Hosanna Excelsis One Universal Church Incorporated v Pastina Pty Ltd (No 2) - [2021] SASCFC 19

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
HOSANNA EXCELSIS ONE UNIVERSAL CHURCH INCORPORATED v PASTINA PTY LTD (No 2)
[2021] SASCFC 19
Judgment of The Full Court
(The Honourable Justice Kelly, the Honourable Justice Peek and the Honourable Justice Blue)
31 March 2021

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DETENTION, INSPECTION AND PRESERVATION - FREEZING ORDERS
In Hosanna Excelsis One Universal Church Incorporated v Pastina Pty Ltd [2020] SASCFC 110 the Court allowed the appeal, set aside judgment in the District Court in favour of the respondent and adjourned consideration of further orders to be made on the appeal.
The parties agree that, as a consequence of allowing the appeal, judgment should be entered in favour of the appellant against the respondent for $75,479.23 inclusive of interest calculated up to 5 February 2021.
Each party seeks an order that the other party pay its costs of the appeal. Each party seeks an order that the other party pay its costs (or a proportion of its costs) of the proceeding below on and after 11 December 2019 and in respect of certain applications. The appellant seeks the discharge of freezing and restraining orders made by the District Court.
Held:
1.The respondent should pay 75 per cent of the appellant’s costs of the appeal (at [22]).
2.Subject to existing costs orders and excluding costs the subject of specific orders, the respondent should pay the appellant’s costs of the proceeding in the Magistrates Court and District Court (at [55]), including of the trial in February 2020 (at [45-47]).
3.Subject to existing costs orders, the appellant should pay the respondent’s costs on an indemnity basis incurred between 11 December 2019 and 17 February 2020 insofar as they related to the estoppel issue (at [45]).
4.As to reserved costs, the respondent should pay the appellant’s costs:
(a)of the application by the respondent for the freezing order dated 18 September 2019 and subsequent applications for variations of the freezing order (at [63]);
(b)of the application by the respondent for the restraining order dated 11 February 2020 (at [63]);
(c)of the application by the respondent seeking striking out of Hosanna’s defence and counterclaim and for judgment in default dated 17 January 2020 (at [51]);
(d)of the oral application by the appellant on 18 December 2019 to adjourn the trial (at [50]).

5.As to reserved costs, the appellant should pay the respondent’s costs on an indemnity basis:
(a)of the application by the respondent for disclosure and delivery up by Hosanna of computer devices dated 13 December 2019 (at [49]);
(b)as to 60 per cent of the application for permission by the appellant to amend its defence and counterclaim dated 17 January 2020 (at [52]);
(c)of the application by the appellant to adjourn the trial dated 13 February 2020 (at [53]).

6.The costs of the proceeding while it was in the Magistrates Court should be assessed on the District Court scale (at [66]).
7.The freezing and restraining orders should be discharged (at [70]).

Retail and Commercial Leases Act 1995 (SA) s 20B, referred to.
Hosanna Excelsis One Universal Church Incorporated v Pastina Pty Ltd [2020] SASCFC 110;
A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27, considered.

HOSANNA EXCELSIS ONE UNIVERSAL CHURCH INCORPORATED v PASTINA PTY LTD (No 2)
[2021] SASCFC 19

THE COURT: In Hosanna Excelsis One Universal Church Incorporated v Pastina Pty Ltd[1] this Court allowed the appeal, set aside the judgment in the District Court in favour of the respondent and adjourned consideration of further orders to be made on the appeal.
[1] [2020] SASCFC 110.
The parties subsequently agreed that the consequence of allowing the appeal was that, in lieu of the judgment ordered by the trial Judge, judgment should be entered in favour of the appellant (Hosanna) against the respondent (Pastina) for the net amount of $65,279.23 plus interest calculated up to 5 February 2021 at $10,200.
The parties make extensive submissions about the costs of the appeal and the costs of the proceeding below. They also make submissions as to whether a freezing order made by the District Court should now be discharged and whether the costs of the proceeding while it was in the Magistrates Court should be assessed under the Magistrates Court scale or the District Court scale.
Costs of appeal
Hosanna seeks an order that Pastina pay its costs of the appeal on the basis that costs should follow the event.
Pastina seeks an order that Hosanna pay its costs of the appeal and in the alternative that there be no order as to the costs of the appeal.
