Farah v Elias

1. [1]

   HIS HONOUR: By his summons filed in this Court on 15 May 2015 Monzer Farah sought the following orders:

   1. (1)

      The decision of the NSW Civil & Administrative Tribunal on 17 April 2015 to reject the plaintiff’s objection to paragraphs 5 and 6 [of] the summons for production issued on 10 February 2015 at the request of the defendant be set aside.

   2. (2)

      The Tribunal return the documents produced by the plaintiff on 17 April 2015 in answer to the summons to the plaintiff.

   3. (3)

      Costs.

2. [2]

   In the events that have occurred, to which reference is made below, the only relief now sought by the plaintiff in this Court is an order for costs.

Background

1. [3]

   Toni Elias is the first defendant. He and his wife commenced proceedings in the Tribunal against Alloha Construction & Formwork Pty Ltd with which company they had contracted to build a house at 19 Rawson Road, Greenacre. Works commenced in about December 2013 but the builder abandoned the site in April 2014 leaving the work incomplete. As far as Mr Elias was aware, the builder failed to arrange for a mandatory engineering certification of certain structural components of the works. It also transpired that the builder was not licensed to perform building works exceeding $20,000, which is the amount that triggers the requirement for Home Warranty Insurance under the Home Building Act 1989. Despite this deficiency, the builder submitted what purported to be a certificate of Home Warranty Insurance from QBE Insurance in respect of the works to Mr Elias’ bank which thereupon released funds to it. Mr Elias is now left with a partially completed dwelling but without any of the mandatory certifications. The builder’s defaults are also not relevantly insured.

2. [4]

   Some months after the builder left the site, Mr Elias received a certificate dated 12 August 2014 from Mr Farah that purported to certify the structural aspects of the works. Mr Farah is an engineer who had originally been engaged by Mr Elias in 2012 to prepare structural drawings for the dwelling. Mr Elias had not, however, had any involvement with Mr Farah after that time and had certainly not engaged him to carry out any inspections of the works. Indeed, Mr Elias knew nothing of Mr Farah’s involvement with the construction until he received Mr Farah’s certificate in late 2014. It appears that Mr Farah was retained for this purpose by the builder.

3. [5]

   Shortly following the builder’s departure, Mr Elias commenced proceedings against it in the Tribunal. Perhaps as the result of his unhappy predicament at the time, he also sought to have Mr Farah produce certain documents in the hope of throwing some light upon his entitlement to obtain a retroactive certification of the works by relying upon his certificate, which would thereby permit Mr Elias to continue with construction. The alternative appeared to be the somewhat unfortunate prospect that the dwelling would have to be demolished.

4. [6]

   For reasons that did not immediately emerge, Mr Farah refused to cooperate or assist Mr Elias in any way at all. Accordingly, Mr Elias issued a summons in the Tribunal directed to Mr Farah requiring him to produce documents compulsorily.

5. [7]

   Mr Farah’s lawyers became involved on his behalf. They maintained the position that they could not meaningfully respond to the summons unless and until they were given access to the pleadings and evidence filed in the Tribunal proceedings, presumably upon the basis that the nature of those proceedings would reasonably inform the extent of Mr Farah’s obligation to produce the documents in question.

6. [8]

   Mr Farah initially declined to produce information with respect to the number of inspections he had carried out, the dates of his inspections, or notes and photographs relating to them. Eventually, however, Mr Farah agreed to produce items numbered 1 to 4 in the summons, accepting that Mr Elias’ request for these was for a legitimate forensic purpose. Mr Farah also ultimately provided his membership number from the Institute of Engineers as requested in item 5. He declined to produce documents sought in item 6 of the summons, being evidence of his then current professional indemnity insurance. Mr Elias would appear to have formed the view that he required that information due to the fact that the builder was uninsured.

7. [9]

   The contest was determined by the Tribunal. It relevantly ruled against Mr Farah with respect to his professional indemnity insurance details. Mr Farah thereupon filed his summons in this Court. That dispute has now been resolved. That is because Mr Elias indicated through his solicitor on 5 June 2015 that he would not press for production of the documents covered by item 6 in the summons if he were assured that Mr Farah was relevantly insured. That assurance was given four days later. Satisfied with that assurance, Mr Elias confirmed that he would no longer press for access to the documents covered by item 6.

