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[2026] NSWSC 848
Supreme Court of NSW
2026-07-20
Rees J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: ReoSteel Pty Ltd v AonAri PT10 Pty Ltd (No 2) (costs) [2026] NSWSC 848
Hearing dates: On the papers; final submissions 8 July 2026.
Date of orders: 20 July 2026
Decision date: 20 July 2026
Jurisdiction: Equity - Commercial List
Before: Rees J
Decision: Decline to vary usual costs order.
Catchwords: COSTS — tenants seek to set aside arbitral award made in landlord’s favour — first ground of challenge falls away at hearing — second ground of challenge added at commencement of hearing and fails — tenants contend that each party should bear their own costs — whether the Court should depart from usual costs order — principles at [28] — no basis to depart from usual order.
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited: Rathswohl v Court (No 2) [2021] NSWSC 505
Reosteel Pty Ltd v AonAri PT10 Pty Ltd [2026] NSWSC 249
ReoSteel Pty Ltd v AonAri PT10 Pty Ltd [2026] NSWSC 712
Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35
State of New South Wales v Stanley [2007] NSWCA 330
Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111
Texts Cited: G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis)
Category: Costs
Parties: ReoSteel Pty Ltd (First Plaintiff)
ReoSteel Holdings Pty Ltd (Second Plaintiff)
AonAri PT10 Pty Ltd (Defendant)
Representation: Counsel:
A Harding SC / FG Di Lizia (Plaintiffs)
SA Wells / H Watson (Defendant)
Solicitors:
Maddison Marcus Law Firm (Plaintiffs)
Lazarus Legal Group (Defendant)
File Number(s): 2025/390719
HER HONOUR: On 22 June 2026, I dismissed an application to set aside an arbitral award with costs: ReoSteel Pty Ltd v AonAri PT10 Pty Ltd [2026] NSWSC 712. I directed the parties to notify any errors or omissions and, in the event that any party wished to vary the usual costs order, to file submissions and affidavits in support of the costs order sought.
The plaintiffs notified a suggested error, which I rejected as meeting that description. But the plaintiffs rely on this suggested error in support of the costs orders they seek, being that each party bear their own costs of the proceedings. It is thus necessary to address both matters.
The defendant, AonAri PT10 Pty Ltd, is the landlord of an industrial complex in Penrith. The plaintiffs, ReoSteel Pty Ltd and ReoSteel Holdings Pty Ltd, are related companies and manufacture steel products for the construction industry. ReoSteel entered into three leases with the landlord for Units 22, 33 and 37 of the industrial complex. ReoSteel Holdings entered into two leases with the landlord for Units 7-10 and Unit 32 of the industrial complex. The five leases were in relevantly the same terms and obliged the tenants to pay outgoings.
A dispute arose about outgoings. The parties agreed to refer the matter to arbitration. The arbitrator issued a partial award, finding that the outgoings were as invoiced. The parties were directed to agree on a form of orders to give effect to his reasons or, if no agreement was reached, to provide submissions in support of the orders for which they contended. On 6 June 2025, the landlord’s solicitor proposed that the tenants be jointly and severally liable for the amount owing. The tenants’ solicitor responded on 11 June 2025, disagreeing with the orders proposed by the landlord though not specifically addressing the issue of joint and several liability. Further letters were exchanged on 12 June 2025, which did not refer to that topic.
The parties proceeded to make submissions on the form of orders. The landlord submitted that the tenants were “jointly and severally liable” for the outgoings. The tenants’ submissions, due at the same time, did not address the issue. The arbitrator did not adopt the landlord’s submission but did order that the outgoings be paid in a global fashion, specifically, “ReoSteel Pty Ltd and ReoSteel Holdings Pty Limited pay AonAri PT10 Pty Ltd the amount of $659,172.25.”
The landlord proceeded to enforce the arbitral award, registering the award as a judgment of this Court. The landlord issued statutory demands, seeking the full amount of the judgment from each tenant. On 28 August 2025, the tenants commenced proceedings in this Court to set aside the statutory demands. On 9 September 2025, the landlord obtained writs of execution in respect of the judgment. The tenants filed a motion seeking a stay of enforcement of the judgment debt. The motion was listed for hearing on 26 November 2025 and a stay granted until then.
