Wang v Yu (No 2)

[2024] NSWSC 4

Supreme Court

New South Wales

Medium Neutral Citation:

Wang v Yu (No 2) [2024] NSWSC 4

Hearing dates:

15, 20 December 2023

Date of orders:

20 December 2023, 17 January 2024

Decision date:

17 January 2024

Jurisdiction:

Equity

Before:

Meek J

Decision:

Costs and ancillary orders made.

Catchwords:

ORDERS — Orders to give effect to findings in respect of rejection of main claim and qualified success of cross-claim — Specific performance of obligations in a Deed refused as Deed signed as result of duress — Judgment for amounts paid as a result of duress

PROCEDURE — Mode of appearance at hearing — audio visual and other mode of appearance — The usual court etiquette, protocols, procedures and restrictions which apply to in-person hearings apply to forms of virtual hearing whether virtual in whole (with all participants joining remotely) or part (with some participants in person and others joining remotely) — Plaintiff sought leave to appear by AVL and initially appeared whilst driving a car — Court expects participants to use their common sense in appearing by AVL — Anyone given permission to appear by AVL should do so in a manner consistent with the appropriate decorum and solemnity of the occasion and not in a manner or environment in which they might be distracted or unable to give their undivided attention properly and safely to the proceedings before the Court — an AVL participant should never participate by AVL in a manner which by dint of their situation or surroundings gives rise to any appreciable risk of placing themselves or others in their vicinity in danger (in this case appearing whilst driving a car with potential risk to herself, other vehicle drivers, passengers or pedestrians)

COSTS — Offers of compromise — Whether offer valid — Meaning of must not include an amount for costs in r 20.26(2)(c) UCPR “judgment .. on the plaintiff's claim with no order as to costs” and for the first cross-defendant to pay the costs of the cross-claimant “as agreed or assessed” — Offers held to be valid

COSTS — Cross-claimant sought on the cross-claim recovery of sums totalling $210,000 against the first cross-defendant and second cross-defendant jointly — A determination was made in the principal judgment that the cross-claimant was entitled to judgment against only the first cross-defendant for $200,000 and against only the second cross-defendant for $10,000 — Cross-claimant served an offer of compromise in relation to the claim against the first cross-defendant but did not serve any offer in relation to the claim against the second cross-defendant — Each of the cross claimant and second cross-defendant claimed different orders based on different perspectives of whether they had been successful on the cross-claim — Orders made

COSTS — Set off – Whether costs in proceedings should be set off

Legislation Cited:

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

Uniform Civil Procedure Rules 2005 (NSW), rr 6.19, 20.26, 42.1, 42.2, 42.13A - 42.15A, 42.20(1), 51.6, 51.10, 51.16

Cases Cited:

ACQ v Cook (No 2); Aircair Moree v Cook (No 2) [2008] NSWCA 306

Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Bullock v London General Omnibus Company [1907] 1 KB 264

Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333

Curtis v Harden Shire Council (No 2) [2015] NSWCA 45

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219

Erasmus v Jackson (Supreme Court (NSW), Wootten J, 15 April 1975, unrep)

Estate of Guamani; Guamani v De Cruzado [2023] NSWSC 502

Horn v GA & RG Horn Pty Ltd (No 2) [2022] NSWSC 1747

Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208

Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59

Optimisation Australia Pty Ltd (Costs), In the matter of [2018] NSWSC 280

Riva NSW Pty Ltd v Key Nominees Pty Ltd [2023] NSWSC 711

Sanderson v Blyth Theatre Company Limited [1903] 2 KB 533

Taylor v Stav Investments Pty Ltd as trustee for the Stav Investments Family Trust (No 2) [2023] NSWCA 322

Wang v Yu [2023] NSWSC 1182

Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188

Zhang v Zhang [2022] NSWSC 924

Texts Cited:

Dal Pont, GE, Law of Costs (5th edition, 2021, LexisNexis)

Practice Note SC Eq 14

Practice Note SC Gen 7

Practice Note SC Gen 12

Practice Note SC Gen 15

Category:

Costs

Parties:

Lu Wang (Plaintiff / First Cross-Defendant)
Jiayi Yu (First Defendant / Cross-Claimant)
STYU Pty Ltd atf SY Family Trust (Second Defendant)
Auslon Property Group Pty Ltd atf 567 Pacific Unit Trust (Third Defendant)
Song Yang (Second Cross-Defendant)

Representation:

Counsel:
P Lonergan (Defendants / First Cross-Claimant)
J Mack (Second Cross-Defendant)

Solicitors:
Kammoun Sukari Lawyers (Defendants / Cross-Claimant)
Harris Freidman Lawyers (Second Cross-Defendant)

File Number(s):

2020/301530

Publication restriction:

Nil

JUDGMENT

Introduction

HIS HONOUR:

1. On 5 October 2023, I delivered reasons for judgment in this matter (Wang v Yu [2023] NSWSC 1182 (principal judgment)), consequent upon a hearing for six days (3 days in mid-June 2023 and 3 days in early August 2023) involving issues between the parties regarding enforceability of a deed and payment of monies arising out of arrangements between them relating to the development of a property at Meadowbank. These reasons assume a familiarity with the principal judgment and will adopt its nomenclature and abbreviations.

2. At its highest level there were two sets of claims brought in the proceedings. First, there were claims by Dr Wang for specific performance of the deed, which I rejected essentially based on findings that the deed sought to be enforced had been procured by duress. I found that purported affirmations of the deed occurred in a context in which the duress was still operative and that the defendants effectively elected to avoid the deed in April 2021 in a context where the duress was still operative. I found that the purported election to avoid the deed was effective (main claim).

3. Secondly, there were claims by Mr Yu in respect of payments of money, specifically payments of $10,000 by Mr Yu in favour of Mr Yang and payments of amounts totalling $200,000 in favour of Dr Wang all of which payments were made under duress and that Mr Yu was entitled to repayment of that sum (cross-claim).

4. I summarised the findings at the conclusion of the principal judgment: principal judgment at [758].

Issues

5. Broadly speaking, following the delivery of the reasons for judgment two types of orders were required to be addressed namely:

1. the orders to give effect to my findings regarding the main claim and the cross-claim; and

2. the appropriate orders to be made for the costs of the proceedings.

6. These reasons for judgment:

1. gives some context to the reasons why the making of final orders has been somewhat delayed, due in part to adjournments;

2. addresses an issue which arose on one of the listings regarding the appearance by a party (in this case Dr Wang) by AVL;

3. briefly mentions and explains the making of the substantive orders; and

4. addresses the outstanding questions of costs.

Arrangements to list the matter to address orders and costs

7. On 5 October 2023, I directed the parties to bring in short minutes of order to give effect to the reasons for judgment in relation to the relief in the main claim and the cross-claim.

8. The judgment was lengthy and it was clear that it would take at least some time for the parties to review the judgment and reflect on it.

9. The proceedings were stood over to 9 AM on 27 November 2023. I directed that in the event that there was dispute regarding orders or costs the party should provide a brief outline of submissions and proposed orders and any brief evidence to be relied upon by Thursday, 23 November 2023.

10. On 23 November 2023, Mr Yu’s legal representatives provided proposed short minutes of order, submissions on costs and an affidavit of Ibrahim Kammoun in respect of the issue of costs, affirmed on 23 November 2023.

11. On the afternoon of 24 November 2023, the Friday before the Monday relisting of the matter, Ms Sidey, the solicitor for Mr Yang, sent an email to my associate (copied to the other parties) indicating that counsel Mr Mack was extremely unwell and not in a position to finalise the submissions and proposed orders and that it was unlikely that he would be well enough to appear on the Monday. She sought to have the matter stood over.

12. In a context in which there was still sufficient time before the end of the term for an adjourned listing to occur and the content of final orders to be debated, I proposed that the listing be vacated and requested counsel to confer to arrange a mutually convenient time for the relisting of the matter before the end of the term.

13. Later on 24 November 2023 at 6:29 PM, Mr Luo, the solicitor for Dr Wang, sent an email to my Associate attaching a Notice of Removal of Solicitor which Dr Wang had filed on 23 November 2023 terminating the authority of Mr Luo and his firm to act on her behalf in the proceedings. Mr Yu’s representatives were agreeable to the vacating of the listing.

14. Early on Monday, 27 November 2023, I made an order vacating the listing for that day and I directed the representatives to respond by Wednesday, 29 November 2023 with proposed alternative dates.

15. Dr Wang indicated that her only availability to address the matter was on 15 December 2023 before noon.

16. That had some significance as 15 December 2023 was the final date of the Court term last year. The Court would then be in vacation before resuming a new Court term on Monday, 29 January 2024.

17. In the above circumstances I listed the matter for 9 AM on 15 December 2023.

18. On 12 December 2023, Ms Sidey provided proposed short minutes of order on behalf of Mr Yang and submissions on the question of costs. Notwithstanding that the parties had had the principal judgment available to them since 5 October 2023, Dr Wang had not by 13 December 2023 provided any proposed orders, evidence or submissions for the purposes of my making final orders.

19. On 13 December 2023 at 2:12 PM, Dr Wang sent an email to my associate (copied to the other representatives) asserting that two days prior she had received a diagnosis indicating a “severe *** deficiency illness” which could potentially be life-threatening and asserted that:

“[F]ollowing my doctor’s recommendation, I need to undergo a series of treatment procedures this Friday to ensure my health and safety.”

20. The email requested a postponement of the hearing and stated:

“I am willing to provide a written medical certificate from my doctor to confirm my current medical condition if needed.”

