Chocron v Onkoud

These proceedings commenced on 15 May 2017. They seek possession of land. The plaintiff is the brother of the defendant's former husband. The plaintiff lives in Argentina and did so, as was disclosed in the Statement of Claim, when it was filed. The defendant defends the claim by suggesting that the claim is a fraudulent one and has been concocted by the plaintiff and his brother to put pressure on the defendant in relation to any residual property matters remaining from the dissolution of the marriage. It is not necessary for me to consider further the substantive claim in that regard.

By a Notice of Motion filed 23 July 2018 the defendant seeks an order for security for costs in the sum of $40,000 on a number of bases but principally because the plaintiff resides outside the jurisdiction. The relevant rule is Uniform Civil Procedure Rules 2005 (NSW) 42.21 which provides:

A number of grounds are put forward in the Notice of Motion for seeking security for costs, including assertions that the claim is not a genuine one and it does not have reasonable prospects of success, and also that the proceedings have been unnecessarily delayed by the plaintiff.

Whilst some of those matters may be considered on an application for security for costs they are subordinate in the present matter to the fact that the plaintiff resides outside the jurisdiction, and in a jurisdiction where it is likely to be very difficult or impossible to enforce a costs order in the event that the defendant is successful in the proceedings.

There is affidavit evidence filed by the solicitor for the plaintiff where the solicitor says that she does not recall the issue for security for costs having been raised between the time of the filing of the Statement of Claim and 29 June 2018 when the matter was before me for directions. The matter was raised on that occasion, and I directed that a Notice of Motion was to be filed if security for costs were to be sought. It was that direction which led to the filing of the present Notice of Motion.

The only affidavit filed in support of the Notice of Motion is an affidavit by the defendant herself. The bulk of the material in that affidavit is directed to the substance of the proceedings with a view to showing that the proceedings are either fraudulent, are being brought for an improper purpose, have little prospects of success or a combination of those matters. The affidavit merely asserts that the legal costs are $40,000, presumably because that is what she has been advised by her solicitor. The solicitor has not filed any affidavit evidence demonstrating his expertise in being able to estimate the costs of proceedings by reason of his experience in conducting litigation in this and other courts.

I have been, however, provided with a schedule of what are said to be the legal costs for the defendant in the matter. That schedule is as follows:

There are eleven items on that schedule, but the majority of them concern costs which are said to have already been incurred. Those costs are stated in rounded terms and I infer that they should be regarded as estimates with no form of cost assessment having been undertaken.

There are a number of authorities that generally speak with the one voice concerning delay in making applications for security for costs. I have regard to what Mason P said in Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205 at [55]; to what Schmidt J said in Karl Suleman Enterprizes Pty Ltd (in liquidation) v Pham [2010] NSWSC 886; and to what Black J said in Re Colorado Product Pty Ltd (in provisional liquidation) [2013] NSWSC 611.

Those authorities all hold that, in the ordinary course where there is a delay in seeking security for costs, the security ordered should represent only the future unincurred costs and should not include those costs that have already been expended. One reason put forward for that is the unfairness of allowing the plaintiff to incur costs without being put on notice that an application for security will be made. Nothing in this case suggests that the position ought to be any different.

There are said to be five categories of future costs being four necessary future conferences totalling four hours, two further court attendances of two hours, a two day hearing, preparation for hearing and the costs of this application.

The matter now has a hearing date on 10 and 11 December 2018. The evidence is complete. In the ordinary course there will be no further need for further court attendances until the hearing. For that reason I intend not to include Item 4 on the schedule.

There is no evidentiary basis to explain the need for the four further conferences (item 2) but I can accept that, in the ordinary course even though the evidence is complete, perhaps two to three further conferences including a conference with counsel would be required. I have been provided with an e-mail dated 18 July from counsel who has been engaged in the matter. Counsel has indicated in that e-mail that his rates are $350 per hour plus GST and $3,500 plus GST per day. He says that he would ordinarily charge a two day brief on hearing fee as well as two to four days preparation depending on how the matter has been set up and what is required. Although this e-mail is dated 18 July it was not apparently made available to the lawyers acting for the plaintiff until during the hearing of the present application.

The Notice of Motion prompted an affidavit from the solicitor for the plaintiff which set out that solicitor’s own estimate of the costs involved in the matter and an estimate of future costs. That ultimately led to an open offer being made by the solicitor for the plaintiff in the sum of $15,000 for security for costs. In fairness to the solicitor she was not aware that counsel briefed had provided information regarding his charge out rates.

An allowance has been made on the defendant’s schedule for a two day hearing at the barrister's daily rate amounting to $7,000 together with $5,000 for the solicitor's attendance in court on those two days (item 9). Regrettably I have not been provided with any evidence about what the usual charge-out rate for the solicitor is, but a figure of $5,000 for two days does not seem unreasonable in the matter.

An allowance has been made for what must amount to two days of full hearing for the barrister and an amount of preparation for the solicitor in that regard (item 10). I do not consider that the size of this matter, given the number of affidavits that have been served, warrants more than one day being allowed to counsel for preparation of the matter.

Item 11 includes costs for the bringing and the hearing of this present application in an amount of $2,500.

Doing the best I can on the limited information available to me I consider that an appropriate figure for future costs for which security should be provided including the costs of this present application, should be in the figure of $22,500. Given the way this present application was dealt with I consider that the appropriate costs order in respect of the Notice of Motion is that the costs should be costs in the cause.

The security is to be provided in two tranches: the first amount in the sum of $15,000 to be paid by 31 August 2018; and the second amount of $7,500 to be paid by 28 September 2018.