Bale v Kimberley Developments Pty Ltd

[2023] NSWSC 1219

Supreme Court

New South Wales

Medium Neutral Citation:

Bale v Kimberley Developments Pty Ltd & Ors [2023] NSWSC 1219

Hearing dates:

7 September 2023

Date of orders:

13 October 2023

Decision date:

13 October 2023

Jurisdiction:

Equity - Duty List

Before:

Slattery J

Decision:

Defendants ordered to pay the plaintiff’s costs of the motion on the ordinary basis. Plaintiff’s costs of the motion fixed in the sum of $7,700.

Catchwords:

COSTS – costs follow the event – complex proceedings in which a property transaction ordered as part of final relief – property transaction cannot be implemented without the defendants causing the removal of a caveat – defendants oppose removal of the caveat – plaintiff successful on motion to remove the caveat in order to implement the property transaction – prior agreement between the parties resolving costs issues between them with respect to trial and appeal proceedings – whether the Court should make any costs order in the circumstances – whether the defendants should pay the plaintiff’s costs of the motion – whether any order for costs should be on the indemnity basis – whether the Court should make a specified gross sum order instead of assessed costs.

Legislation Cited:

Civil Procedure Act 2005, s 98(4)(c)

Cases Cited:

Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194

Bale v Kimberley Developments Pty Ltd [2022] NSWSC 820

Bale v Kimberley Developments Pty Ltd (No. 2) [2022] NSWSC 1009

Bale v Kimberley Developments Pty Ltd (No. 3) [2023] NSWSC 973

Grant v John Grant and Sons (1954) 91 CLR 112

Hamod v State of New South Wales [2011] NSWCA 375

Harrison v Schipp (2002) 54 NSWLR 738

Karam v ANZ Banking Group Ltd [2001] NSWSC 709

Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25

Kimberley Developments Pty Ltd v Bale (No 2) [2023] NSWCA 95

Minister for Immigration and Border Protection v SZTQS [2015] FCA 1069

Re Minister for Immigration and Ethnic Affairs; Ex parte Li Qin [1997] HCA 6; (1997) 186 CLR 622

Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608

Category:

Procedural rulings

Parties:

Plaintiff: Francois Bale
First Defendant: Kimberley Developments Pty Ltd
Second Defendant: Albert Darwiche
Third Defendant: Martin Churchill
Fourth Defendant: Chyna Schein
Fifth Defendant: Theofanis Trigas
Sixth Defendant: Super Start Batteries Pty Ltd

Representation:

Counsel:
Plaintiff: D. O’Connor

Solicitors:
Plaintiff: SCB Legal
First, Second, Fifth and Sixth Defendants: N. Weinberger, Weinberger Lawyers

File Number(s):

2018/237019

Publication restriction:

No

Judgment

1. The plaintiff, Ms Françoise Bale, brought a motion in the duty list in these proceedings on 7 September 2023. The motion resolved except for questions of costs, and she now seeks the costs of her motion. The remaining active defendants in the proceedings, the first, second, fifth, and sixth defendants resisted the relief the plaintiff sought on the motion and now resist the making of any order for costs against them. For convenience, in these reasons this sub – group of active defendants will be referred to as “the defendants”.

2. The plaintiff’s motion presents a minor dispute at the end of an epic contest, which is fully described in the Court’s principal judgments (Ward P) in these proceedings both at trial and on appeal: Bale v Kimberley Developments Pty Ltd [2022] NSWSC 820, given on 23 June 2022 by Ward P; Bale v Kimberley Developments Pty Ltd (No. 2) [2022] NSWSC 1009, given on 27 July 2022 by Ward CJ in Eq (as her Honour then was); Bale v Kimberley Developments Pty Ltd (No. 3) [2023] NSWSC 973, given by Leeming JA on 18 August 2023 sitting at first instance after the appeal proceedings; Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25, given on 22 February 2023 (“the first appeal judgment”) and Kimberley Developments Pty Ltd v Bale (No 2) [2023] NSWCA 95 (“the second appeal judgement”). Persons and property are referred to in this judgment in the same way as they are in the Court’s previous judgments.

