Quijiao Liu v Yuqing Xiao

[2020] NSWSC 1345

Supreme Court

New South Wales

Medium Neutral Citation:

QUIJIAO LIU & ANOR v YUQING XIAO & ORS [2020] NSWSC 1345

Hearing dates:

12 August 2020

Decision date:

02 October 2020

Jurisdiction:

Equity - Expedition List

Before:

Sackar J

Decision:

See para 17

Catchwords:

COSTS — Party/Party — Exercise of discretion — Whether discrete and separable issues justifying departure from order that costs follow event

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 98(1)

Uniform Civil Procedure Rules 2005 (NSW) 42.1

Cases Cited:

Colgate-Palmolive Co v Cussons Pty Ltd (Colgate-Palmolive) (1993) 46 FCR 225

Mendonca v Tonna [2020] NSWCA 196

Texts Cited:

n/a

Category:

Costs

Parties:

Qiujiao Liu (first plaintiff)
Rongda Ji (second plaintiff)
Ming Chen (third plaintiff)
Yuqing Xiao (first defendant)
Xin Zhou (second defendant)
Fujian Xingxing Restaurants Pty Ltd (ACN 6618 093 020) (third defendant)
Zhen Chi Chen (fourth defendant)

Representation:

Counsel:
Mr Garry McGrath SC (plaintiffs)
Ms Elizabeth Cohen (defendants)

Solicitors:
GEA Lawyers (plaintiffs)
Ren Zhou Lawyers (defendants)

File Number(s):

2019/149621

Judgment

1. I gave judgment in this matter on 25 March 2020 ([2020] NSWSC 289). The proceedings concerned the business arrangements entered into between the first plaintiff and the first defendant in both Australia and China.

2. The first plaintiff claimed to have entered an arrangement whereby it was alleged that the first defendant owed certain monies and was also obliged to facilitate the transfer of certain shares in the third defendant to the second and third plaintiffs.

3. In the result although successful I decided that the first plaintiff was only entitled to repayment of $114,268.03 as opposed to the amount she claimed namely, $1,156,909 (although this amount was revised down to $531,054.41 in the final orders sought), although that amount would not carry interest.

4. I was however satisfied certain shares should be transferred as agreed. There was left outstanding a question of dividends which may be owing (if any) to the plaintiffs.

5. For reasons it is unnecessary to record, the matter did not come back before the court until 27 July 2020. Certain orders were then made but for the question of costs.

6. The parties thereafter made submissions in writing on the question of costs.

7. The plaintiffs submit that they should have their costs up to the date of judgment as agreed or assessed. They submit that they have substantially succeeded and the usual rule of costs following the event should be the appropriate order.

8. The plaintiffs also point to the fact that they were wholly successful on obtaining an account on the dividends issue. Various of the plaintiffs were also successful on the question of their entitlement to certain shareholdings.

9. The defendants on the other hand submit that very little was in effect in dispute at the trial. The issues were what was owed to the first plaintiff, whether interest was payable, and if so, at what rate and when it was payable from.

10. The defendants contend that they were largely successful on the debt issue as the plaintiffs only succeeded in proving a small percentage of what they alleged was owing and were not successful in satisfying the court any interest was payable.

The legal principles

11. The court has a wide discretion as to costs as per s 98(1) of the Civil Procedure Act 2005 (NSW):

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act—

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

12. The general rule is that costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs (UCPR 42.1). There are no exhaustive or determinative categories which justify a court exercising its discretion in departing from the usual rule. As Sheppard J observed in Colgate-Palmolive Co v Cussons Pty Ltd (Colgate-Palmolive) (1993) 46 FCR 225 at 234 (where the respondent applied for an order that it be entitled to costs on an indemnity basis):

The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

13. However, as the Court of Appeal (Meagher JA, Bell P and Payne JA agreeing) recently observed in Mendonca v Tonna [2020] NSWCA 196 at [41]:

It is recognised … that in an appropriate case, and with a view to achieving fairness by the exercise of the costs discretion, a different costs order may be made. The circumstances which might justify such a departure include where the losing party has succeeded on an issue or group of issues which is separable or discrete and has occupied a significant part of the hearing, making it unfair in the circumstances for that party to have to bear those costs. 

Consideration

14. In any costs decision the court clearly exercises a very wide discretion. The most common order where a party is entirely successful is that costs follow the event.

15. Where there are discrete issues and a court feels able to do so an apportionment process may be appropriate.

16. Here the plaintiffs were technically successful on their claim but the amount awarded as opposed to that claimed was modest. However they did otherwise succeed on the questions of shareholdings and the right (potentially) to claim dividends. They did fail to persuade the court they were entitled to claim interest on any outstanding debt.

17. In my view the plaintiffs should be entitled to 60% of their costs of the proceedings. I would make that order accordingly and would invite the parties to bring in short minutes to reflect these reasons.

Decision last updated: 07 October 2020