Mohareb v Jankulovski [2013] NSWSC 850 (27 June 2013)

Last Updated: 28 June 2013

Supreme Court New South Wales

Case Title:	Mohareb v Jankulovski
Medium Neutral Citation:	[2013] NSWSC 850
Hearing Date(s):	07/05/2013, 08/05/2013
Decision Date:	27 June 2013
Jurisdiction:	Common Law
Before:	Harrison AsJ
Decision:	(1) The plaintiff's notice of motion filed 12 February 2013 is dismissed. (2) The plaintiff is to pay the defendants' costs of the motion filed 12 February 2013 on an ordinary basis. (3) Paragraph 8 of the further amended statement of claim filed 31 May 2012 is struck out. (4) Leave is granted to the plaintiff to replead his claim in relation to misleading or deceptive conduct only. The balance of the further amended statement of claim remains but is to be incorporated into the second further amended statement of claim. A second further amended statement of claim is to be filed and served within 14 days. (5) The plaintiff is to provide $5,000 for security for costs within 14 days. If there is no agreement between the parties as to its form and the manner it should take, the matter is referred to the Registrar for determination. (6) The proceedings are stayed until the security is given. (7) Costs of the defendants' motion filed 14 December 2012 are costs in the cause. (8) The defendants are to file a further amended defence within 28 days. (9) The plaintiff is to file a reply within 14 days after the further amended defence is filed. (10) Costs of the plaintiff's motion filed 22 August 2012 are costs in the cause. (11) The matter is listed for directions on at 9.00 am before the Registrar on 12 July 2013.
Catchwords:	PROCEDURE -
Legislation Cited:	Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005
Cases Cited:	A v New South Wales [2007] HCA 10; (2007) 233 ALR 584; (2007) 81 ALJR 763 Banque Commerciale SA En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Bhagat v Murphy [2000] NSWSC 892 Byrnes v Fairfax Publications Pty Ltd [2006] NSWSC 251 Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519 Drummoyne Municipal Council v Australian Broadcasting Corp (1990) 21 NSWLR 135 General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125 Gould & Anor v Vaggelas & Ors [1984] HCA 68; (1984) 157 CLR 215 Hall-Gibbs Mercantile Agency Ltd v Dun [1910] HCA 66; (1910) 12 CLR 84 Hamade v State of New South Wales [2011] NSWSC 459 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 Horrocks v Lowe [1975] AC 135 Jebeli v Modir and Golyaei [2005] NSWCA 184 Leichhardt Municipal Council v Green [2004] NSWCA 341 Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 NAB v Meyers [2008] NSWSC 247 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Petritsis v Hellenic Herald Pty Ltd [1978] 2 NSWLR 174 Robinson v Nishtom Pty Limited & Anor [2009] NSWSC 36 Sydney City Council v Geftlick [2006] NSWCA 280 Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1 Welzel v Francis [2011] NSWSC 477
Texts Cited:	Australian Defamation Law and Practice (ADLP) LexisNexis Australia
Category:	Procedural and other rulings
Parties:	Nader Mohareb (Plaintiff) Emil Jankulovski (First Defendant) Emil & Sons Pty Ltd t/as Inducta Engineering (Second Defendant)
Representation
- Counsel:	Counsel: M Dulhunty (Defendants)
- Solicitors:	Solicitors: N Mohareb (Plaintiff in person)
File Number(s):	2012/68684

JUDGMENT

1. HER HONOUR: There are three notices of motion before the Court, two by the plaintiff filed 22 August 2012 and 12 February 2013 and one by the defendants filed 14 December 2012. It is common ground that the plaintiff's motion dated 12 February 2013 should be dealt with first.

2. The plaintiff is Nader Mohareb. Mr Mohareb was not legally represented at this hearing. The first defendant is Emil Jankulovski. The second defendant is Emil & Sons Pty Ltd t/as Inducta Engineering. Emil Jankulovski is the authorised representative of the second defendant. Mr Jankulovski was represented by counsel and a solicitor, the solicitor being his wife.

3. The plaintiff relied on his affidavits affirmed 16 April 2012, 12 February 2013 and 18 February 2013. The defendant relied on the affidavit of Marko Jankulovski affirmed 7 March 2013, the affidavit of Dr Serra Cimilli Erkmen affirmed 7 March 2013, the affidavit of (Joe) Zhou Wu affirmed 8 March 2013 and the affidavit of Emil Jankulovski affirmed 8 March 2013. All deponents were cross-examined.

4. By notice of motion filed 12 February 2013, the plaintiff seeks an order for specific performance of the terms of an agreement by way of settlement of these proceedings made on 4 February 2013 including orders that: (a) the defendants pay to the plaintiff the sum of $20,000 forthwith; (b) the defendants send the plaintiff's clients a letter of retraction and apology as per the agreed upon draft letter; (c) that all previous costs orders in these proceedings be vacated. If a settlement was reached on 4 February 2013, it will not be necessary to consider the other notices of motion.

5. There have been four prior attempts by the parties to settle their dispute, on 5 to 7 March 2012, 13 November 2012, 28 November to 3 December 2012 and 21 December 2012. The initial attempt to settle occurred on 5 March 2012 when Mr Jankulovski emailed Mr Mohareb that he was "happy to put an end to the dispute".

6. The main issue preventing a settlement being reached is the amount of contact or support that Mr Jankulovski and his staff would be required to give Mr Mohareb in the future. The first proposal did not reach agreement after Mr Jankulovski requested that Mr Mohareb not contact himself or anyone at Inducta Engineering while he sought legal advice and for him to direct all correspondence to Mr Jankulovski's legal representative. The second proposal did not reach an agreement as Mr Mohareb wanted the same terms as he had proposed in the first agreement and this was not acceptable to Mr Jankulovski. The third proposal failed when Mr Mohareb would not accept the condition that any contact was only to be via posted mail nor the wording of the proposed letter of apology and retraction to his client. The fourth proposal was not responded to by Mr Mohareb.

7. It is convenient that I now briefly record my observations of both Mr Mohareb and Mr Emil Jankulovski. I observed them closely while giving evidence and being cross examined.

Mr Mohareb

8. I carefully observed Mr Mohareb when he was being cross-examined. I found him to be an unimpressive witness. While this Court made allowances for him being self-represented, he spoke over the top of witnesses, counsel and the Court. He was argumentative and would not confine his answer to the question asked but rather took it as a further opportunity to reinforce his case. Even when he was asked to moderate his behaviour, he did not do so. While most of the evidence he gave is contested by Mr Jankulovski, there is some common ground. I have analysed both parties' evidence to ascertain what occurred.

Mr Emil Jankulovski

9. I carefully observed Mr Emil Jankulovski when he was giving evidence and being cross examined. Mr Jankulovski was quietly spoken. He answered the questions he was asked, even when he was asked the same question a number of times during cross examination when the questions were not in proper form. At times he had to interpret and anticipate the question that Mr Mohareb was asking him. Generally, I found his evidence to be truthful. However, at times he sought to be an advocate for his case.

Motion (1)(a) was a settlement reached between the parties on 4 February 2013?

10. It is common ground that on 4 February 2013 at about mid-morning Mr Mohareb turned up at the offices of Inducta Engineering unannounced. He left between one to two hours later. Most of the contents of that conversation ate dispute. Towards the end of the conversation they agree certain things were done and subsequently on the same day they agree that they had a telephone conversation but the contents of that are in dispute. Finally, there is the exchange of emails, which speak for themselves.

11. Mr Mohareb walked to Mr Jankulovski's office with the intention of trying to serve the notice of motion without necessarily having to show up in person in his office. He intended to drop it in Mr Jankulovski's letterbox, if there were any located at the entrance to the building on the street level, or on level 10. There is no mailbox for Inducta Engineering either at street level or on level 10 of that building. Inducta Engineering has a GPO Post Office box. However, at this time Inducta Engineering's court documents did not provide any address for service of documents.

12. At the time Mr Mohareb entered the office of Inducta Engineering, three employees were working in the office. A plan of the layout of the offices is shown in Ex A. They were Marko Jankulovski, Dr Serra Cimilli Erkmen and (Joe) Zhou Wu. Marko Jankulovski is the son of Emil Jankulovski. They all provided affidavit evidence as to what occurred and were cross-examined. None of them heard the conversation. I will refer to their evidence later in this judgment.

13. Mr Mohareb says (Aff, 12/2/13 [8]) that he entered the office and saw Mr Jankulovski sitting at his desk. Mr Mohareb walked up to him, Mr Jankulovski looked up and recognised Mr Mohareb. Mr Mohareb stated that he looked around the office, he looked at Dr Erkmen but he didn't get a response from her and that no-one asked him where he was going (T 33.17-19). Mr Mohareb indicated by gesture that he had a court document to serve and left it on Mr Jankulovski's desk. Mr Jankulovski denies Mr Mohareb's version and says (Aff, 8/3/13 [2.b]) that his desk and office are not visible from the office entrance and for Mr Mohareb to enter his office Mr Mohareb had to pass by two people working in the open plan area.

