NHB Enterprises Pty Ltd v Ghaly

1. [1]

   On 24 June 2021, I dismissed a charge of contempt against Mr Rimon Ghaly (Mr Ghaly) which had been made by NHB Enterprises Pty Ltd and Finn Pharmaceuticals Pty Ltd (the Applicants). These reasons concern the costs of those proceedings and assume a familiarity with my reasons in NHB Enterprises Pty Ltd v Corry (No 7) [2021] NSWSC 741 (the principal judgment). The charge against Mr Ghaly was specifically dealt with at [367]–[432] of those reasons.

2. [2]

   Costs are in the discretion of the Court with the usual rule being that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. Consistent with the usual rule Mr Ghaly seeks his costs. In submissions filed in support of his application for costs, it was put that, in circumstances where Mr Ghaly has been “wholly successful in defeating the motion”, the Applicants should be required to pay his costs of and incidental to the motion.

3. [3]

   It was emphasised by Mr Ghaly that not only did he succeed by reason of and by reference to the terms of settlement of the 2019 Proceedings, but in terms of the case put against him in relation to retention of documents, the Applicants did not pursue their claim in relation to a number of documents, and with respect to those that they did pursue, the only three documents in relation to which they succeeded were documents which Mr Ghaly conceded were caught by the terms of the April 2018 Consent Orders.

4. [4]

   In relation to these three documents, Mr Ghaly did not succeed in his defence that they had been inadvertently retained. At [425]–[427] of the principal judgment, I said:

5. [5]

   In the principal judgment, I accepted that much of Mr Ghaly’s evidence was clearly designed to give a false impression of innocence on his part, when quite the opposite was true (at [430]), and, at [432], I did not accept:

6. [6]

   On the other hand, my conclusion on the question of inadvertence and my adverse finding as to Mr Ghaly’s credit were ultimately immaterial given that his argument by reference to the terms of settlement was a complete answer to the charge against him.

7. [7]

   The Applicants submit that, notwithstanding their failure to succeed against Mr Ghaly, the usual rule that costs follow the event should be departed from. They submit that Mr Ghaly should either be ordered to pay their costs or that there should be no order for costs as between the Applicants and Mr Ghaly.

8. [8]

   The Applicants have drawn attention to the decision of the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack) and that of the Court of Appeal in Maestrale v Aspite [2014] NSWCA 182; (2014) 13 ASTLR 262 (Maestrale). In Oshlack at [69], McHugh J said (omitting footnotes):

9. [9]

   Although McHugh J was in dissent in Oshlack, these observations were not controversial: see Arian v Nguyen [2001] NSWCA 5; (2001) 33 MVR 37 at [36] (Arian), in turn citing Mannix v Loumbos Pty Ltd [2000] NSWCA 32; see also Maestrale at [84].

10. [10]

    The Applicants placed particular reliance on Arian, in which the primary judge had ordered an appellant who, as plaintiff, had only succeeded in recovering certain out of pocket expenses, to pay the respondent’s costs in circumstances where she considered the plaintiff to be guilty of "conscious exaggeration" and a "conscious effort to deceive both the [respondent and the Court] in respect of the claims made": at [34].

11. [11]

    The Court of Appeal held that the order made was within the primary judge’s discretion but interfered with the exercise of that discretion to make a different costs order on the basis that the primary judge had not taken into account a settlement offer which the appellant had made and bettered (slightly) in the final judgment. In the result, Ipp AJA (with whom Foster AJA agreed) ordered that “a fair result would be achieved were the respondent to be ordered to pay the appellant's costs up to and including the first day of the trial, and the appellant ordered to pay the respondent's costs of the rest of the trial”: at [49]. In this context, the Court can still be seen as penalising the appellant for what the primary judge described as "conscious exaggeration" and a "conscious effort to deceive both the [respondent and the court] in respect of the claims made", albeit not to the same extent as had the primary judge.

12. [12]

    Ipp AJA observed, at [37]–[38], that:

13. [13]

    The Applicants placed strong reliance on Mr Ghaly’s evidence as to his interaction with Mr Corry on the day of the execution of the Second Search Order, about which he was extensively cross-examined and which led to my strongly adverse credit findings. They also pointed to his claims, which I rejected, only inadvertently to have retained documentation belonging to the Applicants. They submitted that Mr Ghaly’s improper conduct “inevitably and unnecessarily prolonged the hearing and increased expenses”. Mr Ghaly’s cross-examination occupied one day of the trial.

