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[2026] NSWSC 757
Supreme Court of NSW
2026-06-30
Hmelnitsky J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Devine Real Estate Concord Pty Ltd v Agha (Costs) [2026] NSWSC 757
Hearing dates: On the papers
Date of orders: 30 June 2026
Decision date: 30 June 2026
Jurisdiction: Equity
Before: Hmelnitsky J
Decision: (1) The notice of motion filed 26 September 2023 is dismissed.
(2) Except to the extent already dealt with by earlier costs orders, the first defendant is to pay the plaintiffs’ costs of the proceedings, as agreed or assessed.
Catchwords: COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion — Where plaintiffs were generally successful — Where appeal by first defendant was largely unsuccessful and appeal by second defendant was allowed — Where plaintiffs’ motion to reopen their case on liability was dismissed — Where plaintiffs’ claims against second defendant were subsequently dismissed COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise/Calderbank offers — Whether offer made by defendants constituted a genuine compromise — Whether it was unreasonable for plaintiffs to reject offer — Whether plaintiffs obtained an award of damages more favourable than offer — Whether indemnity costs should be awarded from date of offer COSTS — Party/Party — Costs-capping — Where question of damages has been finally determined and defendants now seek a retrospective costs-capping order — Where costs incurred are disproportionate to damages recovered — Where defendants incurred significantly greater costs than plaintiffs for the period in relation to which costs-capping is sought — Where there has been judicial criticism of parties’ conduct of proceedings — Whether appropriate to make costs-capping order in respect of plaintiffs’ costs
Original judgment source is linked above.
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.4, 42.15, 42.15A
Cases Cited: Agha v Devine Real Estate Concord Pty Ltd & Ors [2021] NSWCA 29
Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424
Devine Real Estate Concord Pty Limited v Agha [2025] NSWSC 837
Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786
Devine Real Estate Concord Pty Ltd v Agha (No 2) [2018] NSWSC 564
Devine Real Estate Concord Pty Ltd v Agha [2018] NSWSC 556
Devine Real Estate Concord Pty Ltd v Agha [2023] NSWSC 359
Devine Real Estate v Agha & Anor [2022] NSWSC 543
Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375
Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368
In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161
Lord v Craig [2026] NSWSC 17
Manefield v Child Care NSW (No 2) [2011] NSWSC 104
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Muscat v Qin (No 2) [2024] NSWSC 391
Preston v Nikolaidis [2017] NSWSC 1527
Sherborne Estate (No 2): Vanvalen v Neaves; Gilroy v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003
Category: Costs
Parties: Devine Real Estate Concord Pty Ltd (First Plaintiff)
Devine Real Estate Drummoyne Pty Ltd (Second Plaintiff)
Steven James Devine (Third Plaintiff)
EMC Just Holdings Pty Ltd (Fourth Plaintiff)
Wajih Agha aka Roger Agha (First Defendant)
Lewis Coombe (Second Defendant)
Representation: Counsel:
M Rennie (Plaintiffs)
P Doyle Gray / A Djurdjevic (Defendants)
Solicitors:
Jemmeson & Fisher (Plaintiffs)
Summer Lawyers (Defendants)
File Number(s): 2018/87652
Publication restriction: Nil
These proceedings have been on foot for over eight years, having been commenced on 19 March 2018. Leaving aside some complications, the plaintiffs’ essential claim was for orders requiring the defendants to comply with certain contractual restraints of trade, orders preventing them from misusing confidential information, and for damages.
The plaintiffs were generally successful. They obtained interlocutory and final declaratory relief in relation to the restraints. An appeal by the first defendant on those issues was largely unsuccessful. The substantive issues in dispute were finally resolved on 24 March 2026 when I made an order for judgment against the first defendant in favour of the plaintiffs in the sum of $163,614.45, plus pre-judgment interest from 21 April 2021.
The remaining issue concerns costs. What follows are my reasons dealing with that issue.
It is necessary to set out a short history of the proceedings to understand the background to the costs issues in dispute.