On 10 October 2025, the tenants commenced these proceedings, challenging the arbitral award on the basis that, notwithstanding that the tenants were parties to separate leases, the arbitrator had made an arbitral award that made the tenants liable for outgoings pursuant to all leases, jointly and severally. On 24 October 2025, the landlord filed its Commercial Arbitration List Response, offering to address the tenants’ challenge to the arbitral award as follows, at par 12:
“In answer to the whole of the Summons and the relief sought by the plaintiffs, without making any admissions or otherwise prejudicing its rights or position in this proceedings:
a. The defendant notes that the plaintiffs’ Summons seeking to set aside the award and consequent judgment registered in this Court is predicated entirely upon their contention concerning joint and several liability to pay outgoings…;
b. The defendant says that there was evidence before the arbitrator which enables the quantum of outgoings owed in respect of each unit to be determined such that, even if the plaintiffs’ contention as to jurisdictional error being made in relation to the joint and several liability of the plaintiffs in relation to outgoings were accepted to be correct (which the defendant does not accept), then the following amounts are owed by each plaintiff entity as follows:
[the amounts outgoings owed by each tenants were then set out]
c. The defendant, in order to resolve these proceedings in a manner which is consistent with the objects and overriding purpose of the Civil Procedure Act 2005 (NSW) and to avoid further undue expense and delay, consents to the Supreme Court exercising its powers under the Civil Procedure Act 2005 and Uniform Civil Procedure Rules and/or its inherent jurisdiction to vary the quantum of the judgments entered against [the] plaintiff[s] as follows:
i. The judgment against Reosteel Holdings Pty Ltd be varied to $291,988.98 plus interest at Court rates from 16 July 2025 onwards;
ii. The judgment against Reosteel Pty Ltd be varied to $516,281.24 plus interest at Court rates from 16 July 2025 onwards.”
“If your clients seriously contend that the Supreme Court of New South Wales does not have the power or jurisdiction to vary its own judgments, they may make that contention by way of Reply to our client’s List Response.”
No reply was filed. On 13 November 2025, the tenants’ solicitor wrote again, pressing to know the basis on which the judgment could be varied in the circumstances of this case. Further, “In light of the statement in your email to the effect that you do not propose to debate this matter further through correspondence, our clients will proceed on the basis that your client’s case in these proceedings… proceeds within the strict confines of your client’s List Response (and nothing further).” In the event that the landlord sought to raise a point regarding variation of the judgment beyond the Commercial Arbitration List Response, then the tenants’ solicitor put the landlord on notice that the tenants may object to any attempt by the landlord to expand its case in this manner and seek costs thrown away, including on an indemnity basis, by reason of the landlord’s suggested failure to properly raise a point that it could have or should have at this early stage of the proceedings.
On 24 November 2025, the landlord’s solicitor responded, “We take from your response… that you do not take issue with the fact that the Supreme Court does have power and jurisdiction to vary its judgments, including the judgments against your clients… to the amounts specified in our client’s List Response.” The tenants’ solicitor replied, “No, that is not correct.”
On 26 November 2025, by consent, Williams J stayed enforcement of the judgment debt pending determination of the challenge to the arbitral award and any appeal therefrom.
On 17 March 2026, Brereton J heard the applications to set aside the statutory demands. The landlord submissions are set out in his Honour’s reasons in Reosteel Pty Ltd v AonAri PT10 Pty Ltd [2026] NSWSC 249 at [10]:
“The defendant submitted that the best outcome for the plaintiffs in the proceedings challenging the award is that the indebtedness of the plaintiffs will be several rather than joint and several, and that the liabilities under the arbitral award will be as follows:
(a) Reosteel Holdings - $291,988.98 (outgoings of $217,439.98, plus costs)
(b) Reosteel - $561,281.24 (outgoings of $441,732.24, plus costs)”
Further, the landlord submitted to his Honour that it would “consent to an order varying the amounts of the statutory demands to the[se] amounts”, but Brereton J concluded that he did not have power to do so under s 459H(4) of the Corporations Act 2001 (Cth): at [11]-[13]. The statutory demands were set aside. The landlord was ordered to pay the tenants’ costs.
This matter was listed for hearing on 23 March 2026. The tenants sought to amend their Commercial Arbitration List Statement to add a second challenge to the arbitral award. The landlord did not object. I granted leave to amend at the commencement of the hearing. It was this second ground that was the subject of my primary judgment, and on which the tenants failed.
Turning to the suggested error or omission, the tenants initially sought to set aside the arbitral award on two grounds.