21. Later that afternoon I arranged for my Associate to send an email requesting Dr Wang to provide by noon the following day (14 December) a written medical certificate confirming her medical condition and requesting the parties to confer with one another to advise whether they would be available in the following week (18 - 22 December 2023). It was advised that if they were not mutually available, consideration would need to be given to allocating a date in the new Court term.

22. Dr Wang sent an email shortly after giving thanks for the “prompt response” but stating:

“However, it is not achievable for me to get a certificate by noon tomorrow, as the doctor is not available for me every minute. I don’t even know where he is now and tomorrow.

As I booked the last-minute treatment on this Friday, it could be more reasonable and realistic to send you through the certificate when I meet the doctor for treatment on Friday.”

23. My Associate on my behalf sent an email to Dr Wang, copying the other parties, noting that I did indeed require the medical certificate which Dr Wang’s earlier email had indicated she was willing to provide and that I had not vacated the listing for Friday. I noted that before I was prepared to consider vacating the listing I would require appropriate medical evidence. I noted that matter would remain listed until I had the opportunity to review any such appropriate medical evidence. I indicated that my request for the provision of the medical certificate remained.

24. On the morning of 14 December, Dr Wang sent an email with an attachment that was unable to be opened, which email was not copied to the other parties.

25. My Associate at my request sent an email noting that the attachment was unable to be opened and reminding all parties that correspondence should not be sent to the Court without being at least copied to the other parties. Dr Wang replied then by an email stating:

“Here attached the certificate, I thought this was privacy and it deserved to be confidentially respected.”

26. The certificate, apparently signed by a doctor Maciej Mazurek and dated 14 December 2023, stated:

“To whom it may concern,

This is to certify that I have today consulted:

Ms Lu Wang

[address]

In my opinion, this patient is suffering from a severe iron deficiency and will be unfit for work/study from 11/12/2023 to 15/12/2023.”

27. The solicitors for Mr Yu sent an email to my Associate indicating that counsel for Mr Yu and Mr Yang were not available the following week to hear the matter and made a number of comments regarding the medical certificate indicating that it did not identify how the medical practitioner was able to identify that Dr Wang was suffering from a “severe iron deficiency”, did not identify any urgent requirement for treatment including the nature of any such treatment and noting that it was unclear why the certificate referred to Dr Wang being unfit for work/study in a period predating at least in part the date of the certificate. A request was made for the listing to remain.

28. In the above circumstances I instructed my Associate to advise the parties including Dr Wang that the matter would remain listed.

Implied adjournment application

29. On 15 December 2023 at 8:41 AM, Dr Wang sent an email to my Associate copying the other legal representatives in the following terms:

“Hi, All

I am too weak to come over to court today, I need the treatment today.

Kind regards, Lu”

30. Embedded in the space below the email text was a “HotDoc” appointment confirmation for Dr Wang to see Dr Mazurek at 10:15 AM on 15 December 2023.

31. At the listing, Mr Lonergan appeared for the defendants and Mr Mack appeared for Mr Yang. Dr Wang did not appear, nor was there any appearance by anyone on her behalf.

32. I considered it appropriate to formalise the context in which Dr Wang had failed to appear and provided to Mr Lonergan and Mr Mack the bundle of email correspondence as between Dr Wang and my Associate from 12 December 2023 to 15 December 2023 (which in all cases of emails from my Associate had been copied to the legal representatives of the other parties). Mr Lonergan tendered that material which became exhibit D1.

33. I indicated to Mr Lonergan and Mr Mack that whilst there was no formal application before the Court, I regarded the email from Dr Wang as being in substance an adjournment application. They did not seek to contend otherwise.

34. Having regard to a number of matters including the fact that Mr Lonergan foreshadowed that he wished to seek a type of costs order being either a "Bullock order" or a "Sanderson order" against Dr Wang (see below), which had not been previously foreshadowed to her, I considered that the appropriate course was to address what could be appropriately addressed on the listing and adjourn the balance of the matters to be addressed for a brief period of time. This would allow Dr Wang an opportunity to consider any further aspect of the orders that Mr Lonergan foreshadowed would be sought against her in respect of costs.

35. Ultimately, I made orders which were intended to give Dr Wang a fair opportunity to address in particular the question of the proposed Bullock order or Sanderson order, bearing in mind that Dr Wang had previously had available to her since 23 November 2023 all the other material affecting her interests regarding orders sought against her, being the affidavit of Mr Kammoun affirmed 23 November 2023 and Mr Lonergan's proposed orders and submissions.

36. The orders that I made on 15 December 2023 were as follows:

1. Notes that today the matter was listed to deal with final orders and questions of costs.

2. Notes that Dr Wang:

1. corresponded with the Associate to Meek J between 13 December 2023 and today regarding the listing for today, which correspondence has been marked as exhibit D1; and

2. did not attend at the listing this morning, in a context set out in exhibit D1, and as foreshadowed in the email of Dr Wang sent at 8:41am today to the Associate to Meek J.

3. Notes that Meek J has proceeded on the basis that the email of Dr Wang sent at 8:41am today to the Associate to Meek J has been regarded in substance as an application for an adjournment and that counsel for the other parties did not contend otherwise.

4. Notes that for the purposes of proceeding today, Meek J has distinguished between the making of orders in respect of substantive relief regarding the main claim and cross claim on the one hand and costs of those claims on the other.

5. Notes that in a context where there does not appear to be any substantial dispute about appropriate orders to give effect to the reasons for judgment on the substantive relief, Meek J has provisionally indicated that he is minded to make orders 1,3,4,7 and 8 of the orders proposed in the short minutes of orders on behalf of Mr Yu provided on 23 November 2023.

6. Notes that the notation immediately above is subject to Dr Wang having an opportunity on the adjourned date to contend that orders other than those orders are appropriate.

7. Notes that Meek J has heard submissions in relation to costs as between Mr Yu and Mr Yang.

8. Stands over the balance of questions of costs to be dealt with at the further hearing commencing at 9:00am on 20 December 2023.

9. Directs Mr Yu to serve any additional proposed short minutes of order in respect of costs sought against Dr Wang and any submissions by 5:00pm today, such service may be by email to the email address that has been used by Dr Wang in the documents marked in exhibit D1, being [email protected] and [email protected].

10. Notes that the Court will provide to the parties’ legal representatives and Dr Wang by email a transcript of the proceedings today as soon as practicable after that becomes available.”

37. Further, on 15 December 2023, Mr Lonergan provided to my Associate the following documents which had been served upon Dr Wang:

1. amended proposed short minutes of order;

2. affidavit of Ibrahim Kammoun affirmed 15 December 2023; and

3. further written outline of costs submissions.

38. Later, on 15 December 2023, my Associate emailed Dr Wang and the legal representatives for the parties a copy of the transcript of the hearing on 15 December 2023 which included reference to the orders.

Hearing to address substantive orders and costs orders

39. On 19 December 2023, Mr Mack provided further submissions on costs and final orders.

Requests for AVL appearance

40. Each of Mr Lonergan and Dr Wang, for different reasons, sought permission to appear by AVL. I gave permission for that to occur, subject to objection. No party objected to that permission being given.

41. Dr Wang’s reason for appearing by AVL in the email requesting it made reference to the state of her health, but also included the following statement:

“I understand the importance and gravity of the matter at hand, and I assure you that my commitment to full cooperation remains unwavering. I believe that joining the court proceedings through a video conference would not only alleviate the physical strain on my health but also ensure my active and undivided participation in the case.”

42. On the morning of 20 December 2023, the matter was listed to commence at 9 AM. When I first entered the Court Dr Wang was visible on the AVL connection but in the process of driving a car. It was evident that she had joined by a mobile phone. She had not prior to my coming into Court indicated to my staff that she was in some way delayed and would require time to arrive at a destination where she could access AVL whilst not in transit. She had not requested even a brief opportunity for her to pull the car over and proceed whilst sitting in the car as parked.

42. I indicated to her that it was unsatisfactory that she should appear in that way and that I would immediately adjourn so as to enable her to pull over and seek to connect in a safe environment.

43. Ultimately, approximately half an hour later Dr Wang had arrived at her office and appeared by AVL that way.

Mode of appearance at hearing and guidelines for AVL appearance

45. In Zhang v Zhang [2022] NSWSC 924, I stated:

“Mode of appearance at the hearing

52.   Proceedings in Supreme Court are generally held in person: see e.g. Xia v Santah Pty Ltd [2003] NSWSC 807 at [9] per Palmer J. In proceedings commenced by statement of claim, subject to the rules of court and the Evidence Act 1995 (NSW) (Evidence Act), evidence must be given orally at Court: r 31.1(2) UCPR. The Court may direct that all or any of a witness’s evidence in such a trial be given by affidavit: r 31.3(3) UCPR.

53. However, the Court may permit parties or witnesses to the proceedings to give evidence and make submissions by telephone, audio visual link or other form of communication: r 31.3(1) UCPR.

54. Such a decision, as to whether to permit the giving of evidence and making of submissions by telephone, audio visual link or other form of communication, is “for the management of proceedings” within the meaning of s 58 Civil Procedure Act 2005 (NSW) (CPA).

55. The Court in deciding whether to make any order for the management of the proceedings, must seek to act in accordance with the dictates of justice: s 58(1)(a)(ii) CPA.

56. For the purposes of determining what the dictates of justice are in a particular case, the Court must have regard to the provisions in ss 56 and 57 CPA and may have regard to the matters set out in s 58(2)(b) CPA to the extent which the Court considers them relevant.