14. Mr Jankulovski's version (Aff, 6/2/13 [5]) is that on Monday, 4 February 2013, Mr Mohareb appeared in person at the Inducta Engineering premises uninvited. Mr Mohareb just walked into his office and appeared in front of his desk. Mr Mohareb served him with a filed notice of motion with a hearing date of 8 February 2013, which is the same date for hearing of the notice of motion to strike out the amended statement of claim. He was taken by surprise and was shocked as Mr Mohareb appeared before him dressed in his shorts, while he was in the middle of his work. Mr Mohareb was standing in front of Mr Jankulovski's desk while Mr Jankulovski was seated. Mr Jankulovski says that when he saw Mr Mohareb, he felt anxious and embarrassed that he had to deal with Mr Mohareb in person (Aff, 8/3/2013 [8]).

15. Mr Mohareb's version is that when he proceeded to turn back to leave the office in the same way he came in, Mr Jankulovski asked him to wait and not leave immediately. Mr Jankulovski asked him to come in for a second (Aff, 12/2/13 [9]).

16. Mr Jankulovski denies these allegations and says that Mr Mohareb did not proceed to turn back to leave Inducta Engineering's office after Mr Mohareb had given him the document. He says that Mr Mohareb did not indicate in any way that he was leaving Inducta's premises and remained standing in front of his desk.

17. Mr Mohareb's version is that Mr Jankulovski read through the document and as Mr Jankulovski did so, he (Mr Mohareb) did not see any signs of shock or outrage on him (Aff, 12/2/13 [10]). Mr Jankulovski says he did not read the document; he just looked at it for several moments. He realised it was some kind of court document. Mr Jankulovski says it was not possible for him to read several pages of text with Mr Mohareb standing in front of his desk (Aff, 8/3/13 [2.d]).

18. Next Mr Mohareb says that Mr Jankulovski said, "And how do you propose to prove your allegation? I will be simply saying that the Costs Assessor has already examined this and did not find anything untoward." Mr Jankulovski denies having made this remark and says that he does not know the word "untoward" or its meaning. He denies any discussion about the document and says that it is a fabrication as he did not read the document, nor was he aware of its contents (Aff, 8/3/13 [2.d]). It is more probable than not that Mr Jankulovski did not read the contents of the document, as one would expect him to have reacted differently given its contents. The notice of motion alleges that the defendants and their barrister had fraudulently claimed costs they were not entitled to with the "express premeditated" intention of subverting the course of justice by using the costs order to intimidate Mr Mohareb into discontinuing proceedings and sought an order that all documents relating to the defendants' application for a costs assessment be referred to the police for investigation.

19. At this time Mr Jankulovski says that he felt obliged to talk in a friendly manner and negotiate settlement of the defamation claim instantly because the defamation case has been before the Supreme Court for more than one year. So far he had spent more than $20,000 defending the action (Aff, 6/2/13 [9]). During the conversation, which lasted over one hour, Mr Mohareb shouted at him on a few occasions. Dr Erkmen, Mr Wu and Marko Jankulovski were working in the open area of the office and all heard Mr Mohareb raising his voice even though the door to Mr Jankulovski's office was closed.

20. During this conversation, Mr Jankulovski says that Mr Mohareb said, "I read carefully the transcript of the last year hearing, and I found evidence that you were lying." To Mr Jankulovski this was a subtle but clear threat, and he felt very intimidated, bullied and felt that it was a better option to settle under any terms. Mr Mohareb also said, "I paid substantial amount of money to settle another court case because of you and your barrister. If it was not for you I would have never paid that money." (Aff, 6/2/13 [12])

21. Mr Mohareb says that he then said, "I don't believe that it is the costs assessor's job to satisfy himself if the work was done by Ms Dulhunty or, as I am alleging, by someone else. Furthermore, an important component of the evidence I'm relying upon is contained in the transcript of the hearing of the 4 May 2012" (Aff, 12/2/13 [11]). Mr Mohareb says that Mr Jankulovski then replied, "Look, I think this has been going on for too long now and is costing both of us too much and I believe it's time for us to resolve it, between us, once and for all". Mr Mohareb replied "Well, you've said that several times - four offers of settlement to be precise - before and every time we discuss a possible settlement and actually reach an agreement you turn around and change your mind and renege on what was agreed. For this reason I should actually be recording or filming this conversation." (Aff, 12/2/13 [12]) Mr Jankulovski denies that this discussion took place (Aff, 8/3/13 [2.e]).

22. It is common ground that the following conversation then took place. Mr Mohareb says that Mr Jankulovski replied "I know, I know... but this time I really would like to resolve it once and for all. Look, to prove it to you I will give you right now without reservation on my part two licences to all of Inducta Engineering software." While saying this Mr Jankulovski turned to his computer, connected the first of the two licence dongles to his computer, brought up the list of all the Inducta Engineering software on his computer screen and ticked all the boxes next to each of the Inducta Engineering software and authorised all the licences to the connected dongle. He then repeated this whole process for the second licence dongle (Aff, 12/2/13 [13]). Next, he connected a USB storage device to his computer and transferred to it copies of each of the Inducta Engineering programs. He then handed Mr Mohareb the two dongles and the USB saying: "Here it is, this is all yours now. And this is just for starters and to prove to you my goodwill. So what do you think?" Mr Mohareb says this did not come as any surprise to him because it had already been part of previous written offers of settlement which Mr Jankulovski had proposed. Mr Jankulovski does not recall asking Mr Mohareb what he thought (Aff, 8/3/13 [2.f]).

23. Mr Mohareb says that he then replied to Mr Jankulovski by saying, "Any 'fair-dinkum' settlement should not have any restriction on the resumption of the provision of technical support to the Inducta Engineering software." He said this because, except for the very first offer (out of a total of four offers in all before this conversation) for settlement, the subsequent two offers had excluded any resumption of the provision of technical support to the Inducta Engineering software. In addition a specific clause forbade him from making any contact with anyone at Inducta Engineering (Aff, 12/2/13 [16]).

24. Mr Mohareb says that he made it clear to Mr Jankulovski that, as far as he was concerned, the resumption of technical support had to be part of any offer of settlement which would be acceptable to him. To this Mr Jankulovski replied: "That is fine with me." (Aff, 12/2/13 [17])

25. It is Mr Mohareb's view that during the course of their discussion, Mr Jankulovski was conciliatory and displayed true regret for what had happened and that he (Mr Mohareb) was completely disarmed and won over in sympathy with his attitude. And for this reasons he said, "Emil, I truly appreciate your attitude and everything you're saying, but at this late stage of our dispute it is inevitable that a settlement will have to include a certain amount of monetary compensation. But because of your conciliatory attitude and the true regret you've expressed today - which has brought me right down from my highly strung feelings - I am only asking for the amount which this dispute has cost me so far, even though it was my intention to claim much more during the course of the court proceedings." (Aff, 12/2/13 [18])

26. To this Mr Jankulovski then asked Mr Mohareb to tell him how much he was seeking in terms of monetary compensation. Mr Mohareb said, "$20,000". Mr Jankulovski replied, "I'll pay it, even though I'm not happy about it, but I'll do it because this has been going on for too long and costing all of us too much in terms of time, money and distress." While saying this Mr Jankulovski took out his chequebook, wrote a cheque, signed it and handed it over to Mr Mohareb (Aff, 12/2/13 [19]). It is clear that Mr Jankulovski did write a cheque in the sum of $20,000 and gave it to Mr Mohareb.

27. According to Mr Mohareb, Mr Jankulovski then said, "I think we've agreed on everything now including the letter of retraction and apology which we discussed previously. Can you please take care of drafting the Settlement Agreement as we have just discussed and email me a copy so that I can send it back to you in time for you to take it to court for next Friday hearing. I'd like you to file it with the court and have this matter terminated once and for all." (Aff, 12/2/13 [20])

28. Mr Jankulovski says (Aff, 6/2/13 [10]) that in spite of his legal advisers' assurance that he has a good case, he had been losing faith in the legal system and in that particular moment when he saw Mr Mohareb towering over his desk he felt very pessimistic. Mr Jankulovski thought that Mr Mohareb would continue this case indefinitely, and make him spend much more money and time, and potentially harm or even destroy his business. He admitted that he was eager to use this situation to finalise the litigation before the Supreme Court by reaching some sort of settlement. He was also afraid that this situation might escalate and get out of control so, therefore, he tried to lead the conversation in a very friendly manner as he believed that Mr Mohareb wanted to and was going to settle in good faith (Aff, 6/2/13 [11]).