The first ground concerned the form of the orders made by the arbitrator, where the arbitrator was said to have found that the tenants were jointly and severally liable to the landlord for outgoings. This order was said to have been made without the tenants having the opportunity to respond to this potential outcome, but the first ground fell away during the trial. The tenants’ senior counsel accepted that the arbitrator did not address the suggestion that the tenants were jointly and severally liable. The transcript records:
“HER HONOUR: If he is not embracing the suggestion of joint and several liability but he's simply formulated the orders in this way, isn't that just more in the context of an error, an omission, that can be easily sorted out by the parties, acting sensibly…
HARDING: Your Honour's right. I think, if I can put it this way, the matter can be remitted by the Court, as your Honour knows, back to the arbitrator to fix something up, and if this ground was the only ground on which I were to succeed, I can't advance any positive submission as to why that shouldn't occur.
HER HONOUR: …If all that's being done is a throwaway line by the landlord saying joint and several liability and the arbitrator hasn't engaged with it, embraced it or endorsed it, then it seems to me it's more of an error of an administrative nature, surely the correct figures must be able to be divined from the award that he has given.
HARDING: Yes, that's right.
HER HONOUR: It would be a shame for the parties to throw away the resources they have invested in the arbitral process just because there's some kind of administrative error in the final orders.
HARDING: As I say, if this was the only basis on which the Court was considering setting aside the award, there is nothing I could say in opposition to that but if I were to succeed on the other ground, that would be a different story.”
The tenants’ senior counsel acknowledged that “[o]n one view of it, the error is quite obvious”. I noted that the problem may have arisen in the way that the arbitrator’s task was framed, where both corporate entities were referred to in a global fashion, and given the use of a particular defined term. The tenants’ senior counsel accepted this. I noted that it “seems to be a problem easily sorted”.
The landlord’s counsel began his submissions by noting that the figures for each tenant were set out in the Commercial Arbitration List Response. Further details supporting the outgoings owed by each tenant were provided in an aide*-*memoire. The landlord’s counsel informed the Court that the landlord would consent to the judgment amount or arbitral award being varied to separately identify the liability of each tenant.
At the conclusion of the hearing, the way forward was canvassed with the tenants’ senior counsel:
“HER HONOUR: In respect of the aide‑mémoire the defendant handed up, the figures there, in terms of apportioning the arbitral award between the two tenants, is that something your client agrees or disagrees or hasn't had time to think about it or doesn't want to think about it?
HARDING: No, the second last category, we just haven't had time to think about it. We are happy to advise your Honour by email to your associate if we agree or don't agree with the number.
HER HONOUR: Yes.
HARDING: If there is some issue with the number, if we could have leave to point out what we say is the issue.
HER HONOUR: Yes, I think that is sensible. …”
“The plaintiffs confirm that to their knowledge, the schedule reflects the findings of the arbitrator regarding the outgoings payable pursuant to each of the five leases the subject of the dispute.
The plaintiffs wish to make no further submission in response to the direction of her Honour.”
“…the arbitrator did not adopt the landlord’s submission that the tenants were “jointly and severally liable” but did order that the amounts be paid in a global fashion. Whilst the tenants initially argued that the form of orders was problematic, it was accepted at the hearing that the orders should stand and the parties could readily ascertain which tenant owed what. The landlord pointed to how the global figure could be segmented into the amount owing by each tenant. The tenants advised after the hearing that they agreed with this delineation.”
“(1) NOTE the parties’ agreement that Order 1 made by the arbitrator on 16 July 2025 is to be corrected as follows:
Reosteel Pty Ltd pay AonAri PT10 Pty Ltd the amount of $217,439.99 and Reosteel Holdings Pty Ltd pay AonAri PT10 Pty Ltd the amount of $441,732.25.”
“… Order 1 of the orders made by her Honour is premised on what was said to be an agreement between the parties to correct Order 1 made by the arbitrator on 16 July 2025. The plaintiffs contend that there was no such agreement such that order 1 of the orders made by her Honour was made in error.
On 23 March 2026, her Honour directed the plaintiffs to respond in writing to the schedule handed to the Court by counsel for the defendant regarding the quantum and composition of outgoings the subject of the dispute. The plaintiffs did so on 25 March 2026 (by email) …
…In the premises, whilst the plaintiffs acknowledged that the schedule reflected the findings of the arbitrator regarding the outgoings payable pursuant to each of the five leases the subject of the dispute, the plaintiffs did not agree for Order 1 made by the arbitrator on 16 July 2025 to be corrected. …”
The tenants submitted that the Court should vary the usual costs order to provide that each party bear their own costs of the proceedings for four reasons. First, the proceedings were said to be necessary in order to correct an obvious error made by the arbitrator, which otherwise entitled the landlord to recover from each respective tenant debts that were not incurred by that tenant. Second, the arbitrator’s error was due to the landlord’s submission to the arbitrator that the tenants be “jointly and severally liable”, a submission which had no basis and was unjustifiable, and was made in circumstances where the parties were ordered to exchange written submissions without a right of reply. This was said to have put the tenants in the position of having to apply to set aside the judgment in light of the resulting error.