Immediately after the proceedings were commenced, the plaintiffs sought interlocutory relief. Parker J, sitting as the Duty Judge, granted interlocutory restraints on 27 April 2018 against the first and second defendants, with the restraint against the second defendant being only as to the use of confidential information. The usual undertaking as to damages was proffered by the plaintiffs to secure the injunctions.
On 4 May 2018, Sackar J ordered that the question of liability, including the plaintiffs’ entitlement to final injunctions, be determined separately from other issues in the proceedings. A hearing on those issues was conducted across 12 days in August 2018 and May 2019. Sackar J delivered a judgment on liability on 28 June 2019: Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786 (Liability Judgment). The plaintiffs were largely successful. Sackar J concluded that the defendants had breached their non-compete and non-solicitation contractual obligations to the plaintiffs, their duties of confidence, and ss 181 to 183 of the Corporations Act 2001 (Cth): Liability Judgment at [278], [291]-[292], [392].
On 4 December 2019, Sackar J made final orders giving effect to the Liability Judgment. Those orders imposed a restraint of trade on the first defendant from 26 April 2018 to 26 April 2021 preventing him from soliciting employees or customers away from the first plaintiff’s business and engaging in business in competition with the first plaintiff in certain postcodes and within a 6km radius of its office. Only declaratory relief was granted in respect of the second defendant.
The defendants appealed from the Liability Judgment to the Court of Appeal: Agha v Devine Real Estate Concord Pty Ltd & Ors [2021] NSWCA 29 (Appeal Judgment). This appeal was partly successful. The Court of Appeal allowed the second defendant’s appeal and set aside the orders that had been made in respect of him on 4 December 2019. The first defendant’s appeal was largely unsuccessful.
The first defendant made an application for special leave to appeal to the High Court in respect of the Appeal Judgment. That application was refused on 7 October 2021.
Now again in this Court, the plaintiffs filed a notice of motion on 30 March 2022 seeking leave to reopen their case on liability. The motion was heard on 2 and 4 May 2022 before Sackar J. His Honour published judgment on 5 May 2022: Devine Real Estate v Agha & Anor [2022] NSWSC 543. His Honour dismissed the plaintiffs’ motion and ordered them to pay the second defendant’s costs of the motion.
On 3 November 2022, the second defendant filed a notice of motion seeking orders that the plaintiffs’ claims against him be dismissed with judgment entered for the second defendant against the plaintiffs. Kunc J heard this motion on 22 March 2023 and published his judgment on 12 April 2023: Devine Real Estate Concord Pty Ltd v Agha [2023] NSWSC 359. His Honour concluded that the proceedings against the second defendant should be dismissed. On 24 April 2023, Kunc J made orders by consent dismissing the plaintiffs’ claims against the second defendant and ordered that the plaintiffs pay the second defendant’s costs of the proceedings, including his costs of the motion filed on 3 November 2022. His Honour also directed that there be an inquiry as to whether the second defendant was entitled to any damages pursuant to the plaintiffs’ undertaking as to damages.
On 26 September 2023, the defendants filed a notice of motion concerning costs-capping. They did not however press for that application to be resolved straight away. It is only now that the question of damages has been finally determined that they seek retrospective costs-capping orders pursuant to the September 2023 notice of motion.
On 26 and 27 May 2025, I heard the remaining substantive issues in dispute, being the question of the damages payable by the first defendant as a result of his breaches and the question of the damages payable to the second defendant pursuant to the undertaking as to damages. I published my reasons for judgment on 29 July 2025: Devine Real Estate Concord Pty Limited v Agha [2025] NSWSC 837. I dismissed the second defendant’s application for damages and directed the parties to bring in agreed short minutes of order to give effect to my reasons in relation to the damages recoverable by the plaintiffs from the first defendant.
The parties were unable to reach an agreement. Across several directions hearings from September 2025 to February 2026, I made further directions for the parties to facilitate the resolution of the question of how damages should be quantified. This culminated in a short hearing on 24 March 2026 after which I made orders for judgment in favour of the plaintiffs against the first defendant for $163,614.45, plus pre-judgment interest from 21 April 2021.
