Yu v Wei (No 3)

[2021] NSWDC 818

District Court

New South Wales

Medium Neutral Citation:

Yu v Wei (No 3) [2021] NSWDC 818

Hearing dates:

11 February 2021

Date of orders:

12 February 2021

Decision date:

12 February 2021

Jurisdiction:

Civil

Before:

P Taylor SC DCJ

Decision:

No order as to the costs of the first defendant in the proceedings.

Catchwords:

COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion - Orders when proceedings involve multiple parties – Parties with same interests

Legislation Cited:

Civil Procedure Act 2005, s 98

Uniform Civil Procedure Rules 2005, r 42.1

Cases Cited:

Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5

Bamco Villa Pty Ltd v Montedeen Pty Ltd (Unreported, Supreme Court of Victoria, 16 March 1998, Hansen J)

BrimaudvBoston Securities EntertainmentInvestments Pty Ltd [1998] FCA 1392

David Weiping Chen v Kim Man Chan (No 2) [2009] VSCA 233

GrantvJohn Grant & Sons Pty Ltd (1954) 91 CLR 112

Interchase Corp LtdvACN 010 087 573 Pty Ltd [2000] QSC 013

King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204

Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256

Waterman v Gerling (Costs) [2005] NSWSC 1111

Yu v Wei [2020] NSWDC 647

Category:

Costs

Parties:

Guo Jun Yu (plaintiff)
Park Zuliang Wei (first defendant)
Top Pacific Group Pty Ltd (second defendant)

Representation:

Counsel:
Mr A J Macauley (plaintiff)
Mr F Santisi (first defendant)

Solicitors:
Zhang Shijing Lawyers (plaintiff)
GOH Lawyers (first defendant)

File Number(s):

2018/00179714

Publication restriction:

None

Judgment

Introduction

1. Guo Jun Yu sued Park Zuliang Wei and his company, Top Pacific Group Pty Ltd.  The trial comprised four days of evidence and two days of submissions.  Judgment was ordered in favour of Mr Yu for $246,153.68, inclusive of interest, against Top Pacific Group, but the claim against Mr Wei was dismissed. ^[1]   Top Pacific Group was ordered to pay Mr Yu's costs.  The costs in respect of Mr Wei were reserved.

   1. Yu v Wei [2020] NSWDC 647.

Application

2. Mr Wei applies for an order that Mr Yu pay Mr Wei's costs. ^[2]   Mr Yu seeks that the court order be that there be no order as to the costs as between Mr Yu and Mr Wei or, as an alternative, that Mr Yu pay a small proportion of Mr Wei's costs.

   2. First defendant’s costs submissions, undated, at [34].

Background 

3. The judgment identified six issues for determination.  They were:

“1.   Was the cheque paid for Mr Wei’s antique furniture or as part payment of an investment in the development property?

2.   Did Mr Wei agree to pay the $200,000 into the development company that purchased the property?

3.   Was Mr Wei or Top Pacific Group unjustly enriched by the payment from Mr Yu, and liable in restitution to refund the amount?

4.   Was Mr Yu entitled to claim damages from Mr Wei for any breach of a October 2013 agreement?

5.   Is Mr Wei liable in damages for breach of the Shareholders/Unitholders Agreement of 11 February 2014 by under-investing by $200,000?

6.   Did the releases in deeds executed by Mr Wei, Mr Yu, Top Pacific Group and others extinguish any liability of Mr Wei or Top Pacific Group?” ^[3]

3. Yu at heading “B. Issues”, p 1.

4. The first issue consumed most of the time spent on the evidence, but taking into account submissions, each of the issues were significant, save that issue 2 overlapped with issue 1 and there was nothing in issue 4 once the existence of such an agreement (issue 2) was rejected. 

5. In respect of the issues, Mr Yu was successful on the first,^[4] the third,^[5] and the fifth. ^[6]   Mr Wei, in respect of his own defence, was successful on issue 2^[7] and issue 6. ^[8]   He failed on a subordinate issue about the existence of the March agreement and the related conversation. ^[9]  

   4. Yu at [52].

   5. Yu at [88].

   6. Yu at [92]-[97].

   7. Yu at [56].

   8. Yu at [111].

   9. E.g. Yu at [61].

6. Accordingly, both parties had success on some of the issues: Mr Yu a little more so, but Mr Wei was successful in resisting the claim against him as a defendant.  That success depended on the construction of the deeds of release, apart from which Mr Wei would have been liable.

