Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Thumbiran v Silver Chef Rentals Pty Ltd; Thumbiran v Silver Chef Rentals Pty Ltd (No 2) [2022] NSWCA 178 Hearing dates: On the papers Decision date: 09 September 2022 Before: Leeming JA; Brereton JA; Mitchelmore JA Decision: In each of 2021/329654 and 2021/307674: Notice of motion filed 25 August 2022 dismissed with costs. Catchwords: COSTS – unsuccessful respondent seeks costs order in its favour or no order as to costs – whether basis to displace UCPR r 42.1 – court did not determine all points raised by successful appellant – some points not raised at first instance – where respondent's conduct cause of entire litigation – no basis to displace usual order as to costs Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.1 Cases Cited: Thumbiran v Silver Chef Rentals Pty Ltd; Thumbiran v Silver Chef Rentals Pty Ltd [2022] NSWCA 148 Category: Costs Parties: Trevelyn Thumbiran (First Appellant in each appeal) Absolute Pump Services Pty Ltd (Second Appellant in each appeal) Silver Chef Rentals Pty Ltd (Respondent in 2021/329654; First Respondent in 2021/307674) Donny's Pizzeria Pty Ltd (Second Respondent in 2021/307674) Antonio Andrea Telese (Third Respondent in 2021/307674) Representation: Counsel: J Baird (Silver Chef in each appeal) Solicitors: City Legal Solicitors (Appellants in each appeal) SLF Lawyers (Silver Chef in each appeal) File Number(s): 2021/329654; 2021/307674 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2021] NSWSC 1300 Date of Decision: 24 June 2020; 13 October 2021 Before: Darke J; Ball J File Number(s): 2020/20537; 2021/217789 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: This Court allowed two appeals brought by Mr Thumbiran and set aside orders made in two separate proceedings in the Equity Division on 11 August 2022: Thumbiran v Silver Chef Rentals Pty Ltd; Thumbiran v Silver Chef Rentals Pty Ltd [2022] NSWCA 148. In each case, the appeal was allowed with costs. This Court also re-exercised the costs discretion made when Ball J summarily dismissed Mr Thumbiran's proceedings on Silver Chef's application, setting aside the order that Mr Thumbiran pay Silver Chef's costs of that application, and ordering that Silver Chef pay his costs of that application. In relation to the earlier hearing before Darke J, this Court left in place the extant costs order (reflecting Mr Thumbiran's failure on whether the parties had reached a binding agreement) but noted that the order did not extend to subsequent costs when Darke J made orders on Silver Chef's application which went beyond the agreement found to have been reached. In explaining that course, it was said at [47]: "Silver Chef should pay Mr Thumbiran's costs in this Court in accordance with UCPR r 42.1. There being no challenge to any part of Darke J's decision of 21 May 2020, there is no reason to alter the discretion as to costs of that proceeding up to that point. There should be no orders as to the costs incurred in the Real Property List thereafter, with the intention that each side bear his and its own costs. It appears that the only costs ordered have been costs of the motion seeking orders pursuant to s 73 of the Civil Procedure Act, and the orders I propose will confirm that that order is limited to costs incurred up to 21 May 2020. Silver Chef should not have propounded drafts of the deed which materially departed from the agreement. On the other hand none of the points made in this Court were advanced by Mr Thumbiran to Darke J. This is a case where the need for the appeal is attributable to failures on both sides." 1. Within the time specified by UCPR r 36.16, Silver Chef applied to vary the orders as to costs. Its supporting affidavit did not disclose the basis for the application. However, by submissions filed on 2 September 2022 in accordance with directions made by the Registrar, it explained why it sought orders that Mr Thumbiran pay its costs, or alternatively that there be no order as to costs. 2. The Registrar also stated that the Court would after receipt of Silver Chef's submissions, advise whether to invite Mr Thumbiran to make submissions in response. It has not been necessary to do so. The following summary of Silver Chef's submissions presupposes some familiarity with the history recounted in this Court's main judgment. 3. Silver Chef submits, correctly, that Mr Thumbiran succeeded on appeal on a point not raised before Ball J, and further that his decision to take that course was a "conscious and deliberate one". It also relies on the fact that this Court did not determine Mr Thumbiran's submission that Silver Chef's success before Darke J was "tainted by fraud" or had been obtained by an abuse of process. On those bases, it makes the following submission, which is best reproduced verbatim: "14. It is submitted that where an appeal succeeds on a ground not raised at first instance, the successful appellant is ordinarily not entitled to the costs of the appeal (Hussey v Horne-Payne (1878) 8 Ch Div 670; Ex parte Hauxwell (1883) 23 Ch D 643). However it may be appropriate to allow part of the costs of the proceedings at first instance. 15. In National Australia Bank v KDS Construction Services Pty Ltd (1987) 163 CLR 668 at 680, where the appellant was successful upon a point raised for the first time on appeal, it was held that "it was proper in the circumstances to deny the appellant its costs of the appeal". 16. Hussey and KDS Constructions were recently considered by this Court in AMA Group Limited x ASSK Investments Pty Limited (No 2) [2021] NSWCA 116, where in that case the order had initially been made in the principal judgment that the successful appellant should only be allowed 50% of its costs of the appeal. 17. At [12] the Court observed that, "The order made in KDS Constructions reflected the ultimate discretionary nature of the costs jurisdiction, namely that 'in the circumstances it is proper to deny the appellant its costs of the appeal': at 680". 18. Also recently in Michael Wilson & Partners v Emmott [2021] NSWCA 315. where the appellant succeeded on a point not considered by the primary judge (understandably as no relevant submissions were made to him - see [2], [125]), the costs order made was that there should be no order as to costs for both the proceedings below and the appeal. Albeit that in that case there had been an equal measure of success for each party on the appeal. 