29. Mr Jankulovski says that in giving Mr Mohareb the software and a cheque for a substantial amount of money, he acted against his better judgment as he was led to believe that they had settled the defamation case against him, even though he had nothing in writing by Mr Mohareb to confirm the settlement. Mr Jankulovski felt fearful and says that he was coerced, intimidated and was led to believe that he had no option but to pay the money, provide Mr Mohareb with the computer products Inducta Engineering sells and he verbally undertook to be in a good business relationship with Mr Mohareb (Aff, 6/2/13 [20]).

30. Mr Mohareb's version (Aff, 12/2/13 [21]) of the conversation concluding their discussion on 4 February 2013 is in dispute. Mr Mohareb says that he then said to Mr Jankulovski, "Are you saying that you'd like me to do all this on my own? Are you sure you don't want to have someone present on your behalf in court as well?" Mr Jankulovski replied "What for? This matter has already cost me too much. It's time for us to put it to rest. You go to court on Friday and take care of finalising this matter once and for all on both our behalf." On this he shook hands with Mr Jankulovski and left his office with the firm belief that they had both shook hands to seal an agreement, which was acceptable to both of them. Mr Jankulovski denies this conversation but admits the shaking of hands. Mr Jankulovski says that the handshake did not did not seal any agreement, it was only a gesture of good will, showing willingness to try to settle the dispute (Aff, 8/3/13 [2.g]). Mr Mohareb then left the office.

31. Dr Erkmen, Zhou (Joe) Wu and Marko Jankulovski were all in the office when Mr Mohareb was in Mr Jankulovski's office. They were all cross examined and I accept their evidence as being truthful. They all heard Mr Mohareb shouting or raising his voice then he would quieten down. Then he would once again raise his voice and then quieten down. This occurred several times.

32. When Mr Mohareb left his office, Mr Jankulovski informed his legal advisers of the settlement with Mr Mohareb. He was advised that Mr Mohareb had acted unethically and had forced him into an unfavourable settlement (Aff, 6/2/13 [21]). Mr Jankulovski's wife is acting as his solicitor.

33. On the same day, at about 3:30 pm, Mr Mohareb says he received a call from Mr Jankulovski on his mobile phone. It is not in dispute that Mr Jankulovski made a telephone call to Mr Mohareb later that afternoon but the contents of conversation is in dispute (Aff, 12/2/13 [22]).

The latter telephone conversation

34. Mr Mohareb's version of this conversation is that Mr Jankulovski said, "Nader, could I please ask you not to bank the cheque until I've had the chance to receive from you the final wording of what we've agreed upon earlier today?" Mr Mohareb replied "A bit late Emil, I've just walked out of my local bank branch where I just deposited the cheque into my account." Mr Jankulovski replied, "I'll have to cancel that cheque then, that's easy to do". He replied, "I know it's easy to [do] that Emil, but I'm not sure what you're worried about. Your voice is very different from what it was when we were speaking in your office. You sound worried, fearful and panicky, and it sounds to me that you've spoken to someone who has succeeded in sowing doubts in your mind. This is not the first time this has happened and it is the reason why every time we have discussed settlement you change your mind. It seems to me that this is happening to you despite yourself and makes you keep on 'flip flopping' all the time. If you are truly serious about resolving this matter with me you have to stop talking with and listening to others who every time succeed in sowing doubts in your mind about the decisions you've made and influence you to make you want to try and back track and renege. As far as I myself am concerned you have nothing to worry about. I have no intention of deceiving or playing games with you. What we've agreed and shook hands upon in your office is exactly what will be reflected in the written agreement and you have my word on that." Mr Mohareb says that Mr Jankulovski seemed to calm down and be reassured and said "Yes OK, no worries that's fine, it's all going to be OK."

35. Mr Jankulovski's version is that the telephone conversation was very short. He said that when he told Mr Mohareb that he had cancelled the cheque, Mr Mohareb started shouting at him. He said, "You are talking to somebody. Who are you speaking with? Do not talk to anybody else, talk only to me." Mr Jankulovski said that the conversation ended and he hung up. He did not want to hear Mr Mohareb shouting at him (Aff, 6/2/13 [26-27]; Aff. 8/3/13 [2.h]).

36. It is clear that sometime after Mr Mohareb left and prior to 4.30 pm that day, Mr Jankulovski phoned Mr Mohareb and told him that he had cancelled the cheque in the sum of $20,000. I accept that the terms of the conversation was probably after Mr Jankulovski told Mr Mohareb he had cancelled the cheque, Mr Mohareb replied with words to the effect, "A bit late Emil, I've just walked out of my local bank branch where I just deposited the cheque into my account." I do not accept that Mr Jankulovski would have stayed on the phone to hear what Mr Mohareb asserts he said.

Mr Mohareb's latter email of 4 February 2013

37. The next part of what occurred is clear. There was an exchange of emails. Mr Mohareb then wrote and sent Mr Jankulovski a confirmation email, at around 4.30 pm with the draft written details of what they had agreed upon earlier in the day. This email reads:

"Outline of our agreement

Hi Emil,

This is further to our meeting and discussion in your office earlier today, and to confirm in broad outline the terms of the agreement we have both reached today in order to settle the Supreme Court matter on an amicable basis.

As I understand them, the broad outlines of the terms we both agreed upon are:

1) You have agreed to send a letter of retraction and apology to my Clients Sonenco Apartments and Saab Corp, with the following proposed wording:

"Dear Sirs, this is further to my two letters to you early last year and dated 23rd February 2012 & 4th April 2012. I would like to inform you that I now believe that those letters were sent to you as result of an error of judgement on my part. Accordingly, I would now like to retract what I had stated in those two letters and apologise for any inconvenience this may have caused you.

Regards....."

2) You have agreed to pay me or my company NM Structural Engineers P/L - by way of compensation - the amount of $20,000. I acknowledge that I have - as a good will gesture on your part - already received a cheque for that amount from you.

3) As a good will gesture on your part, you have also offered and already provided me with 2 USB dongles with user licences for all the programs that comprise the total suit [sic] of Inducts Engineering software.

4) By mutual consent we have both agreed to put the current dispute behind us and to resume the professional and commercial relationship we had, as it was prior to the onset of the dispute.

Based on the above I have agreed to discontinue the action I had initiated in the Supreme Court, with each party paying their own costs including any costs orders like the cost order awarded in your favour on 4th May 2012.

The above is my understanding and confirmation of the agreement we reached earlier today during our discussion in your office.

As just discussed, I will not have a chance to draft the formal settlement agreement until Wednesday. In the mean time I'm happy to discuss any clarifications which you may have."

38. At around 8.30 pm that evening Mr Mohareb received an email from Mr Jankulovski informing him that he was "going back on their agreement".

Mr Jankulovski's email in response

39. The email states:

"Outline of our agreement

Nader,

I refer to our meeting today.

After careful consideration of the proposed settlement agreement I came to a decision that the terms of settlement are not favourable to Inducta Engineering and therefore I cannot accept it.

I cancelled the cheque.

Please do not come to my office any more and communicate only in writing.

I note that I was intimidated by your presence, as you came unannounced and walked into my office.

Please contact my Barrister Marina Dulhunty if you have further queries."

Consideration of Masters v Cameron

40. The plaintiff submits that at the meeting on 4 February 2013, a settlement agreement was reached with Mr Jankulovski. Mr Mohareb submitted that the settlement falls within the first class identified in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353. Mr Jankulovski asserts that there was no agreement but if there was it fell into the third category of Masters v Cameron.

41. In Masters v Cameron the issue was whether the parties intended to be bound by the critical letter or whether they only intended to be bound once a more formal agreement was entered into. Masters v Cameron has been helpfully summarised in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 at [55]- [59] where Young CJ in Eq recapitulates:

"55 As is well known, the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360, said that cases of the present type may belong to one of three classes. The three classes set out were:

1. Where the parties have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document;

2. Where the parties have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract;

3. Where the parties intend there not to be a concluded contract unless and until a formal document is executed.

56 The vital question is always what the parties intended by the words they have used. In a case where the parties have expressly or impliedly indicated that there will be a further agreement, it is a question of construction whether the execution of a further contract is a condition of the bargain or else is merely an expression of the desire of the parties as to how their transaction will be completed: Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 289. Each case turns on its own facts.

57 In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628, MH McLelland J said:

'There is in reality a fourth class additional to the three mentioned in Masters v Cameron ... namely, "... one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms." '

The words quoted derive from Sinclair, Scott & Co v Naughton [1929] HCA 34; (1929) 43 CLR 310 at 317.

