Re Sunnya Pty Limited

[2023] NSWSC 469

Supreme Court

New South Wales

Medium Neutral Citation:

Re Sunnya Pty Limited [2023] NSWSC 469

Hearing dates:

On the papers; written submissions filed 19 April 2023

Date of orders:

03 May 2023

Decision date:

03 May 2023

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Parties to bring in short minutes of order to give effect to cost judgment

Catchwords:

COSTS – Costs of interlocutory applications

Legislation Cited:

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

Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.7

Category:

Costs

Parties:

Jatcorp Limited (First Plaintiff)
Sunnya Pty Ltd (Second Plaintiff)
Yinhan He (First Defendant)
Yanxia Lu (Second Defendant)
Guangzhou Aotea Biological Technology Pte Ltd (Third Defendant)
Guangzhou Niuriu Trading Co., Ltd (Fourth Defendant)
Sunlife Healthfood Pty Ltd (Fifth Defendant)
Yaqing He (Sixth Defendant)
HWL Investments Pty Ltd (Seventh Defendant)
Supermega Market Ltd (Eighth Defendant)
Megadairy Ltd (Ninth Defendant)

Representation:

Counsel:
M Davis (First and Second Plaintiff)
A Harding SC (Eighth and Ninth Defendant)

Solicitors:
Auyeng Hencent & Day Lawyers (First and Second Plaintiffs)
Monaco Lawyers (First to Third Defendants)
XR Consulting Pty Ltd (Eighth and Ninth Defendants)

File Number(s):

2022/00329426

Publication restriction:

N/A

Judgment

1. Several costs issues in these proceedings have been reserved to be determined on the papers. The first of these issues relates to costs in relation to an Interlocutory Process filed on 4 November 2022 by the Plaintiffs, as amended on 8 November 2022 and again amended on 10 November 2022. The second relates to costs of a mediation which did not proceed. The third relates to costs of the Plaintiffs’ Interlocutory Process filed on 17 February 2023.

2. I recognise, of course, that the Court has power to award costs under s 98(1) of the Civil Procedure Act 2005 (NSW), and exercises a judicial discretion in doing so, and an order for costs is compensatory and not punitive in nature. The general rule, under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) is that costs follow the event unless it appears that some other order ought to be made as to the whole or part of the costs, and, under UCPR r 42.7, costs of interlocutory applications are to be paid and otherwise dealt with in the same way as the general costs of the proceedings unless the Court otherwise orders. These principles were not in issue in the parties’ submissions.

Costs of an Interlocutory Process filed on 4 November 2022

3. By their Interlocutory Process filed on 4 November 2022, the Plaintiffs sought orders that the First and Second Defendants, Mr He and Ms Lu, do all things necessary to cause the withdrawal, cancellation or removal of the request to change of ownership of certain New Zealand trademarks and orders seeking to restrain the Third Defendant (“GABT”) from using or exploiting certain Australian trademarks. The application was expanded on 8 November 2022, and again on 10 November 2022, to address further conduct alleged against the Defendants. Several of the orders sought were not opposed by Mr He, Ms Lu and GABT at the hearing on 10 November 2022 and other orders, in the nature of mandatory interlocutory injunctive relief, were made over those parties’ opposition. I concluded that there was sufficient basis to grant the relief sought, for the reasons set out in my judgment delivered on 10 November 2022, but the ultimate utility of that relief will not be known until the determination of the proceedings on a final basis.

4. The Plaintiffs acknowledge that, where an application for interlocutory injunctive relief is sought, the Court will ordinarily order that costs be costs in the cause, but submit, uncontroversially, that the Court retains a discretion with respect to the costs orders to be made and each case must be determined on its facts. They here submit that the Court should depart from the usual order and order that Mr He, Ms Lu and GABT pay their costs on the ordinary basis relating to that Interlocutory Process, as amended, with those costs to be paid forthwith. Mr Davis, who made written submissions for the Plaintiffs in respect of the application, submits that it was “inappropriate” for Mr He, Ms Lu and GABT to have engaged in the relevant conduct and the Plaintiff should be allowed the costs incurred in seeking interlocutory relief to address that conduct and that costs should be payable forthwith where the Interlocutory Process related to discrete and self-contained matters. The First, Second and Third Defendants have recently changed solicitors, not for the first time, and did not make submissions concerning the application in accordance with the Court’s directions or at all

5. I am not persuaded that I should make an order that the First, Second and Third Defendants pay the Plaintiffs’ costs of the interlocutory application, where that would allow the Plaintiffs to recover those costs irrespective of the outcome of the proceedings, and even if they are unable to establish their claims on a final basis, which then interlocutory relief seeks to preserve. An order that those costs be the Plaintiffs’ costs in the cause is justified, so that the Plaintiffs’ should recover those costs if they succeed in the proceedings but should not be required to pay them if they fail.

Costs of a mediation that did not proceed

6. Second, the Plaintiffs seek an order as to the costs of a mediation that did not proceed. On 5 December 2022, I had noted the parties’ agreement to attend a mediation by 17 February 2023, which was scheduled to occur over two days commencing on 8 February 2023. On 7 February 2023, the then solicitors for Mr He, Ms Lu and GABT advised the Plaintiffs’ solicitors, by email, that due to “unforeseen circumstances” that had arisen that night, they and those Defendants would not be able to attend the mediation on 8 February. That mediation then did not take place as scheduled.

7. On 9 February 2023, the Defendants’ then solicitors sent an email advising the Plaintiffs’ solicitors that a particular to a Reply filed in the proceedings by one of the Defendants was withdrawn and that those solicitors had filed and served notices of intention to cease to act for several Defendants. That particular related to the lease contract dated 26 June 2014, which was relied upon by the Defendants to support their claim that certain other agreements were genuine, where the Plaintiffs have contested their authenticity. Those solicitors ultimately ceased to act for those Defendants.

8. Mr Davis submits that I should infer that the withdrawal of the particular to the Reply concerning that lease agreement, the several Defendants’ then solicitors ceasing to act and their failure to attend the mediation were connected. Plainly, that inference is available but I do not consider that I should draw it in respect of a costs application in proceedings where I may later have to make findings as to the credibility of witnesses, where the costs application can and should be determined on other grounds. Mr Davis also draws attention to another explanation of the Defendants’ failure to attend the mediation, relating to the ill health of Mr He, which it appears was previously advanced and also then abandoned.

9. Had the mediation been ordered by the Court, I may well have ordered that the relevant Defendants pay the Plaintiffs’ costs thrown away in respect of the mediation. However, it was the subject of an inter partes agreement, noted by the Court, and I consider it preferable to leave the Plaintiffs to any claim that they may have against the Defendants arising from the breach of that agreement. I do not consider that claim could properly be brought by any further interlocutory application in these proceedings, where the multiplication of interlocutory applications has already been a significant obstacle to the proceedings reaching a final hearing where they can be determined on the merits. No question of an order that the costs be made payable forthwith arises, where I have not made a costs order in that respect.

Costs of an Interlocutory Process filed on 17 February 2023

10. The Plaintiffs also seek the costs of an Interlocutory Process which they filed on 17 February 2023, which was heard on 3 March 2023 in respect of an application for leave to bring derivative proceedings, to amend the Plaintiffs’ Statement Claim, and for freezing orders against Mr He and Ms Lu and other Defendants, and then on 9 March 2023 also in respect of, inter alia, interlocutory injunctive relief against the Eighth and Ninth Defendants (together, “Supermega”), including interlocutory orders preventing Supermega from manufacturing, selling or exporting “Neurio” and “Guamis” branded products with qualifications. The Plaintiffs were partly successful and party unsuccessful at the hearing on 9 March 2023, and there obtained interlocutory injunctive relief in respect of “Neurio” branded products but failed to obtain interlocutory relief in respect of “Guamis” branded products.

11. The Plaintiffs submit that Mr He and Ms Lu should pay their costs on the ordinary basis in relation to the freezing order; and that Mr He, Ms Lu and GABT should pay their costs on the ordinary basis in respect of certain other orders. To the extent the Plaintiffs were successful in these applications as against Mr He, Ms Le and GABT, they again had an interlocutory character, and the utility of the relief obtained by the Plaintiffs will ultimately need to be assessed against their ultimate success or failure in the proceedings. The Plaintiffs costs in that respect should also be their costs in the cause.

12. The Plaintiffs also submit that Supermega should pay their costs on an ordinary basis in relation to an application for freezing orders against them. Supermega in turn seeks an order that the Plaintiffs pay its costs of and incidental to the hearing on 3 March 2023 and that there be no order as to the costs of the hearing on 9 March 2023. Mr Harding, who appears for Supermega, submits that the costs of the hearing on 3 March 2023 were wasted by reason of difficulties with the Plaintiffs’ case against Supermega, which were then addressed by a Further Amended Statement of Claim filed by the Plaintiffs on 7 March 2023. Mr Harding submits that there should be no order as to the costs sought of the hearing on 9 March 2023, because each of the Plaintiffs and Supermega had a mixed result.

13. I am not persuaded that I should order costs against the Plaintiffs and in favour of Supermega, for the hearing on 3 March 2023. At that hearing, Supermega achieved what was, at best, a temporary deferral of the grant of interlocutory relief in respect of “Guamis” branded products, albeit in a manner that likely brought about a clarification of the claims against it for the benefit of all parties. There should be no order as to the costs of that hearing as between the Plaintiffs and Supermega. I accept Mr Harding’s submission that there should be no order as to costs of the hearing on 9 March 2023 between the Plaintiffs and Supermega, where the result of that hearing was mixed.

Summary and orders

14. In summary, the Plaintiffs’ costs of their Interlocutory Process filed on 4 November 2022, and amended on 8 and 10 November 2022, and their costs of their Interlocutory Process filed on 17 February 2023 as against Mr He, Ms Le and GABT should be costs in the cause; I make no order as to the wasted costs of the mediation, where it was not a Court ordered mediation; and there should be no order as to costs as between the Plaintiffs and the Eighth and Ninth Defendants as to the interlocutory relief sought at the hearings on 3 and 9 March 2023.

15. I direct the parties to bring in Short Minutes of Order to give effect to this judgment within 7 days.

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Decision last updated: 03 May 2023