The plaintiffs submit that costs, so far as they have not yet been the subject of other costs orders already made, should follow the event: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
The defendants say that the circumstances are such that it is appropriate for the Court to depart from the general rule. The defendants’ position on costs proceeds on two alternative bases.
The defendants’ primary position is that I should make the following orders in relation to costs:
That the first defendant pays the plaintiffs’ costs on the ordinary basis up to 26 July 2018 and thereafter the plaintiffs pay the first defendant’s costs on the indemnity basis.
That the plaintiffs pay the second defendant’s costs on the ordinary basis up to 26 July 2018 and thereafter on the indemnity basis.
The defendants seek these orders on three grounds. First, they rely on an offer they made to the plaintiffs on 26 July 2018 (the 26 July offer) as an offer under r 20.26 of the UCPR which triggers the costs rules in rr 42.15 and 42.15A. Secondly, to the extent that the first ground does not apply, they rely on the 26 July offer as a Calderbank offer which the plaintiffs unreasonably rejected. Thirdly, they say that the Court ought to exercise its general discretion in relation to costs to make the above orders in view of the general conduct of the parties during the litigation, including the making of offers.
If the indemnity costs orders are not made, the defendants nevertheless seek the following retrospective costs-capping order pursuant to their notice of motion filed on 26 September 2023:
“Pursuant to UCPR 42.4, the Court specify the maximum costs that may be recovered by the plaintiffs from the defendants on and from 26 September 2023 to the date of the delivery of final judgment in these proceedings, at $50,000 or other sum the court determines.”
“1. The claim or part of the claim to which this offer relates is the entire claim in these proceedings brought by the plaintiffs.
- The proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment are:
- Judgment in favour of the plaintiffs against the first defendant in terms of the relief sought in the amended statement of claim filed 30 May 2018:
(a) at paragraphs 1-8
(b) at paragraph 9 but with an amendment so the date will be until 15 December 2018 instead of until 27 April 2021;
(c) at paragraphs 10 and 11, and
(d) at paragraph 12 but with an amendment so the date will be until 15 December 2018 instead of until 27 April 2021.
- Judgment in favour of the plaintiffs against the second defendant in terms of the relief sought in the amended statement of claim filed 30 May 2018 at paragraphs 13-20.
- Judgment in favour of the plaintiffs against both defendants in terms of the relief sought in the amended statement of claim filed 30 May 2018:
(a) at paragraphs 21, 22, and 23 for an amount of $100,000.00, and
(b) at paragraphs 24 and 29.
- This is an Offer of Compromise made pursuant to Part 20, Division 4, Rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). If this offer does not take effect under those rules, then the offeror still reserves the right to rely on it, on the question of costs, according to the principles in Calderbank v Calderbank [1975] 3 WLR 586.
- This Offer of Compromise is open for acceptance until 4pm on 10 August 2018 with time being of the essence.”
The defendants say that the 26 July offer contained multiple offers under r 20.26 of the UCPR and that the non-acceptance by the plaintiffs of these offers should trigger the operation of rr 42.15 and 42.15A in respect of the costs of the first and second defendant’s claims respectively.
Rules 42.15(1) and 42.15A(1) each set out the requisite condition for the respective rule to apply:
Rule 42.15 applies in respect of a claim if ‘the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer’.
Rule 42.15A applies in respect of a claim if ‘the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer’.
The main dispute between the parties on this ground surrounds the construction of the terms of the 26 July offer and whether those terms were more or less favourable than the judgment ultimately obtained by the plaintiff.
The defendants contend that the 26 July offer consists of separate offers made on behalf of each defendant and that the terms of the offers should be compared to the result that the plaintiffs obtained as against each defendant individually. They further contend that the offers were severable, such that it was possible for the plaintiff to agree to some, but not all, of the orders proposed in the 26 July offer.