58 McLelland J's decision was affirmed in this Court as GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631. The court there consisted of Kirby P, Glass and McHugh JJA. The lastmentioned gave the leading judgment with which the other two judges noted their agreement.

59 At page 634, McHugh JA said:

'The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of surrounding circumstances ... . If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.

Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound.'"

42. Was there an agreement? The parties had entered into a number of negotiations by way of telephone calls, emails and an exchange of consent judgments, consent orders and terms of settlement. An analysis of these various versions and of the words expressed during these negotiations is required to understand their possible effect and to understand whether it can be seen that the parties, by their conduct, intended to be immediately bound, subject to formal documentation (thus falling into the first category of Masters v Cameron), or whether there is no doubt that the parties' negotiations were not at the time intended to be a concluded bargain unless and until a formal contract was executed (thus falling into the third category of Masters v Cameron).

43. Mr Mohareb submitted that the elements of the agreement he alleges was reached on 4 February 2013 are common to all four offers that have been made before. He submitted that the four elements are firstly, a letter of apology and retraction to his client; secondly, a resumption of technical support; thirdly, copies of elements of the Inducta Engineering software that he didn't have; and fourthly, compensation. He submitted that although in previous offers the elements he required might have been expressed differently, the four elements were all present in those proposed, but ultimately unsuccessful, agreements. He acknowledged that in his first settlement offer he used strong language, which could have been toned down. However, he submitted that there was a willingness on his part to resolve the matter and he believed that Mr Jankulovski was going to settle in good faith after their discussion on 4 February 2013.

44. Mr Jankulovski denies the existence of any agreement to settle the matter, either verbal or written. He says that he attempted to settle the matter on several occasions because he wanted to end the lengthy and expensive litigation. All the settlement attempts were without prejudice and were not successful.

45. The fifth proposal occurred during the meeting between Mr Mohareb and Mr Jankulovski (the subject of this motion) on 4 February 2013. In cross examination by Mr Mohareb, Mr Jankulovski said the following in regard to the settlement discussions that took place (T 77.6-23):

Q. On paragraph 10, the last sentence, you say "I was eager to use this situation to finalise the litigation before the Supreme Court by reaching some sort of settlement"?

A. Correct.

Q. So you saw this as an opportunity to finalise the litigation by reaching the settlement?

A. In some way.

Q. That's the decision, you know, you're saying, you know, you took that decision you say "I was eager" so that's something that is out of your own decision. So is it something that internally you wanted to reach settlement?

A. It was at the moment. That was the best I could have thought seeing you in front of my desk and I'm not, I don't think I was thinking rationally. I had - I didn't have time to think a lot about that. So that was just instant decision knowing that at later stage we will discuss that with my lawyers and then at later stage we can sign the document and we can modify it or reject it as many times you did before and I did before. That's why I took it so lightly.

46. And the following (T 84.3-16):

Q. "In giving the plaintiff the software and the cheque for a substantial amount of money I acted against my better judgment as I was lead to believe that we had settled the defamation case against me". Isn't that what happened? You believed that we had settled the case. You are saying here that you believed we had settled the case?

A. Well, my understanding is this, that settlement is when we sign and file in the Court. Anything else in discussion -

Q. But you say you -

A. I have been in business twenty years. I discuss different agreements or contracts with different people and until it is signed, it is not active. Even if it is signed it can be disputed. With you we discussed we couldn't - actually it wasn't a normal discussion because I was intimidated, taken by surprise and I consider all that irregular.

47. Mr Jankulovski stated in his affidavit of 6 February 2013 that he called Mr Mohareb on 4 February 2013 after the meeting in Inducta Engineering's office and said:

"Please do not cash the cheque until we sign the written agreement".

48. Mr Mohareb submits that this statement indicates there was an agreement waiting to be written and signed and this puts the settlement into the first class in Masters v Cameron.

49. Mr Jankulovski submits that all the emails attached to Mr Mohareb's affidavits talk about a broad outline of the agreement, the proposed agreement, so there are no definite terms of a concluded agreement such that Mr Mohareb can rely on the first class of Masters v Cameron or the category recognised by McClellan J in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622. It is submitted that Mr Mohareb's understanding was that the terms were still under discussion and no final agreement had been reached. Mr Jankulovski understood that the terms needed to be developed and negotiated further but this did not take place.

50. The previous four settlement proposals were not considered by either party to be concluded until such time as a formal written agreement was agreed to by both parties. The first three settlement proposals all involved discussions via telephone and email leading to either an amended written proposal or a written proposal based on initial telephone discussions. The discussions that took place on 4 February 2013 and the proposed written agreement sent by Mr Mohareb are, in principle, no different to the previous proposals with two exceptions. As had occurred previously, a verbal discussion took place followed by Mr Mohareb putting a written proposal forward in an email. However, on 4 February 2013 at the conclusion of their verbal discussion, Mr Jankulovski wrote out a cheque for $20,000 to Mr Mohareb's company NM Structural Engineers Pty Ltd. This discussion was also face-to-face, unlike the previous settlement negotiations.

51. In relation to the writing of the cheque, Mr Jankulovski gave the following evidence (T83.24-37):

Q. On 4 February 2013. Why did you write a cheque for $20,000 and the software and all that?

A. Because I want to get rid of you and not to see you again ever, so I just want to give you everything just to disappear and I know it sound irrational but that is the way I thought because at this beginning we start arguing, any disagreement with you was escalating into shouting, your face was changing colours, so I felt really unpleasant and I said all right I ask you twice what do you want, you didn't answer and then you start putting things "okay, I will give you everything just to go away". That was the idea. I am not saying it is rational or smart or I should have known better but that's what I did and as soon as you left I realised the mistake because actually when you left I wasn't under your influence because talking with you it was shifting my sense of reality. You can imagine I felt like in a Kafka novel. Even now I'm not sure why I am here.

52. Mr Jankulovski states that the unexpected visit to his offices by Mr Mohareb was very unsettling for him, his legal representatives, his family and three employees of Inducta Engineering and that Mr Mohareb intruded upon Inducta Engineering's team and interrupted their work.

53. Mr Jankulovski says that he felt very stressed because he was coerced to do something to "settle the Supreme Court proceedings" on most unfavourable terms for Inducta Engineering and against his free will. He was advised by counsel that he had a good case to win by way of a hearing of the notice of motion to strike or dismiss the amended statement of claim.

54. He further believed that by entering into the settlement negotiations on 4 February 2013 with Mr Mohareb, he (Mr Jankulovski) acted against the interests of Inducta Engineering and he felt threatened by Mr Mohareb and was fearful for his safety and the safety of his employees at Inducta Engineering.

55. Mr Jankulovski in oral evidence said the following (T 75.23-44):

PLAINTIFF

Q. The question is when I saw him I felt anxious and embarrassed that I had to deal with the plaintiff in person. So just seeing me make you feel anxious and embarrassed, is that right?

A. Yes, make me feel sick actually.

Q. Okay. And I felt obliged to talk in a friendly manner and discuss the settlement. Why is that? Why did you feel obliged to do that?

A. That was the first thing which came into my mind because I realise the situation is out of control, somebody - I'm arguing for years, abuse in front of my desk, and the three young people like that, I didn't know what to do. That was the first thing, which came to me going to have to make peace in some way or to attempt. I know maybe natural reaction might be to fight back, I don't know what to say but that was the first thing I did.

Q. So you chose of your own choosing to negotiate settlement defamation claim instantly, just seeing me in front of you?

A. I was really kind of intimidated, I didn't know what to do. And my first idea was to calm you down because you really looked scary like towering over my table, even the arms open a little bit, maybe it was in my imagination but that's how I felt.

56. I accept Mr Jankulovski's evidence that in the face-to-face discussions with Mr Mohareb on 4 February 2013, he felt embarrassed and intimidated and anxious to try and resolve the matter. I am of the view that while the writing of a cheque to Mr Mohareb may suggest a binding agreement had been reached, the discussions that took place on 4 February were still only "in principle" discussions, as had been the previous settlement discussions. The difference this time was these discussions took place face-to-face rather than over the phone or via email. The act of writing the cheque was a demonstration of Mr Jankulovski's desire to, at that moment, make the whole matter, and Mr Mohareb, go away.

57. It is my view that while they had agreed the broad terms of a settlement agreement, their intention was that there would be no concluded contract until a formal document was executed. Based on how both parties have conducted their negotiations previously, it is my view that they both wished to "reserve to themselves a right to withdraw at any time until the formal document is signed": Masters v Cameron at [11]. The agreement reached on 4 February 2013 falls within the third class in Masters v Cameron. Therefore, there is no binding contract. In the light of this finding, it is not necessary to cover duress.