3. The plaintiff’s issue on the motion in the Court’s Equity duty list on 7 September 2023 was a narrow one: whether a caveat should be removed and then reimposed to enable the settlement of a real property transaction consequent upon the Court’s final orders in the proceedings. Eventually, after some encouragement from the Court, the parties reached a consensus on the course to be taken. But they could not agree upon costs, so the Court is left to determine that issue.

4. Mr D. O’Connor of counsel appeared for the plaintiff on the motion, instructed by SCB Legal. Mr N. Weinberger of Weinberger Lawyers appeared for the defendants.

A Contest Resolved Except as to Costs

5. The outcome of the trial and the appeal was that the plaintiff had the benefit of orders for the transfer back to her of certain real property, the Forest Lodge property. But the re-transfer was ordered upon terms that the plaintiff repay the defendants the money that the defendants had paid to discharge mortgages so that they could acquire the real property under the original transactions, which were impugned in the proceedings.

6. But the calculation of the final amount payable by the plaintiff was complicated by disputes about quantum, interest, and a complex array of claimed setoffs between the parties. Leeming JA was appointed to quantify and determine the validity of the various offsetting amounts. Leeming JA reached the result that the plaintiff owed the defendants the sum of $301,560.99, which, under the Court’s existing orders the plaintiff must pay to the defendants upon the transfer of the Forest Lodge property to her by another defendant (“the settlement amount”). The payment of the settlement amount was secured by a charge over the Forest Lodge property, which it was contemplated would be removed when the settlement amount was paid on settlement. Leeming JA ordered the sum to be paid by 8 September 2023, the expected date of settlement.

7. Ms Bale arranged finance to fund the payment of $301,560.99 to the defendants and to pay out the experts and lawyers she had retained in the litigation. Settlement of the transfer was arranged for Friday, 8 September 2023 through the PEXA electronic settlement system, with the settlement amount payable to the defendants.

8. At the hearing, the defendants did not oppose the registration of the plaintiff’s incoming financier’s mortgage being placed on the title. But they proposed that the charge in favour of the defendants remain on title pending expiry of the defendants’ right of appeal or the determination of such an appeal. The defendants were concerned that the plaintiff was proposing to resell the Forest Lodge property soon after she acquired it from them and that unless a caveat was reimposed, they would lose their security. The Court raised with Mr Weinberger the possibility that the defendants could lift their existing caveat on settlement and reimpose it after the incoming mortgagee’s first mortgage was registered.

9. But several factors pointed to the outline of a solution to this stand-off. Mr Weinberger indicated that if the defendants were successful in their appeal an approximate maximum additional $420,000 would be added to the present settlement amount. The Forest Lodge property was said to be worth approximately $4.5 million. Even after the incoming financier’s mortgage, it was anticipated there would be a substantial equity remaining in the Forest Lodge property available to secure the highest expected settlement amount. Mr O’Connor of counsel indicated that the plaintiff would undertake to the Court not to deal with the Forest Lodge property after settlement without first giving 21 days’ notice to the defendants. That would give sufficient time to the defendants and the plaintiff to arrange to quarantine the proceeds of any future sale of the Forest Lodge property.

10. The proceedings were resolved on the basis that the defendants’ caveat was ordered to be removed on settlement and a Court order was made that after settlement, the plaintiff, who would then be the registered proprietor, would give at least 21 days’ notice to the defendants of any proposal to deal with the Forest Lodge property.

11. But the parties could not agree upon an appropriate order for costs. At the hearing, Mr O’Connor sought the costs of bringing the motion on 7 September. Mr Weinberger opposed any order for costs at the hearing and contended that costs should be borne by each party in accordance with a pre-existing agreement.

12. The Court had insufficient time to deal with the question of costs, so the Court ordered that the parties put on written submissions on the costs issue, which they did.

13. Where parties agree on the outcome of proceedings but cannot agree on costs, the applicable legal principles may be shortly stated. McHugh J summarised it in Re Minister for Immigration and Ethnic Affairs; Ex parte Li Qin [1997] HCA 6; (1997) 186 CLR 622 at 624-5:

“In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

…

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.

