This is a costs judgment. The plaintiff has succeeded in the proceedings. But the defendant submits that I should, in the exercise of my discretion, make no order as to costs.
The plaintiff obtained judgment for $653,000. This amount corresponded to amounts which it had paid pursuant to a contract for the purchase of Lamborghini motor vehicles, which have not been delivered. $523,000 of the judgment sum concerned the purchase of one vehicle. The remainder concerned deposits paid under a further contract for the purchase of two further vehicles (of a common model, but distinct from that of the first vehicle). Judgment was entered after the defendant filed a defence admitting liability in restitution for these sums.
The proceedings were commenced by summons, in the Duty List, on 23 August. The plaintiff's prayers for relief included judgment for $653,000. Further or alternatively, claims were advanced pursuant to the Australian Consumer Law based on allegedly false representations. In aid of its claim, the plaintiff sought the making of freezing orders.
Freezing orders were made on 23 August and then extended. They remain in place until further order and the plaintiff has indicated that it wishes for them to continue until the judgment is satisfied. For its part, the defendant has indicated that it will seek to have the freezing orders discharged. The issue is to be the subject of a hearing in the Applications List on 20 October.
On 8 September, the proceedings came before me in the Expedition List, on the plaintiff's application for expedition. Although counsel for the plaintiff pressed for me to order expedition, I deferred dealing with the application. Instead, I ordered that the matter continue on pleadings and be adjourned for further mention once the pleadings had been filed and the shape of the contest (if any) had become clear.
The plaintiff filed its statement of claim on 14 September. In it, the plaintiff made clear that its primary claim was in restitution in the sum of $653,000. But it continued to seek alternative relief - first, damages under the ACL; further or in the alternative, that agreements entered into be set aside under the ACL; and further or in the alternative, damages.
A defence was filed near midnight on 28-29 September. In it, the defendant admitted the paragraphs of the statement of claim by which the plaintiff alleged that it was entitled to restitution of the amounts which it had been paid. The defendant denied that it was liable under the Australian Consumer Law (it denied having made various pleaded representations).
The matter was listed before me the following morning. In the light of the defendant's admissions, counsel for the plaintiff sought judgment and this was not opposed. On 3 October, I made orders accordingly, and entered judgment for $653,000 as sought.
Rule 42.34 of the Uniform Civil Procedure Rules 2005 provides that, in certain circumstances, plaintiffs who have succeeded in proceedings in this Court may be deprived of their costs, if their proceedings could instead have been brought in the District Court. But the rule only applies to plaintiffs who recover judgment for less than $500,000. Although the judgment in favour of the plaintiff in the present case falls below the District Court's jurisdictional limit, the rule is not engaged.
So much is common ground. The defendant nevertheless resists a costs order, on three bases.
The defendant's first contention is that, although r 42.34 does not apply, the proceedings could, and should, have been brought by way of statement of claim in the District Court, and that this remains relevant to the exercise of the Court's discretion. The defendant's solicitors submit that, at the very least, the plaintiff ought not recover more costs than those it would have recovered had it brought the proceedings in the ordinary way in the District Court.
The second contention concerns the plaintiff's claims of misleading and deceptive conduct. The defendant's solicitors submit that these claims, which were denied and have not been resolved, were unnecessary, and that the plaintiff should not recover any costs of mounting them.
The third contention concerns the plaintiff's application for freezing orders. The defendant's solicitors submit that the Court has not ruled on the merits of the application (and in particular, whether there was a sufficient threat of dissipation of assets to justify the orders). It remains possible that the orders will be discharged. The submission is that the costs of and associated with the application should be reserved until the issue has been dealt with.
Prima facie, the plaintiff succeeded and is entitled to its costs: UCPR, r 42.1. The defendant must show why the Court, in its discretion, should make some other order.
It is convenient to deal with the freezing order costs first. I have not had the benefit of reply submissions from the plaintiff concerning whether those costs should be reserved. But I think the most efficient course is to reserve them.
Freezing orders are made in aid of a plaintiff's right to execution on a judgment, or a prospective judgment. In that sense, they are ancillary. But this does not necessarily make them interlocutory.
That is clearly seen in cases where the Court makes a freezing order in aid of a plaintiff's claim in an inferior court or tribunal: see Herron v McGregor (1986) 6 NSWLR 246 at 250; see also UCPR, rr 25.10, 25.14. The claim itself is not before the Court; the "matter" before the Court is only whether a freezing order should be granted.
Such an order is temporary, because it expires (if the plaintiff's claim succeeds) once the enforcement process is complete. The order may also be varied or dissolved by the Court upon proper grounds. But a final injunction may have the same features. The order is final in nature (even though it may of course be made on an interim basis before final hearing). In principle, where the Court is asked to make a freezing order in aid of its own process, it is no different.
It seems to me, as at present advised, that the freezing orders made in this case were interim only. The plaintiff's final entitlement to such orders has not been determined and remains in dispute. In these circumstances, the costs occasioned by the application do not necessarily follow the event of the proceedings. Those costs should be dealt with separately.
This brings me to the costs of the principal proceedings. It is true that, with the benefit of hindsight, it can be seen that the plaintiff did not need to mount its claims of misleading and deceptive conduct. The plaintiff could have confined its case to a simple claim in restitution consequent upon the termination of the contracts between it and the defendant. The District Court would have had jurisdiction to deal with that claim, and with the plaintiff's ancillary application for a freezing order. The claim could also have been brought by way of statement of claim from the outset, which would have encouraged default judgment, or judgment on the pleadings, as later occurred.
At the hearing on 8 September, counsel for the plaintiff urged me to grant expedition of the proceedings because, by that stage, a freezing order had been made, and because of the potential complexity of the case, which at that time was said to include elements of fraud. But, as subsequent events have shown, the case was always one for the District Court. Even if there had been a dispute about the defendant's obligation to repay the purchase monies, it is very unlikely that that dispute would have justified retention of the proceedings in this Court, much less expedition.
But, as the defendant has acknowledged, r 42.34 does not apply. Even when that rule does apply, the Court does not automatically deprive plaintiffs of their costs. I see no basis to do so in a case where the rule does not apply.
It would of course be possible to make an order depriving the plaintiff of specific costs such as those solely referable to the misleading and deceptive conduct claims. But I do not think that this would be warranted.
Bearing in mind that the costs of the freezing order application are to be reserved, the misleading and deceptive conduct claims are likely to have generated very modest, if any, additional costs in the principal proceedings. The same may be said of the application for expedition. The fact is that the plaintiff's case has been disposed of promptly, without the need for a trial, in a handful of preliminary hearings. It would not be useful to expend further effort in assessing whether there might have been some marginal saving if the case had been presented differently.
I will therefore make an order ordering the defendant to pay the plaintiff's costs of the principal proceedings up to 3 October, the date of entry of judgment.
Despite the reservation as to freezing orders, the plaintiff has been substantially successful in the present application. Accordingly, I will also order that the defendant pay the plaintiff's costs of the present application.
The orders of the Court are:
1. Reserve the costs of the proceedings of and occasioned by the plaintiff's application for freezing orders.
2. Otherwise, order that the defendant pay the plaintiff's costs of the proceedings to 3 October 2023.
3. Order that the defendant pay the plaintiff's costs of the costs application.
[2]
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: 16 October 2023