Yimiao Australia Pty Ltd v Star Mining Pty Ltd (No 2)
[2023] VSC 1
•11 January 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2022 03213
| YIMIAO AUSTRALIA PTY LTD (ACN 657 775 758) | Plaintiff |
| v | |
| STAR MINING PTY LTD (ACN 656 484 525) & ORS (according to the attached Scheduled) | Defendants |
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JUDGE: | Attiwill J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 December 2022 |
DATE OF RULING: | 11 January 2023 |
CASE MAY BE CITED AS: | Yimiao Australia Pty Ltd v Star Mining Pty Ltd & Ors (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 1 |
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COSTS – First defendant’s injunction application to restrain dealing with, and for inspection and preservation of, its alleged computer equipment – First defendant gave undertaking to commence third party proceedings – Undertakings given by third and fourth defendants – Second defendant did not give any undertakings and informed the Court of its position concerning inspection – Order that the costs are reserved.
COSTS – Plaintiff’s injunction application to restrain dealing with, and for inspection and preservation of, its alleged computer equipment – Undertakings given by the first, third and fourth defendants – Second defendant did not give any undertakings and informed the Court of its position concerning inspection – Order that the costs are reserved.
COSTS – Plaintiff’s injunction application for delivery up of computer equipment – Injunction refused – Order that the plaintiff pay the third defendant’s costs – Order that the plaintiff pay some of the first and fourth defendant’s costs and that their costs are otherwise in the cause – Application by fourth defendant for indemnity costs refused – Application by fourth defendant pursuant to r 63.20.1 of the Supreme Court (General Civil Procedure) Rules2015 that costs may be immediately taxed refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Annabell | Gilbert + Tobin |
| For the First Defendant | Mr P H Caillard | Maxim Legal |
| For the Second Defendant | Mr M A Robins KC | KCL Law |
| For the Third Defendant | Mr M A J McKillop | Minter Ellison |
| For the Fourth Defendant | Mr L F White | Cathay Lawyers |
HIS HONOUR:
INTRODUCTION
On 15 November 2022, the Court dismissed the plaintiff’s summons filed 13 September 2022 (plaintiff’s final summons) and delivered written reasons (Earlier Reasons). The Court ordered that the issue of the costs of the plaintiff’s final summons be set down for hearing on 8 December 2022.
The parties each filed submissions on the issue of the costs of the plaintiff’s final summons. Some of the parties also addressed various other summonses that have, in effect, been spent (e.g. as a result of the application being discontinued) or determined by the Earlier Reasons. These summonses are:
(a) plaintiff’s summonses filed 22 August 2022 (plaintiff’s summons), 29 August 2022 (plaintiff’s amended summons) and 31 August 2022 (plaintiff’s further amended summons); and
(b) first defendant’s summonses filed 23 August 2022 (first defendant’s summons) and 26 August 2022 (first defendant’s amended summons).
At the hearing on 8 December 2022, the parties agreed that these other summonses should be dismissed and they each made submissions on costs.
These reasons address the costs of all of these summonses (Reasons).
APPLICABLE LAW
The applicable law is well established and was not in dispute between the parties.
Pursuant to s 24 of the Supreme Court Act 1986 the costs of and incidental to the summonses are in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
As recently observed by Connock J in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 2):[1]
…when exercising its discretion to award costs the court is also to have regard to the objects set out in s 9(1) of the CPA [Civil Procedure Act] and may have regard to the matters referred to in s 9(2). The court is also subject to the obligation in s 8(1) of the CPA regarding the overarching purpose referred to in s 7.
[1][2021] VSC 547, [36].
In Kevin Hughes Investments Pty Ltd v Ebert Unit Developments Pty Ltd,[2] Connock J said:
15Principles relevant to the exercise of the Court’s discretion in relation to costs have been addressed in many cases and are well known, aspects of which I recently addressed in Weatherbeeta Limited v Hammersmith Nominees (No 2). In the present case there was no material dispute regarding any relevant matters of principle, and having regard to the particular costs issues that fall to be determined in this case it is convenient and sufficient to refer briefly to the following.
16It is well settled that a guiding principle by which the Court’s discretion as to costs is to be exercised is that the successful party is generally entitled to costs, which was a point recently emphasised by the High Court in Northern Territory v Sangare (Sangare) as follows:
[24]It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion ‘cannot be narrowed by a legal rule devised by the court to control its exercise’, the formulation of principles according to which the discretion should be exercised does not ‘constitute a fetter upon the discretion not intended by the legislature’. Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.
[25]A guiding principle by reference to which the discretion is to be exercised – indeed, ‘one of the most, if not the most, important’ principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the ‘just resolution of the real issues in civil proceedings with minimum delay and expense’, that might have been taken into account to justify refusing the appellant an order for its costs.
[2][2020] VSC 167, [15]-[19] (citations omitted).
17In Chen v Chan (No 2), the Court of Appeal observed as follows:
Relevant principles
[10] The contentions of the parties raise a number of questions relevant to costs orders on appeal. The principles relevant to these questions can be summarised as follows:
(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
(2)The Rules of Court permit significant flexibility in determining questions of costs. In particular, the court is entitled to examine the realities of the case and will attempt to do ‘substantial justice’ as between the parties on matters of costs.
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)Where a court determines to make an order apportioning costs, then it does so primarily as “a matter of impression and evaluation,” rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
(6)Where a number of parties have had the same representation, there is a “rule of thumb” as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.
(7)Usually, an order for costs will be made on a party/party basis. But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved.
18In Diakou v Rouse, the Court of Appeal observed that:
[48]Section 24(1) of the Supreme Court Act 1986 confers on the Supreme Court a wide discretion in deciding questions of costs. However, that discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. There are well-established principles that provide guidance for the exercise of the discretion and avoid it being exercised in an arbitrary or inconsistent manner.
[49]One such well-established principle is that costs usually follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party’s costs. …
…
[50]Consistent with this principle, where the outcome of the proceeding is such that it cannot be said that one party has been successful and the other has been unsuccessful, it may be appropriate that there be no order as to costs. That is also the case in a proceeding where its subject matter or the relief sought are such that neither party can be said to have succeeded. However, the conduct of one of the parties in relation to the litigation may be such as to warrant an order for costs being made against that party.
19As was recently observed by the Court of Appeal in Yue’e Zhao v Suzhou Haishun Investment Management Co Ltd, where there has been no adjudication on the merits of a claim, additional considerations arise:
[9]The parties agree that the general rule to be applied in circumstances such as the present is that stated by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin in the following terms:
…It will be necessary to return in a little more detail to the facts of the case, but it is first necessary to state the principles which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means.
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action….
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant’s taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
[10]In Nichols v NFS Agribusiness Pty Ltd, the New South Wales Court of Appeal applied the principles stated in Lai Qin, as explained in later cases, and allowed an appeal against a trial judge’s decision to award costs. In the course of reviewing the authorities following Lai Qin, Payne JA (Basten and Meagher JJA agreeing) accepted that, absent any consideration of the merits of the proceeding, costs may be ordered where there is a capitulation by one party — in the sense that it ‘effectively surrenders to the other’. In his Honour’s view, this approach is consistent with the judgment of McHugh J in Lai Qin. Payne JA referred to the dissenting judgment of Sackville AJA in Muhibbah Engineering (M) BHD v Trust Co Ltd, and to the reference by Sackville AJA in that decision to the following statement by Burchett J in ONE.TEL Ltd v Deputy Commissioner of Taxation:
It is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.
[11]In Nichols, Payne JA considered that, in Muhibbah Engineering:
Sackville AJA was explaining that when in Lai Qin McHugh J described a case where the party seeking costs “in effect, has succeeded in obtaining the relief sought in the proceedings”, his Honour was referring to a case where one party, after litigating for some time, effectively surrenders to the other.
[12]In fact, the quoted words which Payne JA attributes to McHugh J in Lai Qin do not appear in McHugh J’s judgment. They are a quote from Sackville AJA’s judgment in Muhibbah Engineering. However, the principles stated by McHugh J in Lai Qin were, in his words, intended to ‘govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means’. We accept as a general principle that where a party litigates for some time and then acts so as to effectively surrender or capitulate to the other, that will usually be a strong ground to award costs against the party who has surrendered or capitulated. But each case will depend on its own facts.