57. The provisions of s 58(2)(b) CPA are as follows:

“(2)       For the purpose of determining what are the dictates of justice in a particular case, the court—

…

(b)       may have regard to the following matters to the extent to which it considers them relevant—

(i)       the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii)       the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii)       the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv)       the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v)       the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi)       the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii)       such other matters as the court considers relevant in the circumstances of the case.”

58.   A consideration of some significance to be taken into account in determining whether to permit a witness to give evidence by telephone, audio visual link or other form of communication is whether the issues in the case will involve assessing the credibility of the witness: Xia v Santah Pty Ltd at [2]-[6] per Palmer J.”

46. With limited exception, the Supreme Court Practice Notes do not appear to address the use of AVL in civil matters. Practice Note SC Gen 15 ‘Use of audio-visual links in criminal and certain civil proceedings’ is limited to criminal proceedings and, relevantly for civil proceedings, applications by designated government agencies to make AVL directions and appearances by government agency witnesses.

47. Practice Note SC Gen 7 ‘Use of technology’ relevantly provides as follows:

“6. The trial or presiding judge must give approval before technology may be installed or used in courtrooms or jury deliberation rooms. Where such a judge has not yet been allocated, parties should obtain approval from the relevant List Judge.

7. When a judge approves the use of technology, he/she will ask the registry to make all arrangements. In most circumstances the Court will install its own equipment and, in civil matters, the parties will be asked to meet all associated costs.

8. A document Technology in the courtroom - Protocols and Procedures for Video and Audio Link is available on the Court’s website, along with the relevant forms."

48. The ‘document’ referenced in paragraph 8 of the Practice Note is a Fact Sheet headed ‘The Virtual Courtroom’. It is accessible on the Court website via a link as follows:

49. The start of that Fact Sheet relevantly states:

“Virtual courtrooms are still formal courtrooms. All usual court etiquette, protocols, procedures and restrictions apply.”

50. The Fact Sheet also addresses and relevantly states:

“Protocols for the Virtual Courtroom

• Be in a quiet and private location to limit interference from background noise.

..

..

• Observe all normal court etiquette and protocols in the Virtual Courtroom environment. …”

51. The nature of AVL appearances requiring observation of all normal court etiquette and protocols in the virtual courtroom environment is reinforced by other Court practices involving technology. Thus similar considerations apply in relation to use of the Online Court.

52. Practice Note SC Gen 12 ‘Online Court Protocol’ (issued 8 February 2007) provides in part:

“Conduct in an online court

12. As online court is a virtual courtroom, it must only be used for issues requiring consideration and determination by a Judicial Officer. online court is not to be used for communications solely between the representatives of parties.

13. The language used in online court must be the same as that used if the matter were being dealt with in an ordinary courtroom.

14. If a message is posted in an online court by a user who is not a legal practitioner, then the name of the authorising legal practitioner must be included in the last part of the message.

15. Undertakings given in an online court by a party’s representative either on behalf of the party or the representative, are binding as if the undertaking were given in an ordinary courtroom.

16. The rules of contempt apply to proceedings conducted using online court.”

53. Practice Note SC Eq 14 ‘Online Court Protocol’ issued 11 years later (31 August 2018) is to like effect, providing in part:

“Conduct in an Online Court

11.   The Online Court is a virtual courtroom and must only be used for issues requiring consideration and determination by a Judicial Officer.

12.   The Online Court must not be used for communications solely between the parties or their legal representatives.

13.   It is expected that there will be adherence to professional etiquette and courtesy in the Online Court.

14.   Undertakings given and orders made in an Online Court are binding as if given or made in open court. 

15.   All rules including those relating to contempt apply to proceedings conducted in the Online Court.”

54. One might have thought it self-evident that it is not appropriate that anyone should even consider the possibility of attempting to appear by AVL whilst driving a car, let alone in fact appear in that manner.

55. The fact that Dr Wang even entertained the possibility of appearing whilst driving in traffic one might think was at odds with her assertion in the request for permission to appear by AVL that she understood the importance and gravity of the matter at hand and that appearing through AVL would ensure her active and undivided participation in the case.

56. Whilst I do not wish to unnecessarily dwell upon the matter, the matter is of some seriousness and should not pass without some salutary comment.

57. The usual court etiquette, protocols, procedures and restrictions which apply to in-person hearings apply to a virtual hearing whether virtual in whole (with all participants joining remotely) or virtual in part (with some participants in person and others joining remotely).

58. Whilst I have as counsel seen occasions on which witnesses or other participants appear by AVL informally quite apart from the question of the solemnity of the occasion, the Court expects participants to use their common sense in appearing.

59. Parties, legal representatives or any other persons given leave to appear by AVL should understand that the appearance is to be done in a way consistent with the appropriate decorum and solemnity of the occasion that would apply as if the person appearing were physically present in the courtroom.

60. The Court does from time to time understand that on some occasions exigencies will give rise to participants appearing in remote locations. For example, sometimes witnesses are sought to be cross-examined at extremely late notice and, despite some inconvenience, willingly make themselves available to assist in the administration of justice by connecting whilst located in a remote location. I recall one occasion as counsel where a deponent was required for cross-examination and appeared by mobile phone in the midst of a rural retreat or vineyard.

61. However, lest there be any doubt about it, anyone given permission to appear by AVL should not do so in a manner or environment in which they might be distracted or unable to give their undivided attention properly and safely to the proceedings before the Court. Specifically, an AVL participant should never participate by AVL in a manner which by dint of their situation or surroundings gives rise to any appreciable risk of placing themselves or others in their vicinity in danger (in this case appearing whilst driving a car with potential risk to herself, other vehicle drivers, passengers and pedestrians).

Substantive orders

62. Mr Lonergan on behalf of Mr Yu proposed the following orders dealing with the substantive claims both in his initial proposed short minutes of order provided on 23 November 2023 and in his amended proposed short minutes of order dated 15 December 2023:

1. Judgment in favour of the Defendants on the Plaintiff’s claim.

2. ..

3. Judgment in favour of the Cross-Claimant against the First Cross-Defendant on the Cross-Claim in the sum of $200,000.

4. Judgment in favour of the Cross-Claimant against the Second Cross-Defendant on the Cross-Claim in the sum of $10,000.

5. ..

6. ..

7. Declaration that the First Defendant and Second Defendant avoided the Deed signed between the Plaintiff and First Defendant and Second Defendant on (and dated) 28 June 2016 (the Deed) on 13 April 2021.

8. The Plaintiff to deliver up to the Court the Deed for its cancellation.

63. Dr Wang initially did not provide any proposed orders in relation to the main claim. Mr Mack on behalf of Mr Yang proposed an order on the cross-claim which accorded with Mr Yu’s proposal.

64. At the listing on 15 December 2023, considering that in relation to the substantive orders there did not appear to be any substantial dispute as to what was necessary in order to give effect to the reasons for judgment, I foreshadowed that I proposed to make the substantive orders as sought by Mr Yu but reserving to Dr Wang the right at the adjourned listing to make any residual submission that she might wish to make in respect of that.

65. In light of Dr Wang’s absence, I deferred making any final substantive orders so as to permit her a final opportunity to comment on the orders.

66. At the listing on 20 December 2023, I raised with Dr Wang what was proposed in relation to the making of the substantive orders. Subject to one matter, Dr Wang did not seek to oppose those orders as being appropriate to give effect to the reasons for judgment.

67. Dr Wang stated (T 3):

“PLAINTIFF: I confirm I got all the orders from your Honour and I am not disputing the fee orders. Just one regarding about the deed cancellation. Apparently applied for the pure extension, because I need to go over the document. Another way the deed was signed on the 16th. That means after a few, over seven years, the deed has no meaning of that, so I just didn't bring this original deed for the cancellation giving rise to this order appeal.”

68. Thus, in relation to the delivery up of the deed for cancellation, Dr Wang intimated that she had lodged a Notice of Intention to Appeal and did not wish for the deed to be cancelled.

69. The period of time for the filing and serving of a notice of intention to appeal is addressed by r 51.6 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and to be filed within 3 months after the material date or such other period as the Court may order. The periods for appeal and leave to appeal are addressed in rr 51.10 and 51.16 UCPR which also make reference to filing in certain cases “after” the material date.

70. The general position is that where a judge delivers reasons for judgment, but stands the proceedings over for the making of formal orders and for any argument on costs, the material date is the later date when the formal orders are actually made, as distinct from the date for delivery of the principal reasons for judgment: e.g. Erasmus v Jackson (Supreme Court (NSW), Wootten J, 15 April 1975, unrep).

71. I briefly explained to Dr Wang the difference between reasons for judgment and the making of orders and noted that all that had been done thus far was for reasons for judgment to be delivered and that to formalise the parties’ rights orders needed to be made.

72. I explained to Dr Wang that once the formal orders were made it became a matter for her as to whether she wished to seek a stay of the orders or not.

73. I then asked Dr Wang whether there was anything further she wished to address me on in relation to the proposed orders. She stated (T 4):

“PLAINTIFF: Yes. I understand ‑ sorry, I understand, your Honour, what you said, so I will fulfil your orders, so that's it.”

74. The orders proposed on behalf of Mr Yu to deal with the substantive relief on the main claim in the cross-claim seemed appropriate to me to give effect to my reasons for judgment and accordingly at the conclusion of the listing on 20 December 2023, I stated in Court the orders in accordance with the proposed orders.