Point not previously raised
Pastina contends that Hosanna only succeeded on appeal on a point not previously raised by Hosanna at trial or on appeal until it was raised by the Court at the hearing of the appeal. It contends that as a result Hosanna should pay its costs of appeal.
We reject Pastina’s primary contention.
The point on which Hosanna succeeded on appeal was pleaded by it in paragraph 10 of its defence, in which it pleaded that:
… by virtue of 20B(3)(d) as the defendant had been in possession for at least 5 years section 20B could not apply...
It was the point on which Hosanna initially succeeded in obtaining summary judgment in the Magistrates Court, in which the Magistrate held that:
Even if Pastina were to succeed in its argument that at the start of the holding over period, Hosanna had only been in possession of the combined area of the lease for four years, seven months, s 20B(3)(d) applies to the exclusion of s 20B(3)(b) and there is no requirement to imply a five year lease as Hosanna has been in possession of the combined premises for at least five years.
It was the point that the Judge on the appeal against the summary judgment held was not so clearly correct as to justify summary judgment.[2]
[2] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc [2019] SASC 18 at [54]-[65].
It was a point argued by Hosanna at trial, a point that was clearly articulated, and rejected, by the trial Judge in his reasons for judgment.[3]
[3] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc [2020] SADC 43 at [148]-[152].
It was a point raised by Hosanna in ground 5 of its grounds of appeal. While the drafting of the grounds of appeal was less than ideal, particularly read in light of the trial Judge’s reasons for judgment, ground 5 raises the point on which Hosanna succeeded on appeal.
It is true that, in its written submissions on appeal, Hosanna articulated a specific contention (not advanced below) that the holding over comprised a series of one-month tenancies and it was only at the commencement of the seventh one-month tenancy that section 20B(3)(d) was required to be applied. However, at the hearing of the appeal, Hosanna abandoned that specific contention and fell back on the more general contention advanced at trial and rejected by the trial Judge. While the advancing and abandonment of that specific contention is relevant to costs on the “mixed success” question (addressed below), it is not a reason to deprive Hosanna of its costs of appeal generally or to order that Hosanna pay Pastina’s costs of appeal.
Subject to the “mixed success” question, costs of the appeal should follow the event.
Mixed success on issues
Pastina contends that Hosanna should be deprived of its costs of appeal (or ordered to pay a portion of Pastina’s costs of appeal) because Hosanna abandoned several grounds of appeal and did not succeed on others.
In A, DC v Prince Alfred College Inc(No 2)[4] this Court considered the principles to be applied when there is mixed success on appeal or at trial. This Court said:
[4] [2016] SASCFC 27.
The principles governing the exercise of the costs discretion are well established. The Court exercises a judicial discretion with respect to costs in which the general rule is that costs ordinarily follow the event unless there are special circumstances justifying another order.[5] In more recent times, courts more readily modify the general rule recognising that the interests of justice sometimes require a reduction in the costs that would otherwise have been awarded to a successful party when that party has failed on particular disputed questions of fact or law.[6] In Ruddock v Vardalis (No 2), Black CJ and French J summarised the principles as follows:
[5]     GT Corporation Pty Ltd v Amare Safety Pty Ltd [2008] VSC 296 at [31].
[6]     Cretazzo v Lombardi (1975) 13 SASR 4 at 12.
Within the general discretion of the courts to award costs it is accepted by decisions in both Australian and English jurisdictions that:
·       Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.
·       Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
·       A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.
The modification of the ordinary rule to reflect the way in which particular issues in the litigation are determined is a response to those ‘cases in which issues are raised which unduly extend the time and expense of litigation’.
…
The authorities to which we have referred make it clear that the rule does not only apply to a ‘precise issue in the technical pleading sense’ but extends to any substantial disputed question of fact or law. There is of course a limit to the dissection of an action which is practicably possible.
On the other hand, the court should not be overly parsimonious in the award of costs to a plaintiff who has won a judgment against a wrongdoer who has denied liability on all of the grounds of the plaintiff’s claim.
There can be no precision in the balancing of the tension between the ordinary rule and its qualification. Much will depend on the extent to which the costs of the litigation of the separate issues can easily be separated out and on the reasonableness of the forensic decision of the successful party to pursue, not only the claims on which he or she succeeded, but also those claims on which he or she failed.[7]
[7]     At [5]-[6] and [11]-[13] per Kourakis CJ, Gray and Peek JJ (Footnotes omitted).
