Florida Kitchens Pty Ltd v Number One Cutting Service Pty Ltd trading as Number One Marble and Granite (No 2)

[2020] NSWCA 216

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Florida Kitchens Pty Ltd v Number One Cutting Service Pty Ltd trading as Number One Marble and Granite (No 2) [2020] NSWCA 216

Hearing dates:

On the papers

Decision date:

15 September 2020

Before:

Leeming JA;
McCallum JA.

Decision:

1. Vacate the order made on 20 August 2020.

2. The amended summons seeking leave to appeal be dismissed.

3. Each of Florida Kitchens and Mr Andre Elias to pay one half of Number One’s costs of the proceedings in this Court incurred from 7 May 2020 until and including 20 August 2020.

4. Florida Kitchens to pay the whole of Number One’s costs of the proceedings in this Court prior to 7 May 2020.

Catchwords:

COSTS – application to vary costs order – distinct applications for leave to appeal against security for costs and third party costs order – application granted

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 60

Uniform Civil Procedure Rules 2005, rr 19.2, 36.16

Cases Cited:

Florida Kitchens Pty Ltd v Number One Cutting Service Pty Ltd trading as Number One Marble and Granite [2020] NSWCA 187

Category:

Costs

Parties:

Florida Kitchens Pty Ltd (First applicant)
Andre Elias (Second applicant)

Number One Cutting Service Pty Ltd trading as Number One Marble and Granite (Respondent)

Representation:

Counsel:
S Bell (Respondent)

Solicitors:
Georges Elias, Cadmus Lawyers (Applicants)
David Simons, SR Law (Respondent)

File Number(s):

2019/391421

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2019] NSWSC 1568; [2020] NSWSC 216

Date of Decision:

15 November 2019; 13 March 2020

Before:

N Adams J

File Number(s):

2018/391926

Judgment

1. THE COURT: Shortly following the hearing on 20 August 2020, we refused leave to appeal from two judgments concerning costs: (a) an application for leave to appeal from orders dismissing an appeal from orders imposing security for costs in relation to an appeal from NCAT and (b) a third party costs order extending to Mr Andre Elias, the sole director and shareholder of Florida Kitchens. A further application has now been made to vary the order for costs, within the period specified by UCPR r 36.16.

2. The background is contained in our reasons, published later that day, in Florida Kitchens Pty Ltd v Number One Cutting Service Pty Ltd trading as Number One Marble and Granite [2020] NSWCA 187. Florida Kitchens sought leave to appeal by summons filed on 14 February 2020. On 27 April 2020, after the primary judge had made a third party costs order against Mr Elias, an order was made by consent by the Registrar joining Mr Elias as the second applicant, and granting leave to file and serve an amended summons seeking leave to appeal, amended draft grounds of appeal and amended summary of argument. That subsequently occurred, on 7 May 2020.

3. Mr Andre Elias now seeks an order varying this Court’s costs order in the following terms:

“so as to limit the costs payable by the Second Applicant Andre Elias to those costs referable to his appeal against the costs order made against him by her Honour Adams J on 13 March 2020”.

4. As things presently stand, the entirety of the respondent’s costs, as agreed or assessed on the ordinary basis (we refused to make the order for indemnity costs sought by the respondent) may be enforced against either applicant. Both are co-obligors and to the extent that one discharges more than half of the liability, it or he would be entitled to seek contribution against the other.

5. There is an air of artificiality about the application, bearing in mind that Mr Andre Elias is the sole shareholder and sole director of Florida Kitchens. As the sole owner of Florida Kitchens, there is no difference, assuming its solvency, in Florida Kitchens discharging the whole of the obligations under the costs order, or Mr Elias doing so. However, if Florida Kitchens is not able to satisfy the obligations under the costs order, then the variation will assume some significance. This is mentioned because at the forefront of the submissions made to the Associate Justice, and to the primary judge, and in this Court, both in writing and orally, was the fact that, so it was said, it had not been shown that Florida Kitchens was impecunious, and that findings in the court below that there were reasonable grounds to believe that the company would be unable to meet a costs order should not have been made.