14. [14]

    The Applicants also submitted that the argument upon which Mr Ghaly ultimately succeeded, namely in relation to the terms of settlement of the 2019 Proceedings, was “refined” in the course of the hearing, as reflected in the Applicants being granted and taking up leave to file further written submissions in respect of that argument.

15. [15]

    In response, Mr Ghaly submitted that the Applicants’ submissions glossed over the fact that the Contempt Motion should never have been brought against him. This was the effect of the settlement and the Applicants’ agreement to have the 2019 Proceedings dismissed as against Mr Ghaly. Whilst there may have been some refinement of the argument, it was submitted that the essence of the argument was always explicit and indeed a written submission had been made by Mr Ghaly in the course of the interlocutory hearing before Parker J (see NHB Enterprises Pty Ltd v Corry [2019] NSWSC 1659) that the releases contained in the terms of settlement “on their face release Mr Ghaly from the allegations made by [the Applicants] in the 2019 proceedings and [the Applicants] now have no right to insist on the enforcement of the April 2018 Orders through the Contempt Motion in these proceedings or otherwise”.

16. [16]

    Mr Ghaly also submits that whilst it is correct that much attention at trial was directed to his actions on the day of the execution of the Second Search Order, that cross-examination was partly directed towards seeking to establish the charges against Mr and Mrs Corry as well as Mr Ghaly. Reference was made in this regard to the fact that the Applicants originally sought to have Mr Ghaly called in their case against Mr and Mrs Corry. It was also submitted, correctly, that the actual charge against Mr Ghaly (as opposed to some of those against Mr and Mrs Corry) did not in fact involve his actions on the morning of the execution of the Second Search Order.

Consideration

1. [17]

   On balance, I do not consider it appropriate to depart from the usual order, namely that costs follow the event, notwithstanding my adverse credit findings against Mr Ghaly.

2. [18]

   He succeeded on an argument turning on the construction of terms of settlement which the Applicants had entered into with him. Whilst his argument was refined in the course of hearing, that is by no means an unusual characteristic of litigation, especially in the oral tradition. The argument was not without complexity, as the reasons in the principal judgment make plain. Moreover, the refinement of a legal argument could scarcely be described as involving disqualifying misconduct of the kind described in some of the cases referred to above.

3. [19]

   Mr Ghaly found himself in a lengthy trial. He had sought to agitate his construction argument based on the settlement terms on a summary basis before Parker J and also sought a separate hearing of the charge against him. Both of these courses were opposed for perfectly legitimate reasons but the Applicants must have appreciated that one forensic consequence of Mr Ghaly being caught up in proceedings which were likely to be lengthy because of the multiplicity of charges against Mr Corry as well as the charge against Mrs Corry was that, if he succeeded in his construction argument, they would be liable for his costs.

4. [20]

   As to his cross-examination regarding the events of the morning of the Second Search Order, whilst Mr Ghaly was not an impressive witness, the principal thrust of that cross-examination was directed to advancing the case against Mr and Mrs Corry. Indeed, that conclusion is inescapable when one has regard to what ultimately was an extremely narrow charge against Mr Ghaly. As I pointed out in the principal judgment, a much more extensive case could have been advanced against him (subject to his contractual defence) but, for whatever reason, it was not.

5. [21]

   The bulk of oral submissions in the context of the charge against Mr Ghaly were concerned with his defence based upon the terms of settlement and, to the extent submissions were made in respect of particular documents, it must be recalled that Mr Ghaly in fact succeeded in repelling the case made against him in relation to the two documents which he did not concede as having fallen within the terms of the April 2018 Orders.

6. [22]

   Insofar as reliance was placed on Arian, decisions on costs classically turn on their own facts. Arian was a case where the successful party about whom strongly adverse credit findings had been made was the moving party in the proceedings and was found to have brought a seriously exaggerated claim. That is a very different case from the present, where Mr Ghaly had entered into a settlement agreement with the Applicants which purportedly released him from further claims only to find himself, within a matter of months, as the respondent to a motion for contempt of court in relation to the very conduct which had been the subject of the settlement.

7. [23]

   For all of these reasons, the Applicants must pay Mr Ghaly’s costs of the proceedings.