Court of Appeal Supreme Court New South Wales Medium Neutral Citation: New Galaxy Investments Pty Ltd v Thomson & Ors (No 2) [2017] NSWCA 235 Hearing dates: On the papers Decision date: 15 September 2017 Before: Basten JA, Gleeson JA, Sackville AJA Decision: 1. The appellant (NGI) pay 50 per cent of the costs of the first to tenth respondents (Vendors) of Supreme Court proceedings No 2014/228930 (Equity Division Proceedings), including the Vendors' costs of NGI's cross-claim against them, up to 21 August 2015 on the ordinary basis. 2. The Vendors pay 50 per cent of NGI's costs of the appeal, insofar as those costs concern the issues arising on the appeal between NGI and the Vendors, on the ordinary basis. 3. NGI pay the costs of the thirteenth respondent (Ms Lin) relating to NGI's cross-claim against her, up to 21 August 2015 on the ordinary basis. 4. NGI pay the costs of the eleventh respondent (GDI) of (a) NGI's cross-claim against GDI and (b) GDI's cross-claim against NGI, up to 21 August 2015 on the ordinary basis. 5. GDI and Ms Lin pay 50 per cent of NGI's costs of the appeal insofar as the costs concern the issues arising on the appeal between NGI (on the one hand) and GDI and Ms Lin (on the other) on the ordinary basis. 6. The costs of NGI and the twelfth respondent (MVGDD) in the Equity Division Proceedings, insofar as the costs concerned issues arising between NGI and MVGDD, be costs in MVGDD's cross-claim. 7. MVGDD pay NGI's costs of the appeal, limited to the costs directly associated with the issue of the indemnity costs order made by the primary Judge in favour of MVGDD against NGI, on the ordinary basis. Catchwords: COSTS – party/party – orders when proceedings involve multiple parties – appeals – costs where appeal succeeds in part Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Real Property Act 1900 (NSW), s 74P Australian Consumer Law, s 236 Uniform Civil Procedure Rules 2005 (NSW), rr 36.16(3A), 36.17, 42.1 Cases Cited: Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Doppstedt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 New Galaxy Investments Pty Ltd v Thomson [2017] NSWCA 153 Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 Category: Costs Parties: Matter No. 2015/370773: New Galaxy Investments Pty Ltd (Appellant) David Alan Thomson (First Respondent) Tracy Spencer (Second Respondent) Joseph Alonso (Third Respondent) Kaye Alonso (Fourth Respondent) John Wolfe (Fifth Respondent) Janyce Wolfe (Sixth Respondent) Malcolm Smith (Seventh Respondent) Katherine Smith (Eight Respondent) Pera Webb (Ninth Respondent) Maureen Theobald (Tenth Respondent) Golden Destiny Investments Pty Ltd (Eleventh Respondent) MV Golden Destiny Development (Turramurra) Pty Ltd (Twelfth Respondent) Yun "Louise" Lin (Thirteenth Respondent) Kristjan Geering (Fourteenth Respondent) Francisco Gutierrez trading as Avondale Lawyers (Fifteenth Respondent) Matter No. 2016/10107: Francisco Gutierrez trading as Avondale Lawyers (Appellant) David Alan Thomson (First Respondent) Tracy Spencer (Second Respondent) Joseph Alonso (Third Respondent) Kaye Alonso (Fourth Respondent) John Wolfe (Fifth Respondent) Janyce Wolfe (Sixth Respondent) Malcolm Smith (Seventh Respondent) Katherine Smith (Eight Respondent) Pera Webb (Ninth Respondent) Maureen Theobald (Tenth Respondent) Golden Destiny Investments Pty Ltd (Eleventh Respondent) MV Golden Destiny Development (Turramurra) Pty Ltd (Twelfth Respondent) New Galaxy Investments Pty Ltd (Thirteenth Respondent) Representation: Counsel: Mr M Einfeld QC / Mr D Krochmalik (New Galaxy) Mr F Corsaro SC / Mr M Auld (Avondale Lawyers) Mr G Sirtes SC / Mr M Fernandes (First to Tenth Respondents) Mr J Darke SC / Mr J Lee (Eleventh and Thirteenth Respondents) Mr D Allen (Twelfth Respondent) Solicitors: Websters Lawyers (New Galaxy) Fox & Staniland Lawyers (First to Tenth Respondents) Ren Zhou Lawyers (Golden Destiny) Kekatos Legal (MV Golden Destiny) Birchgrove Legal (Francisco Gutierrez) File Number(s): 2015/370773; 