Woodward v Warwick Green Building Pty Ltd

Principles relating to costs of the Stay Application

1. The primary provision governing costs in relation to proceedings in the Tribunal is s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Act"). Pursuant to that section, each party to proceedings is generally to pay their own costs. However, pursuant to s 60(2) of the Act, the Tribunal may award costs if it is satisfied that there are special circumstances warranting it doing so.
2. In relation to proceedings in the Consumer and Commercial Division where the amount in dispute is over $30,000.00, that general rule is modified by r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) ("the Rules) and the Tribunal in those proceedings may award costs even in the absence of special circumstances.
3. It is not in dispute that r 38(2)(b) of the Rules was engaged in the proceedings which are the subject of the appeal.
4. In an appeal from a decision where r 38 of the Rules applies, r 38A of the Rules requires the Appeal Panel to apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
5. It is also undisputed, and I am satisfied, that r 38A of the Rules is engaged in relation to this appeal, because the "provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance …differed from those set out in section 60 of the Act…": the Rules, r 38A(1).
6. The respondent, as costs applicant, submits that the relevant principles in respect of the exercise of the costs discretion in interlocutory proceedings in the appeal are those summarised in Ausino International v Apex Sports [2006] NSWSC 1119 ("Ausino"), where Campbell J described the usual exercise of the discretion in interlocutory matters as follows: [55] In contrast, the present proceedings before me are brought on the basis that they are an interlocutory process. The usual order which is made as to costs concerning interlocutory processes, is that if the plaintiff is the applicant, and succeeds, then the costs of the interlocutory process become the plaintiff's costs in the cause, while, if the plaintiff is the applicant, and loses, the usual order is that the plaintiff pay the defendant's costs of that application. [56] The rationale for that arises from the way that interlocutory proceedings are intended to advance the final hearing. If a plaintiff has a victory on the way to a final hearing, whether that victory is ultimately one which is fruitful will depend upon whether the plaintiff succeeds in the final hearing. However, if the plaintiff brings an interlocutory application and loses, then that interlocutory hearing is one which will, irretrievably, have cost the defendant money, and the justice of the situation is that the defendant should be indemnified for those costs, regardless of the outcome of the proceedings.

Conduct of the Stay application

1. The appellant did not file any sworn material setting out the evidence on which she relied. She did produce a company extract of the respondent, which indicated that that the respondent has issued 25,100 ordinary shares and the amount paid for those shares is $25,100.00.
2. Based on the $25,100.00 value of the share capital of the respondent, as disclosed in the company extract, the appellant asserted that the respondent would not have sufficient money to repay her if she was successful in her appeal and had paid to the respondent the amount it was awarded.
3. The appellant also provided and relied upon extracts from the Personal Property Securities Register, to demonstrate that the respondent was a party to notifications of security over some of its assets, such that the holder of those securities would be entitled to the asset (or the value of that asset) to satisfy the respondent's obligation to each security provider in priority to any other creditors. The appellant also noted that the National Australia Bank Australia Ltd holds a registered security over "all present and after acquired property [of the respondent] - no exceptions".
4. The appellant wrote to the respondent's solicitors on 8 July 2020, seeking evidence from the respondent that it would be able to repay the judgment if the appeal is successful. The respondent did not reply.
5. The appellant's written submissions in support of the Stay Application addressed the searches and submitted that there was a "real risk" that the sum would not be repaid if the appeal was successful.
6. In effect, the appellant says that this was all she could do to support the Stay Application.
7. In response to the Stay Application, the respondent gave unchallenged evidence of its financial position, primarily by way of affidavit by a Director of the Company, Mr Green.
8. Mr. Green described the various registered securities. The major unlimited security is for an overdraft account which currently has a credit balance. Three are for vehicles which have been paid for. Two are for business vehicles recently purchased. Other security interests are part of trading accounts with building suppliers which are in credit or in respect of which there is no money owing. The evidence of Mr. Green satisfied me that the existence of the security interests on the PPS Register do not support the primary assertion made by the appellant in the Stay Application.

The respondent's submissions on costs of the Stay Application

1. The respondent says that where the appellant made an interlocutory application and lost, the justice of the situation requires that the respondent be compensated for the costs incurred in defending the application, regardless of the final outcome of the proceedings.
2. In support of its application for costs in respect of its successful opposition of the Stay Application, the respondent submits that it was necessary for the respondent to prepare the evidence referred to above, and make full submissions on the relevant principles for the stay application and to properly address and refute the evidence relied upon by the appellant .
3. In particular, the respondent says that it was required to make submissions on all of the 10 grounds of appeal relied on by the appellant in doing so, as part of the assessment of the strength or weakness of the appeal, even though the appellant did not engage with this to a significant extent in her submissions.
4. It submits that rr 38 and 38A contain an inherent recognition that larger commercial proceedings arising in or from the Consumer and Commercial Division warrant appropriate costs orders being made on the usual basis, without the need for special circumstances to exist.
5. The respondent also submits that the Stay Application was a separate and discrete interlocutory step taken by the appellant in the continuance of commercial proceedings. Noting that the appellant was represented by solicitors and counsel, the respondent submits that it must be taken that the appellant was aware of the issues and risks associated with making the Stay Application, including that the respondent would incur costs responding to it.

The appellant's submissions on costs of the Stay Application

1. The appellant seeks an order that the costs of the Stay Application be costs in the appeal.
2. She says that she acted promptly in seeking a stay so that the application could be dealt with in a timely and cost effective manner and when the proceeding was listed for the making of directions in relation to the appeal.
3. Noting that the respondent is an Australian registered proprietary limited corporation, the appellant submits that she used the best means at her disposal to obtain what documentation was publicly available to investigate the substance of the respondent's financial position.
4. She relies on my satisfaction, as expressed in my oral reasons dismissing the Stay Application, that the appeal was not one which lacks substance and says that the respondent did not act reasonably in failing to respond to her letter of 8 July 2020 requesting information about the respondent's financial position.

Consideration

1. It is trite to say that each application for costs must be determined on its own merits and that the central and overriding principle in any order as to costs is that of doing justice between the parties in each particular case: Moseley v AB (No 2) [2017] NSWSC 1812 at [65] - [66].
2. That does not mean, however, that I should disregard the guidance derived from the courts where they have set out how the relevant considerations might usually be applied in given circumstances.
3. I am satisfied in this matter that the comments made by Campbell J in Ausino, referred to above, are apposite. I accept that the appellant had a right to bring the Stay Application and was limited in the evidence she might bring in support of it. However, the respondent's successful defence of that application, which included the preparation of the evidence it relied upon, was a cost it was put to for which it should be compensated, irrespective of whether it is successful in defending, or obtaining a costs order, in the appeal.
4. The fact that the Stay Application was a separate and discrete event in the appeal which is now complete, in my view, weighs in favour of making an order that the respondent's costs should be ordered now, rather than reserved or made costs in the appeal: Fiduciary v Morningstar [2002] NSWSC 432.
5. I have considered the respondent's failure to respond to the appellant's letter of 8 July 2020, which was unfortunate. On one view, the appellant may have been disposed not to press her Stay Application to conclusion, with all of the costs that has incurred, had the information eventually sworn to by Mr Green been made promptly available. I cannot infer that, however, where the appellant pressed the Stay Application even after the sworn evidence of Mr Green was served on her.

Order

1. I order that: 1. The appellant shall pay the respondent's costs of the application for a stay on the ordinary basis as agreed or, if not agreed, then assessed on the basis set out in the legal costs legislation as defined in Legal Profession Uniform Law Application Act 2014 (NSW), s 3A.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 19 October 2020