Yu v Wei

Principles

1. Section 98 of the Civil Procedure Act 2005 gives the Court a discretion in relation to costs, but that discretion is subject to the rules of court and other legislation. Rule 42.1 of the Uniform Civil Procedure Rules 2005 provides that costs should follow the event unless it appears to the Court that some other order should be made. Generally, the relevant "event" is success in the proceedings or matter determined, which in the ordinary case would warrant an order in the successful party's favour. There are exceptions to this rule, such as where a successful party unnecessarily lengthens the proceedings, [11] but the onus lies on the losing party to establish a basis for a departure from the usual rule. [12] Only in exceptional cases would a successful party, and perhaps particularly a defendant, be both deprived of costs and ordered to pay the opponent's costs, [13] but Mr Yu does not seek such an order here.
2. The parties accepted there is a "rule of thumb" that a successful party sharing representation with other unsuccessful parties should get his proportionate share of the costs incurred on behalf of all, plus any costs incurred exclusively in respect of their claim. [14] But the rule is not automatically applied; it must give way to questions of fairness and regard must be had to the nature of the case. [15]
3. In David Weiping Chen v Kim Man Chan, [16] the Court recognised that where the successful party has had mixed success on a multiplicity of issues, that may be reflected in a party receiving only a portion of its costs. [17]
4. These matters may indicate that in the present circumstance, the first defendant should receive a discounted amount, less than the 50% of the defendants' costs. 50% because the other 50% was, actually or notionally, incurred by his co‑defendant, Top Pacific Group, and a discount on that proportion because he failed on more of the issues and the one that consumed the most time in the major or evidentiary part of the trial. This calculation might be complicated by issues that are exclusively directed to one party or the other, but in this case, none of the major issues could be so identified.
5. Mr Yu's principal submission was that this discounted amount of less than 50% should, in fact, in the circumstances of this case, be that there is no order as to costs. He relied upon three decisions, namely Interchase Corp Ltd v ACN 010 087 573 Pty Ltd, [18] Bamco Villa Pty Ltd v Montedeen Pty Ltd, [19] and Brimaud v Boston Securities Entertainment Investments Pty Ltd. [20]
6. In the Interchase decision, White J determined that the Court should not order that costs follow the event because "there was joint representation and where the 'successful' party would have had to give evidence whether or not he had been a party". [21]
7. In Bamco Villa, Hansen J also referred to these factors and the additional one that the successful defendant owned and controlled the unsuccessful defendant and "I do not consider that the trial was lengthened or made more expensive to an appreciable extent by reason of his joinder". It was significant that the successful party "controlled and made the decisions for the [unsuccessful party] which led to the litigation".
8. In Brimaud, Emmett J referred to the joint representation and the circumstance that additional costs due to specific allegations against the successful party were ancillary or subsidiary. His Honour thought that the orders would be different if there was separate representation reasonably provided for the successful party. His Honour also indicated that it would be inappropriate "to analyse in precise detail where costs have been wrongly incurred".
9. Of course, these matters in these decisions are mere factors or guides as to what may be appropriate and fair as to costs. Each case has its own peculiarities and must be decided on its own facts.
10. In the present case, there was shared legal representation. The case against both concerned the same sum of money provided by way of a cheque to Mr Wei as reimbursement for part of his contribution to the project, which contribution was paid by Top Pacific Group. The cheque was, at Mr Wei's request, made payable to Top Pacific Group. The principal defence, at least until final submissions, advanced by Mr Wei and Top Pacific Group, was that the funds were payment for antiques, a defence that wholly failed. Mr Wei, as the controlling mind of Top Pacific Group, made the decisions for both him and his company in the litigation and there was a commonality of issues such that no significant issue on which Mr Wei was successful was exclusively related to his defence - issue 2 was an aspect of issue 1, issue 4 was ancillary to issues 1 and 2, and Mr Wei was unsuccessful on issue 5.