2016/10107 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2015] NSWSC 11765 and [2015] NSWSC 1929 Date of Decision: 21 August 2015 Before: Sackar J File Number(s): 2014/228930 [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 a judgment delivered on 23 June 2017, this Court allowed, in part, an appeal by the appellant (NGI) against decisions made by a Judge of the Equity Division (Sackar J). [1] 2. The primary Judge delivered judgment on 21 August 2015 after a lengthy trial in the Equity Division in March of that year. [2] On 17 December 2015, his Honour gave judgment on some unresolved issues. These included questions relating to costs and competing claims to the Court Fund (a sum of $6 million that had been paid into court by the first to tenth respondents (Vendors). [3] 3. The primary Judge gave the parties an opportunity to agree on the form of orders. On 20 November 2015, his Honour made a series of orders giving effect to his reasons for judgment. His Honour declared that: * NGI had, and continues to have, no caveatable interest in the properties of which the Vendors were the registered proprietors (Turramurra Properties) (Order 1); and * NGI lodged caveats over the Turramurra Properties and refused or failed to withdraw those caveats without reasonable cause (Order 2). His Honour also ordered NGI to make interim payments of damages to the Vendors and to the eleventh respondent (GDI) (Orders 3 and 5). His Honour also dismissed a cross-claim by NGI (Order 7). 1. On 21 April 2016, the primary Judge made further orders. His Honour entered judgment in favour of the Vendors against NGI in the sum of $796,026.41 (Order 1) and ordered NGI to pay the costs of each of the Vendors, GDI, the twelfth respondent (MVGDD) and the thirteenth respondent (Ms Lin) up to 21 August 2015 (when judgment was delivered) on an indemnity basis (Order 5). His Honour stayed the costs order until further order (Order 6). In addition, the primary Judge reserved the costs of various applications made and determined after 21 August 2015, subject to certain exceptions (Order 7). 2. This Court allowed NGI's appeal in part (Basten and Gleeson JJA, Sackville AJA dissenting) and made the following orders (using the Court's numbering): "(3) Set aside orders 2, 3, 5 and 7 made on 20 November 2015. (4) Set aside orders 1, 5 and 6 made on 21 April 2016. (5) Dismiss the claims of the [Vendors] against [NGI] for compensation pursuant to s 74P of the Real Property Act 1900 (NSW). (6) Dismiss the claim of [GDI] against [NGI] for compensation pursuant to s 74P of the Real Property Act 1900 (NSW)." There was no challenge to Order 7 made by the primary Judge on 21 April 2016 (relating to costs incurred after 21 August 2015) and that order remains in force. 1. This Court made directions for the filing of submissions on costs if the parties were unable to agree. They could not agree and four sets of competing submissions, plus a series of reply submissions, have been filed. 2. The Principal Judgment explains the background to the litigation and the issues that arose at trial and on appeal. This judgment assumes familiarity with the Principal Judgment. Submissions NGI 1. NGI proposes that the respondents (the Vendors, GDI, MVGDD and Ms Lin) pay NGI's costs of the appeal. In relation to the costs of the Equity Division proceedings, NGI proposes that: * as between NGI and the Vendors, the Vendors should pay 50 per cent of NGI's costs; * as between NGI and GDI (and Ms Lin) there should be no order as to costs; and * as between NGI and MVGDD, costs should abide the outcome of MVGDD's unresolved cross-claim. 