(1)(b)

58. It follows the order sought in paragraph (1)(b) of the notice of motion that an order be made that the defendants send the plaintiff's clients a letter of retraction and apology as per the agreed upon draft letter is refused.

(1)(c)

59. The plaintiff also seeks in paragraph (1)(c) of the notice of motion an order that all previous costs orders in these proceedings be vacated. The plaintiff has not demonstrated any cogent reason why this order should be made. Hence, the plaintiff's notice of motion filed 12 February 2013 is dismissed.

60. Costs are discretionary. Normally costs follow the event. The plaintiff was unsuccessful and he should pay the defendants' costs. The defendants seek their costs on an indemnity basis.

61. As to whether or not the costs should be payable on an indemnity basis, the general rule is that costs are payable on an ordinary basis. A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought is plainly unreasonable: see Sydney City Council v Geftlick [2006] NSWCA 280 at [90]. Indemnity costs orders should be reserved for the most unreasonable action by an unsuccessful plaintiff: see Leichhardt Municipal Council v Green [2004] NSWCA 341 per Santow JA at [57].

62. The usual order as to costs is that subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour, the primary purpose of costs being to indemnify the successful party. Fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67]. In Oshlack v Richmond River Council, McHugh J discussed that the exceptions to the usual order as to costs concentrate on the conduct of the successful party, which disentitles it to the beneficial exercise of the discretion. At [69], McHugh J said:

"'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute." (citations omitted)

63. While the plaintiff's conduct up to date has fallen well short of what is expected of a litigant and in this motion he sought an order that previous orders be vacated, if it was the only orders sought it may have been appropriate to award indemnity costs. However, Mr Mohareb did have an arguable case on whether or not a settlement was reached and as this took up most of the hearing time, it is my view that the costs of this motion should be paid on an ordinary basis. However, if Mr Mohareb continues to file motions like the one before Hidden J, consideration should be given to making an order that he pay costs on an indemnity basis on the next occasion.

(2) The defendant's notice of motion filed

64. By notice of motion filed 14 December 2012, the defendants seek firstly, an order that the costs order made by Harrison J on 4 May 2012 against the plaintiff and assessed in the sum of $8,325 be payable forthwith; secondly, an order that either all claims brought against them by the plaintiff in the further amended statement of claim in matter No. 2012/68684 be summarily dismissed pursuant to UCPR 13.4 and 14.28; or the claims contained in paragraphs 8 to 22 be summarily dismissed pursuant to UCPR 13.4 and 14.28; thirdly, in the alternative, an order that the plaintiff's further amended statement of claim be struck out entirely pursuant to UCPR 13.4 and 14.28 on the basis that the pleadings are embarrassing, frivolous and vexatious and do not disclose any reasonable basis to ground a claim in defamation or any other cause of action; or that the paragraphs 8 to 22 be struck out pursuant to UCPR 13.4 and 14.28; fourthly, in the event that the Court does not summarily dismiss or strike out the plaintiff's action, an order that the plaintiff pay the sum of $20,000 into court by way of security for costs; fifthly, an order that these proceedings be stayed until the plaintiff has paid the costs of $8,325 and/or has paid the sum of $20,000 into court by way of security for costs; sixthly, an order that the plaintiff pay the costs of the first and second defendants on the indemnity basis; and seventhly, in the alternative, an order that the plaintiff pay the costs of the first and second defendants on the ordinary basis.

Motion 2 (1) whether costs should be payable forthwith

65. The defendants seek an order that the costs order made on 4 May 2012 is payable forthwith. The plaintiff opposes this order on the basis it is an additional order and it is too late.

66. On 4 May 2012 in the motion before Harrison J, the defendants were represented by counsel, Ms Dulhunty. Mr Mohareb pointed out that, as the judgment records at [29], Ms Dulhunty sought and was awarded costs of the motion. No application was made and no consideration was given by his Honour, for an application to remove the limitation under UCPR 42.7 and order that costs be assessed and payable forthwith. The costs have now been assessed at $8,325 but Mr Mohareb has lodged an appeal to the review panel against the costs assessor's decision.

67. Usually an order such as this is made where the motion relates to matters distinct from the substantive issues, or where the plaintiff's conduct had been somehow unreasonable.

68. At the time this order was made, Harrison J commented that it was early in the proceedings. His Honour permitted the plaintiff to file an ASC. At the time this costs order was made, it cannot be said that the plaintiff acted unreasonably. On 31 May 2012, the plaintiff filed his further amended statement of claim within the time stipulated. In the exercise of my discretion, I decline to make this order.

Motion 2 (2)(a) and (b) seeking summary judgment

69. UCPR 13.1 provides:

"13.1 Summary judgment

(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief:

(a) there is evidence of the facts on which the claim or part of the claim is based, and

(b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed,

the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires.

(2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed.

(3) In this rule, a reference to damages includes a reference to the value of goods."

70. UCPR 13.4(1) provides that the Court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are, if the proceedings are frivolous or vexatious, or if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court.

71. UCPR 14.28(1) provides that the Court may, at any stage of the proceedings, order that the whole or any part of a pleading be struck out if the pleading firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings, or thirdly, is otherwise an abuse of the process of the court.

72. UCPR 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1).

73. Summary strike out applications have been discussed in General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125 at [8] and restated in many decisions since then. In General Steel, Barwick CJ who sat as a single judge said that a litigant should not be denied access to the appropriate tribunal unless his lack of a cause of action is clearly demonstrated. His Honour stated at [8]:

"The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'."

Defamation claim

74. Defamation is, generally, the publication of material about a person that could lower that person's reputation in the eyes of others. Defamation law concerns the protection of reputation and provides a remedy for injury to reputation caused by a defamatory publication. In relation to defamation law, a publication is considered to be the act of communicating a defamatory meaning to a person other than the plaintiff. This meaning may be communicated by any means such as spoken words, signs or gestures, in writing or with images, in person or by broadcast (Australian Defamation Law and Practice (ADLP) LexisNexis Australia at [1010]).

75. Pleadings regarding defamation must be made pursuant to UCPR 14.30 which reads:

"(1) A statement of claim seeking relief in relation to the publication of defamatory matter must not include any allegation that the matter or its publication was false, malicious or unlawful.

(2) Any such statement of claim must:

(a) subject to subrule (3), specify each imputation on which the plaintiff relies, and

(b) allege that the imputation was defamatory of the plaintiff.

(3) A plaintiff in proceedings for defamation must not rely on two or more imputations alleged to be made by the defendant by means of the same publication of the same matter unless the imputations differ in substance."

76. Particulars in relation to statements of claim for defamation must be made pursuant to UCPR 15.19 that relevantly reads:

"(1) The particulars required by rule 15.1 in relation to a statement of claim seeking relief in relation to the publication of defamatory matter must include the following:

(a) particulars of any publication on which the plaintiff relies to establish the cause of action, sufficient to enable the publication to be identified,

(b) particulars of any publication, circulation or distribution of the matter complained of or copy of the matter complained of on which the plaintiff relies on the question of damages, sufficient to enable the publication, circulation or distribution to be identified,

(c) if the plaintiff alleges that the matter complained of had a defamatory meaning other than its ordinary meaning - particulars of the facts and matters on which the plaintiff relies to establish that defamatory meaning, including:

(i) full and complete particulars of the facts and matters relied on to establish a true innuendo, and

(ii) by reference to name or class, the identity of those to whom those facts and matters were known,

(d) if the plaintiff is not named in the matter complained of - particulars of identification of the plaintiff together with the identity, by reference to names and addresses or class of persons, of those to whom any such particulars were known, and

(e) particulars of the part or parts of the matter complained of relied on by the plaintiff in support of each pleaded imputation.

(2) Such of the following as is applicable must be filed and served with a statement of claim seeking relief in relation to the publication of defamatory matter (or any amended statement of claim) and be referred to in the statement of claim or amended statement of claim:

(a) a legible photocopy of the original publication or, in the case of an internet, e-mail or other computer displayed publication, a printed copy,

(b) a typescript, with numbered lines, of:

(i) if the original publication is in English-the text of the original publication, or

..."

77. While there are specific rules (referred to above) in relation to defamation, I remind myself that generally the function of pleadings is to state, with sufficient clarity, the case that has to be met by the defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale SA En Liquidation v Akhill Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286-296 and 302-3.

78. The first matter Mr Mohareb complained of in his further amended statement of claim ("FASC") is that the defendants published in New South Wales words concerning the plaintiff in the form of a letter sent by the defendants to Mr Mohareb's client.

