Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd

Court of Appeal (NSW)|2018-03-13|Before: Beazley P, Payne JA, Ball J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

headnote [This headnote is not to be read as part of the judgment] An issue as to costs remained between the parties following the judgment of the Court in Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339. The appellant had appealed the entirety of the primary judgment. It succeeded on one issue and was unsuccessful on all other issues. The issues were: (i) what order the Court should make for the costs of the appeal; and (ii) what order the Court should make for the costs of the trial. The Court (Beazley P, Payne JA, Barrett AJA) held: In relation to issues (i) and (ii), at [8]-[21]: Where a successful party is unsuccessful on separable and discrete issues that take up a significant portion of the proceedings this should be reflected in the Court's discretionary order as to costs. In the appeal the appellant was successful on one issue. It failed on the remaining issues which were separable and discrete. It was appropriate that the respondent pay 30 per cent of the appellant's costs of the appeal. At the trial, the respondent succeeded on most of the issues and failed in relation to separable and discrete issues. It was appropriate that the appellant pay 75 per cent of the respondent's costs of the trial. Civil Procedure Act 2005 (NSW) s 98, Uniform Civil Procedure Rules 2005 (NSW) Rule 42.1, Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219, James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296, Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20, Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304, applied.

Judgment

THE COURT: The Court delivered judgment in this matter on 21 December 2017: Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339. In this judgment, which solely concerns costs, familiarity with the principal judgment is assumed. Although the appellant succeeded in one respect on the appeal, no orders for costs were then made for the reasons explained by Payne JA: "[127] The appellant has had success in this appeal but has also failed in a number of respects. My preliminary view is that the respondent should only be required to pay a portion of the appellant's costs of the appeal. The costs of the case below raises different issues as it was fought on many more grounds, and subject only to one matter where the appellant succeeded in this Court, the appellant was wholly unsuccessful. My preliminary view is that the respondent is entitled to a portion of its costs of the Amended Summons and the appellant should pay the respondent's costs of the Amended First Cross-Summons. [128] I think in the circumstances, however, that rather than make orders for costs now, the better course is to give the parties an opportunity to consider these reasons and make written submissions about the costs of the trial and the appeal having regard to these findings. Those submissions can then be considered on the papers."
In accordance with orders made on 21 December 2017, the parties filed written submissions on the question of costs of the hearing before the primary judge and the costs of the appeal as follows: 1. submissions in chief were filed by the appellant on 29 January 2018; 2. submissions by the respondent were filed on 14 February 2018; and 3. submissions in reply by the appellant were filed on 21 February 2018.
The matter was considered by the Court on the papers.
The appellant submitted that the following orders should be made: 1. costs of the appeal - the respondent should be ordered to pay the appellant's costs of and incidental to the appeal. Alternatively, the respondent should be ordered to pay 80 per cent of the appellant's costs of and incidental to the appeal; and 2. costs of the trial - the respondent should be ordered to pay 50 per cent of the appellant's costs of the Amended Summons, as agreed or assessed, and the appellant should be ordered to pay 50 per cent of the respondent's costs of the Amended First Cross-Summons, as agreed or assessed.
The respondent submitted that that the following orders should be made: 1. costs of the appeal - the respondent should be ordered to pay 30 per cent of the appellant's costs of the appeal, and the appellant should be ordered to pay 70 per cent of the respondent's costs of the appeal ; and 2. costs of the trial - the appellant should be ordered to pay the respondent's costs . Alternatively, if the appellant is entitled to a discount for its success on certain issues, then any discount should be minimal and no more than 10 per cent .

Applicable Principles

Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under rule 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 Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 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 Limited (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."

