Supreme Court New South Wales Medium Neutral Citation: Min Kyu Kim & Ors v Byung Sun (Eric) Song & Ors (No 2) [2012] NSWSC 179 Hearing dates: 20 February 2012 Decision date: 06 March 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Defendants to pay Plaintiffs' costs of and incidental to Defendants' motion dated 23 December 2011. Other procedural orders made. Catchwords: COSTS - interlocutory applications - Uniform Civil Procedure Rules 2005 (NSW) r 42.1 - Costs should follow the event. Legislation Cited: - Uniform Civil Procedure Rules 2005 (NSW) r 42.1 Cases Cited: - Drabsch v Switzerland General Insurance Co Ltd (1996) 130 FLR 127 - Van der Velde v Ng (No 2) [2009] FCA 538 Category: Costs Parties: Min Kyu Kim (First Plaintiff) Min Jae Kim (Second Plaintiff) Dong Woo Seo (Third Plaintiff) BMJ Chocolata Pty Ltd (Fourth Plaintiff) MTK Chocolata Pty Ltd (Fifth Plaintiff) Byung Sun (Eric) Song (First Defendant) Jacob Jihoon Kim (Second Defendant) Oliver Brown Pty Ltd (Third Defendant) Representation: Counsel: J.C. Hewitt (Plaintiffs) J. Knackstredt (Defendants) Solicitors: Dahan Lawyers (Plaintiffs) Clamenz Corporate Lawyers (Defendants) File Number(s): 11/296647 Judgment 1I delivered judgment in respect of two Notices of Motion in these proceedings on 22 February 2012. In respect of the first Notice of Motion filed by the Defendants on 23 December 2011 ("the Defendants' Motion"), I did not make orders sought by the Defendants that the Plaintiffs provide security for the Defendants' costs, the Statement of Claim be struck out and the Fourth and Fifth Plaintiffs be removed as party to the proceedings. In respect of the second Notice of Motion ("the Plaintiffs' Motion") I indicated that I would have made orders granting leave to the Plaintiffs/Cross-Defendants to file an Amended Defence to the Statement of Cross-Claim, subject to amendments to clarify several aspects of the pleading. I also indicated that I would grant corresponding leave to the Plaintiffs/Cross-Defendants to amend their Statement of Claim to include a corresponding claim for relief if they wished to take that course. 2I directed the parties to submit Short Minutes of Order to give effect to the judgment, either in agreed form or separately if no agreement could be reached between them. The parties have reached agreement as to several of the orders which should be made consequential upon my judgment, but several other issues remain in dispute. 3The first issue in dispute is whether the Defendants should be ordered to pay the costs of the Defendants' Motion. The Plaintiffs seek their costs of that motion, whereas the Defendants contend that neither party enjoyed a significant measure of success and that they had brought their application for security for costs in good faith and that the costs of the Defendants' Motion should be costs in the cause. The general rule, reflected in Uniform Civil Procedure Rules 2005 (NSW) r 42.1 is that costs follow the event. The Defendants sought several orders, which were the subject of evidence and detailed submissions, including orders for security for costs and striking out the Statement of Claim. They were unsuccessful in obtaining those orders, other than an order for extension of time for them to give discovery and file their witness statements which was necessitated by their non-compliance with two earlier orders made by Barrett J in that regard. I do not think that there is any reason to depart from the general rule in respect of the Defendants' Notice of Motion. I will therefore order that the Defendants pay the Plaintiffs' costs of and incidental to the Defendants' Motion. 4The Defendants also seek their costs in respect of two of their legal representatives who had been required for cross-examination attending Court where the hearing was interlocutory in character and the Plaintiffs were given notice, by letter dated 17 February 2012, that it was unusual for cross-examination to be permitted at an interlocutory hearing and that the Defendants would be seeking costs of those solicitors' attendance. An application for leave to cross-examine those solicitors was made before me and not granted. I think it likely that at least one of those solicitors would have been present in Court in order to instruct Counsel in respect of the interlocutory application before me in any event. However, I think it likely that the attendance of the second solicitor was necessitated by his being required for cross-examination. Accordingly, I consider that I should make an order that the Plaintiffs pay the costs of the attendance of Mr Luke Spartalis, being the more senior of the two solicitors, for cross-examination. 