In that case, the Court’s assessment was that more time was spent at the hearing of the appeal on issues on which the appellant was unsuccessful than issues on which he was successful. However, substantial time was spent on matters in common and in addition there was a close relationship between at least some of the issues on which the appellant was unsuccessful and those on which he was successful. Accordingly, the Court exercised its discretion to order that the respondent pay 90 per cent of the appellant’s costs of the appeal.
In the present case, the issues in relation to mixed success can be divided into three, but ultimately it is necessary to make a holistic assessment as to the appropriate order to be made.
First, as explained above, in its written submissions on appeal Hosanna advanced a specific contention that the holding over comprised a series of one-month tenancies and it was only at the commencement of the seventh one-month tenancy that section 20B(3)(d) was required to be applied. This contention was abandoned at the hearing of the appeal. Although this specific contention might be seen as a nuanced version of the general contention advanced by Hosanna at trial, we accept Pastina’s submission that notionally[8] it should not be required to pay Hosanna’s costs, and should recover its own costs, in respect of that contention. However, the costs incurred in respect of that contention would be relatively small compared to the overall costs of the appeal.
[8] We use the word “notionally” because it is common ground that ultimately only a single costs order should be made that one party pay a proportion or all of the other party's costs of appeal.
Secondly, in July 2020 Hosanna filed an amended notice of appeal in which it deleted grounds 2, 3 and 4 and added ground 1A. Pastina contends that notionally it should not be required to pay Hosanna’s costs, and should recover its own costs, in respect of the deleted grounds of appeal. Hosanna contends that the changes made by its amended grounds of appeal involved matters of nuance rather than the abandonment of one or more grounds of appeal and addition of a new ground of appeal. The original notice of appeal had only been filed in June 2020 and only limited costs would have been incurred by Pastina in relation to the original grounds 2, 3 and 4 given that they were deleted in July 2020. Under rule 194.4(2) of the Uniform Civil Rules 2020 (SA) Hosanna should bear the costs of and occasioned by the amendment and effectively these would be the only costs resulting from the deletion of grounds 2, 3 and 4 in any event. Accordingly, Hosanna should notionally bear its own costs, and pay Pastina’s costs, occasioned by the amendment.
Thirdly, this Court did not decide grounds 1 and 1A. It cannot be said that those grounds failed, nor that they succeeded. Notionally, no award for or against either party should be ascribed to those two grounds.
Exercising a broad discretion, the appropriate order is that Pastina pay 75 per cent of Hosanna’s costs of the appeal.
Costs of action
Hosanna seeks an order that Pastina pay its costs of the proceeding in the District Court on the basis that costs should follow the event. However, it accepts that, subject to existing costs orders, it should pay Pastina’s costs of Hosanna’s estoppel plea on an indemnity basis as ordered by the trial Judge.
Pastina accepts that it should pay Hosanna’s costs of the proceeding in the District Court up to and including 10 December 2019. However, it seeks orders that:
(a)Hosanna pay its costs of the proceeding in the District Court from 11 December 2019 to 16 February 2020 on an indemnity basis (certified fit for senior counsel);
(b)Hosanna pay half of Pastina’s costs of the trial between 17 and 20 February 2020 on an indemnity basis (certified fit for senior counsel) and Pastina pay half of Hosanna’s costs of the trial between 17 and 20 February 2020 on the standard basis;
(c)Hosanna pay Pastina’s costs of Hosanna’s estoppel plea (including amendments to the plea proposed from time to time) on an indemnity basis; and
(d)Hosanna pay Pastina’s costs of its applications dated 18 September 2019 for a freezing order and 11 February 2020 for a restraining order.
Consideration of the orders sought by Pastina requires an understanding of certain aspects of the history of the action.
On 11 December 2019 the matter was called on for trial before Judge Slattery. Hosanna applied for an adjournment of the trial on the ground that Pastina had on the previous afternoon disclosed six documents highly relevant to Hosanna’s plea that Pastina was estopped from asserting that a five-year lease had come into existence as a result of the holding over. Judge Slattery refused the application and ordered that the trial commence on 13 December. On 13 December Judge Slattery ordered that Hosanna pay Pastina’s costs of the adjournment application fixed at $15,000. Judge Slattery later gave reasons for these decisions.[9]
[9] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc(No 2) [2019] SADC 192.