75. In finalising the record of proceedings, immediately following the listing of the matter, I inserted the word “forthwith” in the order in relation to the delivery up of the deed for cancellation to clarify the intent of the order, consistent with the other orders having immediate effect. I arranged for my Associate to notify the party of the orders and to send an email to the parties confirming that I had inserted the word “forthwith” for the purposes of clarity.

76. The Orders made, were as follows:

1. Orders judgment in favour of the Defendants on the Plaintiff’s claim.

2. Orders judgment in favour of the Cross-Claimant against the First Cross-Defendant on the Cross-Claim in the sum of $200,000.

3. Orders judgment in favour of the Cross-Claimant against the Second Cross-Defendant on the Cross-Claim in the sum of $10,000.

4. Declares that the First Defendant and Second Defendant avoided the Deed signed between the Plaintiff and First Defendant and Second Defendant on (and dated) 28 June 2016 (the Deed) on 13 April 2021.

5. Orders forthwith that the Plaintiff deliver up to the Court the Deed for its cancellation.

77. I also made an order reserving my decision on the questions of costs: Order 6.

Costs

Proposed orders

78. In the first set of proposed orders dated 23 November 2023, Mr Lonergan, on Mr Yu’s behalf, sought the following cost orders:

1. The plaintiff to pay the defendants’ costs on the plaintiff’s claim on an ordinary basis up to 15 September 2023 [sic] and on an indemnity basis thereafter as agreed or assessed.

2. The first cross-defendant to pay the cross-claimant’s costs on the cross-claim on an ordinary basis up to 15 September 2023 [sic] and on an indemnity basis thereafter as agreed or assessed.

3. The second cross-defendant to pay the cross-claimant’s costs on the cross-claim on an ordinary basis as agreed or assessed.

4. The plaintiff to pay the defendants’ costs of and incidental to the defendants’ Notice of Motion filed 31 May 2023 seeking to set aside the Subpoena to Produce to Westpac Banking Corporation.

5. The plaintiff to pay the defendants’ costs of and incidental to paragraph 2 of the defendants’ Notice of Motion filed 4 July 2023 seeking to set aside the Subpoena to Produce to Australia and New Zealand Banking Group Limited.

79. In the amended proposed short minutes of order prepared on 15 December 2023, Mr Yu sought additionally the following two orders:

1. Alternatively to order [(3)] above, if the Court is to award the second cross-defendant any costs on the cross-claim (which is opposed), an order pursuant to Sanderson v Blyth Theatre Company Limited [1903] 2 KB 533 for the first cross-defendant to pay the second cross-defendant’s costs of the cross-claim as agreed or assessed (the Sanderson order).

2. Alternatively to [the Sanderson order], if the Court is to award the second cross-defendant any costs on the cross-claim (which is opposed), an order pursuant to Bullock v London General Omnibus Company [1907] 1 KB 264 for the first cross-defendant to reimburse the cross-claimant for the costs he is required to pay the second cross-defendant (the Bullock order).

80. Ultimately, Mr Lonergan did not press orders (4) and (5) dealing specifically with the costs of the notices of motion, having accepted, following a query from me, that the proposed order (1) (regarding the plaintiff to pay the defendants’ costs on the plaintiff’s claim) effectively covered what was sought by Mr Yu in that regard.

81. Further, it was formally clarified that the date from which the indemnity costs were sought was 15 September 2022 (not 15 September 2023).

82. Mr Mack, on behalf of Mr Yang, proposed an order that Mr Yu pay Mr Yang’s costs of the cross-claim. He also proposed an alternative costs order that in the event that the Court was not minded to characterise the “event” as being Mr Yang’s successful defence of the claim for the sum of $200,000, the Court should apportion costs and order Mr Yu to pay 80% of Mr Yang’s costs as agreed or assessed.

Costs principles

83. Costs are in the discretion of the Court, subject to the Civil Procedure Act 2005 (NSW) (CPA), rules of Court and any other Act: s 98(1)(a) CPA.

84. The Court:   

1. has full power to determine by whom, to whom and to what extent costs are to be paid: s 98(1)(b) CPA; and

2. may order that costs are to be awarded on the ordinary basis or on an indemnity basis: s 98(1)(c) CPA.

85. The general position is that if the Court makes any order as to costs, the Court is to order that the 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: r 42.1 UCPR.

86. If the Court makes an order for dismissal of the proceedings, then generally speaking, unless the Court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed: r 42.20(1) UCPR.

87. Generally, costs payable to a party under an order of the Court are to be assessed on the ordinary basis: r 42.2 UCPR.

88. An award of costs, of its nature, is compensatory in the sense of being awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Costs are not awarded by way of punishment of the unsuccessful party: Latoudis v Casey (1990) 170 CLR 534 at 543 (per Mason CJ); [1990] HCA 59.

89. The UCPR provides a regime by which offers of compromise may be served, in which case there is what is described under the rules as an ‘entitlement’ of a party who has obtained a favourable outcome, having regard to the terms of the offer, to have costs assessed on an indemnity basis, unless the Court orders otherwise: see r 42.13A to 42.15A UCPR.

85. In Horn v GA & RG Horn Pty Ltd (No 2) [2022] NSWSC 1747, I stated

“[50] In Meares v Meares (No 2) [2017] NSWSC 523 at [43] - [44], Hallen J indicated that the question for determination regarding the effect of what is said to be an offer of compromise involves a two-stage process. His Honour stated as follows:

43. From the authorities, it appears the question for determination regarding the effect of what is said to be an Offer of Compromise involves a two-stage process. The first stage is to enquire whether the offer made is an ‘Offer of Compromise’ at all, within the meaning of the UCPR. This will depend, in part, on whether it satisfies the formal requirements laid down by UCPR rule 20.26. It also depends, in part, on whether the offer made is one that can truly be called a “compromise”.

44. If the court concludes that the offer which is made is an “Offer of Compromise” within the meaning of the Rules, and that the offer made is one that can truly be called a compromise, then UCPR rule 42.15A(2) operates to establish a ‘default’ position, relevantly that, if the defendant obtains a judgment no less favourable than that which the defendant had offered to accept, then indemnity costs would follow. It is then that the second stage of the process arises, in that the court can “otherwise order”. The court will “otherwise order” if it is persuaded that is appropriate, in the interests of justice, that the “default” position ought not apply: Manly Council v Bryne (No 2) [2004] NSWCA 227, per Campbell JA, at [10]; Evans v Braddock (No 2) [2015] NSWSC 518, at [52].

[51] In D Capital 2 Pty Ltd v Western (No 2) [2022] NSWSC 1283, I made the following observations:

128. For an offer to be regarded as an Offer of Compromise it must contain a real element of ‘compromise’: see e.g. Leichardt Municipal Council v Green [2004] NSWSC 341 at [31]–[37].

129. The question whether any particular offer involves the required element of compromise depends upon the totality of the circumstances and involves an impressionistic assessment: Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308; [2006] NSWCA 114 at [20]–[23].

…

131. The power to order "otherwise" must be for proper reasons: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [47] adopting the comments of Hely J in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 at [17].

132. The mere fact that it is reasonable for a litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule. However that does not mean that reasonableness of the rejection is an irrelevant consideration: Leach at [48].”

91. In contrast, for offers outside the offer of compromise regime, such as offers expressed to be without prejudice except as to costs and relied upon in accordance with the principles in Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333 (Calderbank), there is no prima facie entitlement of a party who has achieved a favourable outcome under the terms of the offer to have an indemnity costs order made in its favour. Rather, the making of a Calderbank offer is one of a number of circumstances the Court takes into account in exercising its discretion to make an order for costs on an indemnity basis.

Costs of the main claim

92. Determination of costs in relation to the main claim requires consideration of the principles regarding an offer of compromise made by a defendant and not accepted by a plaintiff.

93. On 15 September 2022, Mr Yu, by his solicitor, served an offer of compromise. The terms of the offer of compromise are as follows:

“1 Judgment in favour of the First Defendant, Second Defendant and Third Defendant on the Plaintiff's claim with no order as to costs.

2 Judgment in favour of the Cross-Claimant against the First Cross-Defendant on the Cross-Claim in the sum of $150,000.

3 The First Cross-Defendant to pay the Cross-Claimant 's costs of the Cross-Claim as agreed or assessed.

4 This offer is open for acceptance for a period of 28 days from the date of service of this offer of compromise.

5 This offer is made without prejudice and in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW).”

94. Mr Lonergan raised an issue as to whether the offer was a compliant offer of compromise.

95. Rule 42.15A UCPR deals with the situation where an offer of compromise has been made in accordance with the UCPR by the defendant, but not accepted by the plaintiff, and the defendant obtains an order on the claim no less favourable to the defendant than the terms of the offer.

96. Rule 42.15A(2) provides as follows:

(2) Unless the court orders otherwise—

(a)     the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and

(b)     the defendant is entitled to an order against the plaintiff for the defendant’s costs in respect of the claim, assessed on an indemnity basis—

(i)     if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii)     if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

97. In his initial written submissions, Mr Lonergan appeared to assume based on the remarks of Bathurst CJ in Whitney v Dream Developments Pty Ltd (2013) 84 NSWLR 311; [2013] NSWCA 188 at [19]-[28] that an offer which included a provision for payment of costs as agreed or assessed did not comply with r 20.26 UCPR because it was not exclusive of costs.

98. At the hearing on 20 December 2023, I raised with the parties the fact that Mr Lonergan’s assumption regarding the non-compliance of the offer with the provisions of r 20.26 did not appear to take account of rule amendments.

