Silver Star Fashions Pty Ltd v Dal Broi [2018] NSWSC 1697 | Case summary

Judgment

These proceedings concerned an application by the plaintiff under s 66ZL(6) of the Conveyancing Act 1919 (NSW) for permission to rescind under a "sunset clause" nine off the plan contracts it entered into as vendor in 2014. On 26 September 2018 the Court dismissed the Statement of Claim and ordered the plaintiff to pay the defendants' costs of the proceedings (see Silver Star Fashions v Dal Broi [2018] NSWSC 1445 ("the Principal Judgment") at [196]).
On 10 October 2018 the first to tenth defendants filed a Notice of Motion seeking to vary the costs order. The first to tenth defendants seek an order that the plaintiff pay the first to tenth defendants' costs of the proceedings on the ordinary basis up to and including 22 March 2018, on which day a Calderbank offer was made, and on an indemnity basis from 23 March 2018 onwards.
On 11 October 2018 the plaintiff filed a Notice of Motion seeking to vary the costs order. The plaintiff seeks an order that the costs it is ordered to pay the eleventh and twelfth defendants be limited to "the proportion of costs of each of the first to tenth defendants".
The Court made directions for written submissions, with a view to the question of costs being determined on the papers. As no party has indicated that a further oral hearing is necessary, the Court will proceed to deal with costs on the papers.

The Plaintiff's Application

The plaintiff's application arises from what it says was the unreasonable conduct of the eleventh and twelfth defendants in retaining legal representation separate to that of the first to tenth defendants.
The plaintiff accepts that it cannot rely on UCPR r 36.16(3A) because its application was filed more than 14 days after the entry of the orders (see UCPR r 36.16(3C)). The plaintiff seeks instead to rely on UCPR r 36.15(1), which gives the Court power to set aside a judgment or order if it was given or entered irregularly, illegally or against good faith, or on UCPR r 36.16(2)(b), which gives the Court power to set aside or vary a judgment or order already entered if it has been given or made in the absence of a party.
The plaintiff submits that, although its solicitor was present when judgment was given in the proceedings, the question of costs had not been the subject of argument, and so the order as to costs given on 26 September 2018 was made in the absence of the parties. This is said to enliven the Court's power in UCPR r 36.16(2)(b), and to constitute an irregularity for the purposes of UCPR r 36.15.
In relation to the substance of the application, the plaintiff submits that there was no justifiable reason for the eleventh and twelfth defendants to be separately represented in circumstances where the first to tenth defendants were represented by the same solicitors and counsel and were in substantially the same position as the eleventh and twelfth defendants. The unreasonableness of such an arrangement was said to be clear from the minimal role played by counsel for the eleventh and twelfth defendants at the trial, who largely adopted the submissions of counsel for the first to tenth defendants.
The plaintiff relies on the decision of Emmett AJA in DGF Property Holdings Pty Ltd v Di Federico; DGF Property Holdings Pty Ltd v Butros (No 2) [2018] NSWSC 1137, in which his Honour ordered that a separately represented defendant to an application brought under s 66ZL(6) was to have her costs limited to the proportion of costs payable by each of the other defendants, from the date on which the issue of separate representation was raised at a directions hearing. At [18] of that decision, his Honour said: True it is that each of the Purchasers would, in ordinary circumstances, be entitled to have his or her own legal representation. However, the restrictions of the exercise of contractual rights imposed by s 66ZL require that a different approach be taken. The legislation would apply in circumstances where multiple claims have to be considered, as in the present case. Where there are multiple purchasers in similar or identical interests, it may well be unreasonable for there to be separate representation in relation to each claim for permission to rescind made by one vendor in relation to the same subdivision or strata plan. To the extent that there was a conflict, clearly separate representation could be required. However, as I have said, that proposition has not been advanced in the present case.
The eleventh and twelfth defendants submitted that there is nothing in s 66ZL(8) which requires a defendant to join in the same legal representation as other defendants. They submitted that they were entitled to retain the lawyers of their choosing, with fee arrangements they found suitable, and that the plaintiff should have raised the point as early as possible in the proceedings if it thought that the eleventh and twelfth defendants' legal representation was unreasonable.
In the absence of any statutory authority, it is not open to the Court to vary orders that have been made and entered (Deputy Cmr of Taxation v Meredith (No 2) [2008] NSWCA 133 at [15]-[16]). I do not think that UCPR r 36.16(2)(b) is satisfied. It is clear that the order for costs was made when all parties were present on 26 September 2018. It is perhaps arguable that the costs order was entered irregularly within the meaning of UCPR r 36.15(1) because the parties had not fully presented their arguments as to costs at the hearing in circumstances where an impression may have been created by the Court that the issue would be dealt with later. Nevertheless, it is not necessary to determine that question, because even if the Court's power to vary the order has been enlivened, I would not exercise the power, as I do not think that sufficient cause to do so has been shown.
In particular, I do not accept that it would be appropriate for the costs of the eleventh and twelfth defendants payable by the plaintiff to be limited to the proportion of costs incurred by each of the first to tenth defendants. Prima facie, the eleventh and twelfth defendants were entitled to retain the legal representation of their own choosing. A failure to join in the legal representation of other defendants in the same or substantially the same interests may have been unreasonable if the point had been squarely raised with the eleventh and twelfth defendants, including by warning them that a limitation on their costs would be sought, yet they continued with separate representation without good reason. That does not appear to be the case here. I do not think the retaining of separate legal representation should be regarded as unreasonable in the absence of specific (and well founded) opposition to that course.
This view is supported by the reasoning of Emmett AJA in DGF Property Holdings Pty Ltd v Di Federico; DGF Property Holdings Pty Ltd v Butros (supra), as his Honour limited the separately represented defendant's costs in that case from the day on which the issue of separate representation was raised in Court (see [12] and [20]).
For the above reasons, the plaintiff's Notice of Motion filed on 11 October 2018 will be dismissed. The plaintiff will be ordered to pay the eleventh and twelfth defendants' costs of the motion.

Silver Star Fashions Pty Ltd v Dal Broi

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