Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Sarkar and Islam v Everest Property Holdings Pty Ltd [2011] NSWCA 305 Hearing dates: On the papers Decision date: 28 September 2011 Before: Beazley JA at [1]; Campbell JA at [2]; Young JA at [3] Decision: 1. Appeal allowed. 2. Orders made by White J on 16 February 2010 are set aside. 3. Declare that the contract of sale bearing date 1 September 2004 between the appellants as purchasers and the first respondent as vendor, has been validly terminated by the appellants. 4. Judgment for the appellants against the first respondent for $71,934.22. 5. Liberty to apply for judgment to be entered for the second respondent against the appellants in respect of any part of the sum of $71,934.22 not recovered from the first respondent. 6. Order that the first respondent pay the appellants' costs of the proceedings and of the appeal. 7. Order that the first respondent pay the second respondent's costs of the proceedings (other than the cross-claims) and of the appeal on a submitting appearance basis. 8. Order that the first respondent pay the second respondent's costs of the cross-claim (second respondent versus first respondent) of 29 May 2008 up to 14 December 2009. 9. Order that the second cross-claim (first respondent versus appellants) of 19 May 2008 be dismissed with costs. [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.] Catchwords: COSTS- whether full costs should be awarded in an appeal in a vendor and purchaser case which succeeded on a point which was subsidiary to the main argument advanced at trial- full costs awarded. Cases Cited: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Category: Costs Parties: Mohammed Abu Sarkar (First Appellant) Shazedul Islam (Second Appellant) Everest Property Holdings Pty Ltd (First Respondent) Lumley General Insurance Limited (Second Respondent) Representation: Counsel: D L Warren (Appellants) M R Elliott (First Respondent) A McArthur (S) (Submitting appearance for Second Respondent) Solicitors: Herat Solicitors (Appellants) Horton Rhodes (First Respondent) Turks Legal (Second Respondent) File Number(s): CA 2008/278655 Judgment 1BEAZLEY JA : I agree with Young JA. 2CAMPBELL JA : I agree with Young JA. 3YOUNG JA : The Court gave judgment in this matter, together with two other matters, on 24 November 2010 ([2010] NSWCA 315). The parties were ordered to bring in short minutes of the appropriate orders. 4Unfortunately this was a long, drawn-out process. 5Three matters were heard together by White J in the Equity Division. The three appeals were dealt with together and two of those appeals were dismissed with costs. No matter remains outstanding with respect to them. This present matter was the third appeal, which was allowed. 6The basal facts were that the appellants, who were the plaintiffs below, sought a declaration that they had validly terminated a contract for the purchase by them of real estate off the plan at Parramatta. They put forward a number of grounds, principally that there was a defective occupation certificate. 7The primary judge found against the appellants on that ground and on all other grounds. 8The same matters were ventilated on appeal. The Court did not consider that there was any merit at all in the occupation certificate point. 9The first respondent (the vendor) did not attend the proposed settlement. In the other two appeals, the Court held that it was excused the requirement of attending on the proposed settlement because of the conduct of the purchasers. However, the present appellants acted for themselves and the Court ruled that there was no dispensation that could be implied in the case of the present appellants. Accordingly, the appeal was allowed and the appellants are entitled to a declaration that they validly terminated the contract and have their deposit returned. 10It should be noted that there is a second respondent, Lumley General Insurance Ltd ("Lumleys"), which provided a bond in lieu of the deposit required by the contract. 11The question that remains is what are the proper orders for costs. The appellants say that they succeeded on the appeal. They succeeded in such a way that the primary judge should have found for them and they are entitled to the whole of their costs. 12The first respondent says that, whilst ordinarily they who succeed get costs and they who lose pay costs, in the present case, the appropriate order is that each party bear their own costs of the proceedings at first instance, and the appellants be awarded not more than 50% of their costs on the appeal. They say that this is because there was a clearly severable and dominant issue which the appellants lost both at first instance and on appeal and which accounted for a very substantial portion of the costs of the proceedings. That issue was the occupation certificate issue being the primary basis upon which the appellants' case was based. Furthermore, the point in which the appellants did eventually succeed was allegedly not articulated or particularised until a few days before the commencement of the trial. 13The appellants' submissions suggest this is overdramatising the situation. The appellants put that, actually, the point on which the vendor won at the trial was only suggested by the trial judge, that is, that it had been dispensed from attending on settlement. The point that the appellants won on appeal arose out of that matter. 