The plaintiffs on the other hand say that the 26 July offer contained only one offer, namely an offer by both defendants for the plaintiffs to dispose of the whole of the proceedings.
In my view, the 26 July offer is one with respect to the settlement of the entirety of the proceedings brought by the plaintiffs. This is apparent in the first paragraph of the offer itself which states:
“The claim or part of the claim to which this offer relates is the entire claim in these proceedings brought by the plaintiffs.”
(2) An offer under this rule—
(a) must identify—
(i) the claim or part of the claim to which it relates, and
(ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, …
I cannot accept the defendants’ submission that the offer contained multiple offers, such that it was possible for the plaintiffs to accept only some of the proposed orders relating to one or both of the defendants. A partial acceptance of the proposed terms for settlement would have amounted to a non-acceptance of the 26 July offer.
That being the case, rr 42.15 or 42.15A must be approached on the footing that the relevant comparison is between the terms of the 26 July offer and the final orders obtained by the plaintiffs in the proceedings.
The parties are in agreement that the effect of proposed order 2.1(b) and (d) of the offer would have been to impose a restraint on the first defendant until 15 December 2018.
The parties are also in agreement that the effect of proposed order 2.2 would have been to impose a restraint upon the second defendant until 27 September 2018, as sought by paragraph 19 of the amended statement of claim filed on 30 May 2018.
The main area of dispute between the parties about the effect of the offer concerns whether proposed order 2.3(a) provided for the payment of $100,000 by both defendants on a joint basis (as the plaintiffs submit) or two payments of $100,000, one from each defendant (as the defendants submit).
Proposed order 2.3(a) was in the following terms:
“Judgment in favour of the plaintiffs against both defendants in terms of the relief sought in the amended statement of claim filed 30 May 2018:
(a) at paragraphs 21, 22, and 23 for an amount of $100,000.00, …”
Paragraphs 21, 22 and 23 of the amended statement of claim seek damages, equitable compensation, and an order for compensation under s 1317H of the Corporations Act, respectively. These paragraphs are contained in a section of the ‘relief claimed’ which is headed ‘Both Defendants’.
It is reasonably clear that the judgment for $100,000 that was proposed ‘against both defendants in terms of the relief sought in the amended statement of claim … at paragraphs 21, 22, and 23’ was meant to deal with the monetary relief sought by the plaintiffs in these proceedings – relief which was sought against both defendants. That is to say, proposed order 2.3(a) of the offer contemplated one payment of $100,000 from both defendants jointly.
The terms of the 26 July offer would therefore have resulted in the following:
A payment to the plaintiffs of $100,000 by both defendants;
A restraint against the first defendant until 15 December 2018; and
A restraint against the second defendant until 27 September 2018.
The outcome of this litigation has resulted in the following:
A payment to the plaintiffs of $163,614.45 by the first defendant;
A restraint against the first defendant until 27 April 2021; and
Judgment in favour of the second defendant against the plaintiffs.
I am comfortably satisfied that the plaintiffs have obtained final orders and judgment in these proceedings that are more favourable than the 26 July offer. The following factors are relevant to my conclusion.
First, the plaintiffs obtained a better monetary judgment than that which was proposed in the offer.
Secondly, the proposed restraint on the first defendant is less favourable than the restraint period that was ordered by Sackar J, which was until 26 April 2021. This represents a restraint period of some two years and four months longer than the restraint period proposed in the offer. The defendants have rightly conceded this.
Thirdly, although in the end the plaintiffs obtained no restraint at all against the second defendant, the short period of restraint that they could have achieved against him by accepting the offer does not represent a benefit which weighs significantly in the balance. Restraining the second defendant for a period of two months from the date of the offer would only have carried a marginal benefit. He was at that time already prevented by the general law from using or disclosing the plaintiffs’ confidential information to gain an advantage for himself or someone else. Moreover, he had been a junior employee of the first plaintiff and the assistant to the first defendant, whereas the first defendant was a shareholder and director of the first plaintiff. Any marginal benefit that would have been derived from restraining the second defendant for two months is heavily outweighed by the much longer and far more valuable restraint that was obtained against the first defendant by taking the proceedings to trial.