…

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.” [Footnotes omitted]

14. Hill J expressed the law in similar terms in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 at 201; (1993) 116 ALR 523 at 530. This principle has been applied on countless occasions since then. The questions therefore are whether the Court could be confident that Ms Bale or the defendants would have succeeded had the matter been fully contested, or whether one or other party has acted unreasonably in the circumstances precipitating the application, such as to warrant the making of an order for costs.

15. The defendants also submit that if the Court were otherwise to be persuaded that a costs order should be made against them, that it should refrain from doing so because making a costs order would be contrary to an agreement that the parties made to each bear their own costs.

16. To consider both these issues it is necessary to examine more closely the chronology of relevant events leading up to 6 and 7 September 2023.

The Events of August and September 2023

17. The defendants contend that the costs of the present application were covered by consent orders (“the consent orders”) that had been made between the parties on 23 March 2023 in the Court of Appeal, in which they each agreed to bear their own costs of the proceedings both at first instance and on appeal. Those consent orders provided as follows:

“1.   Vacate order 1 made in Bale v Kimberley Developments Pty Ltd (No. 2) [2022] NSWSC 1009 with respect to the first, second, fifth and sixth defendants with the intention that the plaintiff and the first, second, fifth and sixth defendants pay their and its own costs of the proceedings in the court below.

2.   No order as to costs of the appeal in Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25, with the intention that each party to the appeal pay her, his or its own costs of the appeal.

3.   The Court notes that the plaintiff’s receipt of the sum of $350,000 in settlement of her claim as against the third defendant I the court below is in full and final satisfaction of any entitlement that the plaintiff has had or will have in respect of costs as against the first, second, fifth and sixth defendants arising out of the proceedings in the court below and this court.”

18. These consent orders were also referred to in Leeming JA’s August 2023 judgment. A notation made by Leeming JA records that the parties had informed the Court of Appeal as follows:

“that they had resolved the question of costs on the basis that the cost order at first instance be vacated, and there be no order as to costs at first instance or on appeal, with the intention that the plaintiff and the first, second, fifth and sixth defendants pay their own costs at first instance and the parties to the appeal pay their own costs of the appeal”.

19. On 18 August 2023, Leeming JA in Bale v Kimberley Developments Pty Ltd (No. 3) [2023] NSWSC 973 ordered the plaintiff pay Kimberley Developments Pty Ltd the sum of $301,560.99 within 21 days, that is by 8 September 2023. The same day, 18 August, the solicitors for the plaintiff, SCB Legal, foreshadowed to Weinberger Lawyers on behalf of the defendants, that the sum of $301,560.99 would be paid on 8 September 2023 at the same time as the settlement of the transfer of the Forest Lodge property to the plaintiff. SCB Legal said in the email, “the finance company requires confirmation that the charge will be removed at the time of settlement”. SCB Legal also made clear the following:

“We intend to invite your office to the PEXA Workspace and ask that you confirm by reply email your consent to the charge being removed simultaneously with the monies being paid into your trust account at the time of settlement.”

20. This repeated a statement SCB Legal had made in an email the previous day.

21. Surprisingly, no reply was received to this email until 7 September. The implication of the defendants’ present costs submissions is that somehow SCB Legal was at fault for not following up this email. But apart from the discourtesy of Weinberger Lawyers’ failure to reply, even to say that they did not have instructions, the way the correspondence was left on 18 August was apt to give SCB Legal the impression that Weinberger Lawyers had the matter in hand and that dissent from the foreshadowed course was not on the horizon. No follow up was required.

22. On 6 September 2023, SCB Legal did exactly what they had foreshadowed in their two letters of 17 and 18 August. They sent to Weinberger Lawyers an invitation to join the PEXA Workspace. The same day, SCB Legal wrote by email to Weinberger Lawyers, referring to the previous correspondence and noting that a response had not yet been received. SCB Legal reaffirmed the invitation to join the PEXA Workspace, noted that settlement was scheduled for 12 noon on 8 September 2023, and requested removal of the charge and the creation of a payment direction into Weinberger Lawyers’ nominated bank account.

