Davis Stack Capital Pty Ltd v Raj & Jai (Mudgee) Pty Ltd (No 2)

Category: Costs

Parties: Davis Stack Capital Pty Ltd (ACN 162 590 874) (First Plaintiff)
PCL Corp Pty Ltd (Second Plaintiff)
Enveedee Investments Pty Ltd (Third Plaintiff)
RKMN Holdings Pty Ltd (Fourth Plaintiff)
Raj & Jai (Mudgee) Pty Ltd (ACN 659 710 326) (First Defendant)
Raj & Jai Construction Pty Ltd (Second Defendant)
Caerleon Mudgee Pty Ltd (Third Defendant) (submitting appearance)

Representation: Counsel:
A Shearer SC with D Farinha (Plaintiffs)
A McInerney SC with D Robertson (First and Second Defendants)
Solicitors:
Dentons (Plaintiffs)
Mills Oakley (first and second Defendants)

File Number(s): 2024/00385624

Publication restriction: Nil

JUDGMENT

1. On 13 June 2025, I delivered the primary judgment in these proceedings: Davis Stack Capital Pty Ltd v Raj & Jai (Mudgee) Pty Ltd [2025] NSWSC 599 (Judgment). These reasons assume familiarity with the Judgment.

2. I directed the parties to provide short minutes of order containing the orders they proposed in relation to costs and any necessary explanation for those orders.

3. The plaintiffs submit that the defendants should pay 80% of their costs not already subject to an order of this Court.

4. The defendants accept that they should be ordered to pay the plaintiffs’ costs of the proceedings, including all previous costs orders made in the plaintiffs’ favour, save for the costs incurred in relation to an issue that they contend is “dominant” or “separable”. The defendants’ proposed costs orders are:

5. The plaintiffs pay the defendants’ costs of the plaintiffs’ application for orders for specific performance of the USPA against the second defendant (being the relief sought against the second defendant in prayers 3 and 4 of the Summons), including the defendants’ costs of the hearing on 26 and 27 May 2025, as agreed or assessed.

6. Subject to (1) above, the defendants otherwise pay the plaintiffs’ costs of the proceedings, as agreed or assessed.

7. For the reasons that follow, I will order that the defendants pay 75% of the plaintiffs’ costs.

Legal Principles

6. The general rule that “the successful party is generally entitled to his or her costs by way of indemnity” is well-known and often guides the exercise of the Court’s discretion as to costs: Northern Territory v Sangare (2019) 265 CLR 164 at 173 (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ). Where, however, a party succeeds overall in litigation, but fails on a dominant or separable issue, different considerations govern the Court’s discretion. The relevant principles, in this regard, were collected and articulated by the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA) in the following terms:

Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. …

…

Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.

(See also Oikos Constructions Pty Ltd v Ostin (No 2) [2021] NSWCA 98 at [10]-[16], [28] (White JA, Basten and Macfarlan JJA agreeing); Access Training Group Ltd v Jane [2024] NSWCA 204 at [183]-[192] (Ward P, Payne JA agreeing) and [219]-[220] (Basten AJA)).

7. The defendants appropriately accepted that the “Court’s task in apportioning costs is done in a relatively broad-brush basis and largely as a matter of impression and evaluation”.

8. I have approached the question of costs in the present proceedings with these principles in mind.

Application

9. I accept that, subject to one qualification, the plaintiffs would be entitled to the whole of their costs of the proceedings. They were successful in a substantial way against both defendants: they obtained orders for the first defendant to specifically perform the contract for sale and orders for the payment of a substantial sum for default interest, which is an ongoing obligation. The order for specific performance was resisted until close to the hearing on the basis that damages were an adequate remedy, despite authority cited in the Judgment to the opposite concerning real property: see Judgment [29]-[32]. And, until the eve of the hearing, the defendants resisted the orders for default interest, without any explanation, where their liability was incontrovertible.

10. The qualification is that, as the plaintiffs accept, they failed in their claim for specific performance against the second defendant and there ought to be some allowance for this. That claim was separable from the plaintiffs’ entitlement to a decree of specific performance against the first defendant. It took up the majority of the two days of the hearing and was the only substantive issue which remained in dispute between the parties at the commencement of the hearing. Viewed that way, it was the dominant issue at the trial. However, that situation only arose because of the defendants’ late change of position, in abandoning their contention that damages were an adequate remedy, and, on the morning of the commencement of the hearing, seeking leave to discontinue their cross-claim. A costs order has already been made in relation to the cross-claim: see Judgment [100] and order at [101(2)].

11. The question is whether it is more appropriate to discount the plaintiffs’ costs, or to make separate costs orders relevant to issues, as proposed by the defendants.

12. I consider it preferable to reduce the amount payable for the plaintiffs’ costs for the following reasons.

13. First, the plaintiffs were successful in obtaining substantial relief against both defendants. I note that the plaintiffs always required a hearing before the Court to obtain any order for specific performance against the first defendant, because of the exercise of the Court's equitable jurisdiction. Those are not costs that ought to be borne by the plaintiffs, because the claim was caused by the first defendant’s breach.

14. Further, although the only issue actually debated at hearing was the second defendant’s liability for specific performance, that was only so because of a late change of position by the defendants. Until close to the hearing, all issues were in dispute, and the plaintiffs were required to prepare accordingly. This tends against treating that issue as truly dominant or separable and suggests that the adoption of an issue-by-issue approach to the assessment of the costs may introduce unnecessary complexity: see eg Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶40-748 at 48,137. The Court may take a broad bush approach to costs, as the defendants conceded, and in this case such an approach is appropriate.

15. I consider the appropriate amount to be 75% of the plaintiffs’ costs.

Orders

16. I make the following order:

17. The defendants pay 75% of the plaintiffs’ costs not yet the subject of a costs order, as agreed or assessed.

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