These reasons deal with the issue of costs following a dispute between the parties as to the ambit and extent of freezing orders made by the Court on 26 March 2021 which is the subject of my judgment in France v Siekaup (No 3) [2021] NSWSC 497. These reasons assume familiarity with that judgment.
The Court has received and considered written submissions on the issue of costs from the parties who are content for that issue to be dealt with on the papers.
In the judgment, I concluded that the freezing orders could be construed as extending to the assets held by Sieve-Storm Pty Ltd as trustee of the Sieve-Storm Trust, as contended by the plaintiff, and should not be limited in the manner sought by the defendants to the trust assets held by Sieve-Storm Pty Ltd as trustee of the Affordable Property Trust. However, I considered that there was ambiguity in the freezing orders as drafted.
The plaintiff seeks an order that the second defendant pay her costs of 22 April 2021 and thereafter or, alternatively, that the costs be the plaintiff's costs in the cause.
The plaintiff submits that the second defendant should be ordered to pay her costs as it did not exercise liberty to apply to vary or discharge the freezing orders after they were initially made and consented to those orders being extended in their current form on 1 and 8 April 2021. She points to the fact that the defendants did not make any effort to liaise with her to clarify the terms of the freezing orders prior to and during the directions hearing before Slattery J on 22 April 2021 when the issue of the ambit and scope of the orders was first raised. She submits that this is contrary to the requirements of ss 56 and 59 of the Civil Procedure Act 2005 (NSW) (CPA), referring to the Kunc J's comments in Tugrul v Tarrants Financial Consultants Pty Ltd (No 5) [2014] NSWSC 437 at [71]-[74].
The plaintiff also submits that the second defendant should be ordered to pay her costs as it did not succeed where the Court construed the freezing orders in the manner contended for by the plaintiff. To the extent that the freezing orders were found to be ambiguous, the plaintiff says that the proper course is for the second defendant to exercise liberty to restore and seek to vary them.
The defendants contend that they are entitled to a costs order in their favour in relation to the scope of the matters the subject of the judgment.
The defendants rely on the application for freezing orders having been made ex parte and submit that the plaintiff gave no reason for why the defendants were not served or given notice prior to the application being made. They contend that the plaintiff's representatives were aware or should have been aware that the Weston and Barraba properties were sold to Sieve-Storm Pty Ltd as trustee of the role of the Sieve-Storm Trust prior to the hearing of the substantive claim before Parker J and prior to and at the time of the hearing of the plaintiff's application for the freezing orders on 26 March 2021. The defendants submit that, despite these matters, the plaintiff sought freezing orders that the Court has found to be ambiguous. In that context, it is submitted that it was reasonable for the second defendant to have sought clarity on the extent of the freezing orders.
The principles applicable to the making of an order for costs are well established. The starting point is that the award of costs is a matter within the Court's discretion: CPA, s 98(1). While the Court's discretion is broad, it must be exercised judicially and consistently with the overriding mandate provided for in ss 56-60 of the CPA: Mead v Watson [2005] NSWCA 133 at [8].
The usual rule is that costs follow the event unless it appears that some other order should be made as to part or all of the costs: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1.
Rule 42.7 of the UCPR relates specifically to interlocutory applications and reserved costs. The general position with respect to the costs of interlocutory applications is that they are to be paid and dealt with in the same way as the general costs of the proceedings. The general purpose of an order for costs is to provide compensation to the party for the costs incurred in successfully bringing or defending an application: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J) and [134] (Kirby J).
Underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea 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 costs that are incurred: Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [9] (McColl JA, Macfarlan JA agreeing), citing Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [13] (Hodgson JA, Beazley and McColl JJA agreeing) and Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA, Mason P agreeing and Beazley JA substantially agreeing).
In this case, the costs in issue relate to a dispute between the parties that concerned the scope of freezing orders that were obtained by the plaintiff on an ex parte basis in aid of a judgment. As noted above, the Court accepted the plaintiff's contention that it was open to construe the freezing orders as extending to the assets of Sieve-Storm Pty Ltd as trustee of the Sieve-Storm Trust. It also rejected the defendants' argument that words of limitation should be included to provide that the orders applied only to the assets held by Sieve-Storm Pty Ltd as trustee of the Affordable Property Trust. In that context, there is force to the plaintiff's submission that she was successful and costs should follow the event.
I accept that the Court also concluded that the freezing orders were ambiguous. As noted in the judgment, freezing orders need to be framed in clear and unambiguous terms that leave no room for doubt as to whether any future conduct will fall within the boundaries of the orders: at [36]. The decision to describe the second defendant in a manner that was inconsistent with the other documents filed in the proceedings justifiably led to confusion on the part of the defendants: at [39].
That said, the defendants consented to an extension of the orders on two occasions, did not seek to clarify the terms of the freezing orders with the plaintiff prior to the directions hearing before Slattery J on 22 April 2021, and made no application to vary the freezing orders in writing or exercise liberty to apply in the usual way.
Even accepting that it may not have been unreasonable for the defendants to seek to clarify the extent of the freezing orders with the plaintiff, the need for the hearings arose because of the second defendant's position that the ambit and extent of the freezing orders should be limited to the assets of the Affordable Property Trust. That position was not accepted by the Court, both as a matter of construction of the freezing orders and having concluded that such a limitation was not warranted in this case: at [35]. In those circumstances, I do not accept that the finding of ambiguity leads to the conclusion that the defendants should be rewarded with a costs order in their favour.
While no formal application was filed by the defendants, having regard to their position at the hearing and the outcome, this dispute is one that should be considered to have been lost by the defendants. In that context, I do not consider that it would be fair or reflect the justice of the situation if the plaintiff did not recover her costs in respect of the discrete issues which were the subject of the judgment. Overall, the plaintiff was successful on the issues raised and successfully defended the attempt by the defendants to limit the terms of the freezing orders. In my view, she should be compensated for that success in the usual way.
For these reasons, I have concluded that the appropriate order in this case is for the defendants to pay the plaintiff's costs of the dispute as to the ambit and extent of the freezing orders made on 26 March 2021 which was the subject of the judgment in these proceedings delivered on 7 May 2021, and I so order.
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Decision last updated: 03 August 2021