Kyriacou v Raphis Securities Pty Ltd

George and Filomena

1. George and Filomena say that on 2 February 2022 they succeeded in obtaining all the orders they sought in the respective motions except for the consolidation of the WW Auditors Proceeding and the Raphis Proceeding with the now consolidated Accolade and Reliance Proceedings (on which issue judgment was reserved but which application was subsequently dismissed). George and Filomena now seek the following costs orders.
2. First, that the first and second respondents to the consolidation motion (the Russo parties) pay 30% of George and Filomena's costs of and incidental to the amended notice of motion dated 25 February 2022 on the ordinary basis. Second, that the costs of the consolidation motion (other than 30% of George and Filomena's costs) be the parties' costs in the cause of the respective proceedings. Third, that the costs of the amendment motion be the parties' costs in the cause.
3. As to the first of those proposed orders, it is noted that the only relief sought against the Russo parties was the making of orders for access to certain email accounts; and that those orders were made on 2 February 2022. It is said that it was not until the hearing of that application that Mr Angelo Russo agreed to provide access to the email accounts (and that, even then, it was only in response to "probing" as to why access had not been granted).
4. George and Filomena point out that access was first sought directly from Mr Russo on 22 October 2021; and they say that the costs of the amended notice of motion insofar as it related to order 1 (for email access) could have been avoided had the Russo parties provided timely access to the email accounts. It is submitted that their refusal to do so was perverse in circumstances where Mr Russo (and parties with whom George and Filomena say he is aligned) had contended that the plaintiffs were looking to delay the expeditious determination of the associated proceedings (and the WW Auditors Proceeding in particular). George and Filomena again assert (as they did at the hearing on 2 February 2022) that it was the inability to access the email accounts which had effectively put a halt to the progress of all proceedings.
5. George and Filomena submit that costs should follow the event, noting that they were entirely successful against the Russo parties in relation to the access to email accounts. They have suggested that figure of 30% on the basis that access to emails was only one of the four issues before me on 2 February 2022 (but pointing out that the issue was addressed in their evidence and that they and the first respondent's legal counsel filed written submissions in relation to whether the email access order should be made).
6. As to the balance of the costs of the consolidation motion, George and Filomena submit that the appropriate order is that those costs be the parties' costs in the cause in their respective proceedings. George and Filomena say that (although they accept that there was mixed success) they enjoyed a great deal of success in that orders were made for the joinder of two of the four proceedings and all associated proceedings have been expedited and will now be case managed together by the Expedition List Judge. Hence, the submission that the second of the proposed orders is appropriate.
7. As to the costs of the amendment motion, George and Filomena accept that, athough they succeeded in obtaining the relief they sought, they were seeking an indulgence; and, in those circumstances, they propose the third order (i.e., that costs of the amendment motion should be the parties' costs in the cause).
8. No submissions were filed by the Russo parties on the issue of costs.

WW Auditors (third respondent)

1. WW Auditors submits that George and Filomena should pay its costs of the consolidation motion, noting that it is not a party to the Raphis Proceeding and that the consolidation motion was dismissed. It is said that dismissal of the consolidation motion is an event within the meaning of r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), such that costs should follow the event unless otherwise ordered.
2. WW Auditors submits that there is no occasion for an "otherwise" order as the consolidation motion was prosecuted by George and Filomena for what they perceived to be their tactical or forensic advantage. In essence, this submission seems to echo the submissions made at the hearing of the consolidation motion to the effect that it was in George and Filomena's interests to delay the hearing of the WW Auditors proceeding, on which they might not succeed, until the hearing of their own proceeding; a submission on which I did not consider I was in a position then (or, for that matter now,) to come to a concluded view.
3. More relevantly, it is said (and I accept) that George and Filomena failed on the consolidation motion because they did not establish that it was in the interests of justice for the relief sought to be granted (for reasons including that George and Filomena had delayed until after first obtaining security for costs from WW Auditors in separate proceedings ([57]) and had made the informed choice of commencing separate proceedings ([94]); and because of the impracticality and inutility of what they proposed).