11. It is also apparent that Mr Wei was a necessary witness to the defence by Top Pacific Group. Mr Wei submitted that had he not been joined, the proceedings against Top Pacific Group may not have been defended, but there was no evidence from him to that effect. Mr Wei was the person who made the decision for Top Pacific Group to defend the proceedings, and it seems not to be a point in his favour on the issue of costs for him to identify a large amount of costs that because of his own decisions were unnecessarily and wrongly incurred.
12. Mr Wei also submitted that he could have had separate representation and that may have entitled him to a more favourable order. That is true that it may have done if separate representation was reasonable, but the question of that hypothetical seems not to be to his assistance in this application. Mr Wei was successful on the construction of a deed insofar as he, but not Top Pacific Group, was concerned, a significant but narrow point involving no disputed evidence. It also seems to me that the rule of thumb identified earlier might seem less compelling where the successful and unsuccessful parties were related, or when one controlled the other and also where the proper party was, at least until judgment, somewhat uncertain.
13. It seems to me that in these circumstances, that if Mr Wei is entitled to a costs order, it must be a relatively small percentage of the defendants' costs. As indicated, Mr Yu, in his written submissions, included such an order as a secondary alternative. In that event, the orders Mr Yu proposes are much closer to the order the Court finds appropriate than that which Mr Wei sought: that the first defendant's costs [22] be 70 to 75% of the overall defendants' costs, and be payable by the plaintiff. It follows that Mr Yu's submission, that Mr Wei should pay the costs of Mr Wei's unsuccessful costs application, has force.
14. I also take into account the circumstance referred to earlier, that Mr Wei received the funds from Mr Yu, by way of a cheque payable to Top Pacific Group at Mr Wei's direction in respect of Mr Wei's deposit on the development property, paid by Top Pacific Group, a fact that tended to conflate the distinction between Mr Wei and Top Pacific Group as to who was the proper recipient of the funds and who would be liable for their improper use. The ultimate resolution of that matter was influenced, in part, by a concession contrary to the interest of Top Pacific Group by Mr Wei and Top Pacific Group in their final submissions. [23] In these circumstances, the joinder of Mr Wei appeared reasonable and appropriate at the outset to determine who of the mutually related parties, Top Pacific Group or Mr Wei, should bear responsibility for the missing $200,000 payment.
15. Mr Wei also submitted that he paid most (or all) of the costs of the defence, but that was a contested matter and there was no proper basis to infer it without some evidence.
16. I was inclined to order that Mr Yu pay to Mr Wei those costs exclusively connected to his claim alone, and otherwise each party bear their own costs. But any amount of such exclusive costs must be minor.
17. After the trial concluded, a brief written submission on the impact on the deed of the decision in Grant v John Grant & Sons Pty Ltd [24] was provided by the parties, an issue dealt with in some greater detail in the judgment. [25] This appeared to be the only matter exclusively related to Mr Wei in which he was successful, and this matter was of less significance in terms of cost to the parties than this costs argument in which Mr Wei has failed.

Conclusion

1. In my view, in all of these circumstances, the proper order as to the costs of Mr Wei, including the costs of the costs application, is that there be no order as to the costs of the first defendant in the proceedings.

Endnotes

1. Yu v Wei [2020] NSWDC 647.
2. First defendant's costs submissions, undated, at [34].
3. Yu at heading "B. Issues", p 1.
4. Yu at [52].
5. Yu at [88].
6. Yu at [92]-[97].
7. Yu at [56].
8. Yu at [111].
9. E.g. Yu at [61].
10. See Yu at [11]-[13].
11. Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 at [97]-[98].
12. Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10].
13. Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5.
14. David Weiping Chen v Kim Man Chan (No 2) [2009] VSCA 233 at [10(6)].
15. King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [25]-[29].
16. [2009] VSCA 233.
17. At [10(3)].
18. [2000] QSC 013.
19. (Unreported, Supreme Court of Victoria, 16 March 1998, Hansen J).
20. [1998] FCA 1392.
21. At [37].
22. First defendant's costs submissions, undated, at [34].
23. See Yu at [84] and footnote 78.
24. (1954) 91 CLR 112 at 130.
25. Yu at [104]-[111]. 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: 12 October 2022