79. The particulars of publication of the first matter are that the words published were in the form of a letter, under the letterhead of Inducta Engineering and signed by Mr Jankulovski, dated 23 February 2012 to Sonenco Apartments Pty Ltd and was also sent to the construction site at Parramatta. Mr Mohareb pleads that the letter conveyed the following imputations of and concerning himself:

"a. The plaintiff as a structural engineer, is professionally incompetent; (lines 12-19)

b. The plaintiff as a structural engineer, does not possess the professional ability to design the necessary structural engineering requirements for a proposed development at XXXX Parramatta: (lines 12-19) or in the alternative to (b):

c. There is a reasonable suspicion that the plaintiff as a structural engineer, does not possess the professional ability to design the necessary structural engineering requirements for a proposed development at XXXX Parramatta; (lines 12-19)

d. The plaintiff as a structural engineer, should not be permitted to design structural engineering requirements unless he is supervised by another structural engineer; (lines 16-19)."

80. The relevant part of the letter, from line 10 onwards, is as follows:

"We are software company, which develops and support structural design software for reinforced concrete building.

We have become aware that one of our software users, Mr Nader Mohareb is involved in the structural design as an engineer of the building at XXXX PARRAMATTA.

While assisting him in the software usage we had to communicate with him and discuss some issues related to the building design. We are very concern about the ability of Nader Mohareb to perform the design of the building.

We strongly recommend that his design is checked by another structural engineer experienced in this type of design."

81. The second matter complained of is that the defendants published in New South Wales words concerning the plaintiff in the form of another letter to Mr Mohareb's client.

82. The particulars of publication of the second matter are that the words were published in the form of a letter under the letterhead of Inducta Engineering and signed by Mr Jankulovski, dated 3 April 2012 to Sonenco Apartments Pty Ltd and was also sent to the construction site at Parramatta. Mr Mohareb pleads that the letter conveyed the following imputations of and concerning himself:

"a. The plaintiff as a structural engineer, is professionally incompetent; (lines 14-37)

b. The plaintiff as a structural engineer, does not possess the professional ability to design the necessary structural engineering requirements for a proposed large development comprising 19 floors of apartments and 4 levels of parking; (lines 14-37)

c. The plaintiff as a structural engineer, should not be trusted with designing the necessary structural engineering requirements for a proposed large development comprising 19 floors of apartments and 4 levels of parking as he provided incorrect load factors in his model for the proposed building (lines 14-37);

d. The plaintiff as a structural engineer, should not be permitted to design structural engineering requirements unless he is supervised by another structural engineer; (lines 14-37))"

83. The letter is as follows:

"Dear Sir,

We refer to our letter to you dated 23/02/2012 regarding Mr Nader Mohareb.

Please be advised that our previous letter was not meant to question Mr Mohareb's ability or competency as an engineer in anyway.

The letter was only sent as Mr Mohareb had been having difficulty using our software to construct the computer model for your project at XXXX Parramatta.

In particular Mr Mohareb had provided to us incorrect load factors for the model of the proposed building. We note that the proposed building is a large complex comprising 19 levels of apartments and 4 levels of parking.

Our letter was only intended to recommend that another engineer check and confirm the data inputs that Mr Mohareb had used for the model. We note further that in our experience it is a common practice in New South Wales for a second engineer to check the work of the principal engineer on a project anyway. We note

also that it is a mandatory requirement in other states of Australia, such as Victoria, for an independent engineer to check the work of the principal engineer on a project.

As far as we are aware Mr Mohareb does not work in a firm of engineers but is a sole practitioner and has no one readily available to discuss any problems or difficulties that may be associated with a project. We have already provided a significant amount of assistance to Mr Mohareb ourselves in preparing the model.

We would also assume that any insurer for the building, once it is completed, would require an independent engineer's report about the structural integrity of the building anyway and we thought that by getting the model data inputs checked now that you would be saved time and expense in correcting errors now, if any, rather than later when the building has been completed and your having to try to spend time and expense in fixing any potential errors once the building was completed.

We do not see how our letter to you dated 23/02/2012 could possibly have delayed the construction of the building in any way."

84. Mr Mohareb pleaded that as a result of the publication in the first and second matters complained of, he has been injured in his character and business reputation and has been brought into odium, contempt and ridicule whereby he has suffered loss and damage and claims aggravated damages.

Defamatory imputations

85. Defamatory imputations must be specifically pleaded. The alleged defamatory content of a publication is the "imputation" it conveys: Drummoyne Municipal Council v Australian Broadcasting Corp (1990) 21 NSWLR 135 at 136. An imputation is the particular act or condition attributed by the publication (according to the understanding of the ordinary reasonable reader) to the person allegedly defamed: Hall-Gibbs Mercantile Agency Ltd v Dun [1910] HCA 66; (1910) 12 CLR 84 at 91; Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1 at 10; Petritsis v Hellenic Herald Pty Ltd [1978] 2 NSWLR 174 at 183; Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 at [119]- [120], [125], [129].

86. The pleadings must specify the particular imputation upon which the plaintiff relies: Drummoyne Municipal Council v Australian Broadcasting Corp (1990) 21 NSWLR 135 at 136, 137. A plaintiff can rely on multiple imputations arising from the same publication if the imputations "differ in substance": see r 14.30(3). The plaintiff's claim will then be confined to the pleaded imputation, and any variation that can properly be advanced by amendment without material prejudice or disadvantage to the defendant: Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519 at [24]- [25], [60] and [139].

87. The defendants submitted that the pleadings in the FASC are unclear as to what Mr Mohareb's real claim is and fails the test set out for pleadings and referred to General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125; Hamade v State of New South Wales [2011] NSWSC 459; NAB v Meyers [2008] NSWSC 247; Robinson v Nishtom Pty Limited & Anor [2009] NSWSC 36.

88. The defendants submitted that pleading a claim in defamation in an attempt to get technical support is embarrassing and hopeless. It is an improper purpose for bringing the proceedings, is an abuse of the court's process and that the claim is untenable because wanting technical support is not a basis to ground a claim in defamation. The defendants also submitted that Mr Mohareb has confused matters of pleading and particulars making the pleadings as a whole confusing, unclear and embarrassing and it also contains an allegation of malice, which breaches UCPR 14.30(1).

89. It is my view that Mr Mohareb's pleadings in his FASC in relation to defamation are specifically pleaded. Mr Mohareb quite clearly sets out the two matters complained of, the letter dated 23 February 2012 and the letter dated 3 April 2012, sent by the defendants to Mr Mohareb's client, Soneca Apartments Pty Ltd. His pleadings also clearly specify the particular imputations upon which he relies.

90. The pleadings in [1] to [7] of the FASC are properly pleaded and should not be struck out or summarily dismissed.

91. I turn now to the plaintiff's claim for aggravated damages.

Aggravated damages

92. Particulars concerning damages are made pursuant to UCPR 15.32 which is as follows:

"The plaintiff must give:

(a) particulars of facts, matters and circumstances on which the plaintiff will rely in support of a claim for aggravated damages, and

(b) particulars of any claim the plaintiff makes by way of:

(i) special damages, or

(ii) any claim for general loss of business or custom."

93. A plaintiff must show that the conduct relied on as aggravated damages is unjustifiable, improper or lacking in good faith. It is up to the plaintiff to demonstrate an improper motive by the defendant and this is normally done by giving notice in the pleadings of an intention to make this argument by alleging that the defendant was actuated by what was referred to by Lord Diplock in Horrocks v Lowe [1975] AC 135 at 149 as "express malice":

"... as a general rule English law gives effect to the ninth commandment that a man shall not speak evil falsely of his neighbour. It supplies a temporal sanction: if he cannot prove that defamatory matter which he published was true, he is liable in damages to whomever he has defamed, except where the publication is oral only, causes no damage and falls outside the categories of slander actionable per se. The public interest that the law should provide an effective means whereby a man can vindicate his reputation against calumny has nevertheless to be accommodated to the competing public interest in permitting men to communicate frankly and freely with one another about matters in respect of which the law recognises that they have a duty to perform or an interest to protect in doing so. What is published in good faith on matters of these kinds is published on a privileged occasion. It is not actionable even though it be defamatory and turns out to be untrue. With some exceptions which are irrelevant to the instant appeal, the privilege is not absolute but qualified. It is lost if the occasion which gives rise to it is misused. For in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit - the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege.

So, the motive with which the defendant on a privileged occasion made a statement defamatory of the plaintiff becomes crucial. The protection might, however, be illusory if the onus lay on him to prove that he was actuated solely by a sense of the relevant duty or a desire to protect the relevant interest. So he is entitled to be protected by the privilege unless some other dominant and improper motive on his part is proved. 'Express malice' is the term of art descriptive of such a motive. Broadly speaking, it means malice in the popular sense of a desire to injure the person who is defamed and this is generally the motive which the plaintiff sets out to prove."

