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[2025] NSWSC 751
General information, not legal advice.
Supreme Court of NSW
2025-07-21
Walton J
Original judgment source is linked above.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Wang v Fan (No. 2) [2025] NSWSC 751
Hearing dates: On the papers (submissions received on 16, 30 June and 7 July 2025)
Date of orders: 21 July 2025
Decision date: 21 July 2025
Jurisdiction: Common Law
Before: Walton J
Decision: The plaintiff shall bring in Short Minutes of Order reflecting this judgment by 4:00pm on 23 July 2025.
Catchwords: COSTS – r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) – whether success on one aspect of the cross-claim is its own event – relevance of dishonest credibility findings to costs – whether ordinary costs should be apportioned – other historical factors bearing upon costs – costs awarded to the plaintiff
Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68
Liu v Lam (No 2) [2025] NSWSC 264
Rialto Sports Pty Limited (Admins Apptd) v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited (No 3) [2023] NSWCA 279
Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262
Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405; (2014) 17 BPR 33,717
Sze Tu v Lowe (No 2) [2015] NSWCA 91
Wang v Fan [2024] NSWSC 1339
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Category: Costs
Parties: Jingsi Wang (Plaintiff)
Haiyang Fan (Defendant)
Representation: Counsel:
P Russel (Plaintiff)
P D. Reynolds (Defendant)
Solicitors:
Maxim Legal Pty Ltd (Plaintiff)
MLH Lawyers (Defendant)
File Number(s): 2023/00062954
Publication restriction: Nil
By a Statement of Claim, filed on 24 February 2023, Jingsi Wang (“the plaintiff”) brought proceedings against Haiyang Fan (“the defendant”) for failing to repay a loan to the plaintiff of 10 Million RMB and breaching a promise to marry the plaintiff on condition that or in consideration for the plaintiff paying to the defendant the sum of $248,500. These monies were paid by the plaintiff to the defendant in December 2022.
In response to the Statement of Claim, the defendant filed a Defence and a Statement of Cross-Claim which were twice amended. The final versions of those documents were filed on 22 September 2023. In substance, the defendant’s case alleged that the payments made by the plaintiff, in December 2022, were, in effect, partial repayments of previous debts owed to the defendant by the plaintiff. There were 9 transactions that the defendant relied upon, in this respect, that were alleged to have been made by the defendant, or companies he controlled, at the direction of the plaintiff, between August 2018 and February 2022. In August 2023, the plaintiff raised an additional transaction which was alleged to have occurred in October 2018. In total there were 10 disputed transactions.
The hearing in this matter was originally set down for 19 and 20 September 2023. However, the hearing was adjourned on 19 September 2023 as a result of the defendant filing late evidence, namely, an affidavit of the defendant of 14 September 2023 (the “late evidence”). The late evidence, inter alia, raised new payments said to have been made by the defendant, or companies he controlled, which he contended were debts owed to him by the plaintiff as well as alleged WeChat conversations. As a result, the hearing was delayed until 12 December 2023. I will return to the effect of this adjournment below.
The Court delivered judgment, in respect of the claim and cross-claim, on 24 October 2024: Wang v Fan [2024] NSWSC 1339 (“the primary judgment”).
The issue in this supplementary judgment concerns the determination of costs as between the parties.
In determining that issue, the Court will hereafter use the short forms used in the primary judgment. As in the primary judgment the Court will not separately refer to the defendant as a cross-claimant and will use the expression “the defendant” to refer to both categories. The same approach is taken to the plaintiff and cross-defendant.
The parties agreed that the Court should determine this issue on the papers, however, the defendant’s consent was conditional upon “the assumption that the Court does not propose to entertain the allegations of fraud and dishonesty” referred to in the plaintiff’s submissions on costs.
The Court acknowledges that the primary judgment, in assessing the credibility of the defendant, characterised some of the defendant’s conduct as dishonest. However, fraud was never pleaded and I accept the defendant’s submission that “it is well established that claims of fraud and dishonesty needs to be specifically pleaded, particularised and proved if sought to be alleged. [1] In this respect, I note that in written reply submissions, counsel for the plaintiff accepted that fraud was not pleaded but submitted that “if fraud is not an element of a party’s claim or defence, it is not a pleadable matter… [t]hus, the dishonesty of a defendant’s defence or his evidence in support of his defence does not make it a pleadable matter… the honesty of witness’s testimony is a real issue in the trial”.
The plaintiff’s general assertion that the defendant’s “fraud and dishonesty” “caused these proceedings to be commenced by the plaintiff and for the unnecessary additional time, costs and delay in their resolution” needs to be seen in that light. I note for completeness that where the unsuccessful party falsely and deliberately concocts evidence or unnecessarily prolongs a hearing with deliberately false defences or allegations of fact, indemnity costs may be awarded. [2] However, the plaintiff did not make submissions in those terms nor sought indemnity costs on that basis.
As such, this judgment does not turn upon any specific notion of fraud or dishonesty other than, to the extent relevant, the Court found in the primary judgment that aspects of the defendant’s evidence was dishonest. I will therefore determine the matter on the papers.
I will turn to the findings of the primary judgment, which are particularly relevant to the question of costs.