Third, these proceedings were said to have been filed after the landlord had taken various steps to enforce the Court judgment entered on 6 August 2025 on the basis of the arbitral award, in which the landlord pursued each tenant for the whole of the sum awarded by the arbitrator. Fourth, the tenants disputed that there was an agreement that permitted the variation of the arbitral award, and in any event the landlord’s primary position until the hearing was that the tenants were jointly and severally liable. It was only contended in the alternative, and without admission, that each tenant should be liable for different sums. The tenants said that the notation in the orders I made demonstrated the need to bring these proceedings to correct the orders made by the arbitrator. These proceedings were said to be necessary to ensure that the tenants were not each held liable for the full sum of the award. The correspondence was said to demonstrate that the landlord failed to satisfactorily engage with the tenants in relation to correcting the error in the orders made by the arbitrator.
The landlord submitted that costs follow the event save for special or extraordinary circumstances: Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35. The landlord had offered, in its Commercial Arbitration List Response, to consent to the variation of the judgment amounts in respect of each tenant. Notwithstanding this, the tenants chose to press on with the arbitral appeal proceedings. What the landlord offered was what ultimately happened. The tenants were wholly unsuccessful. The tenants did not commence these proceedings to correct an error in the award, but to set aside the award entirely. The fact that the landlord took steps to use the Court’s processes to enforce a valid and enforceable judgment debt was no reason for making the costs order contended for by the tenants.
The Court has a wide discretion with respect to costs: s 98, Civil Procedure Act 2005 (NSW). The general rule is that costs follow the event: r 42.1, Uniform Civil Procedure Rules 2005 (NSW). Whether an order should be made contrary to this general rule “will depend upon 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] (Hislop J, Beazley and Tobias JJA agreeing). The unsuccessful party bears the onus of demonstrating a basis for departing from the general rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10] (Brereton J, as his Honour then was). Departure from the general rule is exceptional: G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis) at 232 [8.26] and the authorities cited there.
The tenants’ submissions are devoid of merit. As the tenants’ senior counsel accepted at trial, the arbitrator did not engage with the landlord’s submission that the tenants were jointly and severally liable. (Nor did the tenants engage with this contention when it was raised by the landlord in correspondence after the partial award.) The arbitrator did make an order in his final award in global terms without separately identifying the liability of each tenant. That may have been a drafting infelicity. But there was no mystery as to the amount owed by each tenant. Nor was it necessary to set aside the arbitral award in toto – as was sought by the tenants – to remedy any drafting infelicity.
When the tenants commenced these proceedings, seeking to set aside the arbitral award on the basis that the arbitrator had made the tenants jointly and severally liable, the landlord promptly acknowledged in its Commercial Arbitration List Response the obvious solution to any drafting infelicity, agreeing to vary the judgments entered against each tenant to separate judgments against each tenant for the portion of outgoings attributable to each of them. The tenants did not embrace this obvious solution but engaged in, with respect, disingenuous correspondence as to the Court’s power to vary its judgments and orders (which, I note, the landlord had proposed would be done by consent).
The landlord offered the same solution at the hearing of the applications to set aside the statutory demands, the week before this matter was listed for hearing. Obviously enough, the same solution would be offered to the Court at the hearing of this application, as was pleaded in the landlord’s Commercial Arbitration List Response.
Even before the landlord’s counsel got to his feet, the tenants’ senior counsel had accepted defeat on the first ground, acknowledging that the matter could be resolved in the manner proposed by the landlord. After the hearing, the tenants agreed with the apportionment of the judgment sum between the two tenants.
In truth, the tenants have simply seized on any drafting infelicity in the arbitral award to delay the landlord’s enforcement of judgment in respect of unpaid outgoings. There is no disentitling conduct on the part of the landlord which would warrant a departure from the usual costs order in this case. The landlord has, at the earliest opportunity, offered to agree to correct any drafting infelicity but that offer has been avoided by the tenants for as long as possible, before their senior counsel appropriately acknowledged the inevitable at trial.
The second ground of challenge to the arbitral award was raised shortly before hearing. The tenants were unsuccessful on that ground. The tenants have not discharged their onus of demonstrating a basis for departing from the general rule that costs should follow the event.
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ReoSteel Pty Ltd
AonAri PT10 Pty Ltd (No 2) (costs)
[2026] NSWSC 712
(1993) 114 ALR 521