19. In the present case it is submitted that: (a) The appellant has not succeeded on the main ground he advanced at the appeal; (b) The ground upon which he succeeded on appeal was not advanced before Ball J when it could, and should, have been, thus causing Ball J's exercise of discretion to miscarry; (c) That decision not to advance that argument was a conscious and deliberate one; (d) That argument could also have been advanced before Darke J on 24 June 2020, but again was not; (e) It would be unjust in all the circumstances and having regard to the above matters to visit all the costs of both the proceedings before Ball J and of the appeal on the respondent; (f) For these reasons, in the proper exercise of its costs discretion, the existing costs orders ought to be vacated as sought in paragraphs 1(a), 1(c) and 2(a) of the Notice of Motion; and (g) In their place the appellant ought to pay the respondent's costs of the appeals and at first instance, or alternatively there ought to be no order as to the costs of the appeals and/or of the proceedings before Ball J and/or Darke J. 1. The starting point is UCPR r 42.1. The usual order is that costs follow the event. The event in each case was the appeal being allowed. The question is whether Silver Chef has demonstrated some reason for departing from the usual rule. There are occasions when a successful appellant's failure to take a point is a proper basis for departing from the usual rule. But each case will turn on its own facts. 2. In the present case, this Court rejected the submission which was advanced by Silver Chef, that the document signed by Mr Thumbiran somehow constituted a charge on his land securing his obligations as guarantor. That submission was wrong. It seems likely that that error is the source of the entire litigation, because seemingly on the strength of that document, Silver Chef lodged caveats on Mr Thumbiran's land. 3. This Court also found that Darke J had erred in making orders in accordance with the deed proffered by Silver Chef. Silver Chef's draft deed departed materially, and favourably to Silver Chef, from the agreement reached by exchange of emails between the parties' solicitors. It left Mr Thumbiran in breach at the outset. It contained an exclusive jurisdiction clause in Victoria. And, most significantly for what ensued, the deed also recited an acknowledgement that Mr Thumbiran had charged his land. None of this should have occurred. It is true that those matters were not pointed out by the unadmitted clerk who appeared for Mr Thumbiran on that occasion. But they should never have been contained in the deed. Even if that were not so, when the judge deleted other clauses which went beyond the parties' agreement, that should have alerted the lawyer who appeared for Silver Chef to alert the judge to other clauses which on no view could ever have been part of the parties' agreement. 4. Those two matters were at the forefront of this Court's reasons. It was said at [19]: "Darke J was entitled to expect that, where both sides were represented, any significant discrepancies between the agreement which had been found to exist and the draft deed would be brought to his attention. That did not occur." 1. The fact that neither side pointed this out to the Court was reflected in this Court making orders with the effect that each side would bear his and its own costs of that aspect of the proceeding. 2. It was also said at [41]-[42]: "But one point should be made clear lest it consume further time. Signing the letter of 11 May 2018 did not without more make Mr Thumbiran a guarantor. Still less could it amount to his granting a charge over his real property to secure his obligations as guarantor. That result is readily reached without any recourse to the principles that guarantees are read strictly with ambiguity resolved favourably to the guarantor: see Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561; [1987] HCA 15. The letter of 11 May 2018 is not contractual. It is not expressed to be contractual. It is expressed to be an acknowledgement of the consequences which will flow if another document is executed. The acknowledgement proceeds on the basis that Mr Thumbiran is named as a guarantor in the other document to be executed by him, said to be attached to it. In the volume of material which was part of the record in these appeals, all of which appears to have been prepared by Silver Chef, there was no document which described Mr Thumbiran as a guarantor. It is true that there are documents signed electronically by Mr Thumbiran next to the words "Guarantor – Absolute Pump Services Pty Ltd", but such documents explicitly identify Absolute Pump Services Pty Ltd as the guarantor, and it is plain that Mr Thumbiran's signature is as the company's agent rather than in his own capacity. Mr Baird was asked, repeatedly, to articulate the argument on which the signature of the 11 May 2018 document could support the conclusion that Mr Thumbiran was a guarantor. Nothing meaningful was said in response. Nor could it be." 1. These points, which are not addressed in Silver Chef's submissions, form an amply sufficient basis for not departing from the usual order as to costs of the appeal from Darke J's decision, and for not altering the effect of the costs of that proceeding at first instance. 2. In the appeal from Ball J's decision, two further points may be made. The first is that it is not unusual for courts not to determine submissions in an interlocutory appeal when there may in the future be a final hearing on different evidence. That circumstance is relevant to the exercise of the costs discretion, but usually more relevant will be the nature of the submissions which the Court did determine. In the present case, Silver Chef sought to defend Ball J's decision on the basis that his Honour had not materially relied on the clauses inserted by Silver Chef in the deed reciting that Mr Thumbiran had charged his land. That submission was rejected (see at [38]-[39]). Thus, not only did Mr Thumbiran succeed and Silver Chef fail in this Court based on the acceptance and rejection of their submissions, but also the outcome was directly linked to Silver Chef's original incorporation in the deed propounded by it of recitals which should not have been there. 3. We doubt that there is a proper basis for the inference that insofar as Mr Thumbiran did not make those points before Ball J, his decision was "a conscious and deliberate one". But it is not necessary in order to determine this application to take that point any further. The issue is whether Silver Chef has made out a proper basis to alter the effect of r 42.1. Even taking Silver Chef's case at its highest, it has failed to do so. Contrary to its submission, there is nothing unjust in Silver Chef bearing the costs of both appeals and the interlocutory hearing before Ball J where those costs were a direct consequence of its incorrect submissions as to the legal effect of documents drafted by it. Silver Chef's notice of motion should be dismissed, with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 September 2022