7. Mr Wei was the secretary, director and controlling mind of Top Pacific Group and with or by his wife, owned the shares of Top Pacific Group.  No significance was attributed to the difference between Mr Wei and his wife, Ms Zhang, either at the trial, ^[10] or at the costs argument.  Mr Wei and Top Pacific Group had common legal representation.  Top Pacific Group is now in liquidation, although both parties urged upon me, and I accept, that that is not a relevant factor to the question of the appropriate order concerning Mr Wei's costs.

   10. See Yu at [11]-[13].

Principles

8. Section 98 of the Civil Procedure Act 2005 gives the Court a discretion in relation to costs, but that discretion is subject to the rules of court and other legislation. Rule 42.1 of the Uniform Civil Procedure Rules 2005 provides that costs should follow the event unless it appears to the Court that some other order should be made. Generally, the relevant "event" is success in the proceedings or matter determined, which in the ordinary case would warrant an order in the successful party's favour.  There are exceptions to this rule, such as where a successful party unnecessarily lengthens the proceedings,^[11] but the onus lies on the losing party to establish a basis for a departure from the usual rule. ^[12]   Only in exceptional cases would a successful party, and perhaps particularly a defendant, be both deprived of costs and ordered to pay the opponent's costs,^[13] but Mr Yu does not seek such an order here.

   11. Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 at [97]-[98].

   12. Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10].

   13. Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5.

9. The parties accepted there is a "rule of thumb" that a successful party sharing representation with other unsuccessful parties should get his proportionate share of the costs incurred on behalf of all, plus any costs incurred exclusively in respect of their claim. ^[14]   But the rule is not automatically applied; it must give way to questions of fairness and regard must be had to the nature of the case. ^[15]  

   14. David Weiping Chen v Kim Man Chan (No 2) [2009] VSCA 233 at [10(6)].

   15. King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [25]-[29].

10. In David Weiping Chen v Kim Man Chan, ^[16] the Court recognised that where the successful party has had mixed success on a multiplicity of issues, that may be reflected in a party receiving only a portion of its costs. ^[17]

    16. [2009] VSCA 233.

    17. At [10(3)].

11. These matters may indicate that in the present circumstance, the first defendant should receive a discounted amount, less than the 50% of the defendants’ costs.  50% because the other 50% was, actually or notionally, incurred by his co‑defendant, Top Pacific Group, and a discount on that proportion because he failed on more of the issues and the one that consumed the most time in the major or evidentiary part of the trial.  This calculation might be complicated by issues that are exclusively directed to one party or the other, but in this case, none of the major issues could be so identified. 

12. Mr Yu's principal submission was that this discounted amount of less than 50% should, in fact, in the circumstances of this case, be that there is no order as to costs.  He relied upon three decisions, namely Interchase Corp Ltd v ACN 010 087 573 Pty Ltd,^[18] Bamco Villa Pty Ltd v Montedeen Pty Ltd, ^[19] and Brimaud v Boston Securities Entertainment Investments Pty Ltd. ^[20]

    18. [2000] QSC 013.

    19. (Unreported, Supreme Court of Victoria, 16 March 1998, Hansen J).

    20. [1998] FCA 1392.

13. In the Interchase decision, White J determined that the Court should not order that costs follow the event because “there was joint representation and where the ‘successful’ party would have had to give evidence whether or not he had been a party”.^[21]  

    21. At [37].

14. In Bamco Villa, Hansen J also referred to these factors and the additional one that the successful defendant owned and controlled the unsuccessful defendant and "I do not consider that the trial was lengthened or made more expensive to an appreciable extent by reason of his joinder". It was significant that the successful party "controlled and made the decisions for the [unsuccessful party] which led to the litigation".

15. In Brimaud, Emmett J referred to the joint representation and the circumstance that additional costs due to specific allegations against the successful party were ancillary or subsidiary.  His Honour thought that the orders would be different if there was separate representation reasonably provided for the successful party.  His Honour also indicated that it would be inappropriate "to analyse in precise detail where costs have been wrongly incurred". 

16. Of course, these matters in these decisions are mere factors or guides as to what may be appropriate and fair as to costs.  Each case has its own peculiarities and must be decided on its own facts.

