Michael Anthony Luxury Cars Pty Ltd v Connexwire Ltd

Written submissions about costs

1. In a nutshell, the defendants assert that they should have the costs of the proceedings before me. And they go further, and submit that costs should be ordered on the indemnity basis.
2. In support of that submission, they rely upon the correspondence that I have summarised above. They also submit that the resistance by the plaintiff to the transfer of the proceedings was so unmeritorious as to justify that special order being made.
3. The plaintiff puts forward three positions, the latter two as alternatives.
4. The first is that the costs of the proceedings before me should be costs in the cause. In a nutshell, it is said that the true merits of the substantive matter are yet to be determined.
5. The second is that costs should be costs in the cause whereby "if that party succeeds in the overall proceedings, it recovers the costs of the interlocutory application, but if it does not succeed, it does not recover those costs but does not have to pay the other party's costs of the interlocutory application". Again, I understood that to be a variant on the proposition that nothing has yet been decided about the substantive question of the state of the Mercedes-Benz, and the defendants should not have the costs of the transfer application if their substantive position is ultimately found to be unmeritorious.
6. The third position of the plaintiff was that costs should be reserved, yet again pending determination of the substantive dispute.
7. Separately, the plaintiff engaged with the question of whether indemnity costs should be ordered. Amongst other things, it was said that the correspondence between the parties did not justify an order for indemnity costs.

Determination

1. In my respectful opinion, the alternative theses of the plaintiff can be concisely rejected, for the following reasons (I shall deal with them out of order for convenience).
2. There is no question of me transferring a matter to Queensland with a question of costs reserved from New South Wales - thereby calling upon another judge, in another State, ultimately to untangle all that occurred months beforehand and hundreds of kilometres away. That could involve yet further oral and written submissions, and recourse to the transcript of the proceedings before me, along with the evidence and submissions at that stage. I have no doubt that it is my responsibility to determine this question of costs before transfer.
3. In similar vein, with regard to the other two positions of the plaintiff, this was a very hard fought transfer application that was conceptually and procedurally separate from the substantive question, and that featured significant evidential and legal resistance on the part of the plaintiff. In my opinion, there is no reason to depart from the ordinary rule that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1; Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67]-[68]. The defendants were wholly successful on their application to transfer the proceedings, and I see no reason to make any other order about costs than one that is explicitly in their favour.
4. In short, there is no question of the defendants not having their costs of these interlocutory proceedings; the only question is whether they should be costs on the ordinary or the indemnity basis.
5. I accept that the submissions of the defendants in support of the latter have force. And it is true that I found that "this matter has nothing inherently to do with New South Wales". But that adverse finding does not of itself mean that the position of the plaintiff was not arguable at all, or so unmeritorious as to call for indemnity costs.
6. In similar vein, I accept that the defendants took significant steps to avoid the entirety of the process that unfolded before me.
7. Having said that, the power to order costs is discretionary: Civil Procedure Act 2005 (NSW), s 98. It is well established that such discretion must be exercised judicially. And it is also the case that indemnity costs are exceptional, in that they are a special order for costs. Whether a special costs order is justified depends entirely on the facts of each case, and specifically whether justice, on those facts, calls for the order.
8. In the recent case of The Owners - Strata Plan 30791 v Southern Cross Constructions (ACT) Pty Ltd (in liq) (No 3) [2019] NSWSC 560 at [36]-[38], Stevenson J with respect very helpfully reiterated the relevant principles on this point: A Calderbank offer may attract an order for indemnity costs from the time that such an offer is rejected or not accepted if the offeree achieves a result no more favourable than the offer: Calderbank v Calderbank [1976] Fam 93 at 106; [1975] 3 All ER 333 at 342. … However an order for indemnity costs does not necessarily follow. The relevant principles were summarised by the Court of Appeal in Ku-ring-gai Council v Chan (No 2) [2018] NSWCA 73 at [6]: "An offeree who does not accept an informal Calderbank offer and thereafter obtains a judgment less favourable than the offer will not necessarily be required to pay indemnity costs from the date of the offer. Such a requirement usually depends on two central considerations, namely, whether there has been a genuine offer of compromise and whether in all the circumstances it was unreasonable for the offeree not to accept it: Jones v Bradley (No 2) [2003] NSWCA 258 at [6]-[9]; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8] (Basten JA, McColl and Campbell JJA agreeing)."
9. Contrary to the plaintiff's written submissions, there is no reason to think that the offers to transfer the proceedings, with each party to bear their own costs, were not genuine offers of compromise. In my opinion, there is certainly an aspect of genuine compromise in the attempt by the defendants to resolve this discrete aspect of the dispute quickly and cost effectively.
10. However, I do not think that "in all the circumstances it was unreasonable for the [plaintiff] not to accept" the offer. In other words, I do not think that the commencement of proceedings in the District Court of New South Wales, and in particular the subsequent refusal to transfer, was so devoid of legal merit as to warrant the exceptional remedy of indemnity costs.
11. It follows that I reject the submission of the defendants, and propose to order costs on the ordinary basis in accordance with the usual rule. To be clear: that order extends to the costs of this dispute about costs, not least because the defendants have substantively succeeded for a second time.
12. The final aspect of this question of costs requiring analysis on my part is the costs order made in the District Court with regard to a notice of motion of the defendants staying the proceedings in that jurisdiction pending the transfer application before me. On 22 February 2019, the learned District Court judge ordered that costs of that motion be the defendants' costs in the cause.
13. It is not entirely clear whether the defendants seek revisitation by me of that order, in that it is possible that there is a disjunction between the recent affidavit of a solicitor for the defendants relied upon with regard to the general question of costs, and the written submission of counsel for the defendants.
14. But in any event, even assuming that revisitation is sought, and even assuming that I possess jurisdiction to effect it, I would not do so. That is because the countervailing factors for and against that motion are by no means clear to me; costs in the cause generally is not inherently adverse to either party; and I believe that I should confine my orders to the dispute with which I was fully engaged.

Order

1. For the foregoing reasons, I make the following order: 1. The plaintiff, Connexwire Ltd, must pay the costs of the first and second defendants, Michael Anthony Luxury Cars Pty Ltd and Michael John Anthony, of the application to transfer the proceedings to the Supreme Court of Queensland, on the ordinary basis.

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