On 13 December 2019 Pastina filed an interlocutory application (FDN 32) seeking an order for further and better disclosure of documents relevant to Hosanna’s estoppel plea and an order for delivery up by Hosanna to Mr Miller, an information technology expert engaged by Pastina, of computer devices containing email mailboxes and on which certain letters to Pastina were created.[10] Judge Slattery made orders for disclosure and delivery up by Hosanna. The costs of Pastina’s application were reserved. Judge Slattery adjourned the trial to 18 December 2019. Judge Slattery later gave reasons for these decisions.[11]
[10] It also sought orders for payment by Hosanna of its costs of Hosanna’s 11 December adjournment application.
[11] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc(No 2) [2019] SADC 192.
On 18 December 2019 Hosanna applied for an adjournment of the trial due to disclosure of 66 documents made by Pastina on 16 December and the fact that Pastina proposed to adduce evidence from Mr Miller but his report was not yet available. Judge Slattery adjourned the trial to a date to be fixed on 20 December 2019 and ordered that in the meantime Hosanna provide a list of proposed directions for the management of the proceeding to a further trial date. The costs of the application or the adjournment were not the subject of a specific order.
On 20 December 2019 Judge Slattery ordered that the trial be listed to commence on 17 February 2020 (before Judge Burnett). Judge Slattery made various interlocutory orders including for service of a report by Mr Miller by 17 January 2020.
On 17 January 2020 Hosanna filed an interlocutory application (FDN 42) supported by an affidavit by its solicitor seeking permission to amend its defence and counterclaim in respect of its estoppel plea and to seek an extension of time (if required) in relation to its counterclaim in respect of duplicated payments and land tax.
On 17 January 2020 Pastina filed an interlocutory application (FDN 45) supported by an affidavit by its solicitor seeking striking out of Hosanna’s defence and counterclaim and that judgment in default be entered against Hosanna and in the alternative that Hosanna’s estoppel plea be struck out.
On 29 and 30 January 2020 Judge Slattery heard the two interlocutory applications and reserved his decision.
On 7 February 2020 Judge Slattery made orders dismissing Pastina’s application. Judge Slattery allowed Hosanna’s application except for its application to withdraw its affirmative plea that the Retail and Commercial Leases Act 1995 (the Act) applied to the original lease. Judge Slattery made consequential orders for the filing of amended pleadings and other pre-trial orders. The costs of each interlocutory application were reserved. Judge Slattery later gave reasons for these decisions.[12]
[12] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc(No 3) [2020] SADC 12.
On 12 February 2020 Hosanna filed a notice of appeal to the Supreme Court against Judge Slattery’s refusal to permit Hosanna to withdraw its plea that the Act applied to the original lease.
On 13 February 2020 Hosanna filed an interlocutory application (FDN 57) supported by an affidavit by its solicitor seeking an adjournment of the trial (listed to commence on 17 February) pending the hearing and determination of its appeal to the Supreme Court. On 14 February Judge Burnett refused Hosanna’s application and reserved the costs of the application.
On 17 February 2020 the trial commenced before Judge Burnett. Pastina opened its case and Mrs Alvaro gave evidence.
On 18 February 2020 Judge Burnett was informed that the parties had agreed on the quantum of the claim and the counterclaim and the issue of set off and that the estoppel plea was abandoned by Hosanna. On 19 February matters relating to agreed facts and a restraining order were addressed.

On 20 February 2020 the parties made closing addresses.
On 17 April 2020 Judge Burnett delivered reasons for judgment upholding Pastina’s claim.[13]
[13] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc [2020] SADC 43.
On 27 May 2020 Judge Burnett delivered reasons for judgment on costs.[14] Judge Burnett made the following orders:
1.The defendant [respondent] pay the costs of the plaintiff [applicant] on and from 14 January 2020 on an indemnity basis subject to any existing costs orders.
2.The defendant pay the costs of the plaintiff of and incidental to its plea of estoppel as contained in paragraph 10 of its defence and counter-claim on an indemnity basis subject to any existing costs orders.
3.Otherwise the defendant pay the costs of the plaintiff on a party and party basis.
…
[14] Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc (No 2) [2020] SADC 64.
The reason for the indemnity costs order the subject of order 1 was the non-acceptance by Hosanna of an informal (Calderbank) offer made by Pastina on 20 December 2019. This has been superseded by Hosanna’s success on appeal.