Costs of the Appeal

In relation to the costs of the appeal, the appellant submitted that the "event" was best described as the Court allowing the appeal, the effect of which was to reduce the appellant's liability by an amount of around $2,000,800 (apparently comprising commission totalling $1,640,000 plus interest). It was submitted that the appellant has had a significant measure of success and that, as there are no exceptional circumstances warranting any other order, the Court should make the usual order as to costs.
The appellant submitted that it was substantially successful on ground 1 of the appeal, that the issues in ground 1 on which the appellant was unsuccessful were not dominant or separable issues in the appeal, that ground 2 of the appeal, upon which the appellant was unsuccessful, was closely related to ground 1 and that while ground 3 of the appeal raised separate issues, they were relatively minor and did not increase the time taken to hear the appeal.
That submission should not be accepted. This is a case where it is appropriate to deprive the successful appellant of a portion of its costs because the matters upon which it was unsuccessful took up a significant and separable part of the appeal. The separable issues here comprised the subject matter of grounds 2 and 3 of the notice of appeal. The exercise in apportionment is necessarily relatively broad brush involving a matter of impression and evaluation by the Court.
In conducting this evaluation, the Court does not propose to make the order suggested by the respondent in relation to the costs of the appeal, namely that the respondent should be ordered to pay 30 per cent of the appellant's costs of the appeal, and the appellant pay 70 per cent of the respondent's costs of the appeal. There is no basis on the facts of this case for an award of costs in favour of the unsuccessful respondent.
The relevant "event" for the purposes of UCPR r 42.1 should be understood in the context of the appellant's unsuccessful challenge to virtually all of the judgment below. The appellant made three claims on the appeal. The total quantum of the claims was approximately $5,500,000 plus interest. The appellant was successful in the first claim only to the extent that it established the respondent had breached Sch 8, cl 7, which had the consequence that it was entitled to a little over $1,640,000 plus interest. The issues in respect of which the appellant was unsuccessful were separable and had the consequence that the respondent was entitled to retain almost $4,000,000 plus interest that had been awarded by the primary judge. The issues raised by the separate grounds of appeal were discrete and dealt with as discrete by the parties. The appellant was unsuccessful in the second and third claims. The appellant was, however, successful in resisting the respondent's notice of contention. As a rough evaluation, approximately 30 per cent of the monetary value of the appeal and 30 per cent of the time taken in the appeal was devoted to issues upon which the appellant succeeded.
Any mathematical precision in the appropriate order is illusory. In the exercise of the discretion and relying on the matters of impression and evaluation identified above, the appropriate order is that the respondent pay 30 per cent of the appellant's costs of the appeal as agreed or assessed.