94. The state of mind or conduct of a defendant relevant to an intention to injure a plaintiff is summarised in Australian Defamation Law and Practice, LexisNexis Australia at [18,005]:

"(a) knowledge of the falsity of the defamatory material or absence of belief in its truth;

(b) recklessness as to whether the matter complained of was true or false;

(c) failure to inquire as to the truth of the defamatory material;

(d) introduction of material irrelevant to the occasion of qualified privilege;

(e) manner and extent of publication, including the language used in the matter complained of;

(f) publication of other defamatory material published by the defendant concerning the plaintiff;

(g) conduct of the litigation by the defendant, including the conduct of the trial."

95. In the particulars of aggravated damages, Mr Mohareb states the following:

"i. the plaintiff's knowledge of the falsity of the imputations;

ii. the first defendant's failure to verify the truth of any of the imputations before publication;

iii. the malice of the defendants towards the plaintiff including:

1. the refusal of the defendants to continue software support of their product in the knowledge that the plaintiff was using their software to complete a structural engineering design contract;

2. the first defendant's refusal to meet with the plaintiff in a meeting proposed by the representative of Sonenco Apartments (being the addressee of the matters complained of) in late March or early April 2012, when that representative expressed his wish to meet with both the defendants and the plaintiff to understand and verify the defendants' claims.

3. the deliberate sabotaging of the plaintiff's own version of the software by remotely shutting down the software on the plaintiff's computer at the time when the defendants knew that the plaintiff was using their software to complete a structural engineering design contract;

4. the first defendant communicating with the plaintiff's client and informing them that the defendants could perform the plaintiff's contractual obligations of design instead of the plaintiff;

5. the making of allegations by the defendants to the client of the plaintiff concerning the ability of the plaintiff to perform the design of the building when the only knowledge the defendants concerning the plaintiff was his request for assistance with the software supplied by the defendants."

96. The defendants submitted that no particulars are provided of improper conduct or improper purpose by the defendants to ground a claim in malice: see A v New South Wales [2007] HCA 10; (2007) 233 ALR 584; (2007) 81 ALJR 763 at 88 to 116.

97. The defendants further submitted that the claim for aggravated damages is embarrassing and hopeless, as the pleading does not disclose any basis to sustain a claim for aggravated damages. The defendants say that the pleading of both aggravated damages and malice is unclear and misconceived and there is no evidence of lack of bona fides of any improper or unjustifiable purpose or conduct.

98. The rules in relation to a claim of malice are contained in UCPR 14.31 as follows:

"(1) Subject to rules 14.32-14.40, a defendant in proceedings for defamation must plead any defamation defence specifically.

(2) If the plaintiff in defamation proceedings complains of two or more imputations, the pleading of any of the following defences must specify to what imputation or imputations the defence is pleaded:

(a) a defence under section 15(2) or 16(2) of the Defamation Act 1974,

(b) a defence under section 25 or 26 of the Defamation Act 2005,

(c) the defence of justification at common law.

(3) If a plaintiff intends to meet any defamation defence:

(a) by alleging that the defendant was actuated by express malice in the publication of the matter complained of, or

(b) by relying on any matter which, under the Defamation Act 1974 or the Defamation Act 2005, defeats the defence,

then the plaintiff must plead that allegation or matter of defeasance by way of reply."

99. By amended defence filed 6 July 2012 the defendants plead:

"(a) Honest opinion pursuant to Section 31 of the Defamation Act 2005 (NSW) ("The Act") and the defence of Fair Comment under Common Law principles;

(b) Qualified privilege pursuant to Section 30 of the Act and Common Law principles;

(c) Contextual Justification pursuant to Section 26 of the Act and Common Law principles."

100. A claim of malice must be pleaded in reply to a defamation defence pleaded by the defendants. Mr Mohareb has not filed a reply to the defendants' amended defence.

101. Consequently, I order that paragraph 8 of the FASC be struck out pursuant to UCPR 14.31 and grant leave for Mr Mohareb to file a reply to the defendants' amended defence filed 6 July 2012 within 14 days.

102. I turn now to pleadings of misleading or deceptive conduct. The defendants also seek to strike out this part of the FASC.

Misleading or deceptive conduct

103. Mr Mohareb makes his claim of misleading or deceptive conduct by the second defendant under s 18 of the Australian Consumer Law. Section 18 reads:

"18 Misleading or deceptive conduct

(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1)."

104. Mr Mohareb needs to establish firstly, conduct on the part of the defendants; secondly, conduct that is misleading or deceptive; thirdly that there was reliance on the conduct; and fourthly, loss or damage caused by the conduct - see Gould & Anor v Vaggelas & Ors [1984] HCA 68; (1984) 157 CLR 215 and Jebeli v Modir and Golyaei [2005] NSWCA 184.

105. The defendants submitted that the plaintiff has confused matters of pleading and particulars making the pleading as a whole confusing, unclear and embarrassing and that it is an abuse of the court's process and that the plaintiff's conduct is sufficient to make a finding that the claim is vexatious and frivolous.

106. Counsel for Mr Jankulovski submitted that both the evidence and the documents under subpoena show that firstly, Mr Mohareb was not engaged as the structural engineer on the building project, but the company NM Structural Engineers Pty Ltd (the company) was in fact engaged; secondly, the company remains engaged on the project; thirdly, Mr Mohareb has not demonstrated that he has suffered any loss; and fourthly, Mr Mohareb has no standing to bring the claims pleaded in paragraphs 8 and following as all dealings with purchases of software and technical support from Inducta Engineering were conducted by the company and not Mr Mohareb personally so that the wrong legal entity has brought the proceedings. Hence, those matters can only be determined at trial.

107. Mr Mohareb pleaded that he acquired the RC Building software from the second defendant and was using it in a civil engineering design contract of a multi-level apartment building. Mr Mohareb's claims of misleading or deceptive conduct relate to provision of technical support in respect of the second defendant's software.

108. However, Mr Mohareb pleaded in his FASC at [17] that the second defendant made the following representations: during the period January 2012 to 30 June 2012 the second defendant would provide technical support and any available updates of the software to Mr Mohareb; and that during that period, the second defendant would not take any action to prevent the use by the plaintiff of the software for his own business purposes. These were representations as to future matters. So far as the issues of the correct identity of the purchaser of the software and standing are concerned, the evidence before this Court is ambiguous, it could be either Mr Mohareb or NM Structural Engineers Pty Ltd. I accept that the contract referred to is between the builder and NM Structural Engineers Pty Ltd.

109. At the time of making the representations, Mr Mohareb pleaded that the second defendant knew or ought to have known that he relied on the second defendant to exercise all due care, skill and diligence in making the representations and that he was likely to act upon those representations. Mr Mohareb pleads that he relied on those representations and proceeded to commit himself to using the software for the structural engineering design of a major development in Parramatta and the representations were made in trade and commerce.

110. Mr Mohareb pleaded that representations were misleading or deceptive or likely to mislead at the time they were made as, on or about 23 February 2012, the second defendant ceased providing any technical support to him and refused to respond to his telephone calls or emails. He also alleges that on or about 5 March 2012, the second defendant deliberately caused the plaintiff's version of the software to cease functioning by remotely connecting with the software on his computer or the USB stick supplied by the second defendant which contained the software. Mr Mohareb relied on s 4 of the Australian Consumer Law as to the future matters.

111. While Mr Mohareb claims damages including aggravated damages in his list of claims after paragraph [22] on his FASC, it is not clear how they are calculated. However, if it is Mr Mohareb who is the purchaser of the software and the contract is between NM Structural Engineers Pty Ltd and the builder, it is difficult to see how Mr Mohareb has suffered damage. He may be engaged in other projects working under his own name rather than that of his company. If not, it is difficult to discern from the pleading how he is suffering.

112. The defendants also submitted that the evidence demonstrates that they did provide more than reasonable technical support to Mr Mohareb, including face-to-face in house training, until such time as it became too difficult to deal with him. In my view, whether this is so and whether there has been misleading or deceptive conduct, can only be ascertained when all the facts and circumstances are known. Once again, this can only occur at trial.

113. As the plaintiff's claim for damages under s 18 of the Corporations Act is defective the plaintiff should specifically plead this part of his claim. It is my view he should be granted limited leave to do so. The balance of the FASC is properly pleaded. The FASC should include the claim for defamation as it is currently pleaded and the amended misleading or deceptive conduct claim. It would be advisable if Mr Mohareb sought legal advice in relation to this issue.

Motion 2 (4) and (5) security for costs

114. The defendants seek an order that Mr Mohareb pay the sum of $20,000 by way of security for their costs and that proceedings be stayed until he does so.