Of course, the final outcome of the litigation vis-à-vis only the second defendant was more favourable to him than the restraint against him proposed in the offer. However, for reasons I have given above, I do not think it is appropriate to view the outcome of the claim against the second defendant in isolation from the outcome of the whole proceedings when considering the 26 July offer, which could only be accepted or rejected i**n globo.
Fourthly and finally, the plaintiffs have had the benefit of factual findings by Sackar J in the Liability Judgment about the serious and systematic breaches by the first defendant of his various obligations to the plaintiffs, including his sabotage of the plaintiffs’ files. While I do not consider this to weigh heavily in the balance, the vindication of the plaintiffs’ position through these findings is a benefit that was afforded by the outcome of the litigation: Manefield v Child Care NSW (No 2) [2011] NSWSC 104 at [45] (Kirby J).
I do not in these circumstances consider that rr 42.15 or 42.15A apply.
The Court has a discretion to make special costs orders where (1) an offer constitutes a genuine offer of compromise and (2) it is unreasonably rejected: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] (Handley, Basten and Beazley JJA).
As to the first element, Basten JA explained in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [9], referring to what was said by Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368, that:
“Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so.”
“(i) the stage of the proceeding at which the offer was received; (ii) the time allowed to the offeree to consider the offer; (iii) the extent of the compromise offered; (iv) the offeree’s prospects of success assessed as at the date of the offer; (v) the clarity with which the terms of the offer were expressed; and (vi) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it …”
In my view, the 26 July offer contained an element of genuine compromise, but it was not unreasonable for the plaintiffs to have rejected it.
The 26 July offer acceded to many parts of the relief claimed by the plaintiffs and represented a material departure from the position the defendants maintained in their defence. It proposed for judgment to be entered against the second defendant in favour of the plaintiffs, a genuine compromise in circumstances where none of the claims against the second defendant would be borne out. The sum of $100,000 offered in answer to the plaintiffs’ claim for monetary relief was also a relatively substantial sum. I was informed in this regard that the plaintiffs had previously made an offer on 16 May 2018 which specified a payment of $373,165, of which $162,665 was by way of damages and the balance was by way of costs. The offer for a payment of $100,000 went a significant way towards meeting the plaintiffs’ position on damages at that point in the litigation.
Be that as it may, I do not think it was at all unreasonable for the plaintiffs not to have accepted the offer prior to 10 August 2018 when it lapsed. The consideration overwhelmingly in favour of this conclusion is the fact that the final orders that the plaintiffs achieved are, in important respects, better than the terms of the offer, for the reasons explained above at [39]-[44].
The fact that there has been a lengthy delay and significant legal costs incurred between the orders giving effect to the Liability Judgment and the final judgment the plaintiffs obtained against the first defendant does not impact on my conclusion. The further appeal proceedings and procedural steps (and the associated legal costs) that sprung from the outcome in the Liability Judgment are not attributable solely to the plaintiffs, nor could they have been in the plaintiffs’ view at the time they were considering whether to accept the 26 July offer.
The defendants invoke the general power reposed in the Court by s 98 of the Civil Procedure Act 2005 (NSW). They seek an indemnity costs order in view of the parties’ overall conduct of these proceedings, even if such orders are not otherwise justified by reason of the plaintiffs’ failure to accept an offer. Their submissions on this point overlap with their submissions on why the costs recoverable by the plaintiffs ought to be limited in accordance with their costs-capping application, which I deal with in further detail below.
The defendants’ submissions on this point are ambitious. The parties’ combined total costs of these ruinous proceedings are approximately $2.94 million, including the costs of the appeal and special leave application. There have been two trials dealing with substantive issues, an appeal, a special leave application and numerous interlocutory applications. Leaving aside the particular criticisms made by Sackar J in relation to the conduct of the liability hearing before his Honour, there is nothing in the evidence before me that would warrant such an extraordinary departure from the general rule in relation to costs as that for which the defendants contend.