14The appellants put that it is not at all unusual in a dispute as to which party of a conveyancing transaction should keep the deposit that there are a number of points of construction and law that arise and, in the ultimate, it often depends only on one point as to who succeeds and who fails. They point out that they did not make a number of separate claims for relief. Their case was that the vendor's termination was a repudiation which the appellants were entitled to accept as a basis to terminate the contract. The issues in the case revolved around the validity of the notice to complete and whether the vendor could, because of the failure of the vendor to provide a valid occupation certificate, issue a notice to complete. In the event that it could issue a notice to complete, then the question of the vendor's readiness, willingness and ability when the time came to complete (or whether the vendor was relieved of the necessity to be ready, willing and able to complete because of the purchasers' intimation that they would not be completing) was relevant. The issues were not separate and distinct, but were intertwined. 15The appellants refer to the decision of this Court in James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296. Whilst this decision usefully sets out the guiding principles, I have not found it of particular value in deciding the present case. 16I agree with the way in which the appellants have presented their submissions. The case at first instance took two days. However, it must be remembered that it was heard together with two other matters. The Black Appeal Book shows that the evidence occupied the first day. Submissions started late on the first day and went through, it would seem, the whole of the second day. The only evidence that seems particularly referable to the present case is the evidence given by Mr Islam on one page. The Blue Appeal Books show that the bulk of the books are the contracts for sale. There is nothing to suggest that there were extra costs incurred because of focus on the occupation certificate point so far as copying documents is concerned. 17In my view, it is artificial to say that this case was one involving a number of distinct issues. There was one basal issue that was won by the first respondent at first instance and it got its costs. It was won by these appellants on appeal and I cannot see any reason why they should not get their costs in full. It is true that there was a focus in the argument on the occupation certificate, but this did not seem to me to extend the time of the hearing, nor to be a particularly significant matter in respect of the costs of the affidavits and documents that were before the Court. 18There are a number of relatively minor issues which are raised by the parties in their submissions which I must now deal with. These are: A. What order should be made with respect to the second respondent's costs of the trial and of the appeal; B. What order should be made with respect to the costs of the first cross-claim; C. What order should be made with respect to costs of the second cross-claim; and D What, if any, order should be made with respect to the costs associated with local court proceedings. 19I will deal with each of these matters in turn. 20A. The result of the appeal is that the monies which Lumleys paid to the vendor are to be (indeed I believe they already have been) refunded to Lumleys. No further order need be made other than that which has been agreed. Normally one would expect that a person who has succeeded should receive their costs. However, before the primary judge Lumleys had filed a submitting appearance. In this Court the appellants sought a declaration that Lumleys were not entitled to pay the vendor, or alternatively an order that the vendor repay the monies that the appellants are obliged to pay the second respondent (Lumleys). There was no appeal by Lumleys. 21The primary judge ordered that the appellants pay Lumley's costs of the proceedings and that Lumleys pay the vendor's costs of the cross-claim (which I will designate "the first cross-claim") with the appellants to indemnify Lumleys in respect of that order for costs. 22For some reason or other, there was no mention that Lumley's costs should be on the basis of a submitting defendant. In view of the result of the appeal, the primary judge's orders for costs with respect to Lumleys cannot stand. What adjustment should be made? The first respondent submits that no order for costs, either at first instance or on appeal, should be made in favour of the second respondent, Lumleys, against it and points out that Lumleys has not advanced any reason why a costs order should be made in its favour. The submissions continue: "5. It was the appellants who chose to sue the second respondent in the Supreme Court proceedings. That was unnecessary in circumstances where the rights as between the appellants and the second respondent were already the subject of separate local court proceedings. ... The first respondent should not now have to pay the second respondent's costs of the Supreme Court proceedings when the appellants and the second respondent between them could have taken sensible steps that would have made the second respondent's involvement in the Supreme Court proceedings unnecessary. 