In Dale v Clayton Utz (No 3),[3] Hollingworth J said:[4]
Similarly, it is common on the grant or dismissal of an application for an interlocutory injunction to order either that costs be in the proceeding, or reserved. That is in recognition of the fact that there may be various reasons why a party may fail at the interlocutory injunction stage, but nevertheless succeed at trial.
But, once again, that common practice may not prevail in every case. If an interlocutory injunction is refused, it may be necessary to have regard to the reason for refusal; for example, if the application fails because the applicant has not even established a prima facie case, a court may be more willing to order costs against the unsuccessful applicant, than in a case where the applicant fails on the balance of convenience, or on a discretionary ground.
[3][2013] VSC 593 (Dale).
[4]Dale, [18]-[19] (citations omitted).
In Artcraft Pty Ltd v Passingham,[5] J Dixon J said:[6]
The usual order is that the costs follow the event when a plaintiff is unsuccessful in its application for an injunction. There is no reason why costs should not be dealt with at this stage. It is common where an injunction is granted to reserve the question of costs to the trial.
[5][2022] VSC 20 (Artcraft) (citations omitted).
[6]Artcraft, [31]. See also the third defendant’s submissions filed 25 November 2022, [4].
In Ugly Tribe Co Pty Ltd v Sikola & Ors,[7] Harper J said:
[7][2001] VSC 189, [7]-[12] (citations omitted).
7In seeking costs on an indemnity basis, the first defendant is asking the Court to depart from its usual course. Special circumstances must be present to justify such a departure. These include:
(i)The making of an allegation, known to be false, that the opposite party is guilty of fraud.
(ii) The making of an irrelevant allegation of fraud.
(iii)Conduct which causes loss of time to the Court and to other parties.
(iv)The commencement or continuation of proceedings for an ulterior motive.
(v) Conduct which amounts to a contempt of court.
(vi)The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law.
(vii)The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.
8The categories of special circumstances are not closed. The cases must not, therefore, be read “in an endeavour to establish a set of inflexible guidelines which should thereafter be determinative of the manner in which the Court’s discretion is to be exercised [for this] would be to fetter the Court’s discretion”.
9At the same time, the courts should, I think, be astute to avoid a wilderness of single instances. Even worse would be the creation of different regimes in different courts, especially as between the Federal Court and a State Supreme Court. This would encourage the undesirable practice of forum shopping, as well as the almost equally undesirable spectre of frequent post-trial applications for costs to be awarded on some special basis (ie on other than the usual party and party basis).
10 According to Winneke, P. in Spencer’s case (at 147):
“It is well recognised that there is occurring an ever increasing gap between party/party costs and those actually incurred … This … has continued … notwithstanding expressions of view by individual Judges that it is capable, in today’s circumstances, of working injustice: see, for example, per Rogers, J. (as he then was) in Qantas Airways Ltd v Billingham Corp. The practice is designed to reflect a compromise between the interests of successful and unsuccessful litigants. As Handley, JA. observed in Cachia v Hanes the practice is also adopted to provide an ‘important spur to settlement’. Sheppard, J. in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 F.C.R. 225 at 233 restated the practice and pointed out:
‘This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation … or a decision of an intermediate court of appeal or of the High Court would be required to alter it’.”
11The compromise about which Winneke, P. spoke is perhaps justifiable on the basis that potential litigants must not be unnecessarily discouraged from bringing their disputes to the courts. After all success can seldom be guaranteed, if only because – where the facts are in dispute, as they generally are – it is seldom possible to predict with certainty what findings of fact will be made. In these circumstances, an honest plaintiff or defendant might be discouraged from bringing or defending a claim were an adverse result to be followed by an order that the losing party indemnify, or go close to providing an indemnity to, the successful party against the latter's costs.
12The position changes where a litigant acts dishonestly in the litigation, or where the rights and privileges of a litigant are flouted or abused. Then, the rationale for refusing to order that the losing party indemnify an opposite party against that party's costs is less compelling. Indeed, costs are more frequently if not invariably awarded on an indemnity or like basis (such as that of solicitor/client) where findings of dishonesty or serious misconduct have been made against the party ordered to pay.
In PCRZ Investments Pty Ltd v National Golf Holdings Ltd & Anor,[8] Chernov JA said:
36Moreover, the circumstances which the authorities seem to suggest enliven the discretion to award solicitor and client costs, are not present here. It is true that the categories of such circumstances are not closed. Nevertheless, the authorities indicate that, generally, the ordinary cost rule should only be departed from where the losing party has misconducted itself in relation to the proceeding or where the institution of the proceeding was plainly unreasonable, or where the proceeding was issued for an ulterior or collateral purpose.
[8][2002] VSCA 24, [36] (Callaway and Buchanan JJA agreeing) (citations omitted).
Rule 63.20.1 of the Rules provides that if an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is complete, unless the court orders that the costs may be taxed immediately.
In Setka v Abbott,[9] the Court of Appeal said:[10]
The discretion to order that the default position not apply is confined only by the principle that the discretion must be exercised judicially. But it has been held, depending upon the circumstances of the particular matter, that the default position may be upset where — (1) there is prospect of considerable delay in completion of the proceeding; (2) the issue the subject of the interlocutory order was discrete from what will finally require determinations; (3) the party against whom the substantive order was made was guilty of unsatisfactory conduct — described variously as “unreasonable” or “reprehensible”, or as involving a want of “competence and diligence”.
[9][2013] VCSA 376 (Setka) (Warren CJ, Ashley and Whelan JJA) (citations omitted).
[10]Setka, [27].
BACKGROUND
On 22 August 2022, the plaintiff commenced this proceeding.
On the same date, the plaintiff filed the plaintiff’s summons. The plaintiff sought the following substantive relief against all defendants:
A.An interlocutory injunction preventing the Defendants, whether by themselves, their officers, servants or agents, from using, disposing of or otherwise dealing with the 1,598 units of equipment described as L7 Antminer crypto-mining hardware bearing serial numbers set out at pages 142 to 173 of exhibit “STF-1” to the affidavit of Songtao Feng affirmed on 19 August 2022 (Equipment), until the hearing and determination of the proceeding or further order.
B.Further or alternatively, an order preserving the Equipment until the hearing and determination of the proceeding or further order.
C.An order that the Plaintiff’s representatives be authorised to enter the property at 159-171 Wellington Road, Clayton, Victoria, and inspect the Equipment.
On 23 August 2022, the first defendant filed the first defendant’s summons. The first defendant sought the following substantive relief against the second and third defendants:
1.An interlocutory injunction preventing the Second and Third Defendants, whether by themselves, their officers, servants or agents, from using, disposing of or otherwise dealing with the 2,059 units of equipment described crypto-mining machines listed at 52 of exhibit “XZ-1” to the affidavit of Xiaoliang Zeng affirmed on 21 August 2022 (the Equipment), until the hearing and determination of the proceeding or further order.
2.Further or alternatively, an order preserving the Equipment until the hearing and determination of the proceeding or further order.
3.An order that the First Defendant’s representatives be authorised to enter the property at 159-171 Wellington Road, Clayton, Victoria, and inspect the Equipment.
On 23 August 2022, at a mention, undertakings were given, and information provided, to the Court as follows:
A.The plaintiff by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraphs C and/or the plaintiff’s inspection under G below, which the plaintiff ought to pay.
B.The first defendant by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraphs D and/or the first defendant’s inspection under G below, which the first defendant ought to pay.
C.Each of the first, third and fourth defendants by their counsel and solicitor (in the case of the fourth defendant) undertake that, they will not, until 4:00pm on 31 August 2022 or further order whether by themselves, their officers, servants or agents, interfere with, remove from the Premises, dispose of or otherwise deal with, any of the 1598 units of equipment described as L7 Antminer Crypto-mining hardware bearing serial numbers set out at Annexure A to these orders (Yimiao Claimed Equipment).
D.Each of the third and fourth defendants by their counsel and solicitor, respectively, undertake that, they will not, until 4:00pm on 31 August 2022 or further order whether by themselves, their officers, servants or agents, interfere with, remove from the Premises, dispose of or otherwise deal with any of the 2059 units of equipment described as Crypto-mining machines listed at page 52 of exhibit “XZ-1” to the affidavit of Xiaoliang Zeng affirmed on 21 August 2022 (Star Mining Claimed Equipment).