The reason for the indemnity costs order the subject of order 2 was Hosanna’s abandonment of the first iteration of its estoppel case in December 2019 and of the estoppel case absolutely in February 2020; Hosanna’s wrongful assertion on 11 December 2019 that it had only received certain documents on the previous day; and the alteration of minutes found on Ms Foreman’s computer in breach of Judge Slattery’s 13 December order.
Costs between 11 December 2019 and 16 February 2020
Pastina contends that effectively the entirety of the steps taken in the proceeding between the original trial date (11 December 2019) and the ultimate trial date (17 February 2020) were wasted because of the manner in which Hosanna conducted its case and in particular because of Hosanna’s estoppel plea which it ultimately abandoned.
Hosanna accepts that it should pay Pastina’s costs on an indemnity basis of and incidental to its plea of estoppel as ordered by Judge Burnett. However, it contends that other costs were incurred between 11 December 2019 and 16 February 2020 and those costs should not be included in an indemnity costs order in favour of Pastina.
It is appropriate that Hosanna pay Pastina’s costs in respect of the estoppel issue and that they be paid on an indemnity basis. The estoppel plea was ultimately abandoned at trial. It had not been properly pleaded at the time of the original trial date and the interlocutory steps taken in relation to it should have been taken long before the original trial date.
However, it is not appropriate that Hosanna pay all of Pastina’s costs, regardless of their subject matter, incurred between 11 December 2019 and 16 February 2020, let alone on an indemnity basis. Some of the costs incurred over that period related to late disclosure of documents by Pastina. Some related to Hosanna’s counterclaim in respect of duplicated payments and land tax. Some related to Hosanna’s first adjournment application in respect of which Judge Slattery made a specific lump sum costs order. Some related to Pastina’s interlocutory application dated 17 January 2020 seeking strike out and default judgment, which was dismissed. Some undoubtedly related to the substantive statutory construction issues that remained to be determined at the February trial. Although Hosanna’s conduct in respect of the estoppel plea merits a special order as to costs, it should not be forgotten that the starting point is that costs follow the event and prima facie Hosanna should recover its costs of action, subject to an appropriate order to reflect Hosanna’s conduct in respect of the estoppel plea.
We accept that there may be arguments on taxation whether particular items of costs incurred by Pastina were incurred in respect of the estoppel plea and hence a taxation would be more complex than if an order were made that Hosanna pay all of Pastina’s costs incurred between 11 December 2019 and 16 February 2020. However, the latter order would be unjust and cannot be justified merely because it would simplify the taxation. In addition, we note that under the original costs orders sought by Pastina and made by Judge Burnett the same complexity would have arisen at least in respect of the period up to 14 January 2020.
The costs of several interlocutory applications made between 11 December 2019 and 16 February 2020 were reserved. If no specific order is made in relation to those costs, they will be costs in the cause and hence form part of the costs of action.[15] It is desirable that those reserved costs be specifically addressed.
[15] District Court Civil Rules 2006 (SA) rule 268. See now Uniform Civil Rules 2020 (SA) rule 194.4(6).
On 13 December 2019 Judge Slattery made orders on Pastina’s application (FDN 32) for disclosure and delivery up by Hosanna of computer devices and reserved the costs of the application. These costs related directly to Hosanna’s estoppel plea and fall within the rationale for indemnity costs order 2 made by Judge Burnett.
On 18 December 2019 Hosanna made an oral application for an adjournment of the trial, which was granted by Judge Slattery on the ground that Pastina proposed to adduce evidence from Mr Miller but his report was not available. The costs of the application or the adjournment were not the subject of a specific order. These costs should be costs in the cause.
On 7 February 2020 Judge Slattery dismissed Pastina’s interlocutory application (FDN 45) seeking striking out of Hosanna’s defence and counterclaim and that judgment in default be entered against Hosanna. Although Judge Slattery was critical of Hosanna’s conduct, there is no reason why the costs of that application should not follow the event of the application and the event of the proceeding and be recovered by Hosanna as part of its costs of action.
On 7 February 2020 Judge Slattery allowed Hosanna’s interlocutory application (FDN 42) seeking permission to amend its defence and counterclaim in respect of its estoppel plea and its counterclaim in respect of duplicated payments and land tax and dismissed its application to withdraw its plea that the Act applied to the original lease. Hosanna should notionally bear the costs of the application itself on the standard basis in accordance with the general rule that the costs of an amendment are to be awarded against the party making the amendment.[16] Hosanna should notionally pay Pastina’s costs of the application and the hearing insofar as it related to the estoppel plea. The parties should notionally bear their own costs of the hearing insofar as it was extended by opposition by Pastina to the application for permission to amend the counterclaim in respect of duplicated payments and land tax. On a global assessment, Hosanna should pay 60 per cent of Pastina’s costs of the application and hearing on an indemnity basis.