23. On the morning of 7 September 2023 at 9:54 AM, Mr Weinberger detonated a day of frenzied action with an email saying that he did not yet have instructions about SCB Legal’s email of 6 September. This was the first time that the plaintiff was made aware the defendants might not be intending to settle in accordance with the orders of the Court. In the balance of the same email, Mr Weinberger claimed a lien for the amount of $191,004.45, which was said to be “payable to me”, that is to Mr Weinberger himself, rather than the defendants. In the same correspondence, Mr Weinberger provided his bank account details but he did not enter them into the PEXA Workspace. It looked like some issue between solicitor and client might have afoot, even though Mr Weinberger denies it.

24. The same morning, three minutes later at 9.57AM, SCB Legal replied, inviting Mr Weinberger into the PEXA Workspace and saying that the invitation was “so that you can enter the payment directions yourself, as you will need to remove the charge”.

25. SCB Legal decided within the next 40 minutes it needed to escalate matters to save the settlement the following day. This was a reasonable decision made a little over 25 hours before settlement was due the following day at 12 noon. At 10.36AM on 7 September, SCB Legal wrote again referring to the previous email correspondence and foreshadowed an application to the Court in the following terms:

“In the event you have not obtained instructions and accepted that PEXA invite by 1pm today, we intend to approach the Court to re-list the matter noting our client will be in breach of the orders. As such please confirm by reply email whether you have instructions to remove the charge against the property.”

26. Mr O’Connor appeared in the list before 1PM to ascertain the Court’s availability after 2PM for a possible hearing. The Court indicated it had time at 2PM. At 12.03PM, SCB Legal wrote to Mr Weinberger foreshadowing that the Duty Judge would be approached at 2PM and enclosing by way of service an unsealed Notice of Motion and Affidavit which was intended to be filed on behalf of Ms Bale. This produced a quick but curious response from Mr Weinberger.

27. Mr Weinberger emailed again at 12:17 PM, noting for the first time that the defendants were considering an appeal. Remarkably, Mr Weinberger’s email said nothing about the need for his clients to comply with the Court’s orders to settle the Forest Lodge transaction the following day. He suggested that the charge on the title to the Forest Lodge property should remain on title until any appeal was determined. At that stage, the recently foreshadowed appeal had not been filed. The full text of the email was as follows:

“1.   I refer to your email below dated 7 September 2023 (9.57am).

2.   I note that Ms Bale is required to pay the amount referred to in Order 2 of Bale v Kimberley Developments Pty Ltd (No. 3) [2023] NSWSC 973 by 8 September 2023.

3.   Our clients are considering an appeal in relation the quantum of the amount. Our clients are entitled to file a notice of intention to appeal or a notice of appeal by Friday, 15 September 2023. If a notice of intention to appeal is filed, the deadline for our clients to appeal is extended to Friday, 17 November 2023.

4.   If the charge is removed on payment our client will not have any security of any amount ordered in excess of the amount referred to above following an appeal.

5.   In those circumstances, our clients seek your client’s agreement to an order that the charge on the title to the property remain until the later of:

a.   Friday, 17 November 2023 (which is the latest date by which an appeal can be filed if a Notice of Intention to Appeal is filed by Friday, 15 September 2023); and

b.   if an appeal of Bale v Kimberley Developments Pty Ltd (No. 3) [2023] NSWSC 973 is commenced, the final orders are made which determine the amount payable by Ms Bale.

6.   Should you proceed to re-list the matter, we are likely to have sinstructions to file a Notice of Intention to Appeal and to seek an order to the effect of what is proposed in paragraph 5 above.”

28. This was a roadblock email. It complains about what will happen if the charge is removed and requests that the charge remain until a time well after the proposed settlement the following day. The email contained no comfort to the plaintiff that the caveat would be lifted to permit settlement.

29. It is no surprise that the plaintiff rushed up to Court to seek relief. Doing nothing exposed her to the risk of losing her finance if the settlement was aborted the following day.

30. SCB Legal’s response was swift. At 12.53PM, its email declared “Our client rejects your offer” and attached an updated Affidavit which it was foreshadowed would be filed in Court at 2PM.

31. Then about 15 minutes later, SCB Legal attempted to move the roadblock created in Mr Weinberger’s 12.17PM email. At 1.10PM, SCB Legal offered that the defendants could register a charge over the Forest Lodge property following settlement, provided it was removed in time to allow the settlement to proceed at 12 noon the following day and that the new charge would be removed on 15 September if the defendants had not filed a Notice of Intention to Appeal by that date, and reiterating the plaintiff’s intention to approach the Duty Judge. Mr Weinberger replied a few minutes later acknowledging receipt and indicating that he was “seeking instructions”.

