Joseph Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 778

Supreme Court New South Wales

Medium Neutral Citation: Joseph Taouk v Assure (NSW) Pty Ltd [2017] NSWSC 778 Hearing dates: On the papers Date of orders: 23 May 2017 Decision date: 16 June 2017 Jurisdiction: Equity Before: Sackar J Decision: See para [25] Legislation Cited: The Civil Procedure Act 2005 (NSW) Cases Cited: Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 Category: Costs Parties: Joseph Taouk (plaintiff) Assure (NSW) Pty Limited (defendant) Representation: Counsel: D Pritchard SC (plaintiff) J Stoljar SC, P D Reynolds (defendant)

Solicitors: Gardner/Ekes Lawyers (plaintiff) MLH Lawyers (defendant) File Number(s): 2016/264640 Publication restriction: n/a

Judgment

Background 1. In this matter I gave judgment on 4 May 2017. 2. On 23 May 2017 I made orders but left open for further submission the question of costs. 3. The plaintiff was entirely unsuccessful in the proceedings as constituted. The defendant on the other hand was successful in relation to its cross claim although the precise amount owed by the plaintiff/cross defendant is yet to be quantified. 4. The defendant seeks an order the plaintiff pay the defendant's costs of the proceedings including the costs of the cross claim up to and including the date of any order on an indemnity basis. 5. The plaintiff opposes such an order.

The Parties' Submissions 1. The defendant draws the court's attention to UCPR rule 42.1 which relevantly provides the court would usually make an order that costs follow the event unless it appeared that some other order should be made as to the whole or any part of those costs. 2. The defendant submits the relevant event here is the hearing of the various separate questions and that the plaintiff should pay the defendant's costs in relation to the determination of those questions. The defendant submits there is no reason why the plaintiff should not be ordered to pay the defendant's costs at this stage. 3. The defendant submits costs should be awarded on an indemnity basis having regard to the terms of the indemnity given under the Development Agreement. It submits agreements as to costs are valid and enforceable and relies upon Abigroup Limited v Sandtara Pty Limited [2002] NSWCA 45 (Abigroup) at [9] per Stein JA. 4. Clause 24(1) of the Development Agreement is in the following terms: Clause 24.1 provides (underlining added): The Guarantor and the Developer indemnify the Owner, and must pay the Owner on demand the actual amount of all losses, liabilities, costs and expenses (including, without limitation, legal expenses on a full indemnity basis) in connection with: (a) the occurrence, cure and attempted cure of any Default Event; (b) where the Developer is in default under this Agreement or any other Project Document, the administration, enforcement or attempted enforcement or preservation or attempted preservation of any rights under this Agreement or any other Project Document; and (c) any amendment to, or any consent, approval, waiver, release or discharge of or under, this Agreement or any other Project Document 1. The defendant points out the court found that the developer had engaged in a default event and it is submitted that the Development Agreement and relevantly the indemnity are engaged. 2. The defendant further submits that the proceedings in particular fall within the scope of clause 24.1(a) and (b). This is on the basis the plaintiff asserted various entitlements alleging that the defendant was obliged to repay certain contributions. The defendant submits therefore that the legal costs relating to its defence of the claim brought against it fell squarely within the terms of the Development Agreement. In addition the defendant submits its legal costs associated with its cross claim were incurred in the context of enforcing the contractual indemnity and guarantee and therefore again fall squarely within the terms of the Development Agreement. 3. Lastly the defendant submits the cross claim specifically foreshadowed a claim for costs on an indemnity basis and the case was conducted on the basis of such a claim, and that the plaintiff has had ample opportunity to deal with it. 4. The plaintiff on the other hand points out that the claim for indemnity costs is based squarely and solely upon the terms of the Development Agreement. The plaintiff however points out that the award of costs is always a matter for discretion of the court (section 98 of the Civil Procedure Act 2005 (NSW)). It is submitted that notwithstanding the terms of any contract, the court has an overriding discretion and is able to regulate the determination of such an issue. 5. In elaboration the plaintiff submits the various bases upon which the defendant seeks the entitlement to indemnity costs are not tenable. The plaintiff submits the costs incurred by the defendant in defeating the plaintiff's claims were not costs incurred in preserving or attempting to reserve its rights under the Development Agreement. They were instead and should properly be characterised as being incurred in defeating a claim arising out of separate oral agreements. 6. Further the plaintiff's claim, it is submitted, did not directly legally or economically affect the defendant's rights under the Development Agreement. The plaintiff instead proceeded without legally or economically diminishing or impeaching those rights being based upon matters arising independently from the Development Agreement. 7. The plaintiff submits it is not appropriate the costs of the entire proceedings to date be awarded in favour of the defendant on an indemnity basis. Instead, it is submitted, if indemnity costs are to be awarded they should be limited to those costs the subject of its cross claim. Indeed the plaintiff submits that the proceedings to date have substantially concerned the plaintiff's claim and an apportionment needs to be made between the costs of the plaintiff's claim and the costs of the defendant's claim. It is submitted such an assessment is necessarily an impressionistic one. 8. The plaintiff submits there are a number of factors that indicate that the vast majority of the costs to date pertain to the plaintiff's case as opposed to the defendant's cross claim. The plaintiff points to the time occupied at hearing in dealing with the plaintiff's claim, which it submits was the vast majority of the time. The plaintiff submits this is supported by the proportion of the evidence, submissions, and preliminary questions pertaining to the plaintiff's claim, as opposed to the defendant's claim. The plaintiff submits this is also reflected in the judgment. 9. In the light of these submissions the plaintiff submits that no more than 20% of the defendant's costs should be awarded on an indemnity basis. The plaintiff submits this reflects appropriately the portion of costs incurred to date that pertains to the cross claim as opposed to the plaintiff's case.