Deutsch Services Pty Ltd v Apex Bespoke Building Pty Ltd

File Number(s): 2024/00211766

Publication restriction: Nil

EX TEMPORE JUDGMENT (REVISED)

1. On 28 February 2025, these proceedings were dismissed because the plaintiff had not paid security for costs and indicated it would never do so.

2. The defendant moves on a notice of motion filed on 20 December 2024 only seeking a single prayer for relief: that pursuant to s 98 of the Civil Procedure Act 2005 (NSW), Mr David Deutsch, the sole director and solicitor on the record for the plaintiff, pay the defendant's costs of the proceedings, as agreed or assessed.

Background

3. The parties read voluminous evidence that went to the detail of the history of the proceedings. They were originally commenced in the NSW Civil and Administrative Tribunal, where Apex sued Deutsch for alleged outstanding invoices payable by reason of Apex's work done on a property owned by Deutsch.

4. By way of cross-claim, Deutsch sought damages for an alleged breach of contract by the defendant. It alleged that Apex ought to have provided it with a report concerning mould, and did not. Deutsch alleged that this led to the loss of an opportunity to sell the property at a higher price. Deutsch’s claim for the lost opportunity damages was transferred to this Court.

5. Apex brought an application for security for costs. On 4 October 2024, Stevenson J made an order that Deutsch pay into court security for costs totalling $100,000, with $50,000 to be paid by 1 November 2024 and $50,000 by the date 28 days prior to the date for final hearing. Security was not paid. Therefore, the proceedings were stayed.

6. Apex then filed and served the current motion seeking the dismissal of the proceedings and costs, including the special costs order identified. Since that time, the proceedings have been dismissed and the parties agreed that Deutsch would pay Apex’s costs of the proceedings in a fixed sum. Subsequently, the plaintiff has been placed into liquidation.

Principles

7. The motion for the personal costs order is brought by the defendant, relying on the discretionary power of the Court found in s 98 Civil Procedure Act 2005 (NSW): see eg May v Christodoulou (2011) 80 NSWLR 462 at [77]-[79] (Sackville AJA, Macfarlan JA agreeing).

8. Further, the defendant placed reliance on the summary of the principles concerning the Court's discretion to make orders against non-parties, explained by Ward P when her Honour was the Chief Judge in Equity in Anderson v Canaccord Genuity Financial (No 2) [2022] NSWSC 649 at [30]-[34] (appeal allowed in (2023) 113 NSWLR 151 but costs principles not challenged). That summary of principles was based on the High Court's decision in Knight v FP Special Assets (1992) 174 CLR 148 and other decisions, which have given description and application of those principles.

9. While accepting that the criteria identified by Ward P assist in the exercise of the costs discretion, I accept that the categories in which a non-party costs order may be made are not closed and the tests that have been identified are not to be seen as a strict test. Instead, the overriding consideration is whether it is in the interests of justice to make the order. The criteria identified do not comprise a checklist or exhaustive statement of relevant factors. However, a key feature that is often referred to in the authorities is whether the non-party can fairly be judged to be a “real party” to the litigation.

10. There was no real dispute about the principles at play. Rather, the issue was the application to the facts of this case.

Consideration

11. I consider that the following considerations are sufficient, on balance, for me to exercise the discretion requiring Mr Deutsch to pay Apex’s costs of the litigation, as agreed or assessed, in circumstances where the proceedings have been dismissed.

12. It is clear that Deutsch was the moving party for these proceedings. Mr Deutsch has been the solicitor on the record for Deutsch and therefore, in that sense, has provided support, if not funding, for the litigation. Further, it is clear that Deutsch can be described as a “person of straw”.

13. I am also satisfied that Mr Deutsch had an interest in the litigation and had a “substantial interest” by reason of the fact that Deutsch is a trustee company of the Deutsch Family Trust. The trust deed in evidence reveals that Mr Deutsch is a beneficiary, along with his family members and other potential beneficiaries. While the trust is a discretionary trust, Mr Deutsch is the controller of that trust, because he is the sole director and shareholder of the plaintiff trustee company.

14. Mr Deutsch was the decision maker in respect to the exercise of the trustees' discretionary powers, and he was also a beneficiary of the trust and a potential object of this discretion. Thus, the fruits of the litigation were his or were “substantially within his gift”: see Ipex ITG Pty Ltd and Takapana Investments Pty Ltd [2014] VSCA 315.

15. I do consider that this situation is consistent with the facts that arose in the more recent Victorian Court of Appeal decision in Kyne v Gerard Brandrick & Associates Pty Ltd [2025] VSCA 17. There it was determined that while an individual was the director and solicitor of an impecunious company, and had lent money to the company for the litigation, those factors were not sufficient to lead to the exercise of the discretion to make a personal costs order. The Court of Appeal did indicate that a personal interest was a relevant criterion in its consideration, and that personal interest did not exist, but it exists here.

16. While I accept that the parties did not refer me to any decision completely on fours with the current factual situation, it is always a question of the Court's discretion based on the evidence before it.

17. While Apex had sought security for costs from Deutsch, and has obtained an order that Deutsch pay its costs, I do not consider that precludes the exercise of the discretion in making a personal costs order against Mr Deutsch in favour of Apex.

18. I otherwise adopt the submissions of Apex provided in writing and orally.

Orders

19. The Court orders that pursuant to s 98 Civil Procedure Act 2005 (NSW), Mr David Deutsche pay the defendant’s costs of the proceedings as agreed or assessed.

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