28. At 1.25PM SCB Legal indicated that counsel had approached the Duty Judge and the matter was listed at 2PM for determination, and withdrew the offer that had been made at 1.10PM. The withdrawal of the offer can no doubt be explained by the certainty of the hearing and the disadvantage of having an offer open while hearing proceeded. The matter commenced a little after 2PM and concluded in the course of that afternoon.

29. Mr Weinberger seemed mystified at how the matter could have been relisted at 2PM without correspondence from the Court. He later requested Mr O’Connor forward to him correspondence with the Court, into which he said "I was not copied". Mr O'Connor replied saying "there is no such correspondence." That was true. Mr O'Connor had come up to Court to ascertain the Court's availability, as is not uncommon in urgent duty matters. Mr Weinberger had written to my Acting Associate at 1:34PM indicating he had not been copied into any written communications. But there were none. When Mr O’Connor appeared before lunch he was asked to inform the other side that the matter would commence after 2 PM.

Consideration of the Parties’ Submissions

34. Mr Weinberger submits on behalf of the defendants that he was unaware until 1:25PM on 7 September that an application was being made by the plaintiff's counsel to Court at a time when he was obtaining instructions on the plaintiff’s offer made at 1:10PM. Mr Weinberger says the plaintiff did not give the defendants a reasonable chance to accept the counterproposal before it was abruptly withdrawn at 1:25PM and Mr Weinberger was informed that he was to appear in the duty list.

35. This is a selective analysis of the chronology. Mr Weinberger omits many relevant matters. He had failed for 18 days to reply to SCB Legal’s correspondence. His 12:17PM email contained no proposal at all about reinstating the caveat after the settlement and did not suggest his client was even open to such a course. SCB Legal had foreshadowed an approach to the Court as early as 10:36AM, repeated at 12:03PM with relevant Court documents, and it is inaccurate for Mr Weinberger to say that he was first informed at 1:25m of going to the Duty Judge. The crisis atmosphere created PMon 7 September was caused by Weinberger Lawyers’ failure to respond to the 18 August emails in a timely way and then their failure to put a reasonable proposal to resolve the matter in something like their 12:17PM email. Some sort of re-imposition of the caveat, or notation on the title after settlement, was the obvious way to resolve this case. Weinberger Lawyers did not come up with such a proposal until it was suggested by SCB Lawyers at 1:10PM.

36. But some proposal along those lines was always necessary to resolve the matter. Weinberger Lawyers then complains that SCB Legal’s offer at 1:10PM was withdrawn at 1:25PM. But the withdrawal is understandable in the chaos that had been created by Weinberger Lawyers’ dilatory conduct. SCB Legal’s offer merely served to communicate a structure for resolving the matter. It was always open to Weinberger Lawyers to make a counteroffer in the same terms. Little or nothing flowed from the withdrawal of the offer.

37. An entirely different scenario would have unfolded if early on 7 September Weinberger Lawyers had written back with instructions of some kind, clearly indicating they were committed to the settlement of the Forest Lodge property transfer proceeding at 12 noon the following day and to a mechanism which would allow that to occur, even if it involved reimposing the caveat later. As the Court indicated during oral argument, some such structure was always the way this case was going to be resolved, and indeed the way it was resolved. And the matter would not have developed into a crisis had Weinberger Lawyers responded more promptly to correspondence.

38. In the Court’s view, had the matter not resolved by agreement, the plaintiff would almost certainly have been successful in much the same terms that were incorporated into the parties’ ultimate agreement or were reflected in SCB Legal’s offer at 1:10PM on 7 September. That is the usual structure for the resolution of a pre-settlement caveat issue like this, where there is ample equity in the subject property. Moreover, in the Court’s assessment, the chronology above shows that the defendants conducted themselves unreasonably before the Court became seized of the matter. On both grounds the plaintiff is entitled to an order for costs and the Court would make a costs order in her favour, subject to the defendants’ argument about the 23 March 2023 consent orders.