6. Alternatively, on 11 December 2009 the parties in the Supreme Court proceedings agreed on a proposal concerning the repayment of the deposit bond depending on the outcome to the proceedings. As such, from that date on there was simply no need for the second respondent to be involved in or incur costs in relation to any proceedings." 23So far as the trial is concerned, it seems to me that, so long as the costs of the second respondent's cross-claim are covered, it, as a submitting defendant, has only a limited right to costs below. 24There were two cross-claims. Unfortunately, the first of these in point of time was designated the "cross-claim", and the second in point of time as the "first cross-claim", and the designation in the various documents has not always been consistent. I will refer to the cross-claim of Lumleys against the first respondent for restitution as "the first cross-claim" and the cross-claim by the first respondent against the appellants for a declaration that it had rightfully terminated the contract as "the second cross-claim". 25The first respondent accepts it should pay Lumley's costs of the first cross-claim up until 11 December 2009 or trial (the trial took place on 14 and 15 December 2009). 26I note that, apart from filing a submitting appearance, a Mr P J Gow appeared for the second defendant at the trial. On p 1 of the transcript, he asked the judge to be excused from the remainder of the hearing. Everyone agreed and Mr Gow was excused. 27Thus, any costs to which the second respondent, Lumleys, is entitled at the trial are to be paid by the first respondent to the second respondent on the submitting appearance basis (which would cover taking instructions, filing appearance and like matters) as well as the appropriate order for costs on the cross-claim which will be dealt with in section B. 28On the appeal there was no appeal by Lumleys, but orders were sought against it by the appellants. 29On the appeal, Mr A McArthur appeared for the second respondent and submitted. It would seem to me that that was perfectly proper, Lumleys had been added as a respondent, orders were sought against it and it did not seek to expand the costs. My view is that, as the first respondent failed, it should pay the second respondent's costs on a submitting appearance basis. Although there is some merit in what the first respondent has submitted, it seems to me that when you are sued, or you are made the respondent to an appeal, you do have a right to actually take some interest in the proceedings and, in filing a submitting appearance and Mr McArthur making a statement that he was there as a submitting respondent, the second respondent acted reasonably and appropriately. 30B. I have already noted that the first respondent accepts that it should pay the second respondent's costs of the first cross-claim up until 11 December or trial. I think it is appropriate to make the date 14 December, the opening date of the trial, because the costs should include the appearance at the trial as a submitting party and handing up the appropriate agreement. 31C. The second cross-claim was the mirror image of the claim. The purchasers sought a declaration that they had terminated the contract, by the second cross-claim, the vendor sought a declaration that it had done so. It seems to me to follow that the costs of the second cross-claim should be paid by the first respondent as really a part of the costs of the action. 32D. The appellants seek an order that they pay the second respondent's costs in the local court proceedings and then that the first respondent indemnify them against those costs. 33I can see no valid reason for making such an order. Although the subject matter was the same, the costs of the local court proceedings are really a matter for the local court. In addition, the local court proceedings had been going for approximately ten months before the Supreme Court proceedings were commenced and the first respondent was never a party to them. 34Accordingly, in my view the following orders should be made: 1. Appeal allowed. 2. Orders made by White J on 16 February 2010 are set aside. 3. Declare that the contract of sale bearing date 1 September 2004 between the appellants as purchasers and the first respondent as vendor, has been validly terminated by the appellants. 4. Judgment for the appellants against the first respondent for $71,934.22. 5. Liberty to apply for judgment to be entered for the second respondent against the appellants in respect of any part of the sum of $71,934.22 not recovered from the first respondent. 6. Order that the first respondent pay the appellants' costs of the proceedings and of the appeal. 7. Order that the first respondent pay the second respondent's costs of the proceedings (other than the cross-claims) and of the appeal on a submitting appearance basis. 8. Order that the first respondent pay the second respondent's costs of the cross-claim (second respondent versus first respondent) of 29 May 2008 up to 14 December 2009. 9.Order that the second cross-claim (first respondent versus appellants) of 19 May 2008 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: 28 September 2011