Lieschke v Lieschke (Costs) - [2023] NSWSC 92

Supreme Court

New South Wales

Medium Neutral Citation: Lieschke v Lieschke (Costs) [2023] NSWSC 92
Hearing dates: On the papers
Date of orders: 16 February 2023
Decision date: 16 February 2023
Jurisdiction: Equity - Commercial Arbitration List
Before: Rees J
Decision:
See [44].

Catchwords:
COMMERCIAL ARBITRATION — costs of failed arbitration — s 33D, Commercial Arbitration Act 2010 (NSW) – principles at [3]-[9] – both parties responsible to some extent — costs to be their respective costs in the new arbitration.

Legislation Cited:
Commercial Arbitration Act 2010 (NSW) s 33D

Cases Cited:
Downer EDI Rail Pty Ltd v John Holland Pty Ltd [2018] NSWSC 581
Traynor v Panan Constructions Pty Ltd (1988) 7 Aust Construction LR 47
Du Toit v Vale (1993) 9 WAR 138
Giustiniano Nominees Pty Ltd v The Minister for Works (Unreported, Full Court of Supreme Court of Western Australia, 1 December 1995)
Mond v Berger [2004] VSC 150

Category: Costs
Parties: Errol Lieschke (Plaintiff)
Malcolm Lieschke (First Defendant)
Michelle Lieschke (Second Defendant)
John McGruther (Third Defendant – submitting appearance)
Representation:
Counsel:
Mr G Burton SC / Mr J O’Sullivan (Plaintiff)
Dr CJ Birch SC / Mr J Mack (First and Second Defendants)
Solicitors:
Jarratt Webb & Barrett (Plaintiff)
Walsh Blair (First and Second Defendants)

File Number(s): 2022/119891

Judgment

HER HONOUR: In Lieschke v Lieschke [2022] NSW 1705, I found in favour of the plaintiff, Errol Lieschke, and set aside an arbitral award pursuant to section 34(2) of the Commercial Arbitration Act 2010 (NSW). The parties sought to be heard in respect of the costs of the arbitration. I have since received written submissions from the plaintiff and the first and second defendants, Malcolm and Michelle Lieschke. The third defendant, being the arbitrator, filed a submitting appearance.
Malcolm and Michelle accepted that they should pay Errol’s costs of these proceedings. The remaining issue is what order, if any, should be made concerning the costs of the arbitral proceedings. The active parties were amenable to this issue being determined on the papers.

Principles

Section 33D of the Commercial Arbitration Act 2010 provides:

33D   Costs of abortive arbitration
(1)   Unless otherwise agreed in writing by the parties, if an arbitration is commenced but for any reason fails, the Court may … make such orders in relation to the costs of the arbitration as it thinks just.
(2)   For the purposes of this section, an arbitration is taken to have failed if: …
(b)   an award made is wholly set aside by the Court. …

Note—
There is no equivalent to this section in the Model Law.

The functions conferred by section 33D of the Act are to be performed by this Court: section 6(1). There is no doubt that the Court has power to make an order as to the costs of the arbitration: Downer EDI Rail Pty Ltd v John Holland Pty Ltd [2018] NSWSC 581 per Stevenson J at [42].
Reported cases where such orders have been made are few in number. Traynor v Panan Constructions Pty…

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: [2023] NSWSC 92
Decision Date: 16 February 2023

CaseChat Overview and Summary

In this case, the parties were Lieschke and Lieschke. The dispute was a commercial arbitration matter that was brought before the court. The nature of the dispute involved the costs incurred during a failed arbitration process. The matter was heard in the Supreme Court of New South Wales.

The primary legal issue before the court was the allocation of costs for the failed arbitration under section 33D of the Commercial Arbitration Act 2010 (NSW). This section outlines the principles to be considered when determining the costs of a failed arbitration. The court was required to decide whether the costs should be borne solely by one party or if both parties were to some extent responsible, and if so, in what proportion.

The court examined the principles outlined in section 33D of the Act, which include the conduct of the parties, the reasons for the failure of the arbitration, and the outcome of the proceedings. The court found that both parties were responsible to some extent for the failure of the arbitration and the associated costs. Therefore, the court ordered that the costs of the failed arbitration be their respective costs in the new arbitration, in accordance with the principles set out in the Act.

The court's decision was based on a comprehensive analysis of the principles outlined in section 33D of the Commercial Arbitration Act 2010 (NSW). The court took into account the conduct of both parties, the reasons for the failure of the arbitration, and the outcome of the proceedings. The court found that both parties were responsible to some extent for the failure of the arbitration and the associated costs. The final orders of the court were that the costs of the failed arbitration be their respective costs in the new arbitration, in accordance with the principles set out in the Act.

Orders