99. The provision of r 20.26 UCPR was amended following the decision in Whitney.

100. In Horn v Horn (No 2) I stated as follows:

“95. Rule 20.26 UCPR was amended following Whitney such that offers made after 7 June 2013 (pursuant to r 20.26(2)(c) UCPR) must not include an amount for costs and must not be expressed to be inclusive of costs: see e.g. Ye v Chen [2022] NSWSC 494 at [104]-[105] per Adamson J.

96. Rule 20.26(2)-(3) provides as follows:

(2)  An offer under this rule—

(a)  must identify—

(i)  the claim or part of the claim to which it relates, and

(ii)  the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and

(b)  if the offer relates only to part of a claim in the proceedings, must include a statement—

(i)  in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or

(ii)  in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and

(c)  must not include an amount for costs and must not be expressed to be inclusive of costs, and

(d)  must bear a statement to the effect that the offer is made in accordance with these rules, and

(e)  if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and

(f)  must specify the period of time within which the offer is open for acceptance.

(3)  An offer under this rule may propose—

(a)  a judgment in favour of the defendant—

(i)  with no order as to costs, or

(ii)  despite subrule (2)(c), with a term of the offer that the defendant will pay to the plaintiff a specified sum in respect of the plaintiff’s costs, or

(b)  that the costs as agreed or assessed up to the time the offer was made will be paid by the offeror, or

(c)  that the costs as agreed or assessed on the ordinary basis or on the indemnity basis will be met out of a specified estate, notional estate or fund identified in the offer.”

101. The change in the text of r 20.26 was adverted to by Bathurst CJ in Curtis v Harden Shire Council (No 2) [2015] NSWCA 45 in which his Honour considered the then amended form of r 20.26. His Honour's decision in that regard in that case involved an offer including relevantly "plus costs as agreed or assessed", which was regarded as being a compliant offer: at [19]-[25].

102. That purpose of the rule as amended was referred to in Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 (Jojeni). In Horn v Horn (No 2), I stated:

“97.   The purpose of the rule is clear. It is directed to the mischief of a monetary offer in a lump sum which does not differentiate between the plaintiff’s claim on one hand and the plaintiff's costs on the other: Jojeni Investments Pty Ltd v Mosman Municipal Council (No 2) [2015] NSWCA 208 (Jojeni) at [11] per Macfarlan, Gleeson and Leeming JJA .

98.   Generally, a recipient of an offer will have some basis (whether it be pleadings, particulars and evidence) for making an assessment of a plaintiff’s claim but without some particular prior disclosure, will not have an informed basis for making assessment of the plaintiff's costs: Jojeni at [11].

99. The prohibition in r 20.26(2)(c) avoids the difficulty that it may not be possible to determine whether the default position of indemnity costs applies until the costs have been assessed: Jojeni at [11].

100. Thus, an offer that there be no order as to costs with the intention that each party bear their own legal costs with respect to the proceedings does not fall within that which is precluded under r 20.26(2)(c) and, accordingly, is not invalid for that reason: Jojeni at [10]-[15].”

103. Mr Lonergan readily accepted that that was the proper position. Dr Wang did not submit otherwise.

104. In the circumstances of this case, the provisions for costs in Mr Yu’s offer of compromise dated 15 September 2022 in my opinion does not fall foul of the provisions of rule 20.26(2)(c) in that neither of the cost provisions contain an amount for costs nor are expressed to be inclusive of costs.

105. Having regard to that, I consider that the offer of compromise was a compliant offer.

106. The terms of the offer of compromise in relation to the main claim as noted provided judgment in favour of the defendants but with no order as to costs. No party in the proceedings provided the Court with estimates or indications of the level of costs each had incurred. However, whilst the costs were not quantified, the proceedings by 15 September 2022 had been on foot for 23 months and it is hardly to be thought that the costs of the main claim were at that point minimal.

107. The defendants have succeeded in obtaining an order for judgment on the plaintiff's claim. That in its terms is no less favourable to the defendant than the terms of the offer.

108. However, when one has regard to the terms of the offer which expressly included that there be no order as to costs, it seems to me that the provisions of r 42.15A(2) UCPR are engaged and the costs consequences of the rule follow.

109. Further, in the circumstances of this case, there does not seem to me to be any appropriate basis to "order otherwise". Dr Wang, when I asked her, did not suggest any such basis: T 8.

110. Mr Lonergan put alternate submissions on the basis that the offer of compromise might not be compliant.

111. In the event that I am incorrect, and the offer of compromise is not a compliant offer, it is necessary to consider those submissions.

112. The letter enclosing the offer of compromise sent by KSL to Dr Wang's then lawyers Brydens on 15 September 2022 foreshadowed that the form of offer of compromise should also be alternatively regarded as being a type of offer known as a Calderbank offer. The letter stated in paragraph 2 as follows:

“The offer set out in the Offer of Compromise is also made by our client in accordance with the principles enunciated in Calderbank v Calderbank [1975] 3 All ER 333 and may be accepted by your client as such. If for any reason the enclosed Offer of Compromise is ineffective as an Offer of Compromise under the Uniform Civil Procedure Rules 2005 (NSW), then our client will rely on this letter and the enclosed Offer of Compromise as a Calderbank offer on the same terms as set out therein. The Calderbank offer is made without prejudice save as to costs.”

113. I accept that in light of the covering letter the offer of compromise may be permissibly regarded as being in the form of a Calderbank offer.

114. Mr Lonergan submitted that the offer clearly demonstrated a compromise on the part of the defendants in that in the outcome of the matter the defendants have achieved a result that there be judgment in their favour on the plaintiff's claim, and at the time that the offer was made the defendants had incurred costs in the proceeding including in preparation of the defence.

115. The letter from KSL to Brydens Lawyers included a paragraph (five) asserting that "our clients have incurred substantial legal costs to date". Further, as I have noted above, the proceedings by 15 September 2022 had been on foot for 23 months and the costs at that point would not have been insignificant.

116. There was clearly risk to all parties in relation to the outcome of the proceedings and I consider that the offer in the form of a Calderbank offer represented a reasonable compromise of the proceedings. I consider that if it failed as being a form of offer of compromise, it ought to have been accepted as a Calderbank offer and accordingly, Dr Wang ought to pay the costs of the defendants on the indemnity basis from the beginning of the day following the day on which the offer was made.

Costs of the cross-claim as between Mr Yu and Dr Wang

117. As is evident from the form of offer of compromise, the offer by Mr Yu related not merely to the main claim but also to compromising as between himself and Dr Wang the proceedings in respect of the cross-claim.

118. Rule 42.14 UCPR deals with the situation in which an Offer of Compromise is made in accordance with the rules by a plaintiff and not accepted by the defendant and the plaintiff obtains an order or judgment on the claim which is no less favourable to the plaintiff than the terms of the offer. For the purposes of the UCPR, unless otherwise indicated, references to the plaintiff include reference to a cross-claimant.

119. In Estate of Guamani; Guamani v De Cruzado [2023] NSWSC 502, I noted:

“202.   The CPA contains definitions of “plaintiff” and “defendant”. Specifically, “plaintiff” means “a person by whom proceedings are commenced, or on whose behalf proceedings are commenced by a tutor, and includes a person by whom a cross-claim is made or on whose behalf a cross-claim is made by a tutor”: s 3. Defined that way, a “plaintiff” is a party who actions or commences either proceedings or a cross-claim. A similar definition appears for “defendant” which term means “a person against whom proceedings are commenced, and includes a person against whom any cross-claim is made”: s 3.

203.   The CPA refers to rules of Court: e.g. s 56. It is clear that there is a legislative interaction between the CPA and the rules of Court with the CPA making provision for “uniform rules” which are those rules made, or taken to have been made, under s 9 CPA. Technically, because both UCPR and the CPA provide that notes included in the Act and the rules do not form part of the Act and the rules, there is no at least express or direct way that one would act upon the note at the end of the Dictionary in the UCPR regarding use of words and expressions defined in the CPA for the purposes of concluding that they have the same meaning in the rules: r 1.2(2) UCPR and s 3(2) CPA.

204.   However, whilst there is not a direct definitional statutory link as between the CPA and the UCPR for construing the words “plaintiff” and “defendant”, there is a relevant statutory provision in the Interpretation Act.

205.   Section 11 of the Interpretation Act provides that:

11 Words etc in instruments under an Act have same meanings as in the Act

Words and expressions that occur in an instrument have the same meanings as they have in the Act, or in the relevant provisions of the Act, under which the instrument is made.

206.   Section 11 accords with the position at common law: see, eg, Blashill v Chambers (1884) 14 QBD 479 at 485 per Grove J; Potts or Riddell v Reid [1943] AC 1 at 27 per Lord Porter; Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, Thomson Reuters) (Herzfeld and Prince) at [14.30] 346.

207.   In the context of s 11 Interpretation Act, an “instrument” means an instrument made under an Act and includes a statutory rule: s 3 Interpretation Act. As noted above, a “statutory rule” includes a rule of Court: s 21 Interpretation Act. Accordingly, the meaning of “plaintiff” and “defendant” in r 42.21 UCPR, in the absence of a contrary intention (see Herzfeld and Prince at [3.10] 46), is the same as the meaning of those terms in the CPA (extracted above).”

120. Rule 42.14(2) provides as follows:

(2)  Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim—

(a)  assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and

(b)  assessed on an indemnity basis—

(i)  if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and

(ii)  if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.

121. The position in relation to an offer before the first day of the trial which comes within the terms of the rule is that costs are payable on an indemnity basis from the day following the day the offer was made: r 42.14(2)(b)(i).