E.The second defendant by its senior counsel informed the Court that it will not in any way interfere with or prevent the inspection by the plaintiff and the first defendant at the site at 159-171 Wellington Road, Clayton (the Premises) as invitees of the Third Defendant as set out in paragraph G below.
F.The fourth defendant by its solicitor informed the Court that it: (a) does not claim ownership of the Yimiao Claimed Equipment or the Star Mining Claimed Equipment; (b) consents to the inspection of the Premises as set out in paragraph G below; (c) will not contend that the inspection breaches the agreement between it and the third defendant; and (d) consents to power to the Yimiao Claimed Equipment or the Star Mining Claimed Equipment being switched off and (e) will not contend that the agreement between the fourth defendant and the third defendant is breached or abandoned by reason of power being switched off to the Yimiao Claimed Equipment or the Star Mining Claimed Equipment.
G.Each of the third and fourth defendants by their counsel and solicitor, respectively, undertake to permit one representative of and one solicitor for the plaintiff (Mr Feng and Mr Qi) and any two of Mr Maolin Chen; Mr Xiaoliang Zeng and/or Rosalie Tong (solicitor) for the first defendant to enter the Premises on 25 August 2022 for the sole purpose of inspecting (including taking any photos of the Yimiao Claimed Equipment and the Star Mining Claimed Equipment), confirming the location and status of, and preparing a written schedule for, each of the Yimiao Claimed Equipment and the Star Mining Claimed Equipment located on the Premises, which will be provided to the second and third defendants as soon as practicable after the visit (but before 12 noon on 29 August 2022), on condition that:
a.a representative of the fourth defendant, Xue Long Li, is in attendance at all times during the site visit;
b.the site visit by the respective representatives and solicitors of the plaintiff and of the first defendant will be supervised by a representative of the third defendant;
c.the representatives and solicitors of the plaintiff must not tamper with, or damage any of the Yimiao Claimed Equipment, but can log into and operate the Yimiao Claimed Equipment that is already connected to power;
d.the representatives and solicitors of the first defendant must not tamper with, operate or damage any of the Star Mining Claimed Equipment, but can log into and operate the Star Mining Claimed Equipment that is already connected to power, to the extent that it is able to identify the Star Mining Claimed Equipment by serial number;
e.the respective representatives and solicitors of the plaintiff and of the first defendant must comply with all reasonable directions of a representative of the third defendant during the visit;
f.the inspection must be conducted within the hours of 8:00am and 5:00pm on 25 August 2022 and any more days, as may reasonably be required;
g.the respective representatives and solicitors of the plaintiff and of the first defendant must keep confidential any information about customers of the third defendant or any equipment which they see during the site visit which is not the Yimiao Claimed Equipment and Star Mining Claimed Equipment; and
h.the third defendant is to make available to the respective representatives and solicitors of the plaintiff and of the first defendant such safety equipment and or machinery or tools appropriate to ensure the inspection can be performed safely and efficiently.
H.The plaintiff, by its counsel, informed the Court that the plaintiff: (a) has not authorised use of the Yimiao Claimed Equipment by anyone other than the plaintiff, or under the agreement between the plaintiff and the first defendant; and (b) has requested that and consents to power to the Yimiao Claimed Equipment being switched off upon completion of the inspection and identification of the Yimiao Claimed Equipment.
I.The first defendant, by its counsel, informed the Court that the first defendant; (a) has not authorised use of the Star Mining Claimed Equipment by anyone other than the first defendant; and (b) has requested that and consents to power to the Star Mining Claimed Equipment being switched off upon completion of the inspection and identification of the Star Mining Claimed Equipment.
J.The first defendant, by its counsel, undertakes to commence any third party proceedings by 4:00pm on 20 September 2022.
The Court also ordered, inter alia, that the hearing of the plaintiff’s summons and the first defendant’s summons be adjourned to 31 August 2022.
On 25 August 2022 there was an inspection at the site and there was evidence that difficulties were encountered during this inspection.[11] At a mention later that day, the Court listed the proceeding for further mention at 12.00pm on 26 August 2022.
[11]See Earlier Reasons, [71].
At the mention at 12.00pm on 26 August 2022 the Court ordered:
1.The plaintiff has leave to file and serve forthwith an amended summons in the form provided to the Court on 26 August 2022.
2.The first defendant has leave to file and serve forthwith an amended summons in the form provided to the Court on 26 August 2022 subject to, in paragraphs 1 and 4 of the proposed summons, the words ‘Second and’ being deleted and ‘Defendants’ replaced with ‘Defendant’.
On 26 August 2022, the first defendant filed the first defendant’s amended summons. The first defendant no longer sought any relief against the second defendant. The first defendant sought the following substantive relief only against the third defendant:
A1.Possession be delivered up immediately to the First Defendant of the 2,059 units of equipment described in pages 52 of exhibit XZ-1 to the affidavit of Xioliang Zeng affirmed on 21 August 2022 (more particularly described at pages 6 to 22 of exhibit XZ-2 to the affidavit of Xioliang Zeng affirmed on 26 August 2022) (Equipment).
1.An interlocutory injunction preventing [the] Third Defendant, whether by themselves, their officers, servants or agents, from using, disposing of or otherwise dealing with the Equipment)[sic].
2.Further or alternatively, an order preserving the Equipment until the hearing and determination of the proceeding or further order.
3.An order that the First Defendant’s representatives be authorised to enter the property at 159-171 Wellington Road, Clayton, Victoria, and inspect the Equipment.
At a further mention at 4.00pm on 26 August 2022 the Court ordered:
1.By 1:00pm on 29 August 2022, the plaintiff and first defendant file and serve any further affidavits and submissions together with a book of authorities in support of their amended summonses filed 26 August 2022. The book of authorities must contain the authorities referred to in the submissions arranged in alphabetical order and be provided in electronic form, by way of single, text-searchable PDF with the passages relied upon highlighted in-text and the relevant paragraph numbers noted on the front page of each authority.
2.By 1:00pm on 29 August 2022, the first defendant file and serve a third party notice and statement of claim.
3.By 4:00pm on 30 August 2022, the third and fourth defendants file and serve any affidavits and submissions in response, together with a book of authorities. The book of authorities must contain the authorities referred to in the submissions arranged in alphabetical order and be provided in electronic form, by way of single, text-searchable PDF with the passages relied upon highlighted in-text and the relevant paragraph numbers noted on the front page of each authority.
On 29 August 2022, there was a further inspection at the site.[12] On 29 August 2022, the plaintiff filed the plaintiff’s amended summons. The plaintiff no longer sought any relief against the second defendant. The plaintiff sought the following substantive relief only against the first, third and fourth defendants:
A1.Possession be delivered up immediately to the Plaintiff of the 1,598 units of equipment described as L7 Antminer crypto-mining hardware bearing serial numbers set out at pages 142 to 173 of exhibit “STF-1” to the affidavit of Songtao Feng affirmed on 19 August 2022 (Equipment).
A.An interlocutory injunction preventing the First, Third and Fourth Defendants, whether by themselves, their officers, servants or agents, from using, disposing of or otherwise dealing with the
1,598 units of equipment described as L7 Antminer crypto-mining hardware bearing serial numbers set out at pages 142 to 173 of exhibit “STF-1” to the affidavit of Songtao Feng affirmed on 19 August 2022 (Equipment), until the hearing and determination of the proceeding or further order.B.Further or alternatively, an order preserving the Equipment until the hearing and determination of the proceeding or further order.
C.An order that the Plaintiff’s representatives be authorised to enter the property at 159-171 Wellington Road, Clayton, Victoria, and inspect the Equipment.
[12]See Earlier Reasons, [72].
On 29 August 2022, the Court made orders in chambers, inter alia:
1.Paragraph 1 of the orders made by Justice Attiwill on 23 August 2022 is vacated.
2.Paragraphs 1, 2 and 3 of the orders made by Justice Attiwill on 26 August 2022, at the mention at 4:00pm on 26 August 2022, are vacated.
3. The proceeding is listed for mention at 10:30am on 31 August 2022.
On 31 August 2022, at a mention, undertakings were given to the Court as follows:
A.The plaintiff by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraph C below, which the plaintiff ought to pay.