17. In the present case, there was shared legal representation.  The case against both concerned the same sum of money provided by way of a cheque to Mr Wei as reimbursement for part of his contribution to the project, which contribution was paid by Top Pacific Group.  The cheque was, at Mr Wei's request, made payable to Top Pacific Group.  The principal defence, at least until final submissions, advanced by Mr Wei and Top Pacific Group, was that the funds were payment for antiques, a defence that wholly failed.  Mr Wei, as the controlling mind of Top Pacific Group, made the decisions for both him and his company in the litigation and there was a commonality of issues such that no significant issue on which Mr Wei was successful was exclusively related to his defence - issue 2 was an aspect of issue 1, issue 4 was ancillary to issues 1 and 2, and Mr Wei was unsuccessful on issue 5.

18. It is also apparent that Mr Wei was a necessary witness to the defence by Top Pacific Group.  Mr Wei submitted that had he not been joined, the proceedings against Top Pacific Group may not have been defended, but there was no evidence from him to that effect.  Mr Wei was the person who made the decision for Top Pacific Group to defend the proceedings, and it seems not to be a point in his favour on the issue of costs for him to identify a large amount of costs that because of his own decisions were unnecessarily and wrongly incurred.

19. Mr Wei also submitted that he could have had separate representation and that may have entitled him to a more favourable order.  That is true that it may have done if separate representation was reasonable, but the question of that hypothetical seems not to be to his assistance in this application.  Mr Wei was successful on the construction of a deed insofar as he, but not Top Pacific Group, was concerned, a significant but narrow point involving no disputed evidence.  It also seems to me that the rule of thumb identified earlier might seem less compelling where the successful and unsuccessful parties were related, or when one controlled the other and also where the proper party was, at least until judgment, somewhat uncertain.

20. It seems to me that in these circumstances, that if Mr Wei is entitled to a costs order, it must be a relatively small percentage of the defendants’ costs.  As indicated, Mr Yu, in his written submissions, included such an order as a secondary alternative.  In that event, the orders Mr Yu proposes are much closer to the order the Court finds appropriate than that which Mr Wei sought: that the first defendant's costs^[22] be 70 to 75% of the overall defendants’ costs, and be payable by the plaintiff. It follows that Mr Yu's submission, that Mr Wei should pay the costs of Mr Wei's unsuccessful costs application, has force.

    22. First defendant’s costs submissions, undated, at [34].

21. I also take into account the circumstance referred to earlier, that Mr Wei received the funds from Mr Yu, by way of a cheque payable to Top Pacific Group at Mr Wei's direction in respect of Mr Wei's deposit on the development property, paid by Top Pacific Group, a fact that tended to conflate the distinction between Mr Wei and Top Pacific Group as to who was the proper recipient of the funds and who would be liable for their improper use.  The ultimate resolution of that matter was influenced, in part, by a concession contrary to the interest of Top Pacific Group by Mr Wei and Top Pacific Group in their final submissions. ^[23] In these circumstances, the joinder of Mr Wei appeared reasonable and appropriate at the outset to determine who of the mutually related parties, Top Pacific Group or Mr Wei, should bear responsibility for the missing $200,000 payment.

    23. See Yu at [84] and footnote 78.

22. Mr Wei also submitted that he paid most (or all) of the costs of the defence, but that was a contested matter and there was no proper basis to infer it without some evidence. 

23. I was inclined to order that Mr Yu pay to Mr Wei those costs exclusively connected to his claim alone, and otherwise each party bear their own costs. But any amount of such exclusive costs must be minor. 

24. After the trial concluded, a brief written submission on the impact on the deed of the decision in Grant v John Grant & Sons Pty Ltd ^[24] was provided by the parties, an issue dealt with in some greater detail in the judgment. ^[25]   This appeared to be the only matter exclusively related to Mr Wei in which he was successful, and this matter was of less significance in terms of cost to the parties than this costs argument in which Mr Wei has failed.

    24. (1954) 91 CLR 112 at 130.

    25. Yu at [104]-[111].

Conclusion

25. In my view, in all of these circumstances, the proper order as to the costs of Mr Wei, including the costs of the costs application, is that there be no order as to the costs of the first defendant in the proceedings.

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Endnotes

Decision last updated: 12 October 2022