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Category: Costs

Parties: Alan Walker in his capacity as liquidator of Quasar Constructions (Commercial) Pty Ltd (in liq) (First Plaintiff)
Quasar Constructions (Commercial) Pty Ltd (in liq) (Second Plaintiff)
James Stuart Crawford (First Defendant)
Crawford 6 Pty Ltd (Second Defendant)
Brookhollow Investments Pty Ltd (Third Defendant)

Representation: Counsel:
J Parrish (Plaintiffs)
G D McDonald (Defendants)
Solicitors:
Hilton Bradley Lawyers (Plaintiffs)
HFK Law (First and Second Defendants)
Emerson Lewis Lawyers (Third Defendant)

File Number(s): 2025/90316

JUDGMENT

Background

1. By my judgment delivered on 30 May 2025 (Re Quasar Constructions (Commercial) Pty Ltd [2025] NSWSC 557), I held that I could not make orders sought by the Plaintiffs under s 1323(1) of the Corporations Act 2001 (Cth) on a final basis and could not make orders on an interim basis under s 1323(3) of the Act, but I could make interim freezing orders under Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) rr 25.11 and 25.14. After hearing the parties further, I made such interim orders under those provisions. It remains to determine the costs of that application.

Applicable principles

2. The applicable principles are well-established. Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid; costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with r 42.1 of the UCPR. A successful party in proceedings has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [134] (“Oshlack”). The principle that costs should follow the event is the “guiding principle” with respect to costs, and the onus is on the losing party to establish the basis for a departure from the usual costs rule in UCPR r 42.1: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]; Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]–[25].

3. The case law has also addressed the question whether costs should be determined by reference to the result as to particular issues. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (“Bostik”), the Court of Appeal also noted that, in relation to trials, it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party did not succeed took up a significant part of the trial, either by way of evidence or argument.

4. In Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6]–[7], the Court of Appeal noted that:

“Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the general rule is that the Court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the “event” refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per Ward, Emmett and Gleeson JJA. Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, 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]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

The relevant principles for the determination of costs on an issue-by-issue basis were stated in [Bostik] at [38] per Beazley, Ipp and Basten JJA:

“Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.””

5. In Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5], the Court of Appeal noted that:

“There is no issue as to the relevant principles. The discretion under Civil Procedure Act 2005 (NSW), s 98 is ordinarily exercised by requiring that “costs follow the event”: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) “that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action” … But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least “unless a particular issue or group of issues is clearly dominant or separable” … And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff ...” [citations omitted]

6. In Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd (No 3) [2023] NSWCA 316 at [7], the Court of Appeal observed:

“… Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the “general rule” is that the court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the “event” refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). …”

7. In Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21 at [11]–[12], the Court of Appeal summarised the applicable principles as follows:

“Costs are in the broad discretion of the Court with the general rule being that they should follow the “event”: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. Generally, the “event” refers to the event of the claim and may be understood as referring 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] .

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 incurring of costs: Commonwealth Bank of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA, Mason P and Beazley JA agreeing).”

8. I have here partly drawn on my summary of the applicable principles in Re Carbon Copies Composites Pty Ltd [2023] NSWSC 1039 at [14]ff and Re Gerringong Storage Pty Ltd [2025] NSWSC 446 at [3]ff.

The parties’ submissions

9. The Plaintiffs seek an order that the Defendants pay their costs of and incidental to the hearing of their application on 15 and 16 May 2025, including their costs of the subsequent argument as to costs, on the ordinary basis as agreed or as assessed. They accept that costs subject of that order should exclude costs which are dealt with in order 3 of my orders dated 22 April 2025, by which the Third Defendant, Brookhollow Investments Pty Ltd, was ordered to pay the Plaintiffs’ costs thrown away by vacation of a hearing date listed on 29 April 2025, quantified on a gross sum basis as $6,000 inclusive of GST. Mr Parrish, who appears for the Plaintiffs, refers to Oshlack as authority that a successful party has a “reasonable expectation” of being awarded costs against an unsuccessful party. He submits that the Plaintiffs were ultimately successful at the hearing, since freezing orders were made in substantially the form that they sought; although, I should note, those orders were made on an interim basis, to a specified date, rather than until further order. He also submits that, where the Plaintiffs were successful in the event, the Court should order that the Defendants pay their costs under UCPR r 42.1, unless it appears to the Court that some other order should be made as to the whole or part of those costs.

10. Mr McDonald, who appears for the Defendants, made submissions directed to identifying any costs for which the Defendants should be liable, by excluding costs from the proceedings as a whole. In oral submissions, he accepted that that approach need not be pursued, where the Plaintiffs limit their claim to costs to exclude those costs which are dealt with in order 3 of my orders dated 22 April 2025. Mr McDonald rightly acknowledged that the Plaintiffs had sought alternative relief, invoking both the statutory jurisdiction under s 1323 of the Act and the Court’s equitable jurisdiction and were ultimately successful in obtaining interim freezing orders under UCPR rr 25.11 and 25.14. Mr McDonald submits that the Defendants were successful in opposing the application under s 1323(1) of the Act. I accept that submission, at least in the sense that the Plaintiffs were not successful in obtaining final relief under s 1323(1) of the Act; however, that submission has limited practical significance, where the Plaintiffs were successful in obtaining continuing interim relief under UCPR rr 25.11 and 25.14, with the result that they obtained, in substance, the alternative form of relief that they had sought on an alternative basis. Mr McDonald also submits that the Plaintiffs ran something of a “test case” as to the scope of s 1323(1) of the Act. However, the issue as to the scope of that section was one issue in the proceedings, on which the Plaintiffs were unsuccessful, and they succeeded in other issues in the proceedings, including establishing the factual basis of continuing relief and establishing their entitlement to continuing relief notwithstanding the claims of non-disclosure advanced by the Defendants, and they obtained, in practical terms, relief on the alternative basis on which they had sought it.

11. Mr Parrish responds to the Defendants’ contention that the Court should differentiate between particular issues by submitting that the costs of the proceedings should follow the practical result, namely that freezing orders were made against the Defendants on substantially the terms sought by the Plaintiffs; and he relies on Bostik at [38] to submit that the Court should order costs in accordance with the outcome of the proceedings without attempting to differentiate between particular issues. In oral submissions, Mr Parrish also pointed out, and I accept, that there was a significant contest as to whether continuing freezing orders should be made at the hearing, by reference to both the factual basis of those orders and a claim advanced by the Defendants there had been non-disclosure before Hammerschlag CJ in Eq when he had made interim freezing orders. The Defendants were not successful resisting interim freezing orders on that basis.

12. Adopting the approach indicated by Bostik and the subsequent case law to which I have referred above, I do not accept Mr McDonald’s submission that there was here a particular issue or group of issues which was clearly dominant or separable such that the Court should differentiate between the issues on which the Plaintiffs were successful and those, primarily the scope of s 1323(1) of the Act, on which they failed. I am also not satisfied that the issue as to s 1323(1) of the Act took up a significant part of the trial, although it required some analysis in the principal judgment, where the factual basis of the application and the non-disclosure issues raised by the Defendants took up the substantial part of the hearing time.

Determination and orders

13. For these reasons, it seems to me that the basis for an apportionment of costs is here not established, and I make the following order:

The Defendants pay the Plaintiffs’ costs of and incidental to the hearing of the application on 15 and 16 May 2025, including their costs of the subsequent argument as to costs, on the ordinary basis as agreed or as assessed, excluding the costs dealt with in order 3 of the orders dated 22 April 2025.

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