Mendonca v Tonna

Costs capping application

1. The matter presently before the Court is a notice of motion filed by the appellant on the same day as the notice of appeal, namely 15 November 2024. Apart from costs of the motion, the substantive orders sought was in the following terms: "(1) Costs of appeal capped under r 42.4 Uniform Civil Procedure Rules 2005 (NSW) in the amount of $15,000 solicitor/client costs consistent with Antov v Bokan at [32] or for an amount to be determined by Court of Appeal."
2. The power to cap costs under the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.4 is available in relation to an appeal pursuant to r 51.1(3) and (4). Rule 42.4 relevantly provides: 42.4 Power to order maximum costs (1) The Court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. … (3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap: (a) progress of the proceedings to trial or hearing, or (b) trial or hearing of the proceedings.
3. The rule is agnostic as to which party may apply for a maximum costs order, but it will be unusual for the moving party to obtain such an order. That is because, as reflected in subrule (2), the purpose of the power is to discourage other parties from taking steps which will unduly increase the costs of the proceedings, in contravention of the overriding purpose stated in s 56 of the Civil Procedure Act 2005 (NSW) as further elucidated in the guiding principles set out in Pt 6, Div 1 of that Act.
4. As explained by Palmer J in Sherborne Estate (No 2): Vanvalen v Neaves [1] the rule will only, or at least usually, be engaged in advance of any determination of the proceedings, [2] and such orders are less likely to be made the further the proceedings have advanced, unless the occasion for making them only arises at some point in the course of the proceedings. As to the purpose, Palmer J stated: "26 I conclude that UCPR 42.4 is intended as a means whereby the Court may, if the need arises, curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs by making it clear, at an early stage of the proceedings, that beyond a certain limit the parties will have to bear their own costs - win or lose. 27 Parties to disputes which are fuelled by personal animosity - FPA applications are a prime example - are sometimes carried away by the desire to vindicate their positions publicly in a court of justice. Such parties insist on marshalling every conceivable issue in support of their case and on rebutting with unnecessary particularity every passing suggestion made by the other side. Unfortunately, legal practitioners are not always resolute enough to rein in those desires on the part of their clients."
5. Although a maximum costs order is available in appeal proceedings, the circumstances in which such an order will be made are likely to be rare, if only because the nature of an appeal will usually limit the scope for conduct of the kind sought to be discouraged by such an order. The vast majority of appeals are dealt with in a day and interlocutory steps are largely confined to procedural issues such as the filing of documents.
6. Nevertheless, such an order may be made if there is reason, perhaps based on the conduct of a party during a trial, to foresee vindictive or disruptive conduct by that party. I invited the appellant to identify the basis on which she anticipated such conduct, but there was no persuasive response to that request. The appellant referred to "exorbitant costs" charged by the respondents, but agreed those had been considered by a costs assessor.
7. In short, the evidence did not reveal a basis from which it might be inferred that the respondents would unduly extend, expand or disrupt the conduct of the appeal. Such an order should not be made merely for the purpose of controlling the costs which might be incurred by the appellant and payable to the respondents if she were to be unsuccessful. The protection against unreasonable costs being claimed on a party-and-party basis will lie in the costs assessment process. If that process is thought to be inappropriate, there is the possibility of an application for a lump sum costs order to be made by the Court. Further, the fixing of security for costs, in accordance with the particular rules relevant to that exercise, provides no useful guidance as to when and in what amount a cost capping order should be made. The application should be rejected.
8. Further, it is desirable to refer to the amount of the capping order which the appellant sought to justify by reference to a judgment of Leeming JA on an application for security for costs. Antov v Bokan [3] is one of many judgments dealing with security for costs and is now six years old.
9. Applications for security for costs are made by respondents who are brought to this Court to defend a judgment obtained in a lower court. Apart from the need for the respondent to establish "special circumstances", an important consideration favouring no order or a limited order as to part of the likely costs is the concern that a larger order might stifle an appeal, which cannot be said to be without merit. That is (and was in Antov) an important consideration in determining the amount of a possible costs order, albeit in circumstances where a much larger order had been sought, without real justification.

Competency of appeal

1. Four points should be made with respect to the appeal. First, it is not immediately clear how an appeal can properly be brought without leave from orders made on 10 April 2024 disposing of the three sets of proceedings, by consent, otherwise than as to costs. If the matters dealt with in the judgment of 15 August 2024 relate only to costs only, the present appeal is incompetent on the basis that leave is required pursuant to s 101(2)(c) of the Supreme Court Act 1970 (NSW). Orders made by consent also require leave under that provision.
2. It appears that all the orders sought to be challenged (other than those of 3 September 2024) were made by consent. Thus the judge noted that "[o]n 24 October 2023, I made orders by consent" appointing a referee: at [25]. At the conclusion of the hearing on 2 April 2024, the judge said, "I requested the parties to prepare short minutes which reflected the various concessions and agreements between them" and, on 3 April, he made orders, by inference those set out in the short minutes: at [46]. On 5 April the judge made an amendment varying one order by $3,000 pursuant to the slip rule: at [47], and further stated that "[o]n 10 April 2024, I then made these further orders and notation to give effect to the parties' further agreement…". On the face of it, all of these orders were made by consent, none was determinative of the final orders and all required leave to appeal pursuant to s 101(2)(c).
3. Secondly, as counsel for the respondent observed, the whole of the proceedings before Kunc J appeared to be a working out of orders which had been made some time earlier in proceedings under s 66G of the Conveyancing Act 1919 (NSW). If those were final orders and the present proceedings involve "working out" orders, the working out orders are essentially interlocutory, as explained by Handley JA in Derrawee Pastoral Company Pty Ltd v McConochie. [4] If that rule applies, leave will be required pursuant to s 101(2)(e).
4. Thirdly, as counsel for the respondents also observed, the appeal appears to require reconsideration of amounts payable to the trustees, either by way of remuneration or costs. That being so, the trustees would need to be joined as respondents to the appeal.

Conclusions

1. The appellant's application must be refused. In that event, the appellant submits that costs of the motion should be costs in the appeal. The best result she could hope for would be that the costs of the motion be the respondent's costs of the appeal. However, in my view the motion was not soundly based and there is no reason why the applicant on the motion should not have to pay the respondent's costs.
2. The Court makes the following orders: 1. Dismiss the appellant's notice of motion filed on 15 November 2024 seeking a costs capping order. 2. Stand over to the hearing of the appeal so much of the amended notice of motion filed on 2 December 2024 as seeks an extension of time to appeal interlocutory orders. 3. Order that the appellant pay the respondent's costs of the motion filed on 15 November 2024.

Endnotes

1. (2005) 65 NSWLR 268; [2005] NSWSC 1003.
2. Sherborne Estate (No 2) at [24].
3. [2019] NSWCA 40.
4. [1995] NSWCA 123; applied in Kara Kar Holdings Pty Ltd v Brookton Holdings [1997] NSWCA 171 (Sheller, Powell and Beazley JJA). 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: 02 December 2024