case, either by the filing of a notice of ceasing to act if the rules require such a form to be lodged. If such a form is not required to be lodged (as appears would be the case here), on the receipt of correspondence from the Court for a party for whom a solicitor no longer acts, it is not unreasonable to expect a solicitor, who is of course an officer of the Court, to inform the Court of that fact. Indeed, Mr Soulos very properly indicated that he would have endeavoured to contact Mrs Rahme if he had been aware of the hearing on 16 March 2022.

Costs of the appeal before me

1. [101]

   Given Mrs Rahme has succeeded on certain grounds of the appeal, for reasons set out below, costs should follow the event, and should be awarded on the ordinary basis. Lest it be suggested that costs should be awarded on a basis other than the ordinary basis, I note that even though Mrs Rahme succeeded on some aspects of her appeal, it can be seen that the issues which were determined could have been put before the Court in a more streamlined manner. Importantly too, in my view, the ground which raised the issue of an ulterior motive was misconceived and should not have been raised. That said, it did not take a great deal of Court time to deal with the allegation, and the total hearing took just over half a day in total.

2. [102]

   I also note that B&K made a number of attempts to resolve the matter without using further Court time and these suggestions were not taken up by Mrs Rahme, albeit there was an issue raised as to whether there was a realistic opportunity of being able to send the matter back to Harrison AsJ as was suggested by B&K. It is also the case that Mrs Rahme has obtained an order more favourable to her than B&K argued was appropriate.

3. [103]

   There are considerations, therefore, pulling in different directions as to how the discretion as to costs should be exercised. It would be regrettable, given the length of the hearing of the appeal motion, for more time to be taken up to argue at length about the costs of this hearing.

4. [104]

   Accordingly, in all the circumstances, and noting especially the relatively short length of the hearing, my current view is that costs should follow the event and should be awarded on the ordinary basis. However, I am prepared to hear further from the parties, in writing, if required.

5. [105]

   Accordingly, I make the following orders:

   1. (1)

      The appeal is allowed.

   2. (2)

      The orders made by Associate Justice Harrison on 16 March 2022 so far as they concern Dana Rahme are set aside. In lieu, the following orders are made:

   3. (3)

      Benjamin & Khoury Pty Ltd is to pay Dana Rahme’s costs of these proceedings on the ordinary basis.

   4. (4)

      In the event that either party seeks to vary Order 3, I direct: