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Representation: Counsel:
P Lowson (First Defendant)
Solicitors:
WMD Law (Plaintiffs)
JSM Lawyers (First and Second Defendants)
Moray & Agnew (Third Defendant)

File Number(s): 2023/00020908

Publication restriction: Nil

JUDGMENT

1. On 11 May 2026 I dismissed the first defendant’s motion filed 12 March 2026 for a gross sum costs order against the plaintiffs in respect of certain interlocutory costs orders made in the proceedings: see Chamberlain v Kiloren Pty Ltd (Gross Sum Costs Order) [2026] NSWSC 494 (my earlier judgment).

2. These reasons assume familiarity with, and maintain the same abbreviations from, my earlier judgment.

3. In my earlier judgment, I directed the plaintiffs and the first defendant to file and serve submissions on the costs of the motion of no more than three pages within seven days of these orders, whereupon the question of the costs of the motion would be determined on the papers.

4. These reasons determine the costs of that motion.

5. I have had the benefit of written submissions on behalf of both the plaintiffs and the first defendant, together with an affidavit in support from the plaintiffs’ solicitor.

6. The plaintiffs seek an order that the first defendant pay their costs in respect of the motion on an indemnity basis as assessed or agreed. The first defendant contends that the appropriate costs order in respect of the motion is that costs be costs in the cause.

7. In support of their contention that the costs should be on an indemnity basis, the plaintiffs contend that the first defendant’s application for a lump sum costs order had no reasonable prospects of success, the motion having failed because the evidence relied on by the first defendant did not establish an adequate basis for the Court to accurately identify a lump sum figure. Reliance in this regard was placed on the well known cases of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

8. Second, the plaintiffs contend that the timing of the motion was unreasonable, and was a tactical application brought six weeks prior to the substantive hearing unnecessarily diverting the plaintiffs’ attention and legal resources, and denying the Court the opportunity to consider the issue of costs in the context of the proceedings as a whole.

9. Third, reliance is placed by the plaintiffs on an offer dated 23 March 2026 to pay the first defendant’s costs in the sum of $25,700, which was rejected. The plaintiffs contend that the offer was reasonable, that the rejection was unreasonable, and that the first defendant failed to obtain an outcome more favourable than the plaintiffs’ offer.

10. The first defendant relied upon a number of matters in support of its contention that the costs should be costs in the cause.

11. First, they submit that there is no reason for the Court to order otherwise in accordance with r 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

12. The first defendant contends that there are compelling reasons why the Court should not otherwise order.

13. First, reliance is placed on the circumstances which founded the costs orders in the first place, namely because of defaults by the plaintiffs in the conduct of the proceedings over a two and a half year period. It is contended that it would be perverse for the value of those costs orders to be undermined by a costs order favouring the plaintiffs in respect of the motion.

14. Relatedly, reference was made to the fact that the reason why the Court reserved to the first defendant the opportunity to seek a lump sum costs order was an attempt to ameliorate the significant disadvantage to the first defendant of the Court acceding to the plaintiffs’ application to vacate the hearing dates. The harm to the first defendant in this regard should not be further exacerbated by them being burdened by a costs order in favour of the plaintiffs.

15. Next, it is contended that neither party succeeded on the gross sum costs application in circumstances where the Court rejected the evidence of both parties.

16. Finally, the first defendant submits that the Court made no finding that the application was improperly brought, nor any finding of misconduct or delinquency by the first defendant or its solicitors.

17. In response to the plaintiffs’ reliance on the offer of 23 March 2026, the first defendant contends that its rejection was not unreasonable in circumstances where the Court accepted that at least some costs were thrown away but that it was not able to quantify them. The Court has not determined the quantum of costs such that the reasonableness or otherwise of any offer can be assessed.

18. The first defendant also submitted that an order that costs of the motion be costs of the proceedings is consistent with the approach I took in Grubisa v Zhou (No 2) [2025] NSWSC 1052 (Grubisa).

Determination

19. For the reasons set out below, the appropriate costs order is that the first defendant pay the plaintiffs’ costs of the motion on the ordinary basis.