5The Plaintiffs/Cross-Defendants seek their costs of the Plaintiffs' Motion seeking leave, inter alia, to file an Amended Defence to the Statement of Cross-Claim. I did not grant that leave in an unqualified manner, requiring that several issues in the Amended Defence to Statement of Cross-Claim be addressed before that occurred, and also inviting the Plaintiffs to proceed by amendment to the Statement of Claim if they wished to do so, consistent with the approach adopted in Drabsch v Switzerland General Insurance Co Ltd (1996) 130 FLR 127. The Defendants point out that, by their letter dated 7 February 2012, they had advised the Plaintiffs that their then refusal to consent to the amendments reflected, at least in part, issues as to the pleading of those amendments. The Defendants also contend that they would have consented to the Plaintiffs amending the pleadings had they been properly pleaded. The Plaintiffs' Motion also sought orders striking out the Defence and Statement of Cross-Claim, which I declined to grant. Although the Plaintiffs had some success in respect of their motion, I do not consider that success was sufficient to warrant an order for costs in their favour without regard to the overall outcome of the proceedings. I consider that the proper order is that the costs of the Plaintiffs' Motion be costs in the cause. 6The Plaintiffs also seek an order that the Defence dated 2 November 2011 and the Statement of Cross-Claim dated 2 November 2011 be automatically struck out if the Defendants do not serve affidavits from lay witnesses by 12 March 2012. This order is no doubt prompted by the fact that the Defendants have twice previously defaulted in respect of orders made by the Court for filing of lay witness statements and are now seeking a reasonably substantial extension of further time in which to file such evidence. The form of the order sought extends beyond a "guillotine order", which would prevent the Defendants serving further affidavits of lay witnesses if they do not comply with the extended time for doing so, although that course may have some justification where it is difficult to see how the Defendants could successfully defend the proceedings without such lay evidence. 7I do not consider that it is appropriate to make such an order where the Defendants have led evidence of genuine difficulties in giving discovery and in completing affidavit evidence, including the need for translation of emails and delays arising because the witnesses' first language is Korean. If there is a further failure to comply with the orders of the Court, the question of the striking out of the Defence and Statement of Cross-Claim can be considered at that point: Van der Velde v Ng (No 2) [2009] FCA 538 at [19]. 8Accordingly, I make the following orders: 1. The time for filing the Defendants' lay evidence set by Orders 2 and 3 made on 14 November 2011 is extended to 12 March 2012. 2. The Plaintiffs have leave to file and serve an Amended Originating Process, Amended Statement of Claim and Amended Defence to the Cross-Claim in the form attached to their solicitors' letter to the Defendants' solicitors dated 22 February 2012, on or before 1 March 2012. 3. The Defendants are to serve a Defence to the Amended Statement of Claim and any reply to the Amended Defence to the Cross-Claim on or before 12 March 2012. 4. The Plaintiffs are to serve any lay evidence in reply on or before 30 March 2012. 5. The Defendants' Notice of Motion is otherwise dismissed. 6. The Plaintiffs' Notice of Motion is dismissed. 7. The Defendants are to pay the Plaintiffs' costs of and incidental to the Defendants' motion dated 23 December 2011, with the exception of the costs referred to in Order 8 below. 8. The Plaintiffs are to pay the Defendants' costs of the attendance of Mr Luke Spartalis at Court on 21 February 2012. 9. The costs of the Plaintiffs' Motion are to be costs in the cause. 10. The proceedings be listed for directions before the Corporations List Judge on 2 April 2012. 9I add that the parties should promptly restore the proceedings for further directions if any significant default occurs in respect of compliance with the directions which I have set out above. ********** 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 March 2012