Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Huang v 18 Woodville Holding Pty Ltd; Tao v 18 Woodville Holding Pty Ltd (No 2) [2023] NSWCA 207 Hearing dates: On the papers Date of orders: 04 September 2023 Decision date: 04 September 2023 Before: Meagher JA; Kirk JA; Griffiths AJA Decision: In proceeding 2022/240885 (1) Dispense with the requirement in Uniform Civil Procedure Rules 2005 (NSW) r 18.2(1) for the filing of a notice of motion by the first respondent (18 Woodville) in respect of its application under r 36.16(3A) to vary the costs orders made on 15 February 2023. (2) Set aside order 3 of the orders made on 15 February 2023 to the extent only that it applies to 18 Woodville. (3) Order that the appellants pay 18 Woodville's costs of the appeal on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. (4) Order that the appellants pay 18 Woodville's costs of this application. In proceeding 2022/240730 (1) Dispense with the requirement in Uniform Civil Procedure Rules 2005 (NSW) r 18.2(1) for the filing of a notice of motion by the first respondent (18 Woodville) in respect of its application under r 36.16(3A) to vary the costs orders made on 15 February 2023. (2) Set aside order 3 of the orders made on 15 February 2023 to the extent only that it applies to 18 Woodville. (3) Order that the appellants pay 18 Woodville's costs of the appeal on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. (4) Order that the appellants pay 18 Woodville's costs of this application. Catchwords: COSTS – party/party – offers of compromise – application under r 36.16(3A) to vary costs order – party seeking to vary costs order gives notice of application to Court and the other parties within 14 days – order made dispensing with filing of notice of motion – costs order varied Legislation Cited: Civil Procedure Act 2005 (NSW), s 14 Real Property Act 1900 (NSW), s 42(1)(d) Uniform Civil Procedure Rules 2005 (2005), rr 18.2(1), 20.26, 36.36, 42.13, 42.14, 42.15, 51.47, 51.48, 51.49 Cases Cited: Bonanno v Finamore (No 2) [2023] NSWCA 24 Eliezer v The Council of St Andrew's Cathedral School (No 2) [2021] NSWCA 227 Oikos Constructions Pty Ltd t/as Lars Fischer Construction v Ostin & Anor (No 2) [2021] NSWCA 98 Category: Principal judgment Parties: Xiuzhen Huang (First Appellant, proceeding 2022/240730) Reynold Zhou (Second Appellant, proceeding 2022/240730) Zhe Tao (First Appellant, proceeding 2022/240885) Jianmin Tao (Second Appellant, proceeding 2022/240885) 18 Woodville Holding Pty Ltd (First Respondent) Hua Cheng International Holdings Group Pty Ltd (in liq) (Second Respondent) Registrar General of New South Wales (Third Respondent) Representation: Counsel: L Chan, A Lim (Appellants, proceeding 2022/240885) M Condon SC (Appellants, proceeding 2022/240730) JP Knackstredt, AF Girgis (First Respondent) Solicitors: Juris Cor Legal (Appellants) Vincent Young Lawyers (First Respondent) File Number(s): 2022/240885; 2022/240730 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity – Commercial List Citation: [2022] NSWSC 947 Date of Decision: 19 July 2022 Before: Ball J File Number(s): 2021/329986 [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: In its judgment delivered on 15 February 2023, this Court (Meagher JA, Kirk JA and Griffiths AJA) dismissed each of these appeals, which had been heard together because they shared a common issue, common respondents and a common legal representative of the appellants. In doing so, the Court also made orders that the two appellants in each appeal pay the respondents' costs of that appeal. 2. On 10 March 2023, the first respondent, 18 Woodville, the only active respondent in the appeals in this Court, filed a notice of motion in each appeal. 3. In respect of proceeding 2022/240885 (the Tao appeal), 18 Woodville sought the following substantive orders: 1. Vacate the costs order made on 15 February 2023 to the extent it applies to the first respondent. 2. Order that the appellants pay the first respondent's costs of the appeal on an indemnity basis. 3. In the alternative to proposed order (2), order that the appellants pay the first respondent's costs of the appeal on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. 1. In respect of proceeding 2022/240730 (the Huang appeal), 18 Woodville sought the following substantive orders: 1. Vacate the costs order made on 15 February 2023 to the extent it applies to the first respondent. 2. Order that the appellants pay the first respondent's costs of the appeal on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. 1. Earlier, on 28 February 2023, 18 Woodville had notified the Court that it sought to vary the costs order made in each appeal so that as varied the order would provide that the appellants pay all or part of 18 Woodville's costs of the appeal on an indemnity basis. That application was referred to the Registrar, who invited the parties to propose by 3 March 2023 a timetable for the filing of a motion, affidavits and written submissions. 18 Woodville's solicitors responded, requesting variations to a timetable suggested by the Registrar. Neither the appellants nor their solicitors responded to the Registrar's communication. 2. On 6 March 2023, the Registrar notified the parties that he had made the following orders in respect of 18 Woodville's notified applications: 1. 18 Woodville to file and serve any motion, affidavits and submissions by 10 March 2023. 2. Appellants to file and serve any affidavits and submissions in reply by 17 March 2023. 3. 18 Woodville to file and serve any reply by 23 March 2023. 4. Motion to be dealt with on the papers. 1. On 16 March 2023, the solicitors for the appellants in each appeal filed notices of intention to cease to act, which were served on their clients on the same day. Those solicitors then filed notices of ceasing to act in each appeal on 27 March 2023. Unsurprisingly, no affidavits or submissions were filed by or on behalf of the appellants in response to the Registrar's directions. 2. On 10 March 2023 and in relation to each appeal, 18 Woodville filed written submissions and an affidavit of David Greenberg, 18 Woodville's solicitor, sworn on 10 March 2023. That affidavit established the following: (1) that each appeal had been commenced on 15 August 2022; (2) that on 15 September 2022 18 Woodville sent an offer of compromise to the appellants in each appeal under UCPR r 20.26 offering to consent to orders dismissing that appeal with no order as to costs if the appellants voluntarily agreed to vacate their strata units and give possession of those units to 18 Woodville by no later than 30 November 2022; (3) that by the time those offers were made 18 Woodville had incurred approximately $24,000 in legal costs and disbursements in responding to both appeals; and (4) that each of those offers expired on 30 September 2022 without the appellants in either appeal accepting or responding to that offer. 3. In his affidavits, which were in identical terms, Mr Greenberg stated that the varied costs order sought by 18 Woodville was, as against the Tao appellants, that they pay its costs of the appeal on an indemnity basis, and, as against the Huang and Zhou appellants, that they pay its costs on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. 4. The apparent basis for the different orders sought is that, in the underlying proceedings involving the Tao appellants, an offer of compromise was made to them under r 20.26 and not accepted. Having made a fresh offer of compromise in the appeal from those proceedings, which is subject to the application of rr 42.13 and 42.14 as modified by rr 51.47 and 51.48, 18 Woodville also refers to r 51.49, which provides that the Court "may have regard to any offer of compromise made (whether under these rules or otherwise) in the court below". Notwithstanding that reference, 18 Woodville offers no submission as to why in relation to the offer of compromise made in the appeal proceeding a different costs order should be made with respect to the period before that offer was made because of the offer made at first instance. 5. There are two questions which arise in relation to 18 Woodville's motions. 6. The first requires the Court to address the circumstances in which it may set aside or vary a costs order after it has been entered where, as here, the terms of rr 36.36(1), (2) and (3) are not relied on and do not apply. 7. This question directs attention to r 36.16(3A), which provides: 36.16 Further power to set aside or vary judgment or order … (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. 1. 18 Woodville accepts that its applications made on 10 March 2023 were not filed within 14 days of the date on which judgments were entered on 15 February 2023. However, 18 Woodville submits that on 28 February 2023, and within that 14-day period, it notified the Court and the appellants that it sought an order varying the earlier costs orders. 2. That being the position in fact, it makes two alternative submissions. The first is that it is implicit in the making by the Registrar on 6 March 2023 of the order for the filing of a notice of motion by 10 March 2023 that the Court had made an order dispensing with the requirement in r 36.16(3A) that the motion be filed within 14 days of the entry of judgment. There are difficulties with this submission which it is unnecessary to explore. 3. The second and alternative submission is that this Court should make an order under Civil Procedure Act 2005 (NSW), s 14 dispensing with the requirement in r 18.2(1) for the filing of a notice of motion in circumstances where notice of the application under r 36.16(3A) was given to the Court and to the other parties within the 14-day period. 4. Recent cases which confirm the Court's power to make such an order in circumstances where the application has been informally made to the Court and communicated to the other parties within the required period include Oikos Constructions Pty Ltd t/as Lars Fischer Construction v Ostin & Anor (No 2) [2021] NSWCA 98 at [36]-[38] and Eliezer v The Council of St Andrew's Cathedral School (No 2) [2021] NSWCA 227 at [19]. 