The Effect of the 23 March 2023 Consent Orders

39. The defendants submit that the Court cannot now make a costs order, as it would be contrary to the March 2023 consent orders. Indeed, the defendants submit the costs issue should never have been argued and that they should have their costs of arguing the costs issue. In support of this position, Mr Weinberger has submitted a claim for professional fees and disbursements in the total of $2,970, substantiated by his memorandum of fees.

40. The agreement between these parties does not oust the Court’s statutory jurisdiction to make a costs order, if it is warranted. Even if the parties agree upon a costs outcome, the Court retains “full power” in its discretion under Civil Procedure Act, s 98(1)(b) “to determine by whom, to whom and to what extent costs are to be paid”. The reasons for this are obvious. The Court’s power to make awards of costs must be exercised to further the administration of justice in accordance with the dictates of Civil Procedure Act, ss 56, 57 and 58, among other considerations. An agreement between the parties in relation to costs need only serve their own narrow interests. One example of this principle being applied in respect of the equivalent provisions of the Federal Court of Australia is Minister for Immigration and Border Protection v SZTQS [2015] FCA 1069. But an agreement between parties concerning the allocation of costs will be a highly relevant matter for the Court to consider in the exercise of its costs discretion, but it is not necessarily determinative of the discretion.

41. The defendants contend that the payment of $350,000 to the plaintiff in settlement of her claim against the third defendant, recorded in the consent orders, satisfied the plaintiff in respect of all future claims for costs, including those occasioned by the present application, and protected the defendants from any claim for costs such as that now being made.

42. On the face of the agreement in the consent orders, there is some superficial force in the defendants’ argument. The agreement was in satisfaction of any entitlement that “the plaintiff has had or will have in respect of costs” against the present defendants “arising out of the proceedings in the Court below and this Court” [emphasis added]. There are two indicia in the consent orders that the defendants highlight that indicate that costs of the kind incurred here were to be satisfied by the agreement recorded in the consent orders. The agreement covers future claims to costs – as it refers to entitlements that the plaintiff “will have”. And the expression “arising out of” is a well-known expression of wide legal import and can encompass future as well as past events.

43. The plaintiff responds to this submission in several ways. She argues that the present application was not one “arising out of” either the first instance or the appeal proceedings. She argues that the consent orders do not deal with legal costs incurred in wholly new applications after the conclusion of the appeal. She contends that the present application is neither part of the “costs at first instance” nor the costs “on appeal”. She says that this is a wholly new application occasioned by the defendants’ unreasonable conduct which needed to be counteracted by her application to ensure that the Court’s orders were implemented. She further says that no part of the agreement recorded in the consent orders purported to bind the parties prospectively to share the costs of all future applications that might be required to implement the Court’s orders to counter unreasonable conduct by the defendants.

44. But the defendants in turn reply that the settlement of the re-transfer of the Forest Lodge property and its timetabling with the payment of the settlement amount to the defendants are the direct consequences of the first instance proceedings that were only finally decided by Leeming JA on 23 August 2023 on referral from the Court of Appeal after the two Court of Appeal judgments. The defendants argue the current dispute bears a close relationship to the timetable of events contemplated by Leeming JA’s recent judgment, which included settlement on 8 September.

45. The defendants’ argument is not persuasive. The argument does not prevent the Court making the costs order in this case that the Court has foreshadowed. The Court should exercise its statutory power to award costs under Civil Procedure Act, s 98 considering the agreement reflected in the consent orders, but it is not bound by it. And when the Court considers the agreement should do so in the light of conventional authority about such agreements. Although the consent orders do not contain a formal release, the defendants are arguing that they operate so as in substance to release future costs claims, as if they were a release. General principles that apply to constructive contractual releases were conveniently discussed in Karam v ANZ Banking Group Ltd [2001] NSWSC 709 at [406] per Santow J (as his Honour then was). These principles include that for the Court to give effect to what the parties intended in an objective sense, general words in a release are limited to what was specifically in the contemplation of the parties at a time when the release was given: Grant v John Grant and Sons (1954) 91 CLR 112. Although, it is possible for a party to agree to release claims or rights of which it is unaware, provided clear language is used to make a plan that is its intention: Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608.