Costs of the Trial

As the appellant has now enjoyed some success it is also appropriate to re-visit the costs order made by the primary judge concerning the trial. The appellant submitted that the respondent should be ordered to pay 50 per cent of the appellant's costs of the Amended Summons as agreed or assessed, and the appellant should be ordered to pay 50 per cent of the respondent's costs of the Amended First Cross-Summons as agreed or assessed. The appellant accepted that its success was only partial, and that it raised issues on which it was unsuccessful. These issues, the appellant submitted, were: "1. The claim that each Agency Agreement failed to comply with Sched 8, cll 4 and 5 of the Regulation, as well as Sched 1, cll 2, 3, 6, 11 and 19 and Sched 2, cll 1 and 2; 2. The claim that the respondent breached fiduciary duties that it owed the appellant as the appellant's real estate agent; 3. The claim that the respondent engaged in misleading or deceptive conduct in negotiating the parties' entry into the Second Agreement; and 4. The claim that the respondent was negligent in the performance of its obligations under the Second Agreement."
The appellant submitted that the respondent was similarly unsuccessful on several issues as it was only successful on 4 out of 14 grounds of relief pleaded in its Amended First Cross-Summons. The most important of the "separate and distinct" issues, the appellant submitted, were the claims that the respondent was not acting as the appellant's "agent" selling the units the subject of each Agreement, but rather was a "principal" in a joint venture with the appellant. It was submitted that the respondent also failed in establishing a contention that the Property, Stock and Business Agents Act 2002 (NSW) ("the Act") and the Property, Stock and Business Agents Regulation (2003) ("the Regulation") did not apply to either Agreement. Finally, the respondent failed in the claim that the appellant was estopped from relying on s 55 of the Act to deny the respondent commission under each Agreement.
The appellant also submitted that the respondent should be deprived of a significant proportion of its costs because its wrongful actions in failing to comply with Sch 2 cl 2 and Sch 8 cl 7 of the Regulation and s 37 of the Act was the conduct that led to the proceedings to obtain relief under s 55A of the Act in which the respondent was successful: see eg Ritter v Godfrey [1920] 2 KB 47 at 60; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 2 FLR 213 at 220-221; McCusker v Rutter [2010] NSWCA 318 at [28]-[32].
The respondent submitted that the appellant should pay the respondent's costs below as agreed or assessed as the "event" the subject of the proceedings below was the overall outcome. Following the judgment on appeal, the overall outcome of the proceedings below was that the respondent was entitled to judgment of $3,896,804 plus interest.
For essentially the same reasons as in relation to the appeal, we are of the view that there was at the trial a distinct and separable issue upon which we have concluded the appellant was entitled to succeed. The place of that issue, in the context of the issues determined by the primary judge, however, needs to be evaluated. While it is true that the respondent raised a number of issues upon which it did not succeed, with the exception of the estoppel argument, those matters were of minor importance and would not warrant any apportionment of costs. The principal differences between the issues raised at the trial and on the appeal were: 1. The respondent's successful claim to relief under s 55A required consideration of a number of factual and credit issues to determine whether the appellant would have acted differently if the asserted breaches of Sch 8, cll 4, 7 and 8 had not occurred; 2. The appellant's failed contention that the respondent breached its fiduciary duties in connection with the second agreement, which also required the primary judge to resolve several factual and credit issues; and 3. The appellant's failed contention that the respondent engaged in misleading or deceptive conduct during the negotiations for the second agreement, which also took up a good deal of time.
We reject the submission that the respondent should be deprived of a proportion of its costs because of its wrongful actions in failing to comply with Sch 2 cl 2 and Sch 8 cl 7 of the Regulation. Any breach of the Act or the Regulation was irrelevant to the proceedings beyond the issue upon which the appellant succeeded. The failure of the respondent to comply is relevant only to the extent that it did not succeed on that separable issue. Whilst it is true, as the appellant submitted, that the respondent's conduct necessitated the conduct of the s 55A proceedings, the appellant was not under an obligation to incur costs and resources by resisting the respondent's application. It is appropriate in those circumstances that the appellant pay the respondent's costs of that issue.
We accept, as the respondent submitted, that a single costs order is preferable to an order differentiating between the costs of the Amended Summons and the Amended First Cross-Summons because the issues in each were "significantly intertwined" and a discount could be incorporated into a single costs order. Again, any mathematical precision in the appropriate order is illusory. In the exercise of the discretion and relying on the matters of impression and evaluation identified above, including those issues where the respondent's case failed, the appropriate order is that the appellant pay 75 per cent of the respondent's costs of the Amended Summons and the Amended First Cross-Summons as agreed or assessed.
We should also make clear in making this order that, as the respondent correctly submitted, nothing in this judgment affects the costs orders already made in interlocutory hearings which continue to apply and should not be re-tried in this determination. As this Court has said recently in El-Wasfi v State of New South Wales; Kassas v State of New South Wales (No 2) [2018] NSWCA 27: "[8] An order made at the conclusion of the proceedings will, subject to any order to the contrary, include costs in respect of interlocutory applications which have been reserved or not otherwise dealt with: UCPR r 42.7(1). However, where an order is made at an interlocutory stage without qualification, it is unaffected by a general order of the costs of the proceedings made at the end of the litigation."

Orders

The Court makes the following orders: 1. The respondent pay 30 per cent of the appellant's costs of the appeal as agreed or assessed. 2. The appellant pay 75 per cent of the respondent's costs of the Amended Summons and the Amended First Cross-Summons as agreed or assessed.

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: 13 March 2018

Property, Stock and Business Agents Act 2002(NSW)

Civil Procedure Act 2005(NSW)s 98, Uniform

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