William Jingcheng He and Ors and (According to the Schedule attached) v Liangping Huang , Top Union Business Pty Ltd (in Liq) and (ACN 162 966 485) [No 3]

[2017] VSCA 356

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0004

WILLIAM JINGCHENG HE & ORS	Applicants
(According to the Schedule attached)
v
LIANGPING HUANG	First Respondent
and
TOP UNION BUSINESS PTY LTD (IN LIQ)	Second Respondent
(ACN 162 966 485) [No 3]

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JUDGES:	SANTAMARIA, BEACH and KAYE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 November 2017
DATE OF JUDGMENT:	30 November 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 356
JUDGMENT APPEALED FROM:	[2016] VCC 1658 (Judge Macnamara)

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PRACTICE AND PROCEDURE – Costs – Complex and lengthy proceedings – Claim and counterclaim below – Different parties to claim and counterclaim – Where costs below made on a ‘global’ basis – Two ‘Calderbank’ offers made to plaintiff by counterclaim – Costs payable on standard basis.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr A W Sandbach	Katherine Moorhouse-Perks
For the First Respondent	Mr R E T Wodak	Wharton Legal
For the Second Respondent	Mr C H Truong	Wharton Legal

SANTAMARIA JA
BEACH JA
KAYE JA:

1. On 29 November 2017, the Court published its reasons for decision on the application for leave to appeal in the present proceeding.[1]  It is now necessary to address the orders that should be made to give effect to those reasons.  Those orders must reflect the facts that:

   [1]He v Huang [2017] VSCA 349.

(a)               at trial, there was both a claim and a counterclaim;

(b)               the application for leave to appeal related both to the claim and the counterclaim; and

(c)               there were different parties to the claim and the counterclaim.

The parties to the claim were Mr William Jingcheng He (‘Mr He’) (the first plaintiff) and JC He International Trade Pty Ltd (‘JC He’) (the second plaintiff).  Liangping Huang (‘Mr Huang’) was the sole defendant.

1. The parties to the counterclaim were Top Union Pty Ltd (in liq) (plaintiff by counterclaim) and Mr He, Cisely Liu and JC He (defendants to the counterclaim).

1. At the trial of the claim, Mr He was wholly unsuccessful.  JC He succeeded in a claim for damages for conversion with respect to plant and equipment.  However, it was unsuccessful in its claim for damages for conversion with respect to stock. 

1. Paragraphs 1, 2 and 3 of the orders of the County Court made on 8 December 2016 were as follows:

1.In the original proceeding, there by [sic] judgment entered for the second plaintiff against the first defendant in the sum of $10,870.00 by way of damages for conversion, together with interest of $2,358.63.

2.The first plaintiff’s claim against the first defendant be dismissed.

3.In the counterclaim, there be judgment entered for the plaintiff by counterclaim against the defendants by counterclaim who are each jointly and severally liable in the sum of $110,558.40 by way of damages and equitable compensation, together with interest of $15,876.29.

1. Other orders were made dealing with the costs of the trial of the claim and the counterclaim.  However, those orders were made on a ‘global’ basis whereby the trial judge (under the rubric of ‘common costs’) treated the claims of the first defendant to the claim (Mr Huang) together with the costs of the plaintiff by counterclaim (Top Union).

1. However, we consider that form of order to be unsuitable, particularly given that the parties to the claim were not the same as the parties to the counterclaim.  We also note that, while the second plaintiff on the claim (JC He) had a measure of success at trial, it wholly failed to improve its situation on the present application.

1. The application by JC He to reverse paragraph 1 of the orders above has been unsuccessful.  In the circumstances, it is necessary to consider what order for costs should be made: (a) in place of the orders which were made on 8 December 2016; and (b) in respect of the present application.

1. The parties have made submissions.  Those submissions reflect the complexity and length of the matter determined below.  In particular, the first defendant to the claim (Mr Huang) submitted that the claim upon which JC He succeeded (conversion of the plant and equipment) took up less than two per cent of the trial. They also refer to two ‘Calderbank letters’: (a) the first on behalf of Mr He and JC He said to be ‘with the consent of the second defendant by counterclaim’ (Ms Liu) dated 16 March 2016 (which was open until 18 March 2016); and (b) the second on behalf of the second defendant by counterclaim dated 24 March 2016 (which was open until 29 March 2016).

1. In the circumstances, we believe that the costs orders made in the County Court should be set aside. JC He was substantially unsuccessful on the claim and we would not, in any event, ‘order otherwise’ under r 63A.24 of the County Court Civil Procedure Rules 2008.  We also consider that no order for costs should be made on the claim.  Further, we consider that the applicants should pay the costs of Mr Huang on the present application.

1. The applicants have been wholly successful in impeaching the order made by the trial judge on the counterclaim.  Accordingly, the orders made by the trial judge should be set aside and, in their place, there should be an order that the counterclaim be dismissed.

1. Counsel for the plaintiff by counterclaim (Top Union) accepted that the costs orders made below, to the extent that they related to the counterclaim, had to be revisited.  However, he contended that, if an order was to be made that his clients pay the costs of the defendants by counterclaim, any such order should be made on the standard basis.  While the applicants had relied upon the ‘Calderbank letters’ to contend that they should be entitled to indemnity costs, counsel for Top Union said, in opposition to any such order, that: (a) the Calderbank letters were not true offers of compromise, but simply demands for capitulation; (b) the case itself was factually complicated (he pointed to the fact that the trial judge had reached a different conclusion on the facts from this Court); (c) the difficulties in the case were compounded by cultural factors (much of the evidence had to be given through interpreters); (d) it could not be said that the counterclaim was bound to fail; (e) the letters were themselves confusing and delivered very shortly before the trial commenced; and (f) a very limited time was given to the plaintiff by counterclaim to consider its position and accept the offers.

1. In the circumstances, we consider that the orders made below should be set aside and, in their place, the plaintiff by counterclaim should be ordered to pay the costs of the defendants by counterclaim.  However, we accept the contentions of the plaintiff by counterclaim, as described above, that the order should be made that costs be payable on the standard basis and not on an indemnity basis.  It was not unreasonable for the plaintiff by counterclaim not to accept the Calderbank offers, even if their terms had been clear and reasonable and time had been allowed for consideration of them.

1. Accordingly, a further order should be made that the plaintiff by counterclaim pay the costs of the defendants by counterclaim in respect of the counterclaim.

1. A further order should also be made directing that the amount held in Court as security for costs be paid into the trust account of the solicitors for the applicants and thereafter disbursed to the applicants.

1. Finally, we will order that Top Union be granted a certificate pursuant to s 4 of the Appeal Costs Act 1998.

SCHEDULE OF PARTIES

BETWEEN
WILLIAM JINGCHENG HE	First Applicant
J.C. HE INTERNATIONAL TRADE PTY LTD	Second Applicant
CISELY LIU	Third Applicant
and
LIANGPING HUANG	First Respondent
TOP UNION BUSINESS PTY LTD (IN LIQ)	Second Respondent