[16] District Court Civil Rules 2006 (SA) rule 263(2)(a). See now Uniform Civil Rules 2020 (SA) rule 194.4(2).
On 14 February 2020 Judge Burnett refused Hosanna’s application (FDN 57) for an adjournment of the trial pending the hearing and determination of its appeal against Judge Slattery’s refusal to permit it to withdraw its plea that the Act applied to the original lease. Judge Burnett reserved the costs of the adjournment application. Hosanna should pay Pastina’s costs of this application.
Costs of trial between 17 and 20 February 2020
Pastina contends that it is appropriate to order that Hosanna pay half of its costs of the trial on an indemnity basis (certified fit for senior counsel) and Pastina pay half of Hosanna’s costs of the trial on the standard basis.
We reject that contention. Part of the trial on the first day (principally Pastina’s opening) addressed the estoppel plea. To that extent, Hosanna will not recover its costs and will have to pay Pastina’s costs on an indemnity basis under the estoppel plea costs order. After the first day, the estoppel plea was abandoned and the trial proceeded as if the issue had never been raised. There is no reason why Pastina should not pay Hosanna’s costs of the trial as part of the costs of action, except insofar as they related to the estoppel plea.
Costs of freezing and restraining orders
On 18 September 2019 Pastina filed an interlocutory application (FDN 18), supported by an affidavit by its solicitor, seeking a freezing order in relation to Hosanna’s assets up to the value of $550,000. On 19 September 2019 Judge Deuter made orders by consent in the terms sought to operate until 10 October 2019 and the application was adjourned to that date. The costs of the application were reserved to the judge hearing the application on 10 October 2019.
On 10 October 2019 Judge Deuter made an order by consent extending the operation of the freezing order until 12 December 2019 and any further consideration of the freezing order was referred to the trial Judge on 11 December 2019. No order was made as to the costs of the application.
On 11 December 2019 Judge Slattery made an order by consent extending the operation of the freezing order until 28 February 2020 or such other date as may be set by the Court upon reservation of judgment.
On 20 December 2019 Judge Slattery made an order varying the terms of the freezing order to increase the relevant amount to $650,000.
On 11 February 2020 Pastina filed an interlocutory application (FDN 54) supported by an affidavit by its solicitor seeking an order restraining Hosanna from disposing of its interest in three parcels of land (and as to the timetable for pre-trial steps generally). On 19 February Judge Burnett made an order by consent restraining Hosanna from disposing of its interest in the three parcels of land. The costs of the application were reserved.
On 8 May 2020, upon entering judgment in favour of Pastina for $420,740.18, Judge Burnett made an order varying the terms of the freezing order to increase the relevant amount to $965,000.
Pastina seeks an order that Hosanna pay its costs of its applications for the freezing order and the restraining order (implicitly on the standard costs basis). It contends that there was a proper basis for it to seek the orders and that Hosanna did not disclose a deceptive drawing from and redeposit of funds into its bank account of $270,000 in October 2019. Hosanna contends that the costs of the applications should be costs in the cause.
As explained above, the merits of the applications for a charging order and a restraining order were never argued or determined because Hosanna was content to consent to the orders sought. The costs in respect of the applications principally comprised Pastina’s costs of preparing, filing and serving the applications and supporting affidavits and Hosanna’s costs of considering that material. Ultimately Hosanna’s position in the litigation has been vindicated in that it has obtained judgment in its favour and Pastina’s rent claim has been dismissed. If Pastina had not brought its unsuccessful rent claim, there would have been no occasion for any application for freezing or restraining orders. In these circumstances, the costs of those applications should be costs in the cause and hence part of the costs of the proceeding recoverable by Hosanna against Pastina.
Costs in the Magistrates Court
Pastina’s action was commenced in March 2018 in the Magistrates Court notwithstanding that its claim for $446,419.77 exceeded the Magistrates Court jurisdictional limit of $100,000. Pastina pleaded that it would seek the transfer of the action to the District Court because the amount of the claim exceeded the jurisdictional limit. Pastina showed the amount claimed as $99,999 and, if the proceeding had remained in the Magistrates Court, its claim would have been so limited. No explanation was advanced on appeal why the action was not commenced in the District Court.
