HER HONOUR: I gave judgment in this matter on 20 September 2024, declining to make an order for specific performance against the guarantor of a contract for the sale of land and otherwise making unopposed orders for specific performance by the purchaser: Evagelakos v UPG 318 Pty Ltd [2024] NSWSC 1179. The parties now seek differing costs orders of the proceedings.
[2]
Facts
The proceedings were commenced on 24 June 2024, when the plaintiffs, Spiro and Helen Evagelakos, sought specific performance of a contract for sale of land against the purchaser, UPG 318 Pty Ltd, and guarantor, Bhart Bhushan. The purchase price was $20.6 million and the date for completion, as extended, was 8 November 2023. The plaintiffs also sought orders for interest accruing under the contract, together with damages and costs of the proceedings on an indemnity basis. The plaintiffs also filed a motion for expedition.
On 28 June 2024 I granted expedition and listed the matter for final hearing on 14 and 15 August 2024.
On 22 July 2024, the defendants filed a defence and cross-claim. The defendants admitted the contract but put in issue the import of the guarantor's obligations. The defendants admitted that the purchaser had failed to complete the contract on time. Further, the defendants admitted that they had served a purported notice of termination but accepted that the contract remained on foot and that the purchaser was in breach of the contract, having failed to comply with a notice to complete. By the cross-claim, the defendants contended that the vendors' silence in respect of their consent to the relocation of the property's border was misleading and deceptive conduct and that the defendants had suffered a loss of commercial benefit, quantified at some $6.6 million.
On 23 July 2024, the plaintiffs issued various notices to produce and subpoena. On 29 July 2024, the defendants filed a motion seeking to set aside various paragraphs of the notices to produce and the subpoena issued to the purchaser's parent company. On 2 August 2024, I made orders largely in the form sought by the defendants.
On 7 August 2024, the plaintiffs filed a defence to the cross-claim. On 8 August 2024, however, the defendants advised that they wished to discontinue the cross-claim. On 9 August 2024, I granted leave to discontinue the cross-claim. The usual consequences of discontinuance apply to the costs of the cross-claim.
The proceedings were heard on 14 August 2024. At the conclusion of the hearing, I asked the parties to provide short minutes of order in the event that their position on the construction of the guarantee and indemnity was accepted. In the result, as I accepted the defendants' submissions as to the scope of Mr Bhushan's obligations, I made orders in the form proposed by the defendants.
[3]
Submissions
UPG 318 consented to an order that it pay the plaintiffs' costs in the proceedings up to and including the date that it filed its defence, where that defence made clear that there was no real contest between the parties in relation to an order for specific performance against it. Mr Bhushan sought an order that the plaintiffs pay his costs of the proceedings, being largely the costs of preparing for the hearing on 14 August 2024. The only issue then remaining was the scope of his obligations as guarantor, on which he succeeded. Further, the defendants made two Calderbank offers on 17 July 2024 and 12 August 2024. (As these offers were not in evidence, it is not necessary to consider this submission further.)
The plaintiffs sought an order that the defendants pay their costs of the proceedings, where they had obtained a declaration that UPG 318 was in breach of contract, an order for specific performance against UPG 318, an order that the guarantor take steps necessary such that that occurs, and judgment for damages (being interest) of $1,410,055.32. Further, the plaintiffs noted that, on 22 July 2024, the defendants filed a cross-claim seeking, by way of set off, $6,635,000.00 for loss and damage. On 9 August 2024, five days before the hearing, the defendants discontinued their cross-claim.
The plaintiffs submitted that Mr Bhushan changed his position in his written and oral submissions as to the scope of his guarantee. The remaining issue of whether an order for specific performance should be made against the guarantor was said to have changed leading up to, during, and after, the hearing. The defendants' ultimate position was reflected in the terms of short minutes of order provided to the Court in the event that that their position was accepted, and ultimately made. The defendants were said to have capitulated in agreeing to judgment in respect of interest owing on the purchase price (I did not understand that this was seriously in contest; the issue was whether the guarantor was obliged to pay this amount on settlement in UPG 318's stead).