122. The power to order otherwise is evident from the terms of subrule (2).

123. The precise order sought by Mr Lonergan on Mr Yu’s behalf is that:

“The First Cross-Defendant to pay the Cross-Claimant’s costs on the Cross-Claim on an ordinary basis up to 15 September 2022 and on an indemnity basis thereafter as agreed or assessed.”

124. I addressed under the heading “Issue 5” in the principal judgment particular matters regarding whether Mr Yu had paid Dr Wang or Mr Yang $10,000 on or about 12 May 2015 and $200,000 in or about November 2015, and if so whether those sums should be repaid.

125. During the course of the main hearing, it became clear that it was necessary to distinguish between the $10,000 amount and the $200,000 amount.

126. The tenor of the pleading by Mr Yu regarding the sum of $200,000 is that it was paid as a loan: principal judgment [530]. I addressed the evidence regarding the sums totalling $200,000 (principal judgment [554]-[565]) and made findings regarding the $200,000 amount at principal judgment [566]-[572].

127. In relation to the $200,000 amount, I noted that Dr Wang in her first affidavit, which predated the cross-claim, accepted that she had received the sum of $200,000: principal judgment [554].

128. I found that the sum of at least $190,000 was paid by four instalments to Mr Yang’s account being $100,000 on 4 January 2016; $20,000 on 22 January 2016; $50,000 on 25 January 2016; and $20,000 on 1 April 2016: principal judgment [570].

129. Mr Yu accepted in evidence that an additional amount of $10,000 was paid to Dr Wang in September 2015. However, it was clear that that was not part of the pleaded $200,000 sum alleged to have been paid “in about November 2015”: CB 141. Rather, I observed in the principal judgment that it was not obvious to me how the additional sum of $10,000 which made up the balance of the $200,000 was paid to Dr Wang. However, as no party suggested that it is critical for me to make a finding regarding how and when the additional $10,000 payment was made, I did not make any precise finding regarding that: principal judgment [571]-[572].

124. A critical part of the findings in relation to the $200,000 was not merely who the money had been paid to but also why the payments were made and whether they were initiated by duress.

125. I found that having regard to the totality of the evidence, the $200,000 was paid consequent upon Dr Wang and Mr Yang pressing Mr Yu for payment and recognition of the amounts that she had paid to APG which led to the discussions and negotiations over the draft deed in December 2015 and is the amount of $200,000 that is ultimately referenced in the Deed: principal judgment [576].

126. I found that the payments were vitiated by duress.

127. The particulars of the pleading by Mr Yu regarding the sum of $10,000 paid to him at the request of Mr Yang did not describe the sum as a loan but the pleading did indicate that it was made under duress: principal judgment [529]. Mr Yang’s defence did not deny that Mr Yu paid him the sum of $10,000 in or about May 2015, but simply did not admit that allegation: principal judgment [538].

128. As indicated in the principal judgment, the evidence regarding the payment of $10,000 was an unsatisfactory part of the case. Whilst I accepted that on one view there is arguably inconsistency between Mr Yu’s affidavit and his cross-examination account regarding the precise purpose of the payment, I noted that there was not an inconsistency in Mr Yu’s version about the fact that the payment was made: principal judgment [548].

129. Ultimately, on balance, I was persuaded to accept Mr Yu’s evidence which only emerged belatedly during cross-examination regarding his conversation with Mr Yang about the request for a sum of $10,000: principal judgment [544]. In particular, I accepted that the amount was some form of “sweat fee” and found that the payment was a sum demanded by Mr Yang from Mr Yu in a context in which he had the prior evening assaulted Mr Yu. I found that the reason why the payment was made was the consequence of the bashing that Mr Yu had received: principal judgment [553].

130. In summary, I concluded at principal judgment [758]:

“(7).   Mr Yu made a payment of $10,000 in favour of Mr Yang which payment was made under duress, and he is entitled to repayment of that sum; and

(8).   Mr Yu made a payment of $200,000 in favour of Dr Wang which payment was made under duress, and he is entitled to repayment of that sum.”

137. Thus, in the final analysis, I found it was clear that there was a distinction between the $10,000 amount and the $200,000 amount.

138. Contrary to the orders sought on the cross-claim, I did not make any finding that Dr Wang and Mr Yang were jointly liable for each of the amounts of $10,000 and $200,000.

139. Bearing the above in mind, I return to consider the offer of compromise in relation to the cross-claim as between Mr Yu and Dr Wang. I consider that within the terms of r 42.14(1) UCPR, Mr Yu as cross claimant obtained a judgment on the claim against Dr Wang which was relevantly no less favourable to him than the terms of the offer. In fact, it was more favourable in that the offer was for judgment against Dr Wang in the sum of $150,000 rather than the sum of $200,000 that is found.

140. However, in light of my findings and what I am about to address regarding costs as between Mr Yu and Mr Yang, I consider that it is proper to confine the extent of the costs order to the costs on the cross-claim referable to the claim for the sum of $200,000.

141. I do not consider that the costs Dr Wang ought to pay should include the costs in respect of the recovery of the sum of $10,000 against Mr Yang on the cross-claim. Mr Yu did not succeed at any point in making out a case that Dr Wang had received a sum greater than $200,000. Mr Yu did not succeed in establishing that he had paid Dr Wang for her own benefit a sum of $10,000 on or about 12 May 2015 by reason of duress.

142. Thus, in accordance with r 42.14(2) UCPR, I order otherwise, leading to the outcome that Dr Wang ought to pay Mr Yu’s costs on the cross-claim referable to the sum of $200,000 on the ordinary basis up to 15 September 2022 and on the indemnity basis thereafter as agreed or assessed.

Costs of the cross-claim as between Mr Yu and Mr Yang

143. As noted, Mr Yu sought as relief in the cross-claim judgment against both Dr Wang and Mr Yang a sum of $210,000 ($10,000 alleged to have been paid in May 2015 [CB 140 pleadings [2]] and $200,000 paid in December 2015: CB 142 pleadings [4c]).

144. On 15 December 2023, I heard submissions from Mr Lonergan and Mr Mack in relation to the costs of the cross claim as between Mr Yu and Mr Yang. Mr Mack addressed submissions regarding what is an “event”, distinguishing the claims of Mr Yu against Dr Wang from the claims against Mr Yang. In particular, he sought to distinguish between what was found to be Dr Wang’s liability in relation to the $200,000 payment and Mr Yang’s liability in respect of the $10,000 payment.

145. In relation to the question of what is a relevant "event" for the purposes of a cost order, Mr Mack referred to my decision in Horn v Horn (No 2) in which I stated as follows:

“What is an event?

71.   Depending on the nature of the litigation the “event” may be characterised in more than one way: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 (Doppstadt) at [15] per Ward, Emmett, and Gleeson JJA.

72.   Generally, the “event” refers to the event of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt at [15] citing Windsurfing International Link v Petit [1987] AIPC 90–441 at 37,861-37,862 per Waddell J.

73.   An “event” may refer to the determination of the proceedings as a whole or of particular causes of action, although not necessarily so. It may include certain disputed questions of fact or law.

74.   An event will not necessarily be limited to “issues” in the technical pleading sense, but any disputed question of fact or law: Hughes v Western Australian Cricket Association (Inc) & Ors (1986) ATPR 40–748 at 48,136 per Toohey J citing Cretazzo v Lombardi (1975) 13 SASR 4 at 12 per Hogarth J; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22 per Young J (as his Honour then was); Australian Receivables Ltd v Tekitu Pty Ltd(subject to deed of company arrangement) (deed administrators appointed) & Ors [2011] NSWSC 1425 at [25] per Ward J (as her Honour then was).

75.   How the Court approaches the question will essentially be guided by the circumstances of each given case rather than abstract analysis of how the notion of an event should be viewed.”

146. In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 (Doppstadt), apart from what I have cited above, the Court of Appeal stated at [17]–[19] the following:

“17 The usual circumstance in which a court will deprive the successful party of the costs relating to an issue on which the successful party lost is when that issue is clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64] (Campbell JA). See also Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; 254 ALR 328 at 330-331 (Mahoney JA).

18 The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Service Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373, and summarised in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA), as follows:

"· Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v PC Henderson (Australia) Pty Ltd.

· In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

· If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

· Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

· A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

· Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272."

19 Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: James v Surf Road Nominees Pty Ltd (No 2) at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. In our view, such an exercise is not warranted in the present case, particularly having regard to:

(1) the multiple sub-issues (on which there was some mixed success for each of the parties) raised by the primary issues of liability and damages; and

(2) the substantial degree of overlap between the liability issue and the failure to mitigate loss issue so far as both concerned the operation and performance of the Doppstadt shredder - that is, whether the failures of the Doppstadt shredder were due to operator error and failure to service and maintain the shredder in accordance with the Doppstadt operator manual, or because the shredder did not perform as represented by the appellants. The respondents' success on the issues of liability and failure to mitigate was outweighed by the appellants' success on the damages issue.”