8. [10]

   The only remaining issue in these proceedings is costs.

The dispute

1. [11]

   Mr Elias contends that Mr Farah’s ultimate concession that he had indemnity insurance forecloses his ability now to complain about the issue of the summons to produce or any argument concerning his obligation to comply with it. He maintains in effect that Mr Farah has conceded the correctness of his approach and that costs incurred in attempting to have Mr Farah comply with the summons should be evaluated by reference to his eventual capitulation.

2. [12]

   Mr Elias maintains in addition that Mr Farah acted unreasonably in prosecuting the present proceedings on the basis of the relevance of the documents in dispute when the real reason for opposing production was that Mr Farah’s insurer was withholding its consent. Mr Farah later conceded in uncontroversial terms that he held the appropriate insurance in any event.

3. [13]

   Mr Farah contends in contrast that Mr Elias’ conduct precipitated the need for him to commence proceedings in this Court. He reasoned as follows.

4. [14]

   From the earliest point in the dispute, Mr Farah took objection to the production of documents upon the grounds of relevance. On 23 February 2015 he lodged a formal objection with the Tribunal. He subsequently limited his objection to categories 5 and 6 but produced the balance of the documents sought in the summons. On 16 March 2015 Mr Farah filed written submissions with the Tribunal objecting to the production of the documents sought in those categories. The objection was adjourned. Mr Farah continued to demand access to the pleadings and evidence that had been filed in order to make further submissions on relevance. Mr Elias unreasonably refused to provide these to Mr Farah and continued to maintain that position up to and including the Tribunal hearing before Member Meadows on 17 March 2015. By reason of the Tribunal decision to reject Mr Farah’s objection to paragraphs 5 and 6 of the summons, Mr Farah was left with no alternative but to commence the present proceedings for judicial review. It was only by 19 June 2015 that Mr Elias effectively capitulated on the production issue, with the result that these proceedings were rendered redundant.

5. [15]

   At the heart of Mr Farah’s position is that it is apparent that the erstwhile contested documents were not and could never have been relevant to Mr Elias’ proceedings against his builder in the Tribunal and that the Tribunal erred by failing to consider that question when reaching its decision contrary to Mr Farah’s objection. Mr Farah also complains that the proceedings in the Tribunal with respect to his objections were afflicted by an absence of procedural fairness because he was refused access to pleadings or evidence upon which he would have been able to mount his submissions touching the questions of the relevance and the legitimate forensic purpose of the documents sought by Mr Elias. Mr Farah contended that success for him in this Court on the substantive issues raised in the proceedings was almost a certainty.

6. [16]

   For these opposing reasons, Mr Farah and Mr Elias each assert that the costs in this Court should be paid by the other.

Costs – general principles

1. [17]

   Unless the Court otherwise orders, costs ordinarily follow the event. Where there has been no hearing on the merits, however, there is no relevant event. Where both parties have acted reasonably in commencing and defending proceedings, a proper exercise of discretion might on one view mean that an appropriate order is that there should be no order as to costs: Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 625 per McHugh J as follows:

2. [18]

   Costs will ordinarily be awarded to a party where the Court can find that:

   1. (1)

      One party has acted unreasonably in prosecuting or defending the action;

   2. (2)

      One party was almost certain to have won had the case been tried;

   3. (3)

      One party has effectively surrendered to the other.

3. [19]

   The Court may also have regard to the conduct of a defendant prior to the commencement of the proceedings if such conduct precipitated the litigation: Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371.

4. [20]

   Section 60 of the Civil Procedure Act 2005 provides that

5. [21]

   Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 per Mason CJ, cited by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67]:

6. [22]

   These principles are given statutory force by s 98 of the Civil Procedure Act 2005 and UCPR 42.1.

