Allspec Constructions and Project Management Pty Ltd v Jana Pty Ltd as trustee for the Azizi Family Trust (No 2)

[2024] NSWSC 774

Supreme Court

New South Wales

Medium Neutral Citation:

Allspec Constructions and Project Management Pty Ltd v Jana Pty Ltd as trustee for the Azizi Family Trust (No 2) [2024] NSWSC 774

Hearing dates:

On the papers

Date of orders:

24 June 2024

Decision date:

24 June 2024

Jurisdiction:

Equity

Before:

Hmelnitsky J

Decision:

(1)   The second defendant pay pre-judgment interest on the judgment sum ordered on 17 May 2024 to the first plaintiff in the sum of $9,150.79, such that the total sum payable to the first plaintiff is $58,188.84.

(2)   The Second Defendant is to pay 40% of the First Plaintiff’s costs of the proceedings.

Catchwords:

COSTS – Party/party – Exceptions to general rule that costs follow the event

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Local Court Act 2007 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Allspec Constructions and Project Management Pty Ltd v Jana Pty Ltd as trustee for the Azizi Family Trust [2024] NSWSC 592

Arian v Ngyuen [2001] NSWCA 5

Commonwealth of Australia v Gretton [2008] NSWCA 117

Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34

Lianos v Order of AHEPA NSW Inc (No 5) [2021] NSWCA 317

Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v PDWL (costs) [2021] FCAFC 75

Category:

Costs

Parties:

Allspec Constructions and Project Management Pty Ltd (ACN 617 645 788) (First Plaintiff)
Joseph Elia (Second Plaintiff)
Jana Pty Ltd (ACN 158 982 122) as trustee for the Azizi Family Trust (ABN 44 290 667 496) (First Defendant)
Anthony Charbel Azizi (Second Defendant)

Representation:

Counsel:

Paul Bolster (Plaintiffs)

Solicitors:

JK Solicitors (Plaintiffs)

Second Defendant appeared in person and with leave for the First Defendant

File Number(s):

2022/00048635

JUDGMENT

1. By way of further amended statement of claim filed 11 November 2022, the plaintiffs sought to enforce the terms of a deed dated 19 January 2021 (the Deed) against the defendants. I delivered a principal judgment in this matter on 17 May 2024: Allspec Constructions and Project Management Pty Ltd v Jana Pty Ltd as trustee for the Azizi Family Trust [2024] NSWSC 592. These reasons should be read with that judgment.

2. In short, I found that the Deed created a binding obligation on the second defendant in favour of the first plaintiff in the amount of $49,038.05 plus interest. The second plaintiff’s claim failed entirely. The judgment amount was significantly less than the amount claimed by the first plaintiff, who sought judgment in the amount of $795,772.76 plus interest. The disparity between the amounts was a consequence of my construction of the Deed which, as I noted, was extremely poorly drafted.

3. In response to the plaintiffs’ claims, the defendants argued that the operative terms of the Deed were so uncertain as to be unenforceable and that the Deed was entered into as a consequence of duress and unconscionable conduct. I rejected the defendants’ arguments regarding duress and unconscionable conduct. However, whilst I found that the Deed had some operative effect, I did accept some of the defendants’ arguments as to its construction.

4. I reserved the question of costs. I also asked the parties to provide short minutes of order detailing the proper calculation of interest which the first plaintiff is entitled to, which they have done. It should be noted that while the second defendant appeared in person and by leave for the first defendant at trial, the defendants were represented for much of the proceedings.

5. The plaintiffs have submitted that costs should follow the event and the defendants should pay the costs of the first plaintiff. They further submitted that there should be no order as to costs in relation to the second plaintiff. The defendants, rather ambitiously, submitted that the plaintiffs should bear their own costs and the second defendant should have its costs paid on an indemnity basis. In the alternative, they submitted that the plaintiffs’ costs should be apportioned according to the relative success of the first plaintiff and the second defendant’s costs should be paid on the ordinary basis.

6. The Court has the discretion to decide who will pay and receive costs and to what extent those costs are to be paid: s 98(1) of the Civil Procedure Act 2005 (NSW). Consistent with rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), there is a general rule that costs follow the event unless the Court considers that some other order should be made. In Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with Mason P agreeing) said:

“underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs.”

7. This approach was endorsed in Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98].

8. The power to award costs includes a power to apportion costs between the parties where suitable. In Lianos v Order of AHEPA NSW Inc (No 5) [2021] NSWCA 317 (Macfarlan JA; Meagher JA; Emmett AJA) the Court of Appeal said that “in an appropriate case, a costs order may be moulded to reflect the degree of success on distinct issues”.

9. The plaintiffs submitted that this is not an appropriate case to apportion costs. In doing so they referred me to the decisions of Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v PDWL (costs) [2021] FCAFC 75 at [15] and Arian v Nguyen [2001] NSWCA 5 at [37] in aid of the proposition that the deprivation of a successful party’s costs requires “strong justification” and “exceptional circumstances”. However, both of those authorities concern the situation where a successful party is ordered to pay the losing party’s costs. They do not particularly support the plaintiffs’ submission that they are entitled to the whole of their costs despite having had only relatively minor success in the litigation.

10. The plaintiffs also submitted that they were forced to run these proceedings as the defendants never conceded any part of the claim. This may be true to some extent, however the ultimate amount obtained was, on all accounts, very small and would most appropriately have been sought in the general division of the Local Court: see s 29 of the Local Court Act 2007 (NSW). I have not received any submission detailing the amount of the plaintiffs’ costs, although it is likely that they exceed the value of the judgment sum.

11. There is, however, force in the plaintiffs’ submission that much of the evidence in the proceedings was in relation to the failed claims of unconscionable conduct and duress made by the defendants. The defendants in response argue that the surrounding circumstances and the second plaintiff’s conduct were “critical” to the ultimate outcome. While I did have regard to the surrounding circumstances of the Deed, they were not determinative of any particular question of construction. Furthermore, a great deal of the documentary evidence, and the evidence of the conduct of various parties set out in affidavit form, could only ever have been relevant to the unconscionable conduct and duress claims.

12. The first plaintiff has had some success and there are no admissible offers of compromise. The plaintiffs’ case against the first defendant failed entirely. The way the case was run before me meant that the defendants’ costs are inseparable. It is thus not appropriate for either defendant to be awarded any costs. However, given its success, the first defendant should not have to pay any of the plaintiffs’ costs. The second plaintiff’s claim failed and there should be no order as to his costs.

13. Given the very limited success of the first plaintiff and my acceptance of some of the defendants’ arguments around the construction of the Deed it is appropriate and fair to exercise my discretion to depart from the general rule such that the first plaintiff’s recoverable costs be limited to 40% of its costs on the ordinary basis.

14. The orders of the Court will be:

1. The second defendant pay pre-judgment interest on the judgment sum ordered on 17 May 2024 to the first plaintiff in the sum of $9,150.79, such that the total sum payable to the first plaintiff is $58,188.84.

2. The Second Defendant is to pay 40% of the First Plaintiff’s costs of the proceedings.

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Decision last updated: 24 June 2024