ASCF Funding Solutions Pty Ltd v SL Property Maintenance Pty Ltd

Medium Neutral Citation: ASCF Funding Solutions Pty Ltd v SL Property Maintenance Pty Ltd [2025] NSWSC 432

Hearing dates: On the papers

Date of orders: 5 May 2025

Decision date: 05 May 2025

Jurisdiction: Equity

Before: Brereton J

Decision: See [21]

Catchwords: COSTS – party/party – general rule that costs follow the event – whether the usual position should be departed from – whether there should be an order for indemnity costs – where the Defendant made a Calderbank offer – where the Defendant was successful at trial – where the Plaintiff submits there should be a departure from the usual position on the basis that the Defendant ran every conceivable argument and did not focus its case – where the Defendant failed on its alternative arguments - where the case was conducted in a timely and efficient manner – whether it was reasonable for the Plaintiff to reject the Calderbank offer – where the Defendant’s offer was modest and involved very little compromise – where the Plaintiff is to pay the Defendants costs on the ordinary basis.

Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296
In the matter of Keybridge Capital Limited (No 3) [2025] NSWSC 423
Kumaran v Employsure Pty Ltd (No 2) [2022] NSWCA 247
Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274
Windsurfing International Inc v Petit (1987) AIPC 90-441

Texts Cited: N.A.

Category: Costs

Parties: ASCF Funding Solutions Pty Ltd (Plaintiff)
SL Property Maintenance Pty Ltd (Defendant)

Representation: Counsel:
H W Somerville, C Hartcher (Plaintiff)
M A Collins (Defendant)
Solicitors:
Summer Lawyers (Plaintiff)
Bridges Lawyers (Defendant)

File Number(s): 2024/385907

Publication restriction: N.A.

Judgment

1. I delivered judgment in these proceedings on 26 March 2025, see ASCF Funding Solutions Pty Ltd v SL Property Maintenance Pty Ltd [2025] NSWSC 262. The Summons was dismissed. The parties were given an opportunity to make short written submissions about costs and agreed for the matter to be determined on the papers.

2. Section 98(1) of the Civil Procedure Act 2005 (NSW) provides:

(1) Subject to rules of court and to this or any other Act—

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

3. Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) provides:

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

4. It follows that the Defendant is entitled to an order for costs unless it appears to the Court that some other order should be made.

5. The Plaintiff contends that given the way the case was conducted and the Defendant’s failure in respect of some of its arguments, the appropriate order as to costs is that the Plaintiff should pay two thirds of the Defendant’s costs on the ordinary basis as agreed or assessed.

6. The Defendant contends that there should be no departure from the general rule, and seeks an order that the Plaintiff is to pay the Defendant’s costs of the proceedings on the ordinary basis up to and including 3 February 2025 and on an indemnity basis from 4 February 2025 onwards. The basis for the application for indemnity costs is a Calderbank letter dated 3 February 2025.

Arguments why the Defendant should receive less than 100% of its costs

7. The Plaintiff submits that there should be a departure from the usual position because the Defendant ran every conceivable argument and did not focus its case. In particular, it submits that the Defendant ran two arguments which unnecessarily increased the costs of the proceedings. It contends that there should be a reduction in the costs awarded to the Defendant as the successful party because the Defendant has “unfairly, improperly or unnecessarily increased the costs”: Windsurfing International Inc v Petit (1987) AIPC 90-441 at 37,861-37,862.

8. The relevant principles have been stated on many occasions. Nixon J recently expressed them in In the matter of Keybridge Capital Limited (N**o 3) [2025] NSWSC 423 as follows:

[11] Generally, a successful party should have the whole of its costs of the proceedings, including costs on an issue on which it has failed. However, in an appropriate case, a costs order may be formulated to reflect the degree of success on distinct issues. Relevant circumstances in which apportionment across different issues has been said to be appropriate include where a successful party has, in respect of one or more issues, unfairly, improperly or unnecessarily increased costs; where the bulk of the time has been taken on an issue on which the unsuccessful party has succeeded; or where a particular issue or group of issues is clearly dominant or separable: see Access Training Group Ltd v Jane [2024] NSWCA 204 at [190]-[191] (Ward P, Payne JA agreeing).

His Honour also cited Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274 at [20] and Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].

9. The Plaintiff relied on Kumaran v Employsure Pty L**td (No 2) [2022] NSWCA 247 at [12]–[14], which is in the following terms:

[12] The relevant question is whether there is any reason why costs should not follow the event of Mr Kumaran’s and ELMO’s ultimate success in defending the claim by Employsure. That question directs attention to whether there should be a special costs order reflective of Employsure’s success on individual issues. In Calvo v Ellimark Pty Ltd (No 2) [2016] NSWCA 197 at [8]-[10], the Court (Ward, Gleeson, Leeming JJA) said:

[8] Where a plaintiff is ultimately unsuccessful, but a defendant is unsuccessful on some – perhaps the majority – of matters raised by way of defence, there is recurringly a question whether costs should follow the event, or whether there should be a special costs order reflective of the plaintiff’s success on individual issues. In each case, it is very much a matter of impression, based upon matters such as the severability of the issues, the reasonableness of reliance upon the issues, and the extent to which the issues incurred expending additional costs and time.