7. [23]

   Contemporary attitudes to the proper exercise of the wide discretion with respect to costs indicate that “[t]he days when a plaintiff could, with impunity, mount an attack on several fronts, some with little prospect of victory, in the hope of a direct hit and the recovery of all costs must be put behind us”: Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 325 at [4] per Finkelstein J.

8. [24]

   In Turkmani v Visvalingam (No 2) [2009] NSWCA 279, relying heavily on what was said about the prior, but in substance indistinguishable, regime under the Supreme Court Act 1970 and rules, in James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [13], Hodgson JA, referring to an earlier judgment of his own said:

Consideration

1. [25]

   The context in which to apply these principles in the present case is one where Mr Elias sought the production of documents that could not have been of any discernible relevance to his dispute with his builder in the Tribunal and in circumstances where he was apparently seeking comfort by establishing, if he could, that at least someone connected with his failing project might have been insured.

2. [26]

   Mr Elias sought production of documents from Mr Farah by the issue of a summons to produce. The Tribunal summons was dated 10 February 2015. Items 5 and 6 in that summons were in these terms:

3. [27]

   After the skirmish in the Tribunal, referred to above, Mr Elias’ solicitor wrote to his opposite number on 5 June 2015 in the following terms:

4. [28]

   Counsel for Mr Farah sought to characterise that letter as a surrender. It is apparent that the letter at least made it clear that no further issue apart from costs of the proceedings in this Court remained in dispute.

5. [29]

   The matter was put beyond doubt on 19 June 2015 when Mr Elias’ solicitor wrote to his opposite number in these terms:

6. [30]

   I am not called upon in these proceedings to assess the correctness or otherwise of the Tribunal decision ordering Mr Farah to produce the documents sought in the summons. However, based upon the material before me it seems highly unlikely that Mr Farah’s professional indemnity insurance status could ever have had any relevance to the dispute joined between Mr Elias and his builder. It was argued on his behalf that the local council’s decision concerning whether or not the unauthorised or uncertified works would be demolished was a relevant issue because it potentially affected the question of the quantum of Mr Elias’ loss in his claim against the builder. That was said to be so inasmuch as the local council may have been interested in the outcome of the Tribunal’s decision and that the Tribunal’s decision may in turn have been influenced by the prospect that the works would or might be required to be demolished.

7. [31]

   As convenient as this argument appears at first sight I do not think it is correct. First, and obviously, the summons sought production of Mr Farah’s “current” insurance details. These would presumably have had no connection with the dispute between Mr Elias and the builder unless the period of insurance corresponded to the date of a relevant default by the builder. That connection has never been made on the evidence before me.

8. [32]

   Secondly, and more fundamentally, it is difficult to see that Mr Farah’s professional indemnity insurance status could have had anything at all to do with Mr Elias’ dispute with his builder. Mr Farah certified the structural integrity of the works by his certificate dated 12 August 2014. The certificate was in these terms:

9. [33]

   The question of whether or not Mr Farah was insured at the time he furnished the certificate in question could have had no relevance to that dispute. Mr Farah was not a party to those proceedings. No allegations had been raised against him concerning the accuracy or reliability of his certificate or in any other way at all. Mr Farah’s insurance status could not in my view even have been relevant as a source of collateral comfort to either the Tribunal or the local council in considering whether or not the works would or might have to be demolished. The adequacy of the structure erected by the builder would certainly have been relevant, and the certificate from Mr Farah would possibly have been critical to that determination. The prospect that Mr Farah may have been a worthwhile target of litigation is and was an entirely different matter.

10. [34]

    It is regrettable that these matters were not adverted to or given closer consideration when the summons was prepared. Items 1 to 4 in that summons appear to have been uncontroversial and have accordingly attracted no attention in the dispute before me. Items 5 and 6 are different and were always likely to be contentious. Earlier attention to matters that now seem obvious would undoubtedly have obviated the current unseemly dispute.

Conclusion and Orders

1. [35]

   In my opinion, whatever view one might have of the reasonableness of his position, Mr Farah is correct in contending that he is entitled to his costs. Accordingly I make the following order:

   1. (1)

      Order the first defendant to pay the plaintiff’s costs of and incidental to the summons.