Hanave Pty Ltd v Nomad Sydney Pty Ltd [2023] NSWSC 533 | Case summary

Supreme Court of NSW|2023-05-19|Before: Chen J

Introduction

On 24 March 2023 I delivered my reasons for judgment in this matter. I made a number of separate orders in connection with costs, one of which was an order that the defendant pay the plaintiff's costs of the proceedings in this Court (order 8).
At the time judgment was delivered, the defendant sought, and was granted, leave to vary the order for costs so made. The defendant has, consistent with the leave granted to them, sought to vary the costs order.
Each side served evidence and submissions. The defendant read, in support of the application, an affidavit of Carrie Peterson sworn 31 March 2023 (which was admitted without objection). The plaintiff read, in opposition to the application, an affidavit of Robert Burke affirmed 4 April 2023 (which was admitted without objection).
On 3 May 2023, the parties advised that they did not require a further hearing in connection with the defendant's application to vary the costs order, and were content for it to be determined "on the papers".
The defendant raised three matters to support a variation of that order - as follows: an order reserving the costs of the appeal in this Court (a) pending the issuance of the new market rent determination; or (b) until the Appeal Panel determines whether the current market determination should be remitted to the original valuer, Mr Hermiz. In the alternate, the defendant submits that costs should be apportioned between the parties to reflect their respective success in the appeal proceedings.
The plaintiff opposes the orders sought by the defendant - although making specific responses to each of the defendant's submissions, essentially argues that, because it was successful in the proceedings, it should have its costs of the appeal to this Court "pursuant to the usual costs rule", and that no apportionment should occur.
That which follows assumes familiarity with the reasons in my earlier judgment.

Reservation of costs until determination of market rent

The defendant sought an order that the costs of the proceedings in this Court be reserved pending the ultimate determination of whether there is a "substantive increase in annual rent in the new determination" (defendant's submissions at [6]).
Although not expressed in these terms, the effect of the defendant's submission is that the outcome of the annual rent review should be considered the "event" for the purposes of determining costs; hence, the question of costs should await - that is, be reserved - pending the determination of the rent review.
The starting point is that although costs lie in the Court's discretion (s 98 of Civil Procedure Act 2005 (NSW)), the usual exercise of that discretion is that costs follow the event. This is reflected in r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ('the UCPR'). Generally speaking, the event is characterised as, or refers to, the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15]. In my view, and as the plaintiff argued, the "event" is here is reflected in the success of the plaintiff in overturning the decision of the Appeal Panel.
It is clear that, in a given case, the "event" for costs purposes may involve consideration of issues: Hendriks v McGeoch (2008) Aust Torts Reports 81-942; [2008] NSWCA 53 at [102]. But, so far as the defendant's submission is concerned, that is not this case. The general statement of the "event" requires no modification, in my view. That is because, no issue in the appeal concerned the amount of annual rent that might become payable following the rent determination.
Furthermore, and contrary to what was argued by the defendant, I do not accept that the costs discretion in favour of the plaintiff should only be engaged if, ultimately, the plaintiff "obtains a substantive increase in annual rent in the new determination" (defendant's submissions at [6]). In my view what occurs in any subsequent rental determination is irrelevant to the outcome of the appeal, and the "event" in this case. There is no reason, therefore, to vary the order so as to reserve the costs of the appeal to this Court.

Reservation of costs pending remitter determination by the Appeal Panel

The defendant next argued that the costs of the appeal should be reserved based upon a Calderbank offer that it made to the plaintiff on 3 November 2022: the defendant submitted that, in substance, it had offered to remit the determination of current market rent to Mr Hermiz for him to make a redetermination according to law (defendant's submissions at [9]).
I do not accept the submission simply because on no view could it be said that the defendant has (or will) secure a more favourable outcome: there is, therefore, no utility, in my view, in reserving the costs of the appeal.
The unstated premise of the submission is that, by that offer and the outcome of the appeal, the defendant has bettered - or might, depending upon what happens below - what was offered, or secure (or might secure) a more favourable outcome. In my respectful view, that is plainly not so. It is necessary to draw attention to the actual terms of the offer in order to explain why.
The 3 November 2022 offer contained an array of terms. It was not, as was submitted, merely confined to an offer directed to, in effect, allowing the appeal from the Appeal Panel and remitting the determination of current market rent to Mr Hermiz. For example, it required each party to bear its own costs of the proceedings before the Tribunal, including the appeal to the Appeal Panel. And, by way of further example, the offer was conditional upon the agreement of the plaintiff to "execute a deed of settlement with mutual releases [containing] a clause acknowledging that each party agrees to forego its rights to object to the Redetermination, including any right to appeal the Redetermination".
In my view the conditional nature of the offer - at a minimum, the requirement that there be mutual releases in the way identified - is destructive of any suggestion that the defendant somehow bettered, or could conceivably better (depending upon future events), the terms of the 3 November 2022 offer.