20. The starting point is r 42.7(1) and (2) of the UCPR which provide:

42.7 Interlocutory applications and reserved costs

(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including—

(a) costs that are reserved, and

(b) costs in respect of any such application or step in respect of which no order as to costs is made,

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

(2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.

21. UCPR r 42.1 is also relevant, and provides that:

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.

22. In In the matter of Arada Australia Pty Ltd (No 2) [2025] NSWSC 1293, Brereton J recently stated at [7]:

In my view, there is some danger in saying that the “usual position” in interlocutory applications is that the costs of the parties should be costs in the cause. This suggests that there is some kind of general rule or starting point that the costs of the parties in interlocutory applications are costs in the cause and that there should be some reason for departing from this “usual position”. It does not appear to me that UCPR r 42.7 should be read as qualifying UCPR r 42.1. The general rule in UCPR r 42.1 applies to interlocutory applications. There remains a discretion and various practices and principles that have developed to assist the Court in the proper exercise of its discretion.

23. I agree.

24. In the present case, there clearly was an event for the purposes of r 42.1 of the UCPR: the motion was dismissed. The application was a discrete interlocutory application in respect of which a costs order should be made.

25. I do not regard any of the matters relied upon by the first defendant as warranting an order that the costs of the motion be costs in the cause.

26. First, the circumstances in which the original order was made permitting the first defendant to seek a gross sum costs order, including its purpose and context, do not provide a reason for ordering that the costs be costs in the cause, regardless of the outcome of the motion. It was a matter for the first defendant as to whether or not to bring an application for a gross sum costs order. In making that decision, the first defendant was required to have regard to the material available to it to quantify the gross sum sought. There is nothing in either the context or purpose of the original order which would entitle the first defendant to bring such an application without any risk as to costs, regardless of its outcome.

27. Second, the fact that I did not accept the evidence of one party or another, and thus did not determine a gross sum, does not mean that there has been no event. The motion failed. It was for the first defendant to put forward sufficient evidence to enable the Court to arrive at a gross sum. The material put before the Court did not permit that course.

28. Third, the fact that the motion was not frivolous, vexatious or hopeless, or not improperly brought and the like, does not provide a reason for costs to be costs in the cause, as opposed to an order that costs be on the indemnity basis. Again, the simple fact is that the motion failed. There was an event. That event should be reflected in an appropriate order as to costs.

29. However, I do not accept that any of the circumstances raised by the plaintiffs justify an award of indemnity costs. I do not accept that the motion had no prospects of success. It was supported by evidence from an experienced solicitor and supported by submissions from counsel. Whilst I was not able to determine a gross sum figure on the material provided, I do not regard that material as so deficient that there was no reasonable prospects of success.

30. The fact that the plaintiffs expressly advised the first defendant that the motion lacked merit does not alter the situation.

31. Nor am I prepared to infer that the timing of the motion was, in the circumstances, a tactical one so as to unnecessarily divert the plaintiffs’ attention and legal resources. The attention and legal resources of the first defendant were also “diverted” by the motion. I do not doubt that the motion was brought on instructions by the first defendant’s legal advisors in an attempt to ameliorate the prejudice that I adverted to at the time of making the original costs orders.

32. Rejection by the first defendant of the plaintiffs’ offer of 23 March 2026 to pay the first defendant’s costs in the sum of $25,700 does not sound in indemnity costs. Whilst the Court has dismissed the motion, the Court has not assessed the gross sum in respect of the various costs orders. It is clear, however, that there are likely to have been not insignificant costs incurred in relation to each of those orders. I am in no position to conclude that the offer of $25,700 is a good one or not in the sense that it exceeds the likely sum of costs that will ultimately be recovered by the first defendant in respect of those costs orders.

33. I do not regard my decision in Grubisa as in any way assisting the first defendant on the present application, the exercise of the Court’s discretion as to an appropriate costs order is quintessentially a fact sensitive exercise.

34. For these reasons, the appropriate order in respect of costs of the motion is that the first defendant pay the plaintiffs’ costs of the motion on the ordinary basis, as assessed or agreed.

35. The Court orders that:

36. The first defendant pay the plaintiffs’ costs of the first defendant’s motion filed 12 March 2026 on the ordinary basis as assessed or agreed.

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