So far as the criticisms made by Sackar J are concerned, neither those comments nor the limited material from that hearing that is before me could possibly justify an order that the plaintiffs now pay the defendants’ costs on the indemnity basis. The plaintiffs, it is to be remembered, were largely successful before his Honour and on appeal. They were also successful before me in that they obtained an award of damages greater than the 26 July offer. I do not consider this to be at all an appropriate case in which to make an order pursuant to s 98 that the successful plaintiffs pay the defendants’ costs on the indemnity basis.
26 September 2023 was a point in these proceedings after the Liability Judgment, the Appeal Judgment, the motion before Sackar J to reopen the case on liability and the motion before Kunc J to dismiss the proceedings against the second defendant had all occurred.
It is relevant to note the following additional matters that have occurred since 26 September 2023.
On 13 October 2023, Kunc J directed that the parties’ solicitors were to serve a notice pursuant to r 42.32 of the UCPR on the parties they represent and on the opposing parties’ solicitors.
On 15 March 2024, the plaintiffs apparently served their notice. As of that date, the plaintiffs’ solicitors estimated that the best outcome that the plaintiffs were likely to achieve on damages was a sum of $251,672.90, and that the estimate for costs was the sum of $708,722.27.
The defendants apparently served their notices on 27 March 2025, although the notices are dated 16 May 2024. They estimated that, between both the first and second defendants, legal costs were in the order of $1,501,342.24. Of this figure, $660,671.12 was attributed to the first defendant’s costs and $840,671.12 to the second defendant’s costs, although the defendants’ solicitor has deposed to the fact that these numbers may have been mistakenly reversed.
The parties then proceeded to a two-day hearing before me in relation to damages.
There is no evidence directly addressing the costs incurred by both parties from 26 September 2023 to the date of judgment, 24 March 2026, which is the period covered by the defendants’ costs-capping application. However, the evidence establishes that the parties have incurred the following amounts in costs over the following time periods:
The defendants have incurred $331,078.31 since 16 May 2024.
The plaintiffs have incurred $187,172.15 since 12 April 2023.
The evidence shows that the total costs of these proceedings, including amounts that were already the subject of costs orders, are as follows:
The plaintiffs have incurred $1,109,322.00.
The defendants have incurred $1,831,078.31.
42.4 Power to order maximum costs
(1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.
(2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party—
(a) has failed to comply with an order or with any of these rules, or
(b) has sought leave to amend its pleadings or particulars, or
(c) has sought an extension of time for complying with an order or with any of these rules, or
(d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap—
(i) progress of the proceedings to trial or hearing, or
(ii) trial or hearing of the proceedings.
(3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap—
(a) progress of the proceedings to trial or hearing, or
(b) trial or hearing of the proceedings.
(4) If, in the court’s opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1).
The power under r 42.4 is broad and is to be exercised with a view to facilitating the just, quick and cheap resolution of the proceedings: Lord v Craig [2026] NSWSC 17 at [95] (Meek J). Although not limited to these purposes, an order may, for example, be made in order to ‘curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs’, and to maintain ‘[p]roportionality of costs to the value of the result’: Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 at [185] (Basten JA), quoting Sherborne Estate (No 2): Vanvalen v Neaves*;* Gilroy v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 at [26], [30] (Palmer J).
In Lord v Craig, Meek J summarised the general principles relevant to the exercise of the power under r 42.4 at [103]-[106] as follows:
“[103] … in NSW, conceptually and in respect of quantum, it is clear that the exercise of the power:
(1) is of a discretionary kind, both as to the making of the order and the amount of any sum fixed with the two stages being difficult to separate;
(2) involves consideration of the future litigation from the perspective of each of the parties to the litigation or affected parties which needs to be addressed separately, and the likely consequences balanced;
(3) will depend upon the total mix of factors relevant to the discretion and the weight given to such factors;
(4) involves not merely an evaluative judgment, but one which will encompass a range of possibilities, rather than a binary choice;
(5) has no set range and indeed costs may be capped at ‘nil’, subject to any statutory exceptions; and
(6) is (if UCPR r 42.4 is used) expressly subject to some limits – specifically amounts referable to certain conduct of parties is excluded including amounts that a party has been ordered to pay another party by reason of failures to comply with the rules, amendments, indulgences leading to extensions of time or otherwise caused a party to incur unnecessary costs inconsistent with the just, quick and cheap mandate.