B.The first defendant by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraph D below, which the first defendant ought to pay.
C.Each of the first, third and fourth defendants by their counsel and solicitor (in the case of the fourth defendant) undertake that, they will not, until the hearing and determination of the plaintiff’s further amended summons or further order whether by themselves, their officers, servants or agents, interfere with, remove from the Premises, dispose of or otherwise deal with, any of the 1598 units of equipment described as L7 Antminer Crypto-mining hardware bearing serial numbers set out at Annexure A to these orders (Yimiao Claimed Equipment).
D.Each of the third and fourth defendants by their counsel and solicitor, respectively, undertake that, they will not, until the hearing and determination of the plaintiff’s further amended summons or further order whether by themselves, their officers, servants or agents, interfere with, remove from the Premises, dispose of or otherwise deal with any of the 2059 units of equipment described as Crypto-mining machines listed at page 52 of exhibit “XZ-1” to the affidavit of Xiaoliang Zeng affirmed on 21 August 2022 (Star Mining Claimed Equipment).
At the hearing on 31 August 2022 the first defendant confirmed that it would not be proceeding with its amended summons.[13] The Court also ordered, inter alia:
1.By 4:00pm on 31 August 2022, the plaintiff file and serve a further amended summons in the form outlined to the Court at the hearing at 2:30pm on 31 August 2022.
2.By 4:00pm on 5 September 2022, the plaintiff file and serve any further affidavits and submissions (including proposed draft orders).
3.By 5:00pm on 9 September 2022, the first, third and fourth defendants file and serve any affidavits and submissions.
4.By 9:00am on 12 September 2022, the plaintiff file and serve any further affidavits and submissions in reply.
5.The plaintiff’s further amended summons filed 31 August 2022 is listed for hearing at 10:30am on 14 September 2022.
[13]Transcript of Proceedings, Yimiao Australia Pty Ltd v Star Mining Pty Ltd & Ors (Supreme Court of Victoria, S ECI 2022 03213, Attiwill J, 31 August 2022) 82.30-83.2 (‘Transcript of Proceedings 31 August 2022’).
On 31 August 2022, the first defendant filed a third party notice pursuant to r 11.15 of the Supreme Court (General Civil Procedure) Rules (Rules).
On 31 August 2022, the plaintiff filed the plaintiff’s further amended summons. The plaintiff sought the following substantive relief against the first, third and fourth defendants and removed the relief the plaintiff had earlier sought at paragraphs A to C of the plaintiff’s amended summons:
A1.An interlocutory injunction that possession be delivered up immediately by the first, second[14] and/or third defendant to the Plaintiff of the 323
1,598units of equipment described as L7 Antminer crypto- mining hardware bearing serial numbers set out in the Annexure to this Summonsat pages 142 to173 of exhibit “STF-1” to the affidavit of Songtao Feng affirmed on 19 August 2022(Equipment) on such terms as the Court determines.
[14]This was a typographical error. It is unclear whether this should have been a reference to the ‘fourth defendant’ or not included. This is made plain by the list of respondents which are the first, third and fourth defendants.
On 13 September 2022, the plaintiff filed the plaintiff’s final summons. The plaintiff no longer sought any relief against the first or fourth defendants. The plaintiff sought the following substantive relief only against the third defendant:
1.Until the hearing and determination of this proceeding or further order, the Third Defendant deliver up possession immediately to the Plaintiff of:
(a)the units of equipment described as L7 Antminer crypto-mining hardware bearing serial numbers set out in Annexure A to this summons, such that the units are made available to be collected by the Plaintiff and its contractors at the site at 159-171 Wellington Road, Clayton, Victoria during business hours; and
(b)the units of equipment described as L7 Antminer crypto-mining hardware bearing serial numbers set out in Annexure B to this summons, such that it will not interfere with the collection of the units by the Plaintiff and its contractors at the site at 175 Wellington Road, Clayton, Victoria, upon the following undertakings by or on behalf of the Plaintiff or such further or other undertakings as the Court considers appropriate:
A.to abide by any order that the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of the order, which the plaintiff ought to pay;
B.that, until the hearing and determination of this proceeding or until further order, the Plaintiff will not dispose of the equipment delivered up under the order;
C.that it will not contend that the Third Defendant does not have ‘possession’ (within the meaning of the Personal Property Securities Act 2009 (Cth)) of the equipment referred to in paragraph (a) of the order, or ‘control’ (within the meaning of the Personal Property Securities Act 2009 (Cth)) of the equipment referred to in paragraph (b) of the order, solely by reason of the delivery up of the equipment under the order.
On 14 September 2022, at the hearing of the plaintiff’s final summons, undertakings were given to the Court as follows:
A.The plaintiff by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraph C below, which the plaintiff ought to pay.
B.The first defendant by its counsel undertakes to abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of paragraph D below, which the first defendant ought to pay.
C.Each of the first, third and fourth defendants by their counsel undertake that, they will not, until the hearing and determination of the proceeding, or further order whether by themselves, their officers, servants or agents, interfere with, remove from the premises located at 159-171 Wellington Road and 175 Wellington Road, Clayton, dispose of or otherwise deal with, any of the 1598 units of equipment described as L7 Antminer Crypto-mining hardware bearing serial numbers set out at Annexure A to these orders (Yimiao Claimed Equipment).
D.Each of the third and fourth defendants by their counsel, respectively, undertake that, they will not, until the hearing and determination of the proceeding, or further order whether by themselves, their officers, servants or agents, interfere with, remove from the premises, located at 159-171 Wellington Road, Clayton dispose of or otherwise deal with any of the 2059 units of equipment described as Crypto-mining machines listed at page 52 of exhibit “XZ-1” to the affidavit of Xiaoliang Zeng affirmed on 21 August 2022 (Star Mining Claimed Equipment).
The Court also ordered, inter alia:
1.The hearing of the plaintiff’s application, filed 13 September 2022, is adjourned to 10:30am on 15 September 2022.
There were further hearings on 15 September 2022, 27 October 2022 and 3 November 2022. On 15 November 2022, the Court delivered the Earlier Reasons and ordered:
1.Upon the giving of the Undertakings, the plaintiff’s summons filed 13 September 2022 is dismissed.
2.By 4:00pm on 25 November 2022, the third defendant, and any other party seeking its costs, file and serve any submissions on costs (limited to 3 pages).
3.By 4:00pm on 2 December 2022, any other party file and serve any submissions on costs (limited to 3 pages).
4.By 4:00pm on 6 December 2022, the third defendant, and any other party that filed submissions seeking its costs, file and serve any further submissions (limited to 3 pages).
5.The issue of costs of the plaintiff’s summons filed 13 September 2022 is set down for hearing at 9:00am on 8 December 2022.
6. There is liberty to apply.
FIRST DEFENDANTS’ SUMMONSES
The first defendant’s summons sought relief against the second and third defendants. The first defendant’s amended summons only sought relief against the third defendant.
The plaintiff and fourth defendant did not make submissions on the costs of the first defendant’s summonses.
The first defendant submitted that there should be no order as to costs, alternatively the costs should be reserved, alternatively the costs should be costs in the cause.
The second defendant submitted that the first defendant should pay its costs on a standard basis of and incidental to the first defendant’s summons excluding the costs of the hearing that commenced at 4.00pm on 26 August 2022. The second defendant also sought an order pursuant to r 63.20.1 of the Rules that those costs may be immediately taxed. The second defendant did not make submissions on the first defendant’s amended summons.
The third defendant submitted that the costs of the first defendant’s summonses should be costs in the cause or reserved.
In my opinion, it is just and appropriate, for the parties’ costs of the first defendant’s summonses to be reserved. The Court is not in a position, at present, to determine where the justice lies between the parties as to these costs. As a result, it is not necessary for the Court to determine the second defendant’s application pursuant to r 63.20.1 of the Rules that the costs may also be taxed immediately.
First, I reject the first defendant’s submissions that there should be no order as to costs. The parties incurred the costs of the first defendant’s summonses. I reject the first defendant’s submission that as the parties to the first defendant’s summonses were already parties to the plaintiff’s summons that ‘no further costs were incurred by the other parties’.[15] The first defendant sought, inter alia, relief that was unique to its own circumstances concerning its alleged computer equipment at the site.
[15]First defendant’s submissions filed 25 November 2022, [7].
Second, I am not satisfied that the first defendant’s summons for relief against the second defendant ‘lacked any objective arguable merit’ as submitted by the second defendant.
The merits of the first defendant’s summons for relief against the second defendant have not been determined by the Court. The relief was also sought at a time when the first defendant had not commenced any third party proceeding (pursuant to r 11.15 of the Rules) against any defendant. It commenced such a proceeding on 31 August 2022 and only against the third defendant. In my opinion, however, the matters that will be determined at the trial of the plaintiff’s claims against the second defendant may have some relevance as to whether the first defendant’s summons for relief against the second defendant ‘lacked any objective arguable merit’. This includes:
(a)whether the second defendant has been in possession of equipment at the site. I refer to the second defendant’s submissions filed 25 November 2022 at paragraph 3(d) and the plaintiff’s statement of claim at paragraphs 22 to 25; and
(b)whether the second defendant has been a bailee of equipment at the site. I refer to the second defendant’s submissions filed 25 November 2022 at paragraph 3(c) and the plaintiff’s statement of claim at paragraphs 22 to 26.
The second defendant also submitted that none of the affidavits filed by, inter alia, the first defendant supported any arguable claim against it. The first defendant’s application against the second defendant was, however, discontinued within only a few days of being filed (ie on 26 August 2022) and prior to the first defendant having any further opportunity to put on any further evidence or a submission.
The Court is not in a position to make such findings now.
Third, I accept that the first defendant, by the first defendant’s amended summons, ‘for all practical intents and purposes’[16], discontinued the application against the second defendant. This is because the first defendant’s amended summons did not seek any relief against the second defendant. In my opinion this does not, in the circumstances, justify an order that the first defendant pay the second defendant’s costs. In my opinion, the first defendant did not effectively surrender or capitulate to the second defendant. This is because on 23 August 2022 the second defendant informed the Court that it will not in any way interfere with or prevent the inspection by the plaintiff and the first defendant at the site as invitees of the third defendant as that inspection was described in paragraph G in ‘Other Matters’ of the Court’s order made 23 August 2022. The second defendant did more than merely state its obligations at law. It informed the Court that it would, in effect, adhere to those obligations. In my opinion, this was also not a surrender or capitulation by the second defendant to the first defendant. I am satisfied, however, that this had a material effect on the first defendant deciding to discontinue its application against the second defendant:
(a)the first inspection at the site then took place on 25 August 2022;
(b)the application was discontinued against the second defendant on 26 August 2022 by the filing of the first defendant’s amended summons; and
(c)I refer to the correspondence relied upon by the second defendant in its submissions filed 25 November 2022, footnote [2]. I also refer to its submissions filed 22 August 2022. In none of that correspondence, or its submissions, did the second defendant state that it will not in any way interfere with or prevent the inspection by, inter alia, the first defendant at the site as an invitee of the third defendant.
[16]The second defendant’s submissions filed 25 November 2022, [4].
Fourth, I am satisfied that the first defendant then took prompt steps, after the hearing on 23 August 2022, to discontinue the application against the second defendant. It was discontinued on 26 August 2022 by the filing of the first defendant’s amended summons. At the hearing on 25 August 2022, counsel for the second defendant appeared at the commencement of the hearing and said that he was keen to protect the second defendant’s position. The Court then excused counsel for the second defendant from further appearing. Counsel for the second defendant then said that his instructor would observe the proceedings. At the hearing on 26 August 2022 at midday, counsel for the second defendant appeared. During the hearing, the first defendant clarified that the draft of the first defendant’s amended summons had an error as it still referred to the ‘second defendant’. At the hearing, the Court gave leave to the first defendant to amend the defendant’s summons to delete any reference to the ‘second defendant’.
Fifth, the third defendant gave undertakings concerning the subject matter of the first defendant’s summons on 23 August 2022 and the first defendant’s amended summons on 31 August 2022. The fourth defendant also gave such undertakings even though the first defendant’s summonses did not name it as a respondent.
Sixth, at the hearing on 31 August 2022 the first defendant confirmed that it would not be proceeding with its amended summons.[17] The only respondent to the first defendant’s amended summons was the third defendant. The third defendant did not submit that this was, in effect, a surrender or capitulation to the third defendant.
[17]Transcript of Proceedings 31 August 2022 (n 13) 82.30-83.2.
Finally, I reject the second defendant’s submission that r 25.05 of the Rules applies to the present circumstances (ie discontinuance of a summons). Rule 25.05 concerns the discontinuance, or withdrawal of part, of a ‘proceeding, counterclaim or third party notice’. This does not include a summons. This is made clear by the circumstances prescribed by r 25.02 which govern when that discontinuance or withdrawal may take place. None of the circumstances are apt to the discontinuance of a summons. In the event that I am incorrect, and r 25.05 does apply, I am satisfied that it is appropriate to ‘otherwise’ order pursuant to r 63.15. I refer to paragraphs 40 to 48 of the Reasons.
As a result, in all of the circumstances, the costs of the first defendant’s summonses should be reserved.
PLAINTIFF’S SUMMONS
The parties agreed that the plaintiff’s summons should be addressed separately to the plaintiff’s subsequent summonses. This is because the plaintiff’s summons concerned, in effect, a restraint on dealing with, and the preservation and inspection of, its alleged equipment whereas the plaintiff’s amended summons (insofar as it concerns paragraph A1 of the plaintiff’s amended summons),[18] further amended summons and final summons sought delivery up of the equipment which was the subject of the Reasons.
[18]The plaintiff’s amended summons also contained alternate relief for a restraint on dealing with, and the preservation and inspection of, its alleged equipment (paragraphs A to C).
The plaintiff’s summons sought relief against all of the defendants.
The plaintiff submitted that the costs should be costs in the cause or reserved.
The first defendant submitted that the plaintiff should pay its costs.
The second defendant submitted that the plaintiff should pay its costs and that they should be immediately taxed. It made the same submissions, in effect, as it made concerning the first defendant’s summons.
The third defendant submitted that the costs should be reserved or in the cause.
The fourth defendant submitted that the plaintiff should pay its costs on an indemnity basis and it also sought an order pursuant to r 63.20.1 that those costs may be immediately taxed.
In my opinion, it is just and appropriate, for the parties’ costs of the plaintiff’s summons to be reserved.[19] The Court is not in a position, at present, to determine where the justice lies between the parties as to these costs. As a result, it is not necessary for the Court to determine the second and fourth defendant’s applications pursuant to r 63.20.1 of the Rules that their costs may also be taxed immediately or the fourth defendant’s submission that its costs be taxed on an indemnity basis.
[19]As the plaintiff’s amended summons also contained alternate relief for a restraint on dealing with, and the preservation and inspection of, its alleged equipment (paragraphs A to C) it is just and appropriate for the parties’ costs of the plaintiff’s amended summons (insofar as it concerns paragraphs A to C) to also be reserved for the same reasons, excluding the second defendant who had ceased to be a respondent to that application.
First, I am not satisfied that, as submitted by the first defendant, the plaintiff knew, or ought to have known, when it issued the plaintiff’s summons that the first defendant was not in a position to dispose or deal with the equipment that had been allegedly seized by the third defendant. These are matters that will be determined at the trial. For example, I refer to the plaintiff’s statement of claim at paragraphs 13 and 44. The Court is not in a position to make such findings now.
Second, on 23 August 2022 and 31 August 2022 each of the first, third and fourth defendants gave detailed undertakings to the Court with respect to the subject matter of the plaintiff’s summons.
Third, I am not satisfied, as submitted by the second defendant, that the plaintiff’s summons for relief against the second defendant ‘lacked any objective arguable merit’.[20] The merits of the plaintiff’s summons for relief against the second defendant have not been determined by the Court. The findings at the trial will be relevant to whether the plaintiff’s summons for relief against the second defendant ‘lacked any objective arguable merit’. The Court is not in a position to make such findings now. The second defendant also submitted that none of the affidavits filed by, inter alia, the plaintiff supported any arguable claim against it. The plaintiff’s application against the second defendant was, however, discontinued within a week of being filed (ie on 29 August 2022) and prior to the plaintiff having any further opportunity to put on any further evidence or a submission.
[20]Second defendant’s submissions filed 25 November 2022, [2].
Fourth, I accept that the plaintiff, by the plaintiff’s amended summons, ‘for all practical intents and purposes’, discontinued the application against the second defendant. This is because the plaintiff’s amended summons did not seek any relief against the second defendant. In my opinion, this does not, in the circumstances, justify an order that the plaintiff pay the second defendant’s costs. In my opinion, the plaintiff did not effectively surrender or capitulate to the second defendant. As I have already said, this is because on 23 August 2022 the second defendant informed the Court that it will not in any way interfere with or prevent the inspection by, inter alia, the plaintiff, at the site as an invitee of the third defendant as that inspection was described in paragraph G in ‘Other Matters’ of the Court’s order made 23 August 2022. The second defendant did more than merely state its obligations at law. It informed the Court that it would, in effect, adhere to those obligations. In my opinion, this was also not a surrender or capitulation by the second defendant to the plaintiff. I am satisfied, however, that this had a material effect on the plaintiff deciding to discontinue its application against the second defendant:
(a) inspections took place on 25 August 2022 and 29 August 2022; and
(b) the application was discontinued against the second defendant on 29 August 2022 by the filing of the plaintiff’s amended summons; and
(c) I refer to the correspondence relied upon by the second defendant in its submissions filed 25 November 2022, footnote [2]. I also refer to its submission filed 22 August 2022. As I have already said in these Reasons, in none of that correspondence, or its submissions, did the second defendant state that it will not in any way interfere or prevent the inspection by, inter alia, the plaintiff at the site as an invitee of the third defendant.
Fifth, I am satisfied that the plaintiff then took prompt steps, after the hearing on 23 August 2022, to discontinue the application against the second defendant. It was discontinued on 29 August 2022 by the filing of the plaintiff’s amended summons. I refer to the Reasons at paragraph 46 concerning the events on 25 and 26 August 2022.
Sixth, I am not satisfied, as submitted by the fourth defendant, that the plaintiff’s conduct concerning the plaintiff’s summons was unsatisfactory.
The fourth defendant submitted:[21]
…Yimiao was aware from late July 2022, before the Summons was first issued, that Genesis was not in possession of the Equipment, was not the tenant of the Mining Site nor of the Container, and had no access to those premises, having been shut out of access on 25 July.
[21]Fourth defendant’s submissions filed 25 November 2022, [4].
These are matters that will be determined at the trial. Further, on 22 August 2022, the fourth defendant’s solicitors informed the plaintiff’s solicitors that the fourth defendant did not oppose the orders sought in the plaintiff’s then unfiled summons.[22] As I have already said in these Reasons at paragraph 60, on 23 August 2022 the fourth defendant gave detailed undertakings to the Court with respect to the subject matter of the plaintiff’s summons.
[22]Ibid, [6].
The fourth defendant also submitted:[23]
The General Indorsement of Claim annexed to Yimiao’s Writ dated 19 August named Genesis as a defendant but did not claim monetary relief in detinue or conversion against it.
[23]Ibid, [5].
The General Indorsement of Claim does, however, contain a claim by the plaintiff against the fourth defendant concerning title to the equipment at paragraphs 19 and 30 to 33.
I also reject the fourth defendant’s submission that the plaintiff’s summons did not seek any substantive relief against it.[24] Paragraph A of the plaintiff’s summons sought substantive relief against the ‘Defendants’, this included the fourth defendant.
[24]Ibid, [6(a)].
Seventh, I accept that the plaintiff, by the plaintiff’s further amended summons, discontinued the application against the first, third and fourth defendants concerning dealing with, and inspection and preservation of, the plaintiff’s alleged equipment. This is because the plaintiff’s further amended summons discontinued that relief. In my opinion this does not, in the circumstances, justify an order that the plaintiff pay their costs. In my opinion, the plaintiff did not effectively surrender or capitulate to them. This is because on 23 August 2022 and 31 August 2022, they gave undertakings concerning dealing with, and inspection of, the plaintiff’s alleged equipment. I am satisfied that this, in effect, had a material effect on the plaintiff deciding to discontinue its application against them for dealing with, and inspection and preservation of, the plaintiff’s alleged equipment:
(a) inspections took place on 25 August 2022 and 29 August 2022; and
(b) the application concerning dealing with, and inspection and preservation of, the plaintiff’s alleged equipment was discontinued against them on 31 August 2022 by the filing of the plaintiff’s further amended summons.
Finally, I refer to paragraph 49 of the Reasons concerning the application of r 25.05 to the present circumstances. In the event that I am incorrect, and r 25.05 does apply, I am satisfied that it is appropriate to ‘otherwise’ order pursuant to r 63.15. I refer to paragraphs 59 to 70 of the Reasons.
As a result, in all of the circumstances, the costs of the plaintiff’s summons should be reserved.
PLAINTIFF’S AMENDED SUMMONS (PARAGRAPH A1), FURTHER AMENDED SUMMONS AND PLAINTIFF’S FINAL SUMMONS
The plaintiff submitted that the costs should be reserved, or alternatively, the costs should be in the cause. It made the following key submissions:
(a) the Court is yet to make any determinations of fact or law, including about whether the third defendant has any security interest which would entitle it to deny the delivery up of the equipment to the plaintiff;
(b) if the proceeding is decided in favour of the plaintiff then the defendants have engaged in tortious conduct and never had any basis to resist the plaintiff’s application;
(c) the party that should bear the costs of the interlocutory application should be determined by the result of the substantive litigation; and
(d) the costs of the injunction application have been significantly exacerbated by the conduct of the defendants, particularly by the second and fourth defendants.
The first defendant submitted that the plaintiff should pay its costs. It made the following key submissions:
(a) it was not until 13 September 2022, upon the filing of the plaintiff’s final summons, that the first defendant was removed as a party to the plaintiff’s application. This was done without notice to the first defendant and after the first defendant had prepared for then hearing;
(b) the first defendant did not oppose the plaintiff’s application for delivery up;
(c) it was necessary for the first defendant to continue to monitor and participate in the plaintiff’s application for delivery up. The first defendant submitted:[25]
[25]First defendant’s submissions filed 27 November 2022, [11].
…the outcome of the interlocutory application and the evidence filed would inevitably effect Star Mining’s defence to the claims brought by Yimiao.
(d) the first defendant incurred wasted costs that would not have been incurred by it but for the plaintiff’s decision to issue and pursue its applications.
The second defendant did not make any submissions on the costs of the plaintiff’s amended summons, further amended summons and final summons. It was not a party to any of these summonses.
The third defendant submitted that the plaintiff should pay its costs (including reserved costs) to be taxed in default of agreement. It made the following key submissions:
(a) the plaintiff’s application was dismissed;
(b) the third defendant was the successful party;
(c) it is basic justice that a successful party should be compensated for expenses that is has incurred because it has been obliged to litigate by the unsuccessful party;
(d) an unsuccessful plaintiff for injunctive relief should pay the costs;
(e) the proceeding has not been necessitated solely by the conduct of third defendant. The third defendant submitted:[26]
[26]Third defendant’s reply submissions filed 6 December 2022, [2].
Yimiao delivered the subject equipment to the Star Mining pursuant to an arrangement recorded in WeChat messages and knowingly delivered the equipment to the premises where it is currently located. Cyber Intelligence took the bailment of the equipment unaware of the existence of Yimiao or Star Mining. Cyber Intelligence incurred costs in setting up the mine sites and supplied electricity to Genesis on credit on the basis that it had security in the equipment.
(f) the plaintiff chose to deny the existence of the third defendant’s security interest and seek delivery of the plaintiff’s alleged equipment;
(g) the third defendant has not engaged in any conduct that has interfered with the efficient and just resolution of the plaintiff’s application;
(h) the third defendant has maintained a consistent position throughout the proceeding concerning its interest in the plaintiff’s alleged equipment;
(i) the matters which caused the plaintiff’s application to be unsuccessful (ie the plaintiff’s undertaking as to damages) were known to the plaintiff at an early stage of the proceeding; and
(j) the plaintiff’s conduct (ie in relation to supporting its undertaking as to damages) necessitated a number of court appearances and caused it to be more lengthy than it should have been.
The fourth defendant submitted that the plaintiff should pay its costs on an indemnity basis and also sought an order pursuant to r 63.20.1 that the costs may be taxed immediately. It made the following key submissions:
(a) the plaintiff’s did not succeed in obtaining the relief;
(b) the plaintiff’s conduct was unsatisfactory;
(c) it was not until 13 September 2022, upon the filing of the plaintiff’s final summons, that the fourth defendant was removed as a party to the plaintiff’s application. This was done without any explanation to the fourth defendant and after the fourth defendant had prepared for the hearing;
(d) the proceedings are at an early stage and will be delayed;
(e) the fourth defendant had no practical choice but to participate in the plaintiff’s application;
(f) the fourth defendant ultimately opposed the plaintiff’s application;
(g) the plaintiff’s submissions that the entire proceeding has been caused by the tortious conduct of the defendants presupposes the outcome of the trial; and
(h) the fourth defendant’s position has been consistent and has not altered.
First defendant
In my opinion, it is just and appropriate for the plaintiff to pay the first defendant’s costs of the plaintiff’s amended summons (insofar as it concerns paragraph A1 of the plaintiff’s amended summons) and further amended summons (including any reserved costs). The plaintiff effectively surrendered and capitulated to the first defendant concerning its interlocutory application for delivery-up on the eve of the hearing. On 13 September 2022, the plaintiff filed its final summons which did not seek any relief against the first defendant. The hearing was set to commence on 14 September 2022. I accept the plaintiff’s submission that it did not discontinue or withdraw its claims in the proceeding (ie its final substantive claims) against the first defendant. However, for the reasons I have already given, it discontinued its interlocutory application for delivery up against it and on the eve of the hearing.
In my view, it is also just and appropriate for the first defendant’s costs of the plaintiff’s final summons to be its costs in the cause. The first defendant did not oppose the plaintiff’s final summons. As I have already said, it was not a party to that summons. In my opinion, however, it is was reasonable for it to attend at the hearing. It filed a submission and also made oral submissions. The plaintiff made no objection to its participation in the hearing. Its costs should be its costs in the cause.
The plaintiff submitted that the first defendant is contractually obliged to indemnify it for any loss caused by the first defendant’s negligence and that if it succeeds in its claim against the first defendant in negligence the costs paid by the plaintiff would be recoverable under that indemnity. In my opinion, this is irrelevant to what is the just and appropriate order for costs. The plaintiff also did not explain how this matter is relevant to the Court’s consideration of the issue of costs.
Third defendant
In my opinion, it is just and appropriate for the plaintiff to pay the third defendant’s costs of the plaintiff’s amended summons (insofar as it concerns paragraph A1 of the plaintiff’s amended summons), the further amended summons and the plaintiff’s final summons (including any reserved costs).
First, the plaintiff’s interlocutory application for delivery up by the third defendant was dismissed. The plaintiff did not succeed in obtaining its injunction. The third defendant was the successful party. The Court found that there was a serious question to be tried.[27] The Court also stated: ‘I am of the view that, when taking into account the serious questions to be tried and factors on the balance of convenience, the course which carries the lesser risk of injustice is to refuse the application for injunctive relief.’[28]
[27]Earlier Reasons, [95].
[28]Ibid, [181].
Second, the Court found that one of the factors that weighed against the grant of an injunction was that the undertakings proffered by the plaintiff were inadequate.[29] The provision of an adequate undertaking was wholly within the control of the plaintiff.
[29]Ibid, [152].
Third, I accept that the Court has not made any findings concerning whether the third defendant has, in fact, any security interest which entitles it to deny the delivery up of the equipment to the plaintiff. The plaintiff submitted that if the proceeding is ultimately decided in its favour, the defendants have engaged in tortious conduct and never had any basis to resist the plaintiff’s application. The plaintiff, however, ultimately did not contend on the application for the injunction that the third defendant’s alleged security interest did not arise or was not arguable.[30] It alleged that it was weak. In those circumstances, I do not consider that any injustice would be caused to the plaintiff in the event that the Court orders the plaintiff to pay the costs of the application for the injunction and then subsequently determines, after a trial, that the third defendant does not have any security interest. The third defendant notified the plaintiff of its alleged security interest as early as 30 August 2022.[31]
[30]Ibid, [124] and [126].
[31]Plaintiff’s submissions filed 6 September 2022, [21(f)].
Fourth, the plaintiff submitted that the third defendant’s conduct is such that it should not be entitled to its costs. In this context, the plaintiff submitted that the costs of the injunction application have been significantly exacerbated by the conduct of, inter alia, the third defendant. The plaintiff relied upon its submissions dated 5 September 2022 (filed 6 September 2022) at paragraph 21 and other matters set out in its submissions filed 2 December 2022 at paragraphs 17 to 24.
I am not satisfied that the costs of the injunction application have been significantly exacerbated by any of the conduct relied upon:
(a) The plaintiff did not identify how any of the conduct relied upon resulted in the costs of the application being ‘significantly exacerbated’.
(b) Most of the conduct relied upon of the third defendant took place prior to the hearing of the application for the injunction.
(c) The injunction application was hard fought by both the plaintiff and the third defendant.
(d) The conduct relied upon demonstrates that the third defendant notified the plaintiff of its alleged security interest as early as 30 August 2022.[32]
[32]Plaintiff’s submissions filed 6 September 2022, [21(f)].
(e) The plaintiff submitted that the third defendant made express representations that the plaintiff’s equipment was stored only in two rooms at the site and expressly denied knowledge of other locations that the machines might be located. It relied upon evidence in an affidavit of Hao Qi made 30 August 2022 at paragraph 21 in which Hao Qi deposed as follows:
Following the above [ie the inspection on 29 August 2022] Neil McAteer and I asked Mr McNaught where any further Yimiao Equipment could be held on the Premises. Mr McNaught said that he had been told all of the crypto mining equipment was located in the First Room and Back Room, and that the Premises were otherwise fully tenanted by other third parties
(f) On 29 August 2022, the plaintiff’s solicitors sent an email to the third defendant’s solicitors in which they stated, inter alia:[33]
[33]See affidavit of Christina McCudden sworn 30 August 2022, exh CMC-2, pgs 17-18 (emphasis added).
When our team asked John McNaught whether the further units could be on site, he stated that he did not know, as he had been told all of the data mining equipment was located in the two locations…
(g) In response, on 30 August 2022, the third defendant’s solicitors sent an email to the plaintiff’s solicitors in which they identified the additional site for the mining equipment (ie the containers).[34]
[34]Ibid, pg 16.
(h) I am not satisfied that this establishes that the third defendant engaged in making ‘false representations’ about the location of the plaintiff’s mining equipment. This is because once the issue of the whereabouts of the equipment was raised by the plaintiff’s solicitors with the third defendant’s solicitors they received a prompt response.
(i) The plaintiff further submitted that the third defendant initially denied having access to the container site and then subsequently submitted, once the plaintiff sought delivery up of the equipment, that the container site was a hosting location controlled by it. In my Earlier Reasons at paragraph 107(b) I stated:
Container Rooms on the Adjacent Premises. Mr Xuelong Li (Genesis) gave evidence that CIT is the keeper of the keys and that the Container Rooms are kept locked. As I have stated earlier this is inconsistent with the statement in the email from CIT’s solicitors to Yimiao’s solicitors on 30 August 2022 that ‘Cyber does not have access to the Genesis mining site at the 175 Wellington Premises.
(j) I accept that the evidence establishes that the third defendant has made inconsistent statements about its ability to access the container site. I am not satisfied, however, that this conduct resulted in the costs of the injunction application being significantly exacerbated. I am also not satisfied that this conduct is of such a nature that the third defendant should not be entitled to its costs.
Fifth, the plaintiff made submissions about the third defendant’s ‘motives for resisting the application’ and ‘its true reason for holding onto the equipment’.[35] The plaintiff did not identify how this was relevant to the issue of costs. The plaintiff relied upon a summary of the transcript at paragraph 23 of its submissions filed 2 December 2022, in support of this submission. Mr McKillop, for the third defendant, did not make any reference to any ‘true reason’ for the third defendant holding onto the equipment and continued to refer to the third defendant as a ‘secured creditor’. I am not satisfied, to the extent that it was submitted on this application, that the third defendant had some ulterior motive in opposing the plaintiff’s application that was separate to its alleged interests as a secured creditor.
[35]Plaintiff’s submissions filed 2 December 2022, [23].
Sixth, the plaintiff submitted that the entire proceeding has been necessitated by the conduct of, inter alia, the third defendant. It also submitted, however, that the Court has yet to make any findings about that conduct.
Seventh, the plaintiff submitted that there are significant and concerning inconsistencies in the evidence and positions of, inter alia, the third defendant. It also submitted, however, that the Court has not made any findings about those matters.
Eighth, the plaintiff submitted that there is no prejudice to the third defendant of its costs being reserved now as, if it does establish that it has the security interest at trial, it will have its costs. For the reasons I have already given, in my opinion, it is just and appropriate that the plaintiff pay the third defendant’s costs and that they not be reserved or in the cause.
Fourth defendant
In my view, it is just and appropriate for the plaintiff to pay the fourth defendant’s costs of the plaintiff’s amended summons (insofar as it concerns paragraph A1 of the plaintiff’s amended summons) and further amended summons (including any reserved costs). The plaintiff effectively surrendered and capitulated to the fourth defendant concerning its interlocutory application for delivery-up. On 29 August 2022, the plaintiff filed the amended summons that named the fourth defendant as a respondent and sought substantive orders against the first, third and fourth defendants, including for delivery up (paragraph A1 of the plaintiff’s amended summons). It also sought an order for costs against the fourth defendant ‘if and to the extent that it opposes the relied sought’. On 31 August 2022, the plaintiff filed the further amended summons that named the fourth defendant as a respondent but did not seek any substantive orders against the fourth defendant (except as to costs), including any order for delivery up.[36] On 13 September 2022, the plaintiff filed the final summons that did not name the fourth defendant as a respondent and did not seek any relief against the fourth defendant. It discontinued the interlocutory application against the fourth defendant. As I have already said, the hearing was set to commence on 14 September 2022.
[36]As I have already said in these Reasons at footnote 14, the reference in paragraph A1 to the ‘second defendant’ was a typographical error. It is unclear whether this should have been a reference to the ‘fourth defendant’ or not included. This is made plain by the list of respondents which are the first, third and fourth defendants.
In my view, it is also just and appropriate for the fourth defendant’s costs of the plaintiff’s final summons to be its costs in the cause. As I said in my Earlier Reasons at paragraph [5]: ‘The fourth defendant (Genesis) initially submitted that it did not oppose the summons or the form of order proposed by CIT [the third defendant], but when further questioned by the Court, submitted that it opposed the form of order proposed by Yimiao. It also submitted that if Yimiao’s proposed order was amended to include certain references to Genesis (ie the fourth defendant) then it would not oppose Yimiao’s summons’. As I have already said, it was not a party to the plaintiff’s final summons. Its opposition to the plaintiff’s final summons was very limited and did not form the basis upon which the Court dismissed the application. In my opinion, however, it was reasonable for it to attend at the hearing as:
(a) It filed submissions and evidence and also made oral submissions.
(b) The plaintiff made no objection to its participation in the hearing.
(c) The plaintiff submitted on this application concerning costs that, although the fourth defendant proposed undertakings during the hearing, it never established a legal basis for seeking such undertakings. The fourth defendant submitted that it had a legal basis as a sub-bailee of the equipment. In my opinion, these are matters for trial. In my opinion, given its alleged interest, it was reasonable for it to attend the hearing and put its position.
I reject the plaintiff’s submission in paragraphs 25 to 26 of its submissions filed 2 December 2022 that the fourth defendant engaged in conduct that makes its application for costs untenable. First, the plaintiff did not explain why this made the fourth defendant’s application for costs untenable. Second, I make the following observations concerning the conduct in paragraph 25 of its submissions:
(a) As to paragraph 25(a): The plaintiff’s submission is not an accurate summary of the document referred to. The fourth defendant stated that it did not have ‘ownership’ and demanded the third defendant return the equipment to avoid unnecessary proceedings. In any event, this conduct did not cause the plaintiff to amend its relief and I am not satisfied that it otherwise caused unnecessary costs.
(b) As to paragraph 25(b): This conduct of the fourth defendant took place after the plaintiff had filed its final summons and after the hearing had commenced. It did not cause the plaintiff to amend its relief and I am not satisfied that it otherwise caused unnecessary costs.
(c) As to paragraph 25(c): I refer to these Reasons at paragraph 91. The plaintiff initially made an application for delivery up against the fourth defendant which it discontinued.
(d) As to paragraph 25(d): I refer to these Reasons at paragraph 92(c).
The plaintiff submitted that to the extent that any costs are ordered to be paid by the plaintiff to any defendant those costs will ultimately be paid by the fourth defendant. In my opinion, this is irrelevant to what is the just and appropriate order for costs. The plaintiff also did not explain how this matter is relevant to the Court’s consideration of the issue of costs.
The fourth defendant sought its costs on an indemnity basis. The fourth defendant relied upon the conduct of the plaintiff. First, with respect to plaintiff’s conduct alleged in the fourth defendant’s submissions filed 25 November 2022 at paragraphs 4 and 5, I refer to my Reasons at paragraphs 64 to 69 above. Secondly, with respect to the plaintiff’s conduct alleged in the fourth defendant’s submissions filed 25 November 2022 at paragraphs 6 and 7, even if the plaintiff engaged in that conduct, I am not satisfied that this justifies an award of costs on an ‘indemnity basis’. Even accepting (without finding) that the successive versions of the plaintiffs summonses were confusing to the fourth defendant, I do not consider this warrants an order for indemnity costs.
The fourth defendant also applied pursuant to r 63.20.1 for an order that it may immediately tax its costs. First, it relied upon the same alleged conduct of the plaintiff that it relied upon concerning indemnity costs. I refer to my Reasons at paragraph 95. In my opinion, the plaintiff’s conduct is not such as to justify an order pursuant to r 63.20.1 of the Rules. Secondly, it submitted that there will be considerable delay in the completion of the proceeding. I do not accept this submission. The proceeding is listed for a trial commencing on 23 October 2023. Thirdly, it submitted that the categories set out in Setka are not closed and submitted that there is a risk that any final costs order will go unfulfilled due to the impecuniosity of the plaintiff. The relevance of this to its application under r 63.20.1 was not further explained by the fourth defendant. Even assuming (without finding) that the plaintiff is impecunious, I am not satisfied that this is relevant to the exercise of my discretion under r 63.20.1. This is because if the costs were taxed immediately it would not mean that the fourth defendant would recover them in any event. As a result, I will not make an order pursuant to r 63.20.1 of the Rules.
CONCLUSION
In conclusion, I will make the following orders:
(a) The first defendant’s summonses filed 23 August 2022 and 26 August 2022 are dismissed.
(b) The parties’ costs of the first defendant’s summonses filed 23 August 2022 and 26 August 2022 are reserved.
(c) The plaintiff’s summons filed 22 August 2022 is dismissed.
(d) The parties’ costs of the plaintiff’s summons filed 22 August 2022 are reserved.
(e) The plaintiff’s summonses filed 29 August 2022 and 31 August 2022 are dismissed.[37]
[37]The Court has already made an order dismissing the plaintiff’s summons of 13 September 2022.
(f) The costs of the plaintiff and of the first, third and fourth defendants of the plaintiff’s summons filed 29 August 2022 (insofar as it concerns paragraphs A to C) are reserved.
(g) The plaintiff pay the costs of the first, third and fourth defendants of the plaintiff’s summons filed 29 August 2022 (insofar as it concerns paragraph A1) and 31 August 2022 (including reserved costs).
(h) The costs of the first and fourth defendants of the plaintiff’s summons filed 13 September 2022 are their costs in the cause.
(i) The plaintiff pay the third defendant’s costs of the plaintiff’s summons filed 13 September 2022 (including reserved costs).
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SCHEDULE OF PARTIES
| YIMIAO AUSTRALIA PTY LTD (ACN 657 775 758) | Plaintiff |
| - and - | |
| STAR MINING PTY LTD (ACN 656 484 525) | First Defendant |
| 3V DEVELOPMENT AUSTRALIA PTY LTD (ACN 611 589 489) | Second Defendant |
| CYBER INTELLIGENCE TECH PTY LTD (ACN 655 149 161) | Third Defendant |
| GENESIS MINING PTY LTD (ACN 658 242 721) | Fourth Defendant |
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