5. In the circumstances of this case, such an order should be made in relation to each application. 6. The second question which arises is whether one or other of the indemnity costs orders sought by 18 Woodville should be made with respect to each appeal. 7. As offers of compromise under r 51.47 have been made in each appeal, rr 42.13-42.15 apply, subject to r 51.49 and the modifications to be made as provided by rr 51.47(2) and 51.48(1). In essence, r 42.14 as modified applies in circumstances where a successful plaintiff in the court below (such as 18 Woodville) makes an offer of compromise in the appeal as respondent, but that offer is not accepted by the appellant, and the respondent obtains a judgment on appeal on terms no less favourable to it than the terms of its offer. In that case, unless the court orders "otherwise", the respondent (here, 18 Woodville) is entitled to an order against the appellant (here, the Huang and Tao appellants) for the payment of its costs in respect of that claim assessed on the ordinary basis up to the day the offer was made and on an indemnity basis from the day following that day. 8. The court's discretionary power under r 42.14(2) to order "otherwise" is to be exercised "having regard to all the circumstances of the case": Bonanno v Finamore (No 2) [2023] NSWCA 24 at [12]. In the context of an offer of compromise made in an appeal, r 51.49 also permits the court to have regard to an offer of compromise made in the underlying proceedings when deciding whether to make such an order. 9. There are no features in the circumstances of the present appeals that would justify a departure from the conditional entitlement conferred by the rule. Although the relief sought was not monetary, 18 Woodville's claims to possession of each of the strata units did not involve significant contingencies making it difficult for the appellants to assess the reasonableness of the offers made. Nor was this a case where it could be said that the judgment only marginally exceeded what was offered. The relief which 18 Woodville sought was possession. The appellants made no offer of compromise and 18 Woodville succeeded in obtaining the relief which was the subject of its offer. 10. The compromise offered by 18 Woodville included the foregoing of its recoverable costs of the appeals. At the time of the offers, the costs already expended totalled $24,000. The likely recoverable costs at that time were not insignificant. 18 Woodville also allowed the appellants a period of more than 2 months in which to vacate the strata units they occupied. On 18 Woodville's case, that offer involved its foregoing its right to claim costs, as well as its existing right to immediate possession of the units. These were real and significant concessions on the part of 18 Woodville, should its offer be accepted. 11. Subject to a consideration of the relevance of 18 Woodville's offer of compromise to the Tao appellants in the underlying proceedings, this is not a case in which the Court should make an order "otherwise" under r 42.14(2). It follows that 18 Woodville is entitled to orders that the appellants in each appeal pay its costs of the appeal on an indemnity basis from 16 September 2022. 12. The offer made to the Tao appellants in the underlying proceedings was made under r 20.26 and directed only to the costs of those proceedings. The principal issue in the appeal was whether the claimed interests of the appellants in the strata units fell within the exception to indefeasibility in s 42(1)(d) of the Real Property Act 1900 (NSW). That issue had not been considered by this Court, and because of its significance the consequences of the separate offers of compromise made in the appeal should be determined by the outcome of the issues in the appeal rather than by reference to an offer of compromise made in the underlying proceedings, which in its terms did not purport to accommodate the costs of any appeal. For these reasons, no different order should be made in relation to the application of r 42.14 in the Tao appeal. 13. In the result, the Court makes the following orders in proceeding 2022/240885 and in proceeding 2022/240730: 1. Dispense with the requirement in Uniform Civil Procedure Rules 2005 (NSW) r 18.2(1) for the filing of a notice of motion by the first respondent (18 Woodville) in respect of its application under r 36.16(3A) to vary the costs orders made on 15 February 2023. 2. Set aside order 3 of the orders made on 15 February 2023 to the extent only that it applies to 18 Woodville. 3. Order that the appellants pay 18 Woodville's costs of the appeal on the ordinary basis until 15 September 2022 and on an indemnity basis on and from 16 September 2022. 4. Order that the appellants pay 18 Woodville's costs of this application. ********** 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: 04 September 2023