46. Properly construed, the agreement in the consent orders does not express an intention to prevent the making of costs orders such as those proposed here. This is so for several reasons. First, costs that are generated due to spontaneous unreasonable conduct occurring six months after the consent orders would hardly have been in the contemplation of the parties at the time of the consent orders. If the agreement contemplated all nature of costs arising from spontaneous future unreasonable conduct, it might be expected that some boundaries might be placed around the extent of costs, or the conduct that would be excluded from the scope of the agreement. But no limitation such as that appears in the consent orders. The better construction of the consent orders is that they only relate to costs that were in contemplation between the parties on 23 March 2023. And the present claim for costs was not in contemplation between the parties then.

47. Secondly, this construction is consistent with the words of the consent orders. The words that refer to any entitlement that “the plaintiff has had or will have in respect of costs” mean an entitlement to costs that has already arisen or will arise in respect of events that were known on 23 March 2023. The words do not refer to an entitlement to costs that will arise in respect of events that were unknown on 23 March 2023, such as the events in question here. In other words, the “entitlement” may be in the future but the factual basis of that entitlement must be known to the parties at the time of the consent orders.

48. Thirdly, it is difficult to say that the costs here are costs “arising out of” either the first instance proceedings or the appeal. It is far more natural to say that the costs in question arise out of the defendants’ unreasonable conduct, or from obstacles impeding execution of the conveyance of the Forest Lodge property.

Indemnity Costs

49. The plaintiff’s submissions also seek an order for indemnity costs against the defendants. Such an order will not be made. The Court has been critical of the way the defendants conducted themselves on 6 and 7 September 2023. But the defendants were acting under pressure (occasioned indeed by their own failures to respond earlier to correspondence). Their conduct, though obstructive in its effect, was not a deliberately planned course such as might warrant an order for indemnity costs. Rather, it was conduct typical of parties reacting instinctively and negatively under pressure. The Court will order costs on the ordinary basis.

A Specified Gross Sum Instead of Assessed Costs

50. These parties are ever ready to engage in volatile and bitter disputes about any conceivable legal issue that might arise between them. Eliminating their opportunities to generate another such dispute is desirable. This is another situation in which the useful provision of Civil Procedure Act, s 98(4)(c) can be deployed. As was foreshadowed to the parties at the hearing, the Court will specify a gross sum instead of assessed costs in respect of the subject matter of the present costs dispute. The Court is able to do so here as both parties supplied memoranda of fees for the Court’s information, and the Court was familiar with the scope of this dispute and confident that it could make such an order fairly on the materials available. The principles applicable are stated in Harrison v Schipp (2002) 54 NSWLR 738, [2002] NSWCA 213 and Hamod v State of New South Wales [2011] NSWCA 375 at [816], among many applicable authorities. That exercise can now be briefly undertaken.

51. With the plaintiff’s submissions the Court has been provided with a memorandum of fees from Mr David O’Connor of counsel in the sum of $5,500 inclusive of GST and an itemised tax invoice from SCB Legal Pty Ltd to the plaintiff in the sum of $3,300 inclusive of GST, totalling $8,800. The Court regards the fees charged by these legal practitioners as reasonable in all the circumstances.

52. Some discount is appropriate when a gross sum is fixed, to take account of contingencies that might arise on an assessment. But there was otherwise no disproportion in these fees in relation to the contest that took place before the Court. A slight discount is nevertheless appropriate in respect of the solicitor’s fees. Some of the costs incurred on 6 and 7 September 2023 would have been incurred anyway, even if there had not been an application to Court. But had the Court application not taken place, counsel would not have been involved at all and so counsel’s fees should be allowed in full. So, the Court will allow $2,200 inclusive of GST on the solicitor’s account, bringing the total to $7,700 inclusive of GST.

Conclusion and Orders

53. For these reasons the Court makes the following orders:

1. Order that the defendants pay the plaintiff’s costs of the re-listing of these proceedings on 7 September 2023 on the ordinary basis.

2. In respect of the costs the subject of Order (1), the Court fixes and orders the payment of a specified gross sum of $7,700 instead of assessed costs, pursuant to its powers under Civil Procedure Act 2005, s 98(4)(c).

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Decision last updated: 13 October 2023