Short v Crawley

Short v Crawley (No. 42) [2009] NSWSC 1110 Saul v Lin [2007] NSWSC 782 CASES CITED : Nardell Coal Corp Ltd (in liq) v Hunter Valley Coal Processing Pty Ltd [2003] NSWSC 642; (2003) 46 ACSR 467; 21 ACLC 1505 Cretazzo v Lombardi (1975) 13 SASR 4 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Roslyn Short as Executrix of the estate of the late Warwick Gordon Short & Anor PARTIES : v Christopher Crawley & 9 ors

COUNSEL : Plaintiff: Mr D Sweeney (sol'r) Defendants: Mr R Gorczyca (sol'r)

SOLICITORS : Plaintiffs: Freehills Defendants: Bruce Stewart Dimarco

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2824/98 Roslyn Short as executrix of the estate of the late Warwick Gordon Short & Anor v Christopher Crawley & 9 Ors (No. 43) JUDGMENT 1 HIS HONOUR: On 2 October 2009 on the plaintiffs' application I made orders varying orders made by consent on 26 November 2008 (Short v Crawley (No. 42) [2009] NSWSC 1110). I then ordered that the defendants pay the plaintiffs' costs of the plaintiffs' notice of motion of 14 September 2009. Those orders were made late in the evening of 2 October 2009 after I had delivered extempore reasons. No submissions were made at the time by either party on the question of costs. The order I made reflected the principle that prima facie costs follow the event (Uniform Civil Procedure Rules, r 42.1). The plaintiffs were successful on their application. 2 The defendants apply for that costs order to be discharged and instead it be ordered that the parties pay their own costs of and incidental to the notice of motion filed on 14 September 2009. There was no dispute about the court's power to discharge the costs order and substitute a new order (Saul v Lin [2007] NSWSC 782 at [13]; Short v Crawley (No. 42) at [68]). 3 The grounds upon which the defendants contend that a different costs order should be made are that:

(a) the consent orders of 26 November 2008 embodied an agreement between the parties. Parties are to be encouraged to settle their disputes or aspects of them. By the plaintiffs seeking a variation of the consent orders so as to alter the parties' underlying agreement the plaintiffs were asking the court to exercise a discretion. Although the plaintiffs succeeded, the making of a costs order against the defendants would impede rather than encourage the policy objective of encouraging parties to settle their disputes.

(b) the defendants succeeded on the issue that the consent orders of 26 November 2008 gave effect to a contract between the parties and that on the proper construction of the contract the guarantees could not be called upon until the conclusion of any appeal, whether or not it was an appeal in relation to the particular orders the subject of the stay. These were discrete issues. Had the plaintiffs conceded those questions, the application could have been dealt with when the matter was first listed before the court for directions on 18 September 2009. 4 The defendants referred to and relied upon the judgment of Campbell J (as his Honour then was) in Nardell Coal Corp Ltd (in liq) v Hunter Valley Coal Processing Pty Ltd [2003] NSWSC 642; (2003) 46 ACSR 467; 21 ACLC 1505 at [143]-[149] where his Honour deals with authorities bearing on the question of whether a plaintiff who successfully seeks an indulgence may nonetheless be liable to pay costs, or may not be entitled to costs. 5 I do not consider that such cases are analogous to the present. As the solicitors for the plaintiffs rightly submit, it is a mistake to conflate the grant of an indulgence with the exercise of a discretion. The fact that the exercise of a discretion is involved does not itself warrant departure from the usual rule that costs follow the event. Whilst the parties reached an agreement for the stay of orders to operate until the conclusion of any appeal, I found that because their agreement was embodied in the form of interlocutory orders which were inherently susceptible to being varied, they did not intend to exclude the court's jurisdiction to modify interlocutory orders. In invoking the court's jurisdiction to modify its interlocutory orders where there had been a material change of circumstances, the plaintiffs were not seeking an indulgence. I do not consider that the authorities discussed by Campbell J in Nardell Coal Corp Ltd (in liq) v Hunter Valley Coal Processing bear on the present question. 6 Nor do I accept that if costs follow the event this would discourage the settlement of disputes. The policy of encouraging negotiated settlements is relevant to whether the power to vary or set aside the consent orders should be exercised. But where, as I have found, those orders should be varied in the light of changed circumstances, it is no derogation from that policy for costs to follow the event. 7 The defendants succeeded on the issues of whether the consent orders embodied and gave effect to an underlying contract between the parties and on the proper construction of the orders. Those were two grounds upon which the defendants resisted the plaintiffs' application. Notwithstanding that success, the defendants failed in their resistance because I found, contrary to the defendants' submission, that there was nonetheless jurisdiction to vary the orders and the jurisdiction to do so should be exercised in the light of the changed circumstances. I could see no proper basis for maintaining the stay and insisting on the continuance of the plaintiffs' bank guarantee when the defendants had withdrawn almost all the grounds of appeal relating to the orders of 19 December 2007. 8 The costs of the application were somewhat increased by the plaintiffs' unsuccessful contentions as to whether consent to the orders gave effect to a contract and as to the construction of that contract. The more significant consideration is that it was not reasonable for the defendants to have resisted the lifting of the stay, and to have insisted on the maintenance of the plaintiffs' bank guarantee in an unchanged amount, when there remained no grounds for challenging the orders which were the subject of the stay, and there was no possibility of the plaintiffs' bank guarantee being called on for its full amount. 9 In Cretazzo v Lombardi (1975) 13 SASR 4, Jacobs J (at 16) warned against a too ready apportionment of costs according to the success or failure of a party on particular issues of fact or law. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 the Court of Appeal (Beazley, Ipp and Basten JJA) said (at [38]): " [38] The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this court in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: 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 Ltd (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 (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: 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.

These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279. "

10 The issues upon which I accepted the defendants' arguments were not dominant issues. I accept that they were separate or discrete issues. But I do not accept that the defendants' success on those issues in itself is a sufficient reason for modifying the prima facie position that the plaintiffs get their costs because they succeeded on the application. Having regard to the length of the hearing and the nature of the arguments advanced, I do not accept the defendants' submission that the application could have been dealt with on 18 September 2009 when the matter was listed for directions had the plaintiffs then conceded the particular issues on which they failed. Moreover, as the transcript of the directions hearing of 18 September 2009 shows, the parties were not then in a position to agree on the financial consequences of the defendants' succeeding completely on their remaining grounds of appeal. I had to make directions for the parties to exchange and provide to my Associate a summary of their calculation of such financial consequences. 11 In the present case, the "event" for the purposes of r 42.1 was not each particular issue, but the plaintiffs' successful claim for substantially the relief sought in the notice of motion. I do not consider that I should depart from the principle that costs follow the event because of the defendants' success on particular issues. I do not consider that the plaintiffs' failure on those issues added largely to the time for hearing the application. I am not in a position to quantify the additional time taken by those issues. I reject the claimed policy reasons for ordering the parties to pay their own costs. Notwithstanding the terms of the agreement, having regard to the changed circumstances, I do not consider that the defendants acted reasonably in resisting the plaintiffs' application. In these circumstances, I do not consider that I should attempt an apportionment to reduce the proportion of the plaintiffs' recoverable costs to reflect their lack of success on particular issues. 12 For these reasons I refuse the defendants' application to vary the costs order made on 2 October 2009. The costs of the defendants' application will be part of the costs of the notice of motion of 14 September 2009.

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