The defendant approached his case globally as “truly an accounting exercise” and conceded that, after consideration of the transactions in Annexure A (extracted in the primary judgment), the plaintiff was in credit to the defendant “by a minor amount” “on the cross-claim and on the defence” (at [31] of the primary judgment). [3]
Further, on the defendant’s own case, the SCC is thereby completely coincident with the Defence and intrinsically linked such that any loss or success of the defendant’s case in the SCC cannot be properly viewed in isolation from the Defence.
That was the context in which findings in the primary judgment were made by the Court as follows:
In the period from 15 to 23 December 2022, the plaintiff advanced the RMB loan to the defendant (at [455] of the primary judgment). I note that the transactions which make up the RMB loan is reflected in [17(2)] of this judgment).
In the period from about 15 to 26 December 2022, the defendant promised to marry the plaintiff on condition that or in consideration for the plaintiff paying to the defendant a sum of $248,500 (at [453] of the primary judgment).
On 26 December 2022, the plaintiff made the $248,500 payment to the defendant (at [456] of the primary judgment).
The defendant failed to establish the following transactions (on his Defence or SCC) to set-off the RMB loan or the $248,500 payment:
(a) Foreign exchange transactions (at [260] of the primary judgment) (b) Haiyan Zhou Payment (at [269] of the primary judgment) (c) Zhang Payment (at [320] – [323] of the primary judgment) (d) $950 Loan to Anson One (at [390] of the primary judgment) (e) $500,000 Loan to Anson One (at [402] of the primary judgment) (f) $100,000 Loan to Anson One (at [408] of the primary judgment) (g) $300,000 Loan to Pfizer (at [450] of the primary judgment) (h) $82, 910.70 Loan to Pfizer (at [450] of the primary judgment)
The defendant conceded the occurrence of the early 2021 cash payment and the plaintiff established the cash payment on 5 October 2018 (at [269] of the primary judgment).
The defendant succeeded on his Defence and SCC in relation to the alleged gift transaction. The alleged gift transaction was found to constitute a loan (whether express or implicit) from the defendant to the plaintiff’s mother at the direction of the plaintiff (at [459] of the primary judgment).
It follows that the defendant was liable to repay the RMB loan to the plaintiff, adjusted with respect to the alleged gift transaction (at [457] and [460] of the primary judgment).
The defendant was liable to pay the plaintiff the sum of $248,500 as money had and received by the defendant to the use of the plaintiff (at [463] of the primary judgment).
Thus, the defendant was successful in his Defence in one respect, namely, the alleged gift transaction (at [458] – [460] of the primary judgment) but failed in all other defences. That Defence corresponded precisely with an equivalent claim in the SCC concerning the alleged gift transaction. Likewise, all other aspects of the SCC, which again corresponded to the Defence, failed.
It is in those circumstances, and contrary to the submissions made by the defendant, his success on the SCC cannot be properly seen as an event isolated from the Defence. This is confirmed by the Judgment Orders, wherein the Court treated the monies owed under the alleged gift transaction to the plaintiff as entitling the defendant to a “set-off” against his liability to the plaintiff under the SOC with the SCC “otherwise dismissed”. Accordingly, the amount claimed in the SCC was treated coincident with the Defence – the alleged gift transaction representing a set-off against the plaintiff’s claims, but otherwise all other transactions replied upon in the SCC (and the Defence) failed. I note that this approach is consistent with how the defendant put his case globally as an “accounting exercise”. This approach is also consistent with the set-off being a Defence. It was unnecessary to plead the alleged gift transaction in the SCC in order to establish the defendant’s entitlement in that respect. [4]
On 12 February 2025, Judgment Orders, which were made by consent of the parties, applied this approach in the following terms:
DECLARE THAT on 15 December 2024, the plaintiff agreed with the defendant to lend to the defendant RMB10,000,000 (RMB loan).
DECLARE THAT in the period from 15 to 23 December 2022, the plaintiff advanced the RMB loan to the defendant by:
(a) transferring $500,000.00 from the plaintiff’s Westpac Banking Corporation account (BSB 732-090; no. 766715) (WBC account) to the defendant’s Commonwealth Bank of Australia account (BSB 063-097; no. 24346467) (CBA account) on 15 December 2022; (b) delivering $70,000.00 in cash to the defendant on 16 December 2022; (c) transferring $30,000.00 from the plaintiff’s WBC account to the defendant CBA account on 16 December 2022; (d) transferring RMB3,000,000 from the plaintiff’s China Merchant Bank account (6214####9109) (CMB account) to the defendant’s Industrial and Commercial Bank of China account (6222021115010564503) (ICBC account) on 19 December 2022; (e) transferring RMB2,000,000 from the plaintiff’s CMB account to the defendant’s ICBC account on 22 December 2022; (f) transferring RMB2,000,000 from the plaintiff’s CMB account to the defendant’s ICBC account on 23 December 2022,
being separate totals of RMB7,000,000 and $600,000.
(a) RMB4,000,000 or its Australian dollar equivalent of $840,000 as of 17 January 2023; and (b) $848,500,
together with interest thereon from 17 January 2023 to judgment pursuant to section 100 of the Civil Procedure Act 2005.
JUDGMENT FOR the plaintiff against the defendant in the sum of $1,969,239.42, comprising the amount of $1,688,500 for the plaintiff’s claim together with interest on the sum of $1,688,500 pursuant to section 100 of the Civil Procedure Act 2005 for the period from 17 January 2023 to judgment in the amount of $280,739.42.
ORDER THAT the defendant’s Further Amended Statement of Cross-Claim filed 22 September 2023 be otherwise dismissed.
ORDER THAT costs be reserved.
There are other indicia of the proceedings, or matters relevant to the proceeding, which also bear upon the question of costs. Those include costs thrown away by an adjournment, costs of a motion concerning notices to produce (which was relevant to the authenticity issue) and costs associated with applications for freezing orders (“the additional costs matters”). I note that I will approach the issues across costs globally at the conclusion of this judgment but, for present purposes, will deal with the significance of each of these matters to the question of costs.
As earlier mentioned, the matter was adjourned part-heard on 19 September 2023 as a result of the late evidence, filed by the defendant on 14 September 2024, 5 days before the hearing was listed to commence. For present purposes, it is sufficient to refer to two matters raised by that fresh evidence, even though the evidence brought in many of the transactions relied upon by the defendant.
The first such issue, raised by the defendant in the affidavit, was one of the foreign exchange transactions involving the plaintiff and the defendant’s mother allegedly transferring RMB 2,544,020 to Zhu Zhang on 3 August 2021. That transaction was not the subject of any pleadings and ultimately the Court found that there was no evidence that the defendant paid any money to Zhu Zhang and that the evidence did not support that the defendant’s mother made a payment to Zhu Zhang. This was one of the foreign exchange transactions ultimately raised as part of the defendant’s Defence and SCC which failed.
A second issue, raised by the defendant in the affidavit, was his reliance upon, for the first time in the proceedings, alleged WeChat conversations. The defendant relied upon the existence of alleged WeChat conversations between the plaintiff and himself, namely, as discussed in the primary judgment, the Palm Beach WeChat conversations and the PUA WeChat conversations.
The plaintiff denied the authenticity of alleged WeChat conversations and issued Notices to Produce to Court seeking production of documents relating to those conversations and production of the defendant’s mobile number and other electronic devices containing the alleged Palm Beach and PUA WeChat conversations. Ultimately, the defendant did not establish the authenticity of the PUA and Palm Beach WeChat conversations. That issue occupied a considerable amount of time in evidence, the parties’ submissions, and ultimately the primary judgment.
In the resolution of issues relating to the late evidence, the Court granted the adjournment sought and fixed further hearing dates on these essential bases:
The defendant was permitted to bring the fresh evidence, noting the question of authenticity remaining extant; and
The plaintiff was given an opportunity to meet the fresh evidence (and case); and
The defendant was ordered to pay the plaintiff’s costs thrown away by reason of the grant of an amendment to the Defence and SCC (to produce a Further Amended Defence and a Further Amended Statement of Cross-Claim) and the adjournment of the proceedings.
On 4 December 2023, the plaintiff filed a Notice of Motion seeking orders that the defendant be examined on oath before the Registrar as to his answers to the Notices to Produce to Court issued by the plaintiff on 29 August 2023, 20 November 2023 and 29 November 2023 (the “4 December 2023 Motion”).
As earlier mentioned, the hearing resumed on 12 December 2023 and, by consent of the parties, the 4 December 2023 Motion was dismissed with costs reserved. The circumstances surrounding the agreement to dismiss the 4 December 2023 Motion were as follows:
The parties had a hearing on 4 December 2023 before N Adams J regarding the 4 December 2023 Motion which was stood over to 7 December 2023 on the basis that there would be some communications between the parties in the interim period. However, on receiving information that the matter was returning before the Court as presently constituted, on 12 December 2023, N Adams J adjourned the matter to that date.
On 12 December 2023, the 4 December 2023 Motion was returned to the Court sitting in the proceedings proper. On that occasion counsel for the plaintiff confirmed the 4 December Motion was abandoned and stated “that the state of production of documents…has been dealt with… [t]he motion is almost redundant now, we’re at trial and we need to move ahead”. [5] Counsel for the plaintiff stated he would raise objections to any material brought in on the defendant’s case and cross examine on it in the proceedings proper. Counsel for the defendant consented to the Court making orders to dismiss the 4 December 2023 Motion with costs reserved.
The plaintiff also, correctly, in my view, asked the Court to have regard to costs associated with the attainment by the plaintiff of freezing orders.
I will deal with the various freezing orders seriatim.
On 24 February 2023, the plaintiff filed a Notice of Motion seeking a freezing order against the defendant in respect of his Australian assets (24 February 2023 Motion”). On 3 March 2023, with the consent of the defendant, Wright J made the freezing order (“3 March 2023 Freezing Order”) and reserved costs on the Notice of Motion. The plaintiff’s submissions, in support of the freezing order, outlined concerns that the defendant would abscond or that the defendant would remove his assets from Australia, or dispose of, deal with or diminish his assets in value. Two circumstances the plaintiff relied on giving rise to those concerns were as follows:
the defendant had previously avoided Chinese creditors and Chinese Court orders by transferring all of his assets to his parents and sister; and
alleged threats to the plaintiff that the defendant would ensure the plaintiff would not receive any money even if she obtained a judgment against the defendant.
On 24 March 2023, the plaintiff filed a Notice of Motion seeking to vary the 3 March 2023 Freezing Order by expanding its operation to the defendant’s worldwide assets (“24 March 2023 Motion”). On the same day, with the consent of the defendant, Chen J made the variation sought (“Varied 3 March 2023 Freezing Order”) and reserved costs on the Notice of Motion.
I would observe that, in the circumstances, the plaintiff would receive her costs of the 24 February 2023 Motion and the 24 March 2023 Motion, in dealing with the question of reserved costs.
On 24 October 2024, after the primary judgment was delivered, the plaintiff made an oral application seeking an extension of the Varied 3 March 2023 Freezing Order for a period of 7 days. That order was made by consent later on the same day. There would seem to be no occasion, in those circumstances, for any award of costs against the defendant.
On 29 October 2024, an application was made to Fagan J as the duty judge to extend the Varied 3 March 2023 Freezing Order. Consent orders were filed and made by the Court extending the Varied 3 March 2023 Freezing Order to 5:00pm on 21 November 2024. Again, this would not seem to be an occasion for the award of costs against the defendant.
On 18 November 2024, the plaintiff filed a Notice of Motion seeking to vary the Varied 3 March 2023 Freezing Order by extending its operation “until payment of any judgment debt together with interest and any orders for costs in favour of the plaintiff against the defendant in these proceedings or further order of the court” (“18 November 2024 Motion”). The defendant opposed the 18 November 2024 Motion. The 18 November 2024 Motion was originally listed for hearing on 20 November 2024, however, on 19 November 2024 that listing was vacated and a hearing was listed before Justice McNaughton on 21 November 2024.
On 20 November 2024, by consent of the parties, Justice McNaughton made orders to the following effect:
extended the Varied 3 March Freezing Order to 5:00pm on 5 December 2023.
stood the 18 November 2024 Motion over for hearing on 5 December 2024.
Ordered the defendant to file and serve any evidence on which he wished to rely on in relation to the 18 November 2024 Motion by 5:00pm on 3 December 2024.
Reserved costs
The matter was brought before N Adams J on 5 December 2024 who granted the 18 November 2024 Motion in the terms sought (save that reference was made to the intervening variation of the original freezing order). Her Honour ordered that the defendant pay the plaintiff’s costs on the 18 November 2024 Motion. Those costs should also be taken into account in assessing costs overall in this matter.
“37. Costs are not awarded by way of punishment of the unsuccessful party but, rather, “are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings”: Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9].
- The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs.
- How “the event” should be defined will depend upon the nature of the litigation. Generally the “event” refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Windsurfing International Inc v Petit [1987] AIPC 90-441 at 37,861 – 37,862 (Waddell J).
- In a proper case, the party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue. The circumstances in which this may occur are not limited to cases where it was unreasonable for the successful party to raise the issue on which it failed: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D. The relevant principles were reviewed by this Court in Elite Protective Service Pty Ltd v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), 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 1996, 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] FCA 259; (1993) 26 IPR 261 at 272.
- In approaching the question of apportionment where there are multiple issues, it has also been recognised that there is a basis for distinguishing between the position of successful defendants and successful plaintiffs. In Griffith at [19] Hodgson JA explained the distinction as follows:
In the former case, the defendant has been caused to incur costs in defending a claim which the decision in the case has wholly rejected, and has thus determined should not have brought about the incurring of any costs at all. In those circumstances, it may be considered appropriate that the defendant have costs associated with reasonable defences, even if they ultimately proved to be unsuccessful and severable. In the latter case, the plaintiff has chosen to bring the whole proceedings and thereby to incur costs and cause costs to be incurred which otherwise would not have been incurred; and in those circumstances, it may be seen more readily as appropriate that the plaintiff be liable for the costs of unsuccessful severable claims or issues, even if it was reasonable to include those claims or issues.
- A similar view was expressed in Griffith by Basten JA at [38]-[39]. After referring, with apparent approval, to the statement of Burchett J in Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169 that:
... A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably he may suffer in costs. Ultimately, the question is one of discretion and judgment.
Basten JA said (at [39]):
Even were it otherwise, caution should be taken in allowing an unsuccessful plaintiff to resist payment of costs in respect of particular independent defences which are unsuccessful or need not be addressed.
Costs of the appeals
(a) What costs order should be made in favour of the appellants?
- Each of the appellants has succeeded in setting aside the relief awarded against them in the Court below. Ordinarily costs should follow the event. Are there circumstances which justify some other order on the appeals?
- If one looks at the appeals, there were multiple issues and more than one “event”. The grounds of appeal relied upon by the appellants and the relief sought by them on appeal were directed to setting aside both the relief awarded against the appellants and the relief awarded against the Estate in which they had an interest on intestacy.
- With respect to the Estate, Margaret sought to characterise all of the claims made by Geoffrey and Mary as, in substance, claims for partnership accounts, with the consequence that all claims were said to be barred by s 15 of the Limitation Act. Sunly and Gordon (and Helen) made a similar submission to this effect. These appeal grounds had mixed success. The grounds failed insofar as Geoffrey and Mary’s claims against the Estate were to recover trust property for the partnership. Sunly and Gordon (and Margaret and Helen) also challenged the findings of Gzell J that KST had used partnership funds in the purchase of the three properties and the consequential relief by way of constructive trust in favour of the partnership over the Estate’s interest in the three properties. These appeal grounds also failed.
- To the extent that the appellants failed on issues argued in the interests of the Estate, some allowance in favour of Geoffrey and Mary should be made to reflect Geoffrey and Mary’s success on appeal in maintaining their distinct claim against the Estate, except for the variation to the orders by Gzell J to limit the terms of the scope of the inquiry.
- The process of apportioning costs as between different issues with respect to the Estate and the appellants can only be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. Related to this assessment is the issue whether the appellants should be deprived of part of their costs on appeal because they otherwise raised issues in their own interests on which they were unsuccessful. I now turn to this issue.”
“ORDER THAT the defendant pay the plaintiff’s costs of the proceedings on its statement of claim and the plaintiff’s costs of the proceedings on the defendant’s first cross-claim, including all reserved costs, as may be best to agreed.”
“The Defendant to pay 75% of the Plaintiff’s costs of the proceedings (or such other reduced percentage of the Plaintiff’s costs as the Court considers fit), as agreed or assessed.”
Applying the principles set out in Sze Tu, the plaintiff submitted that the Court should not reduce the plaintiff's costs in any way as suggested by the defendants for the following reasons:
The plaintiff succeeded on all issues bar one in the proceeding, namely, the alleged gift transaction. The success of the defendant, in this respect, was a success on the Defence entitling the defendant to a set off. The defendant did not achieve any success on his SCC.
The issues which the plaintiff succeeded on were many and extensive, including the authenticity of the Palm Beach and PUA WeChat conversations, the credit of the defendant and 8 of the 9 disputed transactions.
The only issue the defendant succeeded on, namely, the alleged gift transaction, was neither dominant nor separable from the other issues. In this respect, the plaintiff highlighted that the determination of this issue involved the Palm Beach WeChat conversations, which the Court had already ruled was not authentic, enabling the Court to quickly deal with the remainder of its consideration on the alleged gift transaction.
Consideration of the alleged gift transaction did not take up a significant part of the trial either by way of evidence or argument, which is apparent from the reasons of the Court and the conduct of the trial. Moreover, there has been no suggestion that the plaintiff’s position or conduct on the alleged gift transaction was unreasonable.
The defendant’s approach, in seeking a 25% reduction or other reduction to the plaintiff’s costs, presumably on the basis of the success of the alleged gift transaction, is irrational in the circumstances. If such a reduction was granted, it would, in effect, force the plaintiff to suffer a 25% reduction for issues upon which it was wholly successful on or otherwise justified in obtaining in full. For example, a 25% reduction of all the plaintiff’s costs would mean that the plaintiff is deprived of 25% of her costs on:
(a) every other issue in the proceeding; (b) the reserved costs on the notices of motion for the freezing order; and (c) costs already awarded against the defendant.
The defendant submitted that the default rule that ‘costs follow the event’ should apply in this case, and that there are at least two discrete ‘events’, being the plaintiff’s SOC and the defendant’s SCC, that a costs order should account for.
The defendant relied on two considerations in relation to these ‘events’ relevant to the Court’s discretion to award costs, namely:
the defendant’s success on his SCC with respect to the alleged gift transaction and consequent success on his Defence of set off in relation to the same; and
The plaintiffs lack of success on her SOC with respect to her contention that the payments the defendant made to her mother constituted a gift.
The defendant made the following submissions which outlined authorities that discussed the default rule and what constitutes an ‘event:
“13. The usual rule is that ‘costs follow the event’. As explained recently by the Court of Appeal in Rialto Sports Pty Limited (Admins Apptd) v Cancer Care Associates Pty Limited; CCA Estates Pty Limited (No 3) [2023] NSWCA 279 per Bell CJ and Gleeson JA at [60]:
The default rule in UCPR r 42.1 is that costs follow the event, unless the Court considers some other order should be made. Generally, the “event”, as referred to in r 42.1, refers to the event of a claim or counterclaim, as the case may be. It may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15], referring to Windsurfing International Inc v Petit [1987] AIPC 90–441 at 37.861–37,862 (Waddell J).
14. However, it is also well established that it may be appropriate to depart from this starting position where a party succeeds on some issues in the proceedings and fails on others. Furthermore, construing what constitutes the appropriate ‘event’ may involve a certain degree of nuance into the analysis.
15. In Hughes v Western Australian Cricket Assn Inc (1986) 8 ATPR 40-748, at 48-136, Toohey J summarised the law as follows:
(a) Ordinarily, costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.
(b) Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed; and
(c) A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law.
…
17. In Commissioner of the Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64 at 68, Wilcox J emphasised that the courts should not be reluctant to reduce costs to reflect lack of success on discrete issues and explained the policy considerations underpinning this approach as follows at 68:
I recognise the importance of the general principle to which Mahoney JA referred. But I do not think that courts should be reluctant to recognise the existence of exceptional cases. In these days of extensive court delays and high legal costs the courts should use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. If parties come to realise that they will not necessarily recover the whole of their costs, … they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take.
18. In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, Western Australian Branch (No 2) (1993) 46 IR 301 at 302, French J (as he then was), expressed agreement with this observation and further stated that:
[T]he demands of the community for greater economy and efficiency in the conduct of litigation may have to be reflected in a softening of the presumption that a successful party is entitled to all its costs.
19. In this regard, as stated in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 (Beazley, Tobias and McColl JJA) at [34] (emphasis added):
Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent’s Notice of Contention. This is not to say that so-called “discrete issues”, for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it 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.
20. By way of example:
(a) In Sze Tu, there were multiple issues and more than one “event”. The Court of Appeal accepted that, to the extent that the appellants failed on certain issues, some allowance in favour of the respondents ought to be made to reflect their success, and concluded that the respondents pay 85% of the appellants’ costs of the appeal (looking at the matter “globally”, on a “broad brush basis”, and “largely as a matter of impression and evaluation by the court”, bearing in mind that the costs order should reflect a just and fair outcome “without isolating and weighing individual issues with minute precision”);
(b) In Mok Gek Bouy v Minister for Immigration, Local Govt and Ethnic Affairs (No 2) (1993) 47 FCR 81, Keely J reduced the successful applicant’s costs order by 10%, to reflect her lack of having raised issues in respect of which she was unsuccessful, which the court considered led to some increase in the length of hearing (from 37 to 39 days);
(c) In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) ACSR 20, Young J reduced the plaintiff’s entitlement to costs to 50%. Young J reduced the costs award to reflect various sub-issues in respect of which the plaintiff was unsuccessful and the lesser net result achieved compared to that which they were aiming for, although it was substantially successful. In doing so, Young J stated:
Subject to [not making a successful defendant pay the costs of an unsuccessful plaintiff], the court may, though it is a matter of discretion, conclude that in all the circumstances a successful party should pay the costs in respect of an issue on which that party has failed or when one looks at the matter globally the successful party should pay some of the costs or alternatively have that party's costs reduced because although the party has been successful overall, it would be unfair to allow that person to get the whole of his or her costs: see Rosniak v GIO (1997) 41 NSWLR 608 at 615.”
The defendant submitted that the plaintiff was successful on her SOC except in relation to the alleged gift transaction and that the defendant was successful on his SCC, “particularly” with respect to the alleged gift transaction, but overall, the plaintiff enjoyed a greater degree of success, although the defendant’s success was not de minimis. The defendant noted, in that respect, in terms of the principal sums awarded, that the plaintiff was entitled to repayment of RMB 10 million and $248,500 (which together the defendant submitted amounted to approximately RMB 11.2 million) while the defendant was entitled to repayment of RMB 3 million (27% of the sum awarded to the plaintiff).
In light of the two considerations the defendant raised as relevant matters within the ‘events’ going to the Court’s discretion to award costs, and that the plaintiff enjoyed a greater degree of success than the defendant, the defendant submitted that there are several ways that the costs discretion could be properly exercised to arrive at a just and fair result:
The Court could order that the defendant pay the plaintiff’s costs in respect of the proceeding excluding costs associated with the alleged gift transaction and further ordering that the plaintiff pay the defendant’s costs of the alleged gift transaction. This approach would require a cost assessor to determine both parties’ costs and then isolate the costs associated with the alleged gift transaction, which would increase the complexity of the costs assessment (“first approach”).
The Court could order that the defendant pay the plaintiff’s costs less an amount the Court considers fairly reflects the plaintiff’s lack of success in the alleged gift transaction (for instance less 10-15%), and further ordering that the plaintiff pay a proportion of the defendant’s costs in relation to the alleged gift transaction (for instance 10-15%) (“second approach”).
The Court could order that the defendant pay the plaintiff’s costs, less an amount the Court considers fairly reflects (1) an appropriate adjustment for the plaintiff’s lack of success in resisting the defendant’s SCC vis-à-vis the alleged gift transaction and (2) the defendant’s success on his SCC in that respect (“third approach”).
The defendant submitted that his preference for the award of costs would be the third approach with the appropriate adjustment being less 25%. In this respect, the defendant made the following submission:
“The figure of 25% is posited by Mr Fan as the appropriate adjustment, which it is submitted reflects a broadbrush assessment of the cumulative effect of these two considerations. It may be observed that 25% is indeed a fair measure of Mr Wang’s success in the monetary sense, with the difference favouring Ms Wang. RMB 10,000,000 + AUD 248,500 is approximately RMB 11.2M at the current exchange rate. (RMB 3,000,000 / 11,200,000) x 100 = 27%. The advantage of this approach is it is the simplest approach given that it only requires the assessment of Ms Wang’s costs and a broadbrush fixed percentage adjustment, which would likely save significant time and cost at the assessment stage, but it is less precise than the first two methods above as a consequence.”
The defendant responded to some of the plaintiff’s discrete submissions outlined earlier in the judgment. The defendant’s responses, relevant to the consideration of costs, are as follows:
It would not be fair or just for the Court to order the defendant to pay the plaintiff’s costs with no adjustment (as sought by the plaintiff) because that approach would not recognise the ’event’ of the defendant’s success on the SCC. The plaintiff spent time and money, and caused the defendant to spend time and money, wrongly claiming that RMB 3,000,000 paid to her mother was a gift in order not to pay this money back to the defendant, and having lost to the defendant on this claim, now demands compensation for her legal costs for pursuing her unsuccessful defence to his claim, and asserts that the defendant should not be compensated for the costs of succeeding on this claim. That could not be said to be fair and just. There is room to debate the degree of the adjustment to be made to reflect their respective measures of success and the best form of the order to capture this concept, but Ms Wang’s blanket demand to be compensated for all of her costs is not tenable. The defendant’s success on his SCC, in relation to the alleged gift transaction, should not be characterised as no more than an ‘issue’. It should be recognised as an ‘event’.
In response to the plaintiff’s submission outlined at [40(3)] of this judgment, the defendant accepted that the defendant’s success in relation to the alleged gift transaction was not a dominant issue, however, this issue was separable. The plaintiff’s claims had their own particular factual context which was independent of the alleged gift transaction. The plaintiff’s claim did not necessitate her contending that the monies that the defendant had advanced to her mother were a gift. The Court found that (1) the money was not a gift and was due and owing to the defendant, and (2) that finding did not interfere with or preclude the plaintiff’s claim other than by way of a set-off of a separate claim based on separate events.
In response to the plaintiff’s submission outlined at [40(4)] of this judgment, the defendant submitted that, although the alleged gift transaction was not a dominant issue at trial, it may be observed that time spent at trial is just part of the impact of the plaintiff wrongly maintaining her assertion that the payment to her mother by the defendant was a gift – it led to unnecessary evidence, submissions and trial preparation as well. It may also be emphasised that the plaintiff’s submission does not logically gainsay the proposition that there should be an adjustment to reflect the degree of her lack of success and/or the defendant’s degree of success. The issue was not de minimis. There was detailed evidence and argument on the issue, as the judgment reflects, and the quantum in question was 3 million RMB (plus interest), which is not insignificant, although less than the plaintiff’s claim. The alleged gift transaction resulted in a reduction of the judgment sum by approximately 27%. Furthermore, contending that money that was lent was, in fact, a gift, and advancing a substratum of evidence and submissions directed to that purpose, could not be described as reasonable.
I interpose to note that no adverse credit findings were made against the plaintiff in relation to the alleged gift transaction. In the primary judgment, the Court explicitly concluded “I do not find, however, that the plaintiff’s evidence as to the alleged gift transaction reflects adversely on her credibility as a witness even though I have rejected the plaintiff’s case in that respect” (see [91] of the primary judgment).
In response to the plaintiff’s submission outlined at [40(5)] of this judgment, the defendant submitted that describing the 25% reduction in the plaintiff’s costs as irrational is little more than an expression of the plaintiff’s objection to the order sought in vociferous terms. The authorities indicate that the assessment of an appropriate percentage is necessarily broad brush and inexact. Furthermore, as discussed above, an attempt to achieve greater precision carries a greater burden for the costs assessor. Strictly, an order that the plaintiff have her costs, excluding the costs associated with the alleged gift transaction, and an order that the defendant have his costs of the same, is the most precise way of achieving justice between the parties conceptually. However, the practical implementation and the cost of that exercise comes at a cost in terms of the increased complexity of the assessment exercise. Likewise, an order for costs with a percentage reduction for the plaintiff’s costs (10-15%), and an order that the defendant have some of his costs (10-15%) is conceptually fair and just but has complications. The 25% reduction is proposed as a broad brush means of reflecting an appropriate reduction of the plaintiff’s costs and a set off of some of the defendant’s costs.
Lastly, the defendant submitted that if he is successful on the costs application, then the Court should also order that the plaintiff pay the defendant’s costs of and incidental to the costs dispute.
The inquiry as to what costs order should be made is primarily directed to the successful party: see Sze Tu at [37].
The starting point is s 98 of Civil Procedure Act which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent that costs are to be paid. The provisions of r 42.1 of the UCPR provides that, if the court makes any order as to costs, the court is to order that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs: Sze Tu at [38].
How “the event” should be defined will depend upon the nature of the litigation. Ordinarily the purposes of r 42.1 of the UCPR concerns the event of the claim and may be understood as referring to the practical result of a particular claim: Sze Tu at [39].
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.
In relation to trials, 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 evidence or argument.
I agree with the submission for the plaintiff that the defendant’s submissions on costs proceeded upon the false premise that the defendant succeeded in respect of his SCC against the plaintiff regarding the alleged gift transaction in such a way that the provisions of r 42.1 of the UCPR are attracted with respect to the SCC because the resolution of the SCC was its own event.
As earlier noted in this judgment, the alleged gift transaction was not a discrete issue in the proceedings. Nor was it dominant or severable from other issues and, in particular, the alleged gift transaction was not severable from the defendant’s Defence. The transaction under the SCC was coincident with the Defence.
The defendant’s Defence and entire case theory was that the December 2022 payments were in repayment of alleged pre-existing debts or liabilities of the plaintiff to the defendant including those in respect of the payments to the plaintiff’s mother. While the Court found for the defendant on the alleged gift transaction, the Court otherwise rejected the defendant’s entire case theory. There was not found to be any liability of the plaintiff to the defendant with respect to all the other eight disputed transactions on the SCC.
The plaintiff was correct to submit the Defence and SCC accepted that the defendant was liable to the plaintiff. [6] I also agree with the submission of the plaintiff that the prospects of the defendant being awarded RMB 151,000 [7] is extremely remote when, on his own case theory, there was an ‘accounting exercise’ bringing into account the plaintiff’s December 2022 payments as payments due as a result of earlier sums paid by the defendant at the plaintiff’s direction. Even after the set-off of RMB 3 million from the alleged gift transaction, judgment was given against the defendant of $1,688,500 which significantly exceeds the defendant’s acceptance of the above-mentioned net amount. [8]
It follows that the proper approach of the Court to the question of costs in these proceedings, having regard to r 42.1 of the UCPR, is that the plaintiff is entitled to her costs of the proceedings unless it appears to the Court that some other order should be made as to the whole or part of costs. That is the only relevant event. The resolution of the SCC should not be seen as a separate event from the SOC and the defence of it.
In my view, having regard to the above-mentioned considerations and the further considerations below, the exception in r 42.1 of the UCPR is not engaged.
As earlier observed, the alleged gift transaction was not a dominant or complex issue once the Palm Beach WeChat conversations were shown not to be authentic. The resolution of the alleged gift transaction only required the Court to consider the Isabella WeChat conversation in the context of the surrounding circumstances. The plaintiff did not dispute that the payments were made to her mother or that, in the event the plaintiff was liable, with respect to those payments, the defendant was entitled to set them off.
As earlier mentioned, it should also be noted in this context that the authenticity of the Palm Beach and PUA WeChat conversations was a significant and time-consuming issue about which the plaintiff was successful.
Those conclusions are, in my view, sufficient to resolve the issue of costs in favour of the plaintiff in terms proposed by the plaintiff on her application. However, I do additionally observe that the plaintiff is also entitled to costs with respect to the additional costs matters in the proceedings, to the extent of my earlier conclusions in that respect.
It also follows that I do not consider that this is a proper case to engage in a process of apportionment. In any event, if I were to engage in such an approach, I do not consider that the approach to apportionment adopted by counsel for the defendant is sound.
I do not consider that the use of the quantum of the ultimate orders in contrast to the sum set-off, as a mathematical exercise, for the alleged gift transaction is a sound basis to apportion costs. I do not consider that it is in accordance with authority and none has been pointed to by the defendant. Whilst the Court may exercise a discretion to apportion costs, the discretion is made on an evaluative basis and would involve the analysis of the discrete issues on which the unsuccessful party succeeded and the impact those matters had on the costs of the proceedings. Mathematical precision is illusory.
Furthermore, if the Court were to engage in a process of apportionment and adopt a broad brush approach, there is no proper basis, in my view, to reduce the plaintiff’s costs by an amount of 25%. That reduction may be the product of the mathematical exercise engaged in by the defendant but it bears no relationship, in my view, to the contribution of the alleged gift transaction to the length or cost of the proceedings when that issue is striped of any consideration of the authenticity of the Palm Beach WeChat conversations.
In all the circumstances, the plaintiff should have her costs of the proceedings as against the defendant. Whether the form of the order originally proposed by the plaintiff is appropriate is a matter that may require further consideration as part of the plaintiff’s compliance with the Direction below.
**********
See Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) 14.14(3), 15.4(2), Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538, Krakowski v Eurolynx Properties Ltd [1995] HCA 68; (1995) 183 CLR 563 at 573 (Brennan, Deane, Gaudron and McHugh JJ); Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262; (2015) 91 NSWLR 325 at [55]; Simmons v New South Wales Trustee and Guardian (2014) 17 BPR 33,717; [2014] NSWCA 405 at [75] (Gleeson JA).
Liu v Lam (No 2) [2025] NSWSC 264 at [59].
On the defendant’s final accounting, the defendant alleged that (1) the plaintiff was liable to the defendant for RMB 7,477,215 less RMB 7,628,215 = RMB 151,000; and (2) the defendant was liable to the plaintiff for $2,911,579.20 less $2,752,910.70 = $158,668.50 (see [35] of the primary judgment).
See s 21 of Civil Procedure Act 2005 (NSW).
Tcpt 12 December 2024, p 2, line 4-5.
The plaintiff contended the net amount was $128,668.50. See footnote 3 of this judgment.
See [35(1)] of the primary judgment.
This conclusion is a fortiori if interest is taken into account.
Wang
Fan
(1995) 183 CLR 563
(2015) 91 NSWLR 325
(1986) 6 NSWLR 534
(1997) 41 NSWLR 608
(1993) 26 IPR 261
(1988) 81 ALR 166
(1991) 30 FCR 64
(1993) 46 IR 301
(1993) 47 FCR 81