Apportionment of costs

The defendant also argued that, if costs were not reserved, the Court should apportion costs in a number of ways: first, the defendant argued that it should be awarded costs of the issues "on which it was successful" (defendant's submissions at [13]); and, secondly, the defendant argued that, in consequence of the "deficiencies" in the amended summons regarding identifying the questions of law, this "occasioned unnecessary litigation, which increased [the defendant's] costs of the proceedings" (defendant's submissions at [15]).
The first submission is directed to issues in the proceedings, and how they were determined; the second submission is essentially directed to the conduct of the litigation by the plaintiff. The defendant's ultimate submission was that the Court should apportion costs and that the "appropriate way" to do this is to order that the plaintiff pay the defendant's costs after the first day of the hearing (defendant's submissions at [16]).

An issues based apportionment

In relation to the submission concerning the issues in the proceedings, the defendant essentially submitted that the appeal involved separate issues and that, notwithstanding the plaintiff ultimately succeeded on appeal, it did not succeed on all issues: this success, it was argued, should be reflected via an alteration to the order for costs on appeal. The defendant's argument relies upon the principle that individual issues litigated in proceedings can constitute part of "the usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost is when that issue is clearly dominant or separable": Doppstadt at [17]; Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64].
The argument here is that, as the plaintiff failed on a number of its grounds of appeal, it is appropriate to apportion costs because they are "separable" issues for costs purposes. When called upon to undertake this assessment, it is accepted that "in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court": Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36].
I do not consider that it is a fair way to measure the success of the plaintiff on appeal by reference to a mathematical assessment of the specific grounds upon which they succeeded, or failed. To do so would, in my view, fail to have proper regard to the fact that many - perhaps most - of the grounds of appeal contained numerous sub-grounds. To submit that, having raised seventeen grounds of appeal, the plaintiff only succeeded on twelve does not, in my view, reflect the reality of what has occurred. For example, in connection with appeal ground 5, there were four grounds of appeal. The subject matter of all grounds was closely connected. I allowed 3 of the grounds (grounds 5(a), (c) and (d), but refused leave for one ground (ground 5(b)). I do not think it could be said that, in those circumstances, there was a failure of this ground: it was merely a rejection of a part of it. Furthermore, some grounds of appeal overlapped, and in other instances one ground was argued more prominently than the other, or to the exclusion of the other. As to this last matter, by way of example, I refused leave in relation to ground 2(b), but that argument was advanced essentially through ground 2(a). So, again, I do not think it could be said that, in those circumstances, there was a failure of this ground.
The only truly separable issue, in my view, was ground 7 - which related to the licence. The plaintiff conceded as much, but submitted that it only formed a "minor part of its case" and in any event did not take up a significant part of the hearing (plaintiff submissions at [11]).
It is true that the issue did not occupy much of the hearing time, and it may well have been considered by the defendant to be minor. But it is clearly a separable issue. I consider that in the circumstances the order for costs should reflect this, notwithstanding the general approach is against apportionment: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].
Nevertheless, I do not consider that, as the defendant submitted, the plaintiff should be ordered to pay the defendant's costs of this issue: to do so would add uncertainty and complexity to the outcome of litigation, and a more pragmatic approach is warranted. Further, in my view, denying the plaintiff's costs "after the first day of the hearing" is neither fair nor just - and, importantly, it would not reflect what I consider to be a reasonable apportionment of the costs involved in connection with that issue.
Accepting that this exercise cannot realistically be assessed with mathematical precision, I consider that a reduction in 5% of the costs payable on appeal is warranted to reflect this separable issue.
In relation to the submission concerning the "deficiencies" in the amended summons, although, ultimately, there were some difficulties with the manner in which the grounds of appeal contained within the summons were framed, the plaintiff did provide a revised document that provided a degree of clarity around the questions of law said to arise. Without intending in any way to diminish the importance of clearly framed grounds of appeal that precisely identify the question of law (for reasons explained in the principal judgment at [44]-[47]), the substantive argument about where the errors arose in the Appeal Panel's reasons was, in my respectful view, sufficiently clear from the submissions. Furthermore, as the outcome of the appeal demonstrates, there were questions of law that aligned with what was argued by the plaintiff.
Thus, I do not accept that the framing of the questions of law in the summons prolonged the hearing, as the defendants submitted, justifying a variation to the order in connection with the costs of the appeal.

Orders

For the above reasons, I make the following orders: 1. Order 8 made on 24 March 2023 is varied to now read as follows: order the defendant to pay 95% of the plaintiff's costs of the proceeding in this Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 May 2023

Hanave Pty Ltd v Nomad Sydney Pty Ltd

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