1. So far as the appeal is concerned, NGI says that it succeeded in setting aside the judgment in favour of the Vendors and the order that it pay compensation under s 74P of the Real Property Act 1900 (NSW) (RP Act) to the Vendors and GDI. NGI accepts that it did not succeed in setting aside the declaration that it did not have a caveatable interest in the properties and did not obtain an order that the Court Fund be paid to it. Nonetheless, NGI says it succeeded on the ultimate issue and for that reason should receive its costs of the appeal. The Vendors 1. The Vendors say that NGI should be ordered to pay 75 per cent of their costs of the Equity Division proceedings on the ordinary basis. The Vendors contend that they had to commence proceedings against NGI in order to remove the caveats it lodged against the titles to the Turramurra Properties. They say that it was not until the third day of the trial that NGI conceded that it was not entitled to maintain the caveats and withdrew them, thereby allowing the Vendors to complete the sale of the properties to GDI. The Vendors rely on the holding by the primary Judge and by a majority of this Court (Gleeson JA and Sackville AJA, Basten JA dissenting on this point) that NGI was never entitled as against the Vendors to lodge the caveats. 2. The Vendors submit that most time on the appeal was taken up with NGI's unsuccessful contention that it had a caveatable interest in each of the properties. Although NGI succeeded on the question of whether the caveats were lodged and maintained without reasonable cause, the Vendors submit that NGI should pay 75 per cent of their costs on the appeal. GDI and Ms Lin 1. GDI and Ms Lin submit that NGI should pay their costs of the Equity Division proceedings on the ordinary basis until 21 August 2015 and that costs incurred thereafter should be reserved for determination by the primary Judge in accordance with Order 7 made on 21 April 2016. They also contend that NGI should pay 75 per cent of their costs of the appeal. 2. Ms Lin relies on the fact that NGI's claim against her was dismissed in the Equity Division proceedings and that NGI did not challenge that order on appeal. GDI says that it succeeded on its cross-claim against NGI, other than in respect of its claim for damages under s 74P of the RP Act. GDI relies on the primary Judge's finding that it was entitled to damages against NGI pursuant to s 236 of the Australian Consumer Law (ACL) and that NGI did not challenge that finding on appeal. Since the damages awarded under s 236 of the ACL do not differ from the damages awarded by the primary Judge under s 74P of the RP Act (the order set aside on appeal), NGI says that its success on the appeal has not in substance altered the outcome of the Equity Division proceedings. MVGDD 1. MVGDD expresses "fears" that the costs order in its favour (Order 5 made on 21 April 2015) has been set aside by mistake. The error, so it argues, is that the Court failed to differentiate MVGDD's position from that of the Vendors and GDI. MVGDD invokes the slip rule [4] in inviting the Court to correct the "mistake". Alternatively MVGDD says that the costs order in its favour should remain since NGI did not challenge the order on appeal. MVGDD accepts that NGI challenged the order for indemnity costs, but submits that NGI did not dispute on appeal that the primary Judge was entitled to make an order that NGI pay MVGDD's costs. 2. In the further alternative, MVGDD submits that if this Court decides to re-exercise the discretion as to costs, it should award costs on an indemnity basis. It argues that NGI failed against it at first instance and that the primary Judge found that NGI had unreasonably persisted with its contract claim. Reasoning 1. Section 98 of the Civil Procedure Act 2005 (NSW) provides that, subject to the rules of court, costs are in the discretion of the Court, including by whom, to whom and to what extent costs are to be paid. UCPR r 42.1 provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless the circumstances justify some other order. As the authorities make clear, the "event" may be characterised in more than one way. [5] 2. NGI has succeeded in its challenge to orders made by the primary Judge that rested on his Honour's finding that NGI lodged and maintained its caveats without reasonable cause. Since the finding underