Weng v NSW Demo & Exca Services Pty Ltd

The plaintiffs' application for indemnity costs

1. The plaintiffs submit that they should be entitled to their costs on an indemnity basis the following reasons: 1. As is set out in the affidavit of Mr Pagin (sworn 22 March 2024), the misconceptions in the application and the admissions in the defence were matters that were pointed out to the solicitors for the defendant in correspondence, but the defendant persisted with the application. 2. During the hearing, submissions inconsistent principles with authority were put and a recent decision of the Court of Appeal which was inconsistent with the defendant's argument was not referred to (Roberts v Goodwin Street Developments Pty Ltd (2023) 110 NSWLR 557; [2023] NSWCA 5). The plaintiffs also complain that submissions made concerning UCPR r 14.13 and s 30 of the Evidence Act 1995 (NSW) were wrong. These errors required comprehensive submissions in reply. The result was an unduly hearing which placed a burden on the plaintiffs. This conduct was not reasonable, given the narrow compass of issues ordinarily in dispute when there is an application to set aside default judgment. 3. The defendant failed to meet the unexacting burden of showing a bona fide defence. The proposed defence in fact contained no defence as to liability, which had effectively been admitted. Whether or not the draft defence was bona fide, the defendant effectively withdrew it as it acknowledged that the defence was not the one it would propound if default judgment were set aside.
2. Before setting out the defendant's response, I note a concession by the defendant that indemnity costs should be ordered for one discrete issue. As the defendant insisted on challenging the English language ability of the first plaintiff (Mr Weng, erroneously called "Ms Weng" in my previous judgment), the plaintiffs were put to the expense of bringing an interpreter to court. It was only during the hearing that the defendant abandoned the application to cross-examine Mr Weng and the solicitor who prepared his affidavit. This was a hopeless argument and considerable extra costs were incurred as a result. The defendant concedes that these costs should be payable on the indemnity basis.
3. The defendant acknowledges that it must pay the plaintiffs' costs, but submits that those costs (except for the costs referred to in the previous paragraph) should be payable on the ordinary basis.

The parties' submissions

1. The plaintiffs submit that the conduct of this application is plainly contrary to the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW), has caused the plaintiffs to incur considerable extra legal costs, for which the plaintiffs should be compensated by an indemnity costs order.
2. The defendant submits that the motion was not hopeless, and that there was no relevant delinquency. To the contrary, the defendant persists in its argument that the concept of irregularity includes a contravention or non-compliance with specific provisions and that their complaints about typographical errors were complaints that the court was obliged to entertain given the importance of the obligations for compliance with regulations in a strict fashion.

Should indemnity costs be ordered?

1. Taking trivial points, not citing relevant authority and bringing a case that is weak are not uncommon in litigation. They are rarely grounds for indemnity costs. Several aspects of the defendant's conduct of this litigation are, however, of concern.
2. The first is an issue the defendant does not deal with in submissions, namely the hopelessness of the defence and, more importantly, the disclosure during the hearing that the defence put before the court was not the one which the defendant wish to propound if the application to set aside were successful.
3. Persisting in a hopeless defence may be a matter warranting an indemnity costs order: Dubow v Fitness First Australia Pty Ltd [2011] NSWCA 401. Resiling from the defence that has been put before the court for the purpose of an application to set aside judgment is, however, conduct of the kind that may warrant an order for indemnity costs being made under s 98(1)(c) of the Civil Procedure Act as it is conduct of a contumelious kind.
4. The second issue is that hopeless applications under UCPR rr 36.15 and 36.16 have been the subject of recent appellate concern. Setting aside a judgment for any reason is a power which should be entertained "sparingly and with caution": State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283, cited in Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd (No 2) [2024] NSWCA 13 at [5] (see also Clarke v Health Care Complaints Commission (Recusal Application) [2024] NSWCA 16).
5. The bringing of an application to set aside default judgment on such trivial grounds as a typographical error about a date runs the risk that indemnity costs may be ordered, for the reasons explained by the Court in Majak v Rose (No 5) [2017] NSWCA 238 at [11]-[13], namely that such applications may amount to an abuse of process. I am satisfied that this is the case here.
6. A third factor is the unnecessary additional costs incurred by the plaintiffs in relation to the fanciful claim that the first plaintiff (whose affidavit contained no errors) was somehow to blame for not having picked up the typographical errors in his solicitor's affidavit. The insistence on cross-examination of these witnesses, in circumstances where the date errors had obvious explanations, was capricious. The defendant concedes that indemnity costs should be payable but argues that these costs can somehow be cordoned off from the rest of the costs. I consider that to be unnecessary; all of the costs of this application should be paid on the same basis because the whole of the defendant's contumelious and time-wasting activity is interlinked.
7. For the above reasons, an order for indemnity costs should be made in favour of the plaintiffs for the period from which the defendant first sought the indulgence of the court in setting aside the judgment by bringing a Notice of Motion, namely 14 November 2023. That order will extend to this costs application as well.
8. I note that there is no application for these costs to be payable forthwith under UCPR r 42.7 or s 98(3) or s 98(4) of the Civil Procedure Act.

ORDERS 1. By way of variation of order (2) of the orders of 4 March 2024, the defendant is to pay the plaintiffs' costs of the Notice of Motion filed on 14 November 2023 and all aspects of the conduct of that Notice of Motion, including but not limited to this application for indemnity costs, on the indemnity basis.

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