In March 2019 an order was made by the Magistrates Court by consent transferring the proceeding to the District Court.
Pastina contends that the costs of the proceeding while it was in the Magistrates Court should be assessed under the Magistrates Court scale and not the District Court scale. There is no merit in that contention. The action should have been instituted by Pastina in the District Court in the first place. The costs of the proceeding from the outset should be assessed on the District Court scale.
Continuation of freezing order
Hosanna seeks an order discharging the freezing order originally made on 19 September 2019 and the restraining order made on 19 February 2020.
The freezing order was granted for the purpose of ensuring that Pastina would recover its claim, which totalled $446,419.77 plus default interest. The amount of the initial freezing order of $550,000 assumed complete success by Pastina in its claim. Now that the judgment in favour of Pastina has been set aside, and instead judgment is to be entered in favour of Hosanna, the rationale for making the freezing order (and the consequential restraining order) no longer exists.
Pastina contends that the freezing order should not be discharged because this Court is not in a position to determine the net outcome as between the parties after the taxation of costs. The freezing order was not granted for the purpose of protecting any ultimate net entitlement that Pastina might have to the payment of costs in the event that it failed in its claim and suffered judgment against it on Hosanna’s counterclaim. Given that the rationale for the making of the freezing order no longer exists, it should be discharged.
Pastina effectively is contending that a new freezing order should be granted on an entirely different rationale. On that basis, the onus of proof lies on Pastina to prove that it is likely that the net outcome as between the parties after the taxation of costs will be in its favour and as to the amount of that net outcome. The onus of persuasion that a freezing order should be granted also lies on Pastina. Pastina has failed to discharge that onus. As a result of the orders made and to be made by this Court, Pastina will have a judgment in its favour for $77,279 together with 75 per cent of the costs of the appeal together with the costs of the proceeding in the District Court (excluding costs relating to Hosanna’s estoppel plea). There is no evidence on which this Court could find that it is likely, or even that there is a realistic possibility, that the indemnity costs order in favour of Pastina for the costs relating to Hosanna’s estoppel plea will exceed, let alone substantially exceed, the amount payable by Pastina to Hosanna.
Conclusion
We make the following orders:
1.Judgment be granted on the appellant’s counter claim against the respondent for $77,279 inclusive of interest calculated to 5 February 2021 (with post-interest to run on that amount from 6 February 2021) and the respondent’s claim against the appellant be dismissed.
2.The freezing order made on 19 September 2019 (as varied) be discharged.
3.The restraining order made on 19 February 2020 (as varied) be discharged.
4.The respondent pay 75 per cent of the appellant’s costs of the appeal on the standard basis.
5.Subject to existing costs orders made before 17 May 2020, the respondent pay the appellant’s costs of the proceeding in the Magistrates Court and District Court on the standard basis except costs in respect of the matters referred to in orders 7 and 8.
6.The costs the subject of order 5 include:
(a)the costs of the application by the respondent for the freezing order dated 18 September 2019 (FDN 18) and subsequent applications for variations of the freezing order;
(b)the costs of the application by the respondent for the restraining order dated 11 February 2020 (FDN 54);
(c)the costs of the application by the respondent seeking striking out of Hosanna’s defence and counterclaim and for judgment in default dated 17 January 2020 (FDN 45);
(d)the costs of the oral application by the appellant on 18 December 2019 to adjourn the trial; and
(e)the costs of the trial in February 2020 (except costs in respect of the matters referred to in order 7).
7.Subject to existing costs orders made before 17 May 2020, the appellant pay on an indemnity basis the respondent’s costs of the proceeding in the District Court incurred between 11 December 2019 and 17 February 2020 insofar as they related to the estoppel issue, except for costs the subject of the costs order made by Judge Slattery on 13 December 2020.
8.The costs the subject of order 7 include:
(a)the costs of the application by the respondent for disclosure and delivery up by Hosanna of computer devices dated 13 December 2019 (FDN 32);
(b)60 per cent of the application by the appellant for permission to amend its defence and counterclaim dated 17 January 2020 (FDN 42); and
(c)the costs of the application by the appellant to adjourn the trial dated 13 February 2020 (FDN 57).