147. In relation to apportionment of costs, Brereton J in the matter of Optimisation Australia Pty Ltd (Costs) [2018] NSWSC 280 stated at [13] as follows (omitting footnotes):

“13 Where litigation involves multiple issues, the ultimately successful party may have failed on one or a number of those issues. Given that “the event” is not necessarily limited to the final overall outcome, but includes individual issues in the proceedings, [4] the question often arises whether there should be a departure from the general rule where the ultimately unsuccessful party has succeeded (and, as a corollary, the successful party has failed) on one or more substantial issues. The court does not usually apportion costs between issues, but acts on the outcome of the proceedings as a whole, without attempting to differentiate issues on which the party may not have succeeded. [5] However, a successful plaintiff who has failed on certain issues may be deprived of costs on those issues, or even ordered to pay the defendant’s costs of them. [6] But this course, while open, is one on which the court embarks with hesitation; the authorities [7] reflect consistent themes that (1) justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case; but (2) it may be appropriate to apportion costs where a clearly definable and severable issue, on which the otherwise successful party failed, has occupied a significant part of the trial. [8] The severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general rule. [9] However, the court may depart from the general rule if the ultimately unsuccessful party succeeds on significant issues, [10] particularly if those issues are clearly dominant or separable. [11]”

148. Recently in Taylor v Stav Investments Pty Ltd as trustee for the Stav Investments Family Trust (No 2) [2023] NSWCA 322 at [7], the Court of Appeal referenced its earlier decision in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (cited in the extract from Doppstadt above), in which it had summarised the principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which a successful part in the proceedings on an appeal did not succeed.

149. Mr Mack submitted that the claim against Mr Yang was “always at the margins” for various reasons including that Mr Yu expressed an intention not to enforce (any judgment) against Mr Yang.

150. In addressing the costs of the cross-claim as between Mr Yu and Mr Yang in which the parties had mixed success, Mr Lonergan sought to explain why the claim in respect of the $200,000 sum was persisted against Mr Yang. Mr Lonergan referred to Dr Wang's defence to the cross-claim observing that she had admitted that the sum of $200,000 was paid to her: CB 150 (amended) defence 4a; T 11 – T 12.

151. I asked why in that context, where Dr Wang had accepted the position in relation to the $200,000 amount, the claim for that sum was prosecuted against Mr Yang. Mr Lonergan’s response related to paragraph 11 of the amended defence filed on 31 May 2023. Paragraph 11 of the amended defence by Dr Wang is in the following terms:

“11 In the premises, and upon the true construction of the said Deed, including the Recitals therein, and in the events which happened,

a. the said receipt of $200,000 by the First Cross Defendant referred to in operative clause 4B was part of the subject matter of the said Deed and of the agreements, compromise and release referred to and contained therein, and

b. by reason of its connexion with the payment to the Third Defendant that is referred to in paragraph 2(e) of this Defence to Cross Claim, the payment of $10,000 claimed by the Cross Claimant is part of the subject matter and scope of the said Deed, and of the agreements, compromise and release referred to and contained therein, and

c. by reason of the provisions of the Deed, the First Cross Defendant was released (and her agents, if any, were agreed by the Cross Claimant to be released) from any such obligation or claim as is alleged by the First Cross Claim and the Cross Claimant is estopped or barred from alleging or maintaining those allegations and from maintaining the First Cross Claim.”

152. Mr Lonergan essentially submitted that the pleading by Dr Wang of paragraph 11 of the amended defence gave rise to a conflation of the $10,000 amount and $200,000 amount and effectively left Mr Yu in a position where he was obliged to "disentangle" the $10,000 sum in the $200,000 sum: T 15 – T 16 (15 December 2023). He additionally submitted that the characterisation of the $200,000 sum was always in dispute: T 17.

153. Mr Mack in his written submissions (12 and 19 December 2023) and oral submissions (15 and 20 December 2023) strongly disputed the appropriateness of Mr Yang’s joinder. He submitted that there was a fundamental distinction between the $10,000 sum and the $200,000 sum. He submitted that there were always obvious deficiencies in the case against Mr Yang for the $200,000 sum and submitted that it was ultimately “functionally abandoned”. He submitted that the “vast bulk” of the disputed facts arose in relation to the main claim and would have been litigated absent the cross-claim. He further submitted that the case in relation to how Mr Yang was liable had not been articulated on Mr Yu’s behalf and that the Court was left to make a determination about that, finding that Mr Yang was the agent of Dr Wang: written submissions 12 December 2023.

154. During the course of the argument, at first blush, it seemed to me that there was some force in Mr Mack’s submissions in relation to costs of the cross-claim against Mr Yang.

155. Initially on 15 December 2023, I had a sense of unease as to whether it was necessary for Mr Yu to sue Mr Yang in respect of both sums, or at least continue to sue Mr Yang in respect of the $200,000 sum. On no view of the matter was it seriously suggested that Mr Yang had received the sum of $200,000 such that in his own right he ought to be responsible for repayment of that sum to Mr Yu.

156. I wondered whether Mr Yu, by persisting in a claim for $200,000 against Mr Yang in addition to the $10,000 claim, had unnecessarily complicated the matter and more importantly deprived Mr Yang of the possibility of considering whether he might have consented to a judgment in respect of the $10,000 claim. On any view of it, that claim was an extremely small one which, had it been isolated against Mr Yang, might well have led to different forensic choices by him in addressing it.

157. It did occur to me whether this is one of those cases in which the amount claimed does bear some significance in respect of the costs of the proceedings.

158. Whilst it is true that Mr Yu succeeded in relation to recovering the sum of $10,000 from Mr Yang on the cross-claim, the basis on which he recovered it was not the pleaded basis nor indeed on the evidence which he had advanced leading into the hearing. Rather, the basis on which he recovered the sum was in respect of evidence that emerged from Mr Yu in cross examination.

159. During the course of submissions on 20 December 2023, I considered further the submission of Mr Lonergan regarding whether the late amendment by Dr Wang of her defence to the cross-claim in paragraph 11 amounted to sufficient reasonable justification for Mr Yu to continue a cross-claim against Mr Yang for the sum of $200,000.

160. I also reflected on the fact that where there are proceedings for differing amounts against a party or a number of parties, the dollar amount which is sued for does not necessarily reflect the time and effort and forensic engagement that is involved in running proceedings.

161. Thus, if one takes the situation here, it would not be correct to think that the time, effort and costs associated with running the part of the cross-claim regarding the payment of $200,000 were twenty times the time, effort and costs required to run the part of the cross-claim for $10,000.

162. On one view it might be said that Mr Yu and Mr Yang have had mixed success on the cross-claim.

163. Thus, towards the end of the further listing on 20 December 2023, I raised with Mr Lonergan and Mr Mack a number of other possibilities.

164. Specifically, for the purposes of testing potential cost outcomes, I ventured the notion of whether it might be appropriate that each of them bear their own costs of the cross-claim, or alternatively for Mr Yang to pay Mr Yu’s costs in relation to the part of the cross-claim referable to the sum of $10,000 and for Mr Yu to pay Mr Yang’s costs in relation to the part of the cross-claim referable to the sum of $200,000.

165. During further discussion it emerged that neither counsel regarded those alternatives as being effectively the same, essentially because, from different perspectives, they submitted that the time taken in the hearing in relation to particular aspects of the matter differed.

152. Mr Mack for his part submitted that the costs, and time and effort taken in relation to the $200,000 part of the cross-claim were all considerably more than the $10,000 part of the cross-claim. He submitted that the $10,000 part of the cross-claim was clearly severable from the cause of action related to the $200,000: T 16 (20 December 2023).

153. I observed that there was some interconnectedness and raised the issue of the duress pervading both payments: T 17 (20 December 2023).

154. Mr Mack specifically submitted as follows:

“MACK: It does not connect to a cause of action against my client, and that's my point. When one looks at joinder one looks at cause of action and relief sought against a particular party, and that was on one view of it, in relation to the $200,000, never going to get off the ground without a different pleading, and without amendment to make my client liable on a different basis. It is a massive waste of time and resources which is contrary to the overriding purpose. My client ought not be saddled with a non‑strategic decision in light of the knowledge of Mr Yu and obviously I am for him on a costs argument, your Honour.”

169. As the case law I have referred to above makes clear, whilst an “event” may refer to the determination of a particular cause of action, that is not necessarily so. It may include certain disputed questions of fact or law.

170. Ultimately, I am not convinced that the late amendment to the defence (on 31 May 2023) prior to the commencement of the hearing on 13 June 2023 amounted to sufficient reason for Mr Yu to continue a cross-claim against Mr Yang for the sum of $200,000.

171. However, Mr Yang was in my opinion properly joined in relation to the claim regarding the $10,000 sum. As I ultimately found, part of the claim for recovery of the $10,000 involved a finding that the sum had been demanded by Mr Yang as a ‘sweat fee’ in the context of having assaulted Mr Yu. The fact of the assault and the fact of the duress and extent of the duress were common questions of fact not merely confined to payment of the $10,000 but to the entry into the deed and also the payment of the amounts totalling $200,000. A joinder of persons may occur as of right or by leave where there are common questions of fact in all the relief claimed: r 6.19 UCPR.

172. Whilst I have found that Mr Yu should not be entitled to judgment against Mr Yang in relation to the $200,000 amount, that speaks to a discrete head of relief rather than to the appropriateness of his joinder to the proceedings. Mr Yang could have made relevant offers in relation to the $200,000. Whether he did or not is not known to me. Certainly, no offers were tendered by Mr Mack in respect of Mr Yang’s defence of the cross-claim in whole or any part of it.

173. Mr Yang, having been properly joined in relation to the claim for the $10,000 sum, strongly contested the disputed issue of whether Mr Yu had been the subject of duress. I do not regard his involvement in that respect as being minimal. My impression is that Mr Mack spent a not insubstantial part of his cross examination on issues testing the reliability and credit of Mr Yu’s version in relation to whether he had been the subject of an assault and the issue of duress.