Reliance and Accolade (ninth and tenth respondents)

1. Reliance and Accolade seek orders in respect of both motions that George and Filomena pay their costs on the ordinary basis.
2. As to the consolidation motion, Reliance and Accolade say that they conceded at an early stage that it was appropriate for the respective Reliance and Accolade Proceedings to be consolidated. They place reliance on a letter dated 13 January 2022, marked "without prejudice save as to costs", which was sent by their solicitors (MDW Law) to George and Filomena's solicitors in which they put forward a proposal for the joinder of the Reliance and Accolade Proceedings (but for the other proceedings not to be joined to any other set of proceedings) and for the costs of the motion to be each party's costs of the proceedings. It is said that this offer should have been accepted; and that the fact that it was not accepted meant that Reliance and Accolade were required to appear on the joinder motion and to defend the other relief sought in the motion which affected them. It is submitted that they ultimately did this successfully and that costs should therefore follow the event.
3. As to the amendment motion, it is noted said, at the hearing of the motion on 2 February 2022, Senior Counsel for George and Filomena conceded that the amendment motion was not pressed against Accolade and Reliance but that, up to that point, Accolade and Reliance had incurred costs in attempting to determine why they were named as parties to the proposed amended statement of claim, what relief was sought against them and what causes of action were pleaded against them. Complaint is made that at no stage prior to the hearing of the amendment motion did George and Filomena's legal representatives indicate that the motion would not be pressed against them. Reliance and Accolade say that, although the costs can be expected to be small, there is no reason why (when Reliance and Accolade were required to attend and be heard on the amendment motion) they should not receive an order for their costs.

Cassaniti Parties (14th, 15th, 17th and 18th respondents)

1. The Cassaniti Parties (as defined in the 3 March 2022 reasons) submit that George and Filomena should pay their costs of the consolidation motion on the ordinary basis, invoking the usual rule that costs follow the event (and arguing that the relevant event was the dismissal of the consolidation motion pursuant to r 28.5 of the UCPR).
2. It is noted that the orders made arising from the motion were, first, for the consolidation of the Reliance and Accolade Proceedings (which was not opposed and was also the subject of the Calderbank offer by those respondents on 13 January 2022 to which I have referred above); and, second, for the filing of the proposed further amended statement of claim (to which the Cassaniti Parties had consented prior to the hearing). Accordingly, it is contended that the Cassaniti Parties were wholly successful in opposing the orders sought and are entitled to be indemnified for their wasted costs of the application; and there is no basis to depart from the usual rule.
3. The Cassaniti Parties say that it is not relevant to the question of costs that the matter has now been transferred to the Expedition List instead of being case managed as I had contemplated during the course of the hearing on 2 February 2022 (and see [91] of my earlier reasons).
4. The Cassaniti Parties say that the manner in which the application for joinder or consolidation came about is relevant in this context, pointing out that (on the third occasion of the failure by George and Filomena to serve their evidence) the Cassaniti Parties had sought for the matter to be relisted before the Registrar; and that, at 8.46am on the morning of the directions hearing (1 November 2021), George and Filomena filed and served an affidavit advising that they intended to file a motion to join all the matters before the Court. It is submitted that this was done as a fait accompli without any approach to the Cassaniti Parties (and prior to service of any of the Kyriacous' evidence).
5. The Cassaniti Parties say that it was only after MDW Law's letter dated 12 January 2022, seeking clarification as to the mechanics of the proposed joinder and the relevant rule under which it was sought, and as to whether George and Filomena also sought to seek an order for the proposed amended statement of claim, that George and Filomena served the amended notice of motion for consolidation and amendment on 25 January 2022.
6. Finally, it is submitted that application of effective case management and co-operation between the parties could have achieved the same resolution much more expeditiously and cost effectively (if that had been the desired goal of the motion). The Cassaniti Parties complain that they have been put to a real and unnecessary expense which has not advanced the litigation but, rather, has frustrated and delayed it. As such, it is submitted that the Cassaniti Parties should have their costs of the motion paid on the ordinary basis.