6. If as Florida Kitchens has hitherto steadfastly maintained throughout the litigation in this Court it is able to satisfy the costs order, then this present variation sought by Mr Elias is wholly inutile. Put differently, the fact that this application is made serves to strengthen the conclusion that security for costs was correctly ordered.

7. However, litigants are at liberty to advance cases in the alternative. Mr Andre Elias relies on the fact that Florida Kitchens sought to appeal from the original decision, and he (together with Florida Kitchens) sought to appeal from the second decision, as was plain on the face of the amended summons, amended draft notice of appeal and amended summary of argument.

8. Against this, the respondent Number One submits that the only order sought was “Leave to appeal from the whole of the decisions below”, and invites this Court to conclude that Mr Andre Elias personally sought leave to appeal from the first decision because it would improve his prospects of obtaining leave to appeal from the second decision. Number One also submits that had an application been made following the hearing, it would have been opposed.

9. Pursuant to UCPR r 19.2(4), Mr Elias is taken to have commenced proceedings against Number One from the date the amended summons was filed, on 7 May 2020. Costs incurred by Number One prior to Mr Andre Elias being joined could only, absent some (further) third party costs order, be recovered from Florida Kitchens. There is merit in Mr Elias’ submission that, in effect, Number One should not receive the advantage of a third party costs order in relation to Number One’s costs of opposing Florida Kitchens’ application for leave merely from the fact that Mr Elias was subsequently joined to the existing summons. In principle, Mr Elias might have filed a separate originating process if he sought to appeal from the third party costs order.

10. Number One’s opposition to the variation is without substance. True it is that the form of the order sought does not distinguish between the orders from which leave to appeal was sought. However, that submission ignores what immediately preceded the proposed order on the amended summons, which made it clear beyond argument that Mr Elias did not seek leave to appeal from the order made against Florida Kitchens. The fact that Number One says it would have opposed the order now sought had it been raised at the hearing is relevant to costs of the present application, but is no reason not to deal with the application on its merits. That is to say, Mr Elias’ silence on the day is not a proper reason for denying him the right given by UCPR r 36.16 to apply to vary the order.

11. However, the form of the order sought is apt to be problematic. It is desirable to minimise the disputes which might arise in determining whether costs are referable to the application for leave against the third party costs order (not least because the entire litigation in this Court to date has concerned costs), and consistently with s 60 of the Civil Procedure Act 2005 (NSW) it is vital that costs not unnecessarily be incurred in determining which aspect of the amended summons Number One’s costs are referable to. The costs will themselves be small – they amount in substance to responding to the amended summary of argument and part of the hearing and preparation for hearing. With that in mind, the costs order will be varied, so that it provides that each of Florida Kitchens and Mr Andre Elias is severally liable for one half of Number One’s costs of the proceedings in this Court incurred from 7 May 2020 until and including 20 August 2020, and Florida Kitchens is liable for the whole of Number One’s costs of the proceedings in this Court prior to 7 May 2020.

12. Turning to the costs of the application to vary the costs order, there is some force in Number One’s submission that those costs have been increased by the failure to raise the variation at the hearing. Conversely, those costs have also been increased by Number One’s unsuccessful opposition to the variation. Bearing in mind those matters, and the fact that the order proposed in Florida Kitchen’s application was itself problematic, there should be no order as to the costs of the application to vary the costs order, with the intention that the parties bear their own costs of that application. That will be the effect of the time limit of 20 August 2020 in the varied orders.

13. The Court’s orders are:

1. Vacate the order made on 20 August 2020.

2. The amended summons seeking leave to appeal be dismissed.

3. Each of Florida Kitchens and Mr Andre Elias to pay one half of Number One’s costs of the proceedings in this Court incurred from 7 May 2020 until and including 20 August 2020.

4. Florida Kitchens to pay the whole of Number One’s costs of the proceedings in this Court prior to 7 May 2020.

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Decision last updated: 15 September 2020