[9] …, the mere fact that a defence was reasonably arguable does not preclude a court from making a special costs order departing from the starting point of costs following the event. Ultimately, as Hodgson JA explained in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]:

underlying the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs.

[10] In making that assessment of fairness, regard may be had to the extent to which an issue contributed to the cost of the trial, and the extent to which it was arguable. However, the discretion as to costs is not circumscribed by the binary question whether or not an unsuccessful defence was reasonably arguable. The ultimate question – what is the appropriate order to achieve fairness – may in an appropriate case require a more nuanced analysis.

[13] Whilst Mr Kumaran and ELMO failed on the competition issue which involved contested evidence, including cross-examination of experts, and also failed on the protectable interest issue, they ultimately succeeded on the enforceable restraint issue.

[14] The competition issue was a discrete issue, which the primary judge described as “an important issue indeed and it occupied a good deal of time at the hearing”: primary judgment at [337]. Some reduction in costs should be made for Mr Kumaran and ELMO’s failure on this issue. Dealing with the matter broadly, on the limited materials available to this Court, a reduction in the successful parties’ costs of 35 per cent is appropriate.

10. The Defendant’s primary case concerned the question of construction of the Letter of Offer. It was successful on that case. The Defendant advanced two alternative cases, one relying on an alleged implied term and the other relying on the penalties doctrine. I addressed those alternatives briefly in my reasons, although strictly I did not need to do so given the Defendant’s primary case succeeded. I indicated that had I come to a different view about the Defendant’s primary case, I would have rejected its alternative cases.

11. This case was conducted efficiently in the course of a single day. There was no cross-examination. Most of the argument during the hearing focused on the question of construction. The argument about the implied term took very little time and was related to the question of construction. The argument concerning whether or not there was a penalty took slightly longer. It was not entirely discrete from the question of construction because the argument was focused on the legal consequences that would flow from a particular construction of the contract. I concluded that the reliance on the penalties doctrine was misconceived (see [44]). However, I do not conclude that by maintaining the argument, the Defendant unfairly, improperly or unnecessarily increased the costs.

12. It is also relevant that the Defendant made a Calderbank offer that was intended to dispose of the proceedings: see Michael Hill at [22]. That offer reflected an attempt by the Defendant to minimise costs in the proceedings.

The Calderbank letter

13. By letter dated 3 February 2025, the Defendant made an offer to the Plaintiff to resolve the proceedings. The offer proposed that the proceedings be dismissed with no order as to costs on the basis that the Defendant would pay $10,000 to the Plaintiff. The offer was open for 14 days. It was expressed to have been made in accordance with the principles of Calderbank v Calderbank [1975] All ER 333.

14. The letter included the following paragraph:

The proposed loan contemplated by the Letter of Offer was not “established” as, inter alia, the funds the subject of the Letter of Offer were not made “available” by your client for our client to drawdown upon. In fact, within approximately 24 hours of entry into the Letter of Offer, your client advised that it would not proceed with the loan. Accordingly, there was no “establishment of the loan” and your client is not entitled to payment of its fees and costs, as alleged.

That argument was vindicated – see my reasons in the primary judgment at [36].

15. The relevant question is whether it was reasonable in all the circumstances for the Plaintiff to have rejected the offer. A non-exhaustive catalogue of factors to be considered was stated in E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2*)* [2021] NSWSC 1296 at [59] by Ward CJ in Eq as follows:

The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA (with whom McColl and Campbell JJA agreed)).

16. The Plaintiff submits that the offer was not a proper compromise in circumstances where the construction argument was relatively finely balanced. It submits that neither parties’ position was unassailable and that the offer of $10,000 with no order as to costs in a case where legal costs were limited was not indicative of the risks faced by the respective parties, where the full value of the claim was in the order of $250,000.

17. I accept that the Defendant’s offer of $10,000 was modest. It did not represent a significant compromise. The Defendant did not call any witnesses and it was unlikely to have incurred substantial legal costs, and so an offer that it bear its own costs did not involve a significant compromise. While the Plaintiff was unsuccessful in the proceedings, its position on the question of construction was always reasonably arguable.

Conclusion

18. Strictly speaking, there are distinct matters that I need to consider. They are: (1) whether it appears to the Court that some order other than an order that costs follow the event should be made, and; (2) whether costs should be paid on the ordinary or indemnity basis. However, while these matters are conceptually distinct, there is considerable overlap. That is because the existence of the Calderbank letter is a factor relevant to whether there should be a departure from the general rule that costs follow the event, and the contentions as to why costs should not follow the event are relevant to the question of whether there should be an order for indemnity costs.

19. The Defendant failed on its alternative arguments. While the trial may have been slightly shorter without those arguments, the matter was still argued efficiently within a single day. The Defendant also took steps to try to avoid the need for a hearing by issuing a Calderbank letter, but the offer was so modest that it involved little compromise in a case where the question of construction that arose was reasonably arguable.

20. Given this combination of circumstances, it does not appear to me that there should be a departure from the general rule that costs follow the event, but I do not consider that costs should be awarded on an indemnity basis.

Orders

21. The Plaintiff is to pay the Defendant’s costs of the proceedings on the ordinary basis.

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