174. Mr Lonergan for his part submitted that a significant part of the findings on the cross-claim related to the duress aspect and submitted that Mr Mack had cross-examined far more significantly in relation to that than he had in relation to the details of the payments of the $200,000 sum or the $10,000 sum: T 17 (20 December 2023).

175. Ultimately, I am persuaded that it is appropriate to approach the costs of the cross-claim as one in which each of Mr Yu and Mr Yang had mixed success in relation to the $200,000 part of the cross-claim and the $10,000 part of the cross-claim.

176. In light of the dispute regarding the proportion of time and effort taken in relation to the $200,000 part of the cross-claim and the $10,000 part of the cross-claim, I consider that the most appropriate order is to not order that each party bear their own costs but rather to order that Mr Yang pay Mr Yu’s costs in relation to the part of the cross-claim referable to the sum of $10,000 and for Mr Yu to pay Mr Yang’s costs in relation to the part of the cross-claim referable to the sum of $200,000. That way, the parties can choose should they wish to do so, to make submissions to a costs assessor regarding the extent of the costs associated with the claims for recovery in respect of those amounts.

Should a Bullock order or Sanderson order be made

177. A “Bullock order" is commonly understood as an order requiring an unsuccessful defendant to pay a plaintiff the amount of the plaintiff's costs liability to other (successful) defendants: Bullock v London General Omnibus Co [1907] 1 KB 264.

178. A "Sanderson order" is commonly understood as an order requiring an unsuccessful defendant to pay directly to successful co-defendants the amount of their costs: Sanderson v Blyth Theatre Co [1903] 2 KB 533; see generally G E Dal Pont, Law of Costs (5^th edition, 2021, LexisNexis) at [11.12].

179. In the event that I were to find that Mr Yang was a successful party against Mr Yu in respect of the cross-claim in relation to the sum of $200,000, Mr Lonergan on Mr Yu’s behalf sought against Dr Wang either a Sanderson or a Bullock order for such costs. His preference was for a form of Sanderson order that Dr Wang be liable to pay directly to Mr Yang any costs that Mr Yu was ordered to pay to Mr Yang: written submissions 15 December 2023.

180. Dr Wang submitted that the notion that she should bear any part of Mr Yu’s costs liability to Mr Yang in respect of the cross-claim was “ridiculous”: T 13 (20 December 2023).

181. Mr Lonergan in his submissions observed that the difference at least in part related to the credit risk exposure of Mr Yu and Mr Yang. In relation to whether a Sanderson order or a Bullock order should be made, Mr Lonergan submitted that it was administratively expedient for the order to be a Sanderson order, referring to the judgment of Campbell JA (with whom Beazley JA and Giles JA agreed) in ACQ v Cook (No 2); Aircair Moree v Cook (No 2) [2008] NSWCA 306 at [52]. Mr Mack disputed any such administrative expediency: T 14 (20 December 2023).

182. In support of the Bullock or Sanderson orders, Mr Lonergan submitted that once Dr Wang characterised the payment of $200,000 as being related to the deed on which she sued on the main claim, any claim brought by Mr Yu required the characterisation of monies to be addressed. As Mr Yang was the person who Mr Yu asserted and was found to have propagated fear upon Mr Yu "and the initial recipient of the monies", it was appropriate for Mr Yang to be joined to the proceedings.

183. Mr Yang’s joinder to the proceedings regarding the claim for $10,000 was, as I have noted, proper. However, I reject that submission to the extent that it seeks to justify claims for both amounts against Mr Yang. Whilst I found that an amount of $200,000 had been paid by Mr Yu to Mr Yang's account (principal judgment at [564]) it was clear that the $200,000 amount was intended for Dr Wang.

184. The mere fact that Mr Yang was the person who propagated fear upon Mr Yu and was the conduit through which Dr Wang received the $200,000 did not to my mind justify the persistence of the cross-claim against Mr Yang for the sum of $200,000.

185. Mr Mack opposed the making of any Bullock order or Sanderson order. He submitted, technically correctly, that Dr Wang successfully defended the part of the cross-claim which sought judgment against her for the $10,000 cash sum. Indeed, more forcefully, he submitted that Dr Wang had in light of the evidence I have referred to above effectively accepted that she had received the sum of $200,000, even before the cross-claim was filed.

186. In all the circumstances, I do not consider that it is appropriate for a Bullock order or Sanderson order, or some varied order like those orders, to be made against Dr Wang in respect of Mr Yu’s liability for the costs of Mr Yang on the cross-claim.

Set-off of costs

187. Whilst there was debate as noted above as to whether a Bullock order or a Sanderson order ought to be made, I consider that some consideration should be given to setting off of the cost liabilities as between Mr Yu and Mr Yang.

188. In Riva NSW Pty Ltd v Key Nominees Pty Ltd [2023] NSWSC 711, I addressed the power of the Court to make orders in relation to setting off of costs. I noted that:

”221.   The Court has a statutory power of set-off: s 21 CPA.

222.   Further, the Court’s power over its own procedures and judgments permits set-off between judgments and orders: State of New South Wales v Hamod [2011] NSWCA 376 at [36] per Giles JA (Beazley JA – as her Excellency then was – and Whealy JA agreeing) quoting Australian Beverage Distributors v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560; (2006) 230 ALR 184 (Australian Beverage Distributors) at [68]-[70] per White J (as his Honour then was).

223.   The extent of the power is summarised in Ritchie’s Uniform Civil Procedure NSW (LexisNexis Butterworths) (Ritchie’s) at [s 21.25]. Relevantly, the power extends to setting-off:

(1).   costs ordered in the same set of proceedings: Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660 at 664 per Bowen CJ in Eq; Bank of New South Wales v Preston (1894) 20 VLR 1 at 3 per Hood J; Wentworth v Wentworth [1996] NSWCA 553 at 2 per Priestley and Clarke JJA and Grove AJA (approving Wentworth v Wentworth (Supreme Court (NSW), Young J, 12 December 1994, unrep); In re A Debtor (No 21 of 1950) (No 2); Ex parte The Petitioning Creditors v The Debtor [1951] Ch 612 at 618 per Danckwerts J, 620-621 per Harman J;

(2).   costs ordered in separate proceedings: Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660 at 664 per Bowen CJ in Eq; Reid v Cupper [1915] 2 KB 147 at 150, 152 per Buckley LJ, 154 per Phillimore LJ, 155 per Pickford LJ; Puddephatt v Leith (No 2) [1916] 2 Ch 168 at 173, 179 per Younger J; and

(3).   a judgment debt determined in separate proceedings between the same parties in a different State against the amount found to be owing on the claim under consideration by the court: Jim’s Group Pty Ltd v Quindar Pty Ltd [2014] NSWSC 647 at [63]-[68] per Beech-Jones J (as his Honour then was).

224.   The fact that a costs amount has not been finally determined is no objection to allowing a set-off. In such a case the appropriate course is to order a stay of the judgment, pending quantification of the costs, and then to permit the set-off of the quantified amounts: Ritchie’s at [s 21.25] citing Corbett v Nguyen (No 2) [2012] NSWSC 673 at [12] per Windeyer AJ (in tandem with order 4 made in that case); Australian Beverage Distributors at [77]-[81] per White J (as his Honour then was): Lahoud v Lahoud [2012] NSWSC 284 at [82]-[93] per Ward J (as the President then was) (set-off is not dependent on previously determined quantification).”

189. Rather than Mr Yu and Mr Yang either agreeing on costs or obtaining cost assessments for costs and then attempting to execute those sums, it seems to me that it is appropriate to direct that the amounts for costs due in the cross-claim be set off against one another so that there is only ultimately a balance owing one way or the other for the difference between the amount of the agreed or assessed costs.

Conclusion

190. The orders of the Court are as follows.

191. In respect of substantive orders on the main claim and the cross-claim, the orders made on 20 December 2023 are (the Court):

1. Orders judgment in favour of the defendants on the plaintiff’s claim.

2. Orders judgment in favour of the cross-claimant against the first cross-defendant on the cross-claim in the sum of $200,000.

3. Orders judgment in favour of the cross-claimant against the second cross-defendant on the cross-claim in the sum of $10,000.

4. Declares that the first defendant and second defendant avoided the Deed signed between the plaintiff and first defendant and second defendant on (and dated) 28 June 2016 (the Deed) on 13 April 2021.

5. Orders forthwith that the plaintiff deliver up to the Court the Deed for its cancellation.

192. In respect of cost orders on the main claim and the cross-claim, I order as follows (the Court):

1. Orders the plaintiff to pay the defendants’ costs on the plaintiff’s claim on an ordinary basis up to 15 September 2022 and on an indemnity basis thereafter as agreed or assessed.

2. Orders the first cross-defendant to pay the cross-claimant’s costs in respect of the claim against the first cross-defendant in relation to the $200,000 amount on the cross-claim on an ordinary basis up to 15 September 2022 and on an indemnity basis thereafter as agreed or assessed.

3. Orders the cross-claimant pay the second cross-defendant’s costs in respect of the costs on the cross-claim against the second cross-defendant referable to the claim for the $200,000 amount, on the ordinary basis as agreed or assessed.

4. Orders the second cross-defendant pay the cross-claimant’s costs in respect of the costs on the cross-claim against the second cross-defendant referable to the claim for the $10,000 amount, on the ordinary basis as agreed or assessed.

5. Orders that the costs the subject of orders (3) and (4) above whether quantified by agreement or by assessment be set off against each other.

6. Grants liberty to apply in relation to the working out of the order for set-off.

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Decision last updated: 17 January 2024