The plaintiffs submitted that when regard was had to the defendants' capitulations and the orders the plaintiffs ultimately obtained, the plaintiffs achieved, in substance, what they had sought. The mere fact that the Court does not make an order in the precise terms initially sought does not have the effect that the Court should not award costs: State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8]. Given the defendants' late concessions, it was said to be reasonable for the plaintiffs to litigate whether Mr Bhushan ought to specifically perform the Contract: Sportsbet at [8].
In the alternative, the plaintiffs submitted that it was not appropriate for the plaintiffs to be ordered to pay any part of Mr Bhushan's costs, where the plaintiffs achieved a substantial measure of success on an issue that "was of sufficient significance in proportion to the whole case": BHP Billiton Iron Ore Pty Ltd v National Competition Council [No 2] [2007] FCA 557 at [23]-[24]. The fact that a plaintiff is not entitled to the costs of an issue on which they have failed "does not necessarily mean that [they] should be ordered to pay the defendant's costs on that issue … the incurring of costs on the issue on which the plaintiff fails is not solely attributable to the plaintiff's decision to prosecute that issue, but can also be attributed, in part, to the defendant's decision to contest the issue on which the defendant failed": Mizzi v Reliance Financial Services Pty Ltd [2007] NSWSC 37 at [96] (per Brereton J). If the Court was minded to order that the plaintiffs pay part of Mr Bhushan's costs, this is an appropriate case for the making of a Sanderson order: Sanderson v Blyth Theatre Co [1903] 2 KB 533. This was not a case where there had been "nothing about the conduct of the [UPG 318] which necessitated the bringing of the [proceeding] against the [Mr Bhushan]": Gould v Vaggelas (1985) 157 CLR 215 at 229-230; Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15] cf Fairborne Pty Ltd v Strata Store Noosa Pty Ltd (No 2) [2009] QSC 307 at [9].
[4]
Consideration
The issues pleaded by the plaintiffs were largely accepted by the defendants in their defence. There was no dispute that the plaintiffs were entitled to an order for specific performance against UPG 318. The issue was whether the plaintiffs were entitled to such an order against the guarantor, either to perform the contract at the same time as the purchaser or at all.
The plaintiffs relied on an affidavit by Mr Evagelakos and their solicitor, Leon Rizos. The problem inherent in the notices to produce and subpoena continued, insofar as the plaintiffs served evidence concerning unrelated proceedings. Mr Bhushan was the same guarantor of a contract for sale of land to a related company of UPG 318, but the terms of the guarantee were different: Ryan v UPG 322 Pty Ltd [2023] NSWSC 1293. The plaintiffs also sought to adduce evidence regarding efforts to enforce the orders made in Ryan. That evidence was not relevant and fell by the wayside.
The defendants called no evidence. There was no cross-examination. The defendants raised only one issue, being the interpretation of the guarantee. Mr Bhushan's position was that specific performance was not available given the terms of the guarantee, but did not suggest that, if his construction of the guarantee clause was not accepted, then any discretionary factors pointed against an order for specific performance being made against him.
Mr Bhushan succeeded on that issue. I do not accept that Mr Bhushan changed his position; it turned on the proper construction of a contract, which did not change. Any costs order should reflect Mr Bhushan's success but also the defendants' readiness to admit the facts and issues which were not genuinely in dispute, and to focus on the issues that were.
I consider that the costs orders proposed by the defendants are fair and appropriate in the circumstances of this case, essentially for the reasons advanced by the defendants. One of the most, if not the most, important principles in the exercise of the discretion regarding costs, is that an unsuccessful party ought to pay a successful party's costs: Northern Territory v Sangare (2019) 265 CLR 164 at [25] (per Kiefel CJ, Bell, Gageler, Keane and Nettle JJ). Pursuant to the rule that costs follow the event, prima facie, other than in special cases, a wholly successful party should receive costs: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35], [67]. The exercise of the Court's discretion as to costs is directed to ensuring, as much as possible, 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: Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] (per Hodgson JA). There was no disentitling conduct.
[5]
Orders
For these reasons, I make the following orders:
1. Order the first defendant to pay the plaintiffs' costs of the proceedings up to and including 22 July 2024.
2. Order the plaintiffs to pay the second defendant's costs of the proceedings.
[6]
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Decision last updated: 10 October 2024