115. UCPR 42.21 relevantly reads:

"42.21 Security for costs

(1) If, in any proceedings, it appears to the court on the application of a defendant:

(a) that a plaintiff is ordinarily resident outside New South Wales, or

(b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or

(c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or

(d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or

(e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so,

the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given."

116. None of the subparagraphs 1(a) to (e) are applicable to this matter. Part 42.21 is not applicable.

117. While it is accepted that a natural person is not usually ordered to pay money into court for security of costs, the court has inherent power to order that a natural person plaintiff pay a sum of money into court for security for costs and has so ordered in the past: Bhagat v Murphy [2000] NSWSC 892; Byrnes v Fairfax Publications Pty Ltd [2006] NSWSC; Keiren Welzel v Francis [2011] NSWSC 477.

118. Mr Jankulovski's counsel submitted that this matter is an appropriate matter in which to order Mr Mohareb to pay the sum of $20,000 into court by way of security for costs as this matter is now in its second year of litigation and basically has not progressed since the amended defence was filed. According to the defendants' counsel, the merits of most, if not all, of Mr Mohareb's claims in the FASC are dubious and the manner in which he is conducting these proceedings, coupled with clear evidence that he is likely to attempt to evade paying a substantive costs order, and the fact that there have been four costs orders made against him already, warrant an order for security for costs in this matter. The defendants submitted that the sum sought has been set to balance some protection for them in the event that Mr Mohareb fails in his claims whilst giving consideration to not stultifying the proceedings by seeking an excessively high sum.

119. To ascertain whether or not this order should be made, it is necessary to briefly refer to the history of these proceedings.

120. On 4 May 2012, Harrison J ordered that the ASC be struck out. Leave was granted to Mr Mohareb to file a FASC within 28 days and he was ordered to pay the defendants' costs of and incidental to the motion. These costs have been assessed at $8,325. However, Mr Mohareb has filed a summons seeking leave to appeal this assessment in this Court.

121. On 31 May 2012, the FASC was filed.

122. On 6 July 2012, the defendants filed an amended defence.

123. On 8 February 2013, the notice of motion filed 4 February 2013 came before Hidden J. The motion sought orders that:

"[A]ll documents relating to and associated with, the defendants' application for costs assessment is referred to the Police for investigation and eventual charging for the defendants and their barrister Ms Marina Dulhunty for fraudulently claiming costs which they know they are not entitled to, with the express premeditated intent of subverting the course of justice by using the costs order to intimidate the plaintiff into discontinuing the proceedings."

124. Not surprisingly, Hidden J dismissed Mr Mohareb's notice of motion filed 4 February 2014 as being incompetent and ordered Mr Mohareb to pay the costs of the motion. As I understand it, these costs have not yet been assessed.

125. On 12 February 2013, the defendants' notice of motion filed on 14 December 2012 was to be heard by Johnson J. However, it could not proceed as Mr Mohareb attempted to have heard an unfiled notice of motion on that day. Johnson J ordered Mr Mohareb to pay the defendants' costs in a specified gross sum of $2,200 (including GST) pursuant to s 98(4) of the Civil Procedure Act 2005, forthwith. This amount has been paid.

126. In Welzel v Francis, Ball J stated at [9] and [10]:

"[9] However, in Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443, Holland J held that the court retained its inherent jurisdiction to order security for costs against a plaintiff notwithstanding legislative provisions which permitted a defendant to obtain security for costs in certain circumstances. In particular, the inherent jurisdiction to order security against a plaintiff was not affected by Pt 53 r 2(1) of the Supreme Court Rules, which has now been superseded by, but which was in substantially the same terms as, UCPR r 42.21. That jurisdiction was an aspect of the court's inherent power to regulate its own practice and procedure 'to procure proper and effective administration of justice and prevent abuse of process' (at 447). In Rajski, proceedings had been brought by Dr Rajski and Raybos Pty Ltd, a company controlled by him, against the defendant. The defendant sought security for its costs. That application was contested on the basis that the court had no power to order security against Dr Rajski, or against Raybos in circumstances where its co-plaintiff was a natural person. Holland J rejected that submission. There was evidence that Dr Rajski had denuded Raybos of approximately $275,000 before the proceedings were commenced and that most of that money had gone to Dr Rajski's mother, with whom Dr Rajski resided. In those circumstances, his Honour thought that it was appropriate to order security against both Raybos and Dr Rajski.

[10] The decision of Holland J was affirmed on appeal (see Rajski v Computer Manufacture & Design Pty Ltd [1983] 2 NSWLR 122) and has been applied in a number of subsequent cases: see, for example, Bhagat v Murphy [2000] NSWSC 892; Byrnes v John Fairfax Publications Pty Ltd [2006] NSWSC 251. In the former case, there had been a large number of interlocutory applications and, although Young J thought that Mr Bhagat had a glimmer of a good case, that glimmer was 'very much obscured by the vast amount of irrelevancies thrown up around it' (at [19]). ..."

127. As in Bhagat, Mr Mohareb has brought unnecessary motions before this Court and in particular I refer to the notice of motion that was determined by Hidden J to be incompetent and Mr Mohareb was ordered to pay the costs. Mr Mohareb also has another costs order that of $8,325, made against him. I accept that on 12 February 2013, when he was ordered to pay the defendants' costs assessed at $2,200 he did so. When the defendants' solicitors requested Mr Mohareb to provide financial evidence that he had sufficient means to fund any costs order made against him he refused to provide any such information. Taking these matters into account, it is my view that it is necessary to ensure that Mr Mohareb exercises some restraint before filing further notices of motion. By filing numerous notices of motion, costs are incurred by both parties and they take up Court time and place strain on the Court's limited resources. As Mr Mohareb has not given any particulars of his financial position, it is difficult to say whether he will be in a position to pay the defendants' costs should he be ordered to do so. In these circumstances it is my view that an order for security for costs should be made. An appropriate amount for security for costs is the sum of $5,000.

Motion 2 (6) and (7)

128. So far as costs of this motion are concerned, costs are discretionary. Each party has been partially successful. In these circumstances it is my view that costs should be costs in the cause.

(3) The plaintiff's notice of motion filed 22 August 2012

129. By notice of motion filed 22 August 2012, the plaintiff seeks orders firstly, that paragraphs 1 to 15 of the amended defence be struck out; secondly, that the defendants' amended defence is struck out and that the defendants refile a further amended defence which complies with UCPR pleading requirements; and thirdly, in the alternative to (2), that the defendant provide an adequate response - in strict adherence with UCPR requirements - to the plaintiff's request for further and better particulars.

130. At [15] of his judgment dated 4 May 2012 Harrison J stated:

"15 Indeed, as noted earlier in this application, the defence contains a considerable amount of material of a factual nature inappropriately included in a pleading which, whilst arguably relevant to the ultimate disposition of the dispute between the parties, would not ordinarily be found in a defence. For example, the defence contains quoted conversations or statements made by the plaintiff in relation to the project about which the letter of 23 February 2012 would appear to have been written. A relatively clear, if one-sided, picture of the dispute between the parties emerges from a reading of that document. The plaintiff contends that this fact is inimical to the defendants' application in the circumstances."

131. These paragraphs that were the subject of criticism by Harrison J appear in [1] to [15] of the amended defence. While they provide a narrative, they strictly speaking do not respond to the pleading in the FASC and therefore should be struck out. I make such an order.

132. So far as particulars are concerned, it is unclear what answers to the request for particulars he refers to. I decline to make such an order. In any event, the defence will now be amended to respond to the FASC and further particulars may be asked and answered.

133. Once again each party has been partially successful and partly unsuccessful. For the same reasons given previously, it is my view that the appropriate order for costs is that costs are costs in the cause.

The Court orders that:

(1) The plaintiff's notice of motion filed 12 February 2013 is dismissed.

(2) The plaintiff is to pay the defendants' costs of the motion filed 12 February 2013 on an ordinary basis.

(3) Paragraph 8 of the further amended statement of claim filed 31 May 2012 is struck out.

(4) Leave is granted to the plaintiff to replead his claim in relation to misleading or deceptive conduct only. The balance of the further amended statement of claim remains but is to be incorporated into the second further amended statement of claim. A second further amended statement of claim is to be filed and served within 14 days.

(5) The plaintiff is to provide $5,000 for security for costs within 14 days. If there is no agreement between the parties as to its form and the manner it should take, the matter is referred to the Registrar for determination.

(6) The proceedings are stayed until the security is given.

(7) Costs of the defendants' motion filed 14 December 2012 are costs in the cause.

(8) The defendants are to file a further amended defence within 28 days.

(9) The plaintiff is to file a reply within 14 days after the further amended defence is filed.

(10) Costs of the plaintiff's motion filed 22 August 2012 are costs in the cause.

(11) The matter is listed for directions on at 9.00 am before the Registrar on 12 July 2013.

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