[104] Considerations that may be taken into account include (in part by analogy to other cost powers) the extent of costs actually incurred, the circumstances of the time at which they were incurred, whether they were reasonable in those circumstances and what would have been a reasonable amount to have been incurred.
[105] Capping is inherently interlocutory, and capable of being the subject of a costs variation order if need be. Nonetheless the use of UCPR r 42.4 is intended to have a semi-final effect at least in a practical sense, in that the power of variation is qualified by reference to it being in the interests of justice to make a variation order and the requirement for there being special reasons to do so.
[106] Reasons which might lead the court to ultimately vary an interlocutory costs capping order include, for example, a material change of circumstances.” (footnotes omitted)
“[314] The jurisdiction to make retrospective costs capping orders should be carefully exercised. The parties will have a general expectation that, if successful in the proceedings, they will be able to substantially recover their costs. But that expectation must be tempered by a recognition that UCPR, r 42.4 powers have long been available and may be exercised.
[315] The Court may not be precluded from making an order under UCPR, r 42.4 even at this late stage, if such an order would serve a useful purpose. …”
The main thrust of the defendants’ submissions on this issue is that the plaintiffs had overworked their case to the point that the costs of the proceedings are out of all proportion to the importance and complexity of the subject matter in dispute, which they say was neither novel nor complex. They point to a multitude of comments made by Sackar J during the course of the liability hearing criticising the plaintiffs to that effect. They also point to comments made by Sackar J about the plaintiffs’ delay in bringing their application to reopen the case: Devine Real Estate v Agha & Anor [2022] NSWSC 543 at [15], [67], [76] and [77]. The defendants submit that the plaintiffs, through their solicitor, have not provided any justification for the conduct giving rise to these criticisms.
The defendants say that they, on the other hand, have not been the subject of any judicial criticism for their conduct of the proceedings. To the contrary, they say they have conducted them most efficiently. As evidence of this, they say that the prospect of a cross-claim by the first defendant for payments from the plaintiffs arose during the interlocutory hearing before Parker J, but that no cross-claim needed to materialise as the parties agreed to resolve the matter five weeks after the proceedings were commenced.
The plaintiffs resist the costs-capping application. They point out that the comments of Sackar J relied upon by the defendants do not relate to the fees incurred by the plaintiffs subsequent to 26 September 2023, which is when the costs-capping application was first brought. Furthermore, they say that the defendants have also been the subject of criticisms about their handling of the proceedings, although in their view that is not relevant to the current application. There is otherwise no conduct of the plaintiffs in these proceedings subsequent to 26 September 2023 which has been criticised and therefore no reason to make an order in respect of legal fees incurred after that date based on prior conduct.
To the extent that Sackar J’s comments from the bench during the liability hearing were relevant to the assessment of costs, the plaintiffs point out that his Honour invited the parties to address him on costs in the Liability Judgment at [441]. The defendants at that point did not choose to do so, only bringing their present costs-capping application over four years after the Liability Judgment was published.
Finally, they say that a comparison of the costs incurred between the parties would weigh against the conclusion that the plaintiffs have been needlessly inflating costs or adding to the complexity of the proceedings. In particular, they emphasise that since 12 April 2023, over a period of three years, the plaintiffs have incurred about 57% of the costs that the defendants have incurred since 16 May 2024, over a period of two years.
The order sought by the defendants in relation to costs-capping is an order pursuant to r 42.4(1) of the UCPR that the Court specify the maximum costs that may be recovered by the plaintiffs from the defendants on and from 26 September 2023 to the date of judgment at $50,000 or some other sum determined by the Court.
