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E Co [a pseudonym] v Q [a pseudonym] (No 5)

E Co [a pseudonym] v Q [a pseudonym] (No 5)

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Case Copied 8 July 2019 58 min read

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Supreme Court

New South Wales

Medium Neutral Citation: E Co [a pseudonym] v Q [a pseudonym] (No 5) [2019] NSWSC 844
Hearing dates: 17 June 2019
Decision date: 08 July 2019
Before: Ward CJ in Eq
Decision:
1.   Subject to Order 2, order the first defendant to pay the plaintiffs’ costs of the proceedings on the ordinary basis.
2.   Order the plaintiffs to pay the first defendant’s costs of the preparation and adducing of expert evidence going to the issue as to whether the imposition of the conditions proposed in the principal judgment on the acceleration of the plaintiffs’ expectations in relation to the Properties and the Business (namely, the Lonergan Edwards reports) would be “financially ruinous” to the plaintiffs; such amount to be set-off against the costs the subject of Order 1.
3. Pursuant to s 101 of the Civil Procedure Act 2005 (NSW), order the first defendant to pay to the plaintiffs’ interest on those costs that the plaintiffs have paid to their legal advisers in connection with these proceedings and that are the subject of Order 1 above, at the prescribed rate as from the date or dates on which the costs concerned were paid, less (in the case of costs paid by the first plaintiff) the amount representing any tax benefit obtained by the first plaintiff by reason of the expenditure on legal costs expenses (i.e., the difference between the tax that was paid by the first plaintiff and the tax that would otherwise have been payable by the first plaintiff had it not been for the expenditure it incurred in relation to the legal fees in respect of these proceedings).
4.   Direct the parties to forward within seven days an appropriate form of order to encapsulate the order for interest on costs, if there be any dispute as to the operation or implementation of Order 3.
5. Pursuant to s 98(4) of the Civil Procedure Act 2005 (NSW), order that the costs the subject of the costs orders made above be calculated on a gross sum basis in accordance with a regime to be the subject of directions made to reflect these reasons and direct the parties to forward within seven days draft short minutes of order for that purpose.
6.   Costs of the hearing of the costs submissions on 17 June 2019 be included in the costs order made in Order 1 above.

Catchwords: COSTS – Costs orders – costs of the principal hearing – costs of the re-opened hearing – claim for party/party costs – claim for indemnity costs on the basis of the principles in Calderbank v Calderbank – claim for interest on a party’s costs – claim for costs on a gross sum basis – whether disentitling conduct of the kind that would warrant departure from the general rule that costs follow the event
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 98, 101
Courts and Other Justice Portfolio Legislation Amendment Act 2015 (NSW), Sch 1.2 [2].
Uniform Civil Procedure Rules

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NSWSC 844
Decision Date: 08 July 2019

CaseChat Overview and Summary

The case before the court involved a dispute between E Co and Q. The matter was complex, encompassing issues related to costs incurred during a principal hearing and a subsequently re-opened hearing. The court was asked to adjudicate on various claims for costs, including party/party costs, indemnity costs under the principles in Calderbank v Calderbank, interest on a party's costs, and costs on a gross sum basis. The central legal issue was whether certain conduct by the parties warranted a departure from the general rule that costs follow the event.

The court commenced by examining the nature of the claims for costs and the principles applicable to each. It considered the conduct of both parties throughout the proceedings, assessing whether any actions were egregious enough to justify a deviation from the usual cost allocation rule. The court found that while both parties had engaged in conduct that could be considered vexatious, the overall conduct did not reach the threshold that would warrant such a departure. The court emphasised the importance of proportionality in making such a decision, ultimately determining that the conduct did not warrant a departure from the general rule.

As a result of this finding, the court ruled that costs should follow the event. This meant that the successful party would be entitled to recover the costs of both the principal and re-opened hearings, along with interest on those costs. The court also considered the claim for indemnity costs but found that the principles in Calderbank v Calderbank did not apply. The court declined to award costs on a gross sum basis, adhering to the usual practice of awarding costs on an itemised basis. The court's decision was grounded in the need to balance the interests of both parties while adhering to established legal principles.

The final orders of the court reflected its reasoning. E Co was awarded costs of both the principal and re-opened hearings, along with interest on those costs. The claim for indemnity costs was dismissed, as was the request for costs on a gross sum basis. The court's decision was clear and based on a thorough analysis of the applicable legal principles and the conduct of the parties.

Orders