Determination

1. The principles applicable on interlocutory costs applications are well-known. There is a broad discretion as to costs generally (see s 98 of the Civil Procedure Act 2005 (NSW)), which discretion must of course be exercised judicially and by reference to the overriding statutory purpose mandated by s 56 of the Act. Moreover, the usual rule is that costs follow the event (r 42.1 of the UCPR). Where there is more than one event or there is mixed success on an application, questions of apportionment of costs may arise.
2. There is also an issue as to whether it is appropriate to determine costs issues on interlocutory applications or to reserve the question of such costs to be determined at the final hearing (with the benefit of a more complete understanding of the issues and conduct of the case). The rationale for making an order that costs be reserved or costs in the cause is that, at an interlocutory stage, the court is often not in a position to determine who in justice should bear the costs of the interlocutory application. Nevertheless, each case must depend upon its own facts and the primary aim is to reflect the justice of the situation in any costs order (see Dal Pont, Law of Costs (LexisNexis 5th ed, 2021) [14.27] 491; Petar v Macedonian Orthodox Community Church St Pekta Inc (No 2) [2007] NSWCA 142 [21] (Beazley JA, as Her Excellency then was, Giles and Hodgson JJA); Khoury v Sidhu [2011] FCA 857 [31]-[32] (Greenwood J)).
3. In the present case, I accept that it is appropriate that I deal with the costs of these discrete interlocutory applications at this stage, as the ongoing case management of the matter will now be assumed by the Expedition List Judge.
4. Dealing first with the amendment motion (as it is raises a single issue), I consider that (other than in relation to Reliance and Accolade) the costs should be the parties' costs in the cause (as George and Filomena submit). Leave to amend was necessary in any event; and George and Filomena were certainly seeking an indulgence from the Court. However, as to Reliance and Accolade, the application was not pressed. They would still have been required to attend at the hearing of the consolidation motion on 2 February 2022 (and hence those costs would seemingly have been incurred in any event) but I accept that costs would have been incurred in the preparation for the separate amendment motion. Ordinarily, the concession that the costs of this aspect of this matter would be likely to be small might tell against the making of costs orders at this stage. However, as Reliance and Accolade are not parties to the Raphis Proceeding (and that proceeding has not been joined or consolidated with the Reliance/Accolade Proceedings) I accept that it is appropriate to make a costs order in their favour at this stage and I will do so (limited to the costs of preparation for the amendment motion).
5. Turning then to the consolidation motion, which as noted above involved a number of issues, I deal first with the application for email access. Since no submissions were made by the Russo parties and since I considered the objection to email access to be misconceived, and on the basis that an apportionment of costs referable to the application for email access is not unreasonable, I will make the first of the orders sought by George and Filomena in relation to the consolidation motion. However, I consider a 25% portion of their costs is more reasonable (having regard to the fact that email access was one of four issues and it occupied less time than the consolidation application itself).
6. As to the balance of the costs on the consolidation motion, I consider that Reliance and Accolade should have their costs borne by George and Filomena as they had, quite sensibly, proposed the joinder of the Reliance and Accolade Proceedings (which was ultimately not opposed by George and Filomena) and they resisted any further joinder (and were successful in so doing).
7. As to WW Auditors, I see no reason for costs not to follow the event. It was not a party to the Raphis Proceeding (as already noted) and it successfully resisted consolidation.
8. As to the Cassaniti Parties, again I consider that there is no basis to depart from the usual rule. The consolidation motion failed for the reasons set out in my 3 March 2022 decision. I accept that I had contemplated a different outcome by way of case management of the proceeding but that transpired not to be feasible. Had I ruled on the consolidation application on 2 February 2022 I would have dismissed it. The fact that the proceedings have now been expedited (without opposition by the parties) is not to the point. Nor is the fact that the proceedings are together being case managed by the Expedition List Judge. While I made clear that it is open to George and Filomena to press again in the future for such an order; the fact remains that George and Filomena brought and pressed an application for consolidation of all four of the proceedings; that was unsuccessful on the material before me at that stage. The degree of success to which they point could have been achieved by consensus on a programme for case management but (perhaps due to the opposing perspectives as to the cause of or reason for the delay to date in the proceeding) such consensus was not achieved in advance of the contested hearing of the consolidation motion. Costs should in my opinion follow the event - that being the dismissal of the application for joinder or consolidation of all four proceedings.

Orders

1. For those reasons, I make the following orders: 1. Order that the first and second respondents to the amended notice of motion dated 25 January 2022 and filed in Court on 2 February 2022 (the consolidation motion) pay 25% of the costs of the plaintiffs in the Raphis Proceeding of and incidental to the consolidation motion, such costs to be payable on the ordinary basis. 2. Order that the plaintiffs in the Raphis Proceeding pay the costs of the ninth and tenth respondents to the amended notice of motion filed on 24 November 2021 (the amendment motion) limited to the costs of and incidental to preparation for the amendment motion (but not their attendance in court on 2 February 2022). 3. Order that the plaintiffs in the Raphis Proceeding pay the costs of each of: the third respondent to the consolidation motion; the ninth and tenth respondents to the consolidation motion; and the fourteenth, fifteenth, seventeenth and eighteenth respondents to the consolidation motion, being the costs of and incidental to the consolidation motion, such costs to be payable on the ordinary basis.

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