The matters on which the defendants rely in seeking that order include the numerous comments made by Sackar J about the plaintiffs’ conduct of the hearing before him. It is quite clear that his Honour considered that the case had been overworked by the plaintiffs to a very high degree. The liability hearing took place over 12 days, during which his Honour made a number of comments from the bench about the gross lack of efficiency in the way the plaintiffs’ case was presented. On 19 November 2018, the plaintiffs presented 186 pages of submissions, which his Honour described as a telephone book. He said they were ‘extravagant beyond belief’. This caused the length of the hearing, which had been expedited, to be extended. In the month of March 2019, the plaintiffs served a further 312 pages of submissions.
Sackar J made numerous other comments about the plaintiffs’ conduct of the hearing. His Honour said:
“It’s intolerable, Ms Heath. This case has reached a point where it has been overworked to a level that I have rarely seen in my professional existence, on liability only …
I regard this as humbug in the extreme. It is overworked material …
This is overworking a case to an extreme that I have almost never seen in my long professional career and I will not stand for it …
So far as I am concerned, it’s been overworked enormously.”
“Ms Heath, I’m going to say in the presence of your client that you have virtually made this case not justiciable because the amount of irrelevant minutiae that you’ve managed to cobble together in this phonebook is going to make it near to impossible for me to get through it and near to impossible for me to do justice for the parties. It shows a particular genius for irrelevance, if I may say so.”
“I regard this as ridiculous quite frankly and it’s contrary to the Uniform Civil Procedure Act, in particular s 56 and following.”
His Honour made comments to similar effect at paragraph [13] of the Liability Judgment.
His Honour’s comments were pointed and forceful. They were intended to be taken seriously.
I do not however accept that they can be relied on in the way the defendants now seek. However critical his Honour was in relation to the plaintiffs’ conduct of the liability hearing, those criticisms tell me nothing of any relevance on the question of whether the costs subsequent to September 2023 should be capped.
Nor do the defendants’ other more generalised complaints about the proceedings justify a costs-capping order. They submit that the proceedings had relevance only for the plaintiffs. They submit that the plaintiffs pursued a vendetta at a cost that was out of all proportion to the issues in dispute which, they submit, were neither novel nor complex. In a largely inadmissible affidavit, a solicitor for the defendants has attempted to set out the history of the proceedings and the various frustrations which he attributes to the plaintiffs. In the absence of any attempt to defend the admissibility of this evidence, I have proceeded on the basis that the plaintiffs’ objections to it should be upheld.
I do not regard the matters relied on by the defendants as matters that warrant a costs-capping order. I do not understand how it can be said that the proceedings really only mattered to the plaintiffs when the defendants have spent in the order of $1,800,000 defending them and, at the same time, did not make a reasonable offer to settle them. I also do not see how it can be said that the plaintiffs have pursued a vendetta in circumstances where they have largely been vindicated, both on questions of liability and quantum.
It is true that the costs of the proceedings are wildly out of proportion to the amount of damages recovered. But damages were not the only remedy sought. The plaintiffs also sought and obtained final injunctions to protect their confidentiality and to enforce contractual restraints for years beyond what the defendants were ever willing to offer.
It is also relevant that the disproportion in costs is evident on the plaintiffs’ side as well as the defendants’. In fact, as the plaintiffs point out, the defendants have incurred significantly greater costs during the period for which the costs-capping order is sought than have the plaintiffs.
In my view, the costs-capping application should be dismissed.
The orders of the Court will be:
The notice of motion filed 26 September 2023 is dismissed.
Except to the extent already dealt with by earlier costs orders, the first defendant is to pay the plaintiffs’ costs of the proceedings, as agreed or assessed.
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Devine Real Estate Concord Pty Ltd
Agha (Costs)
(2010) 176 LGERA 424
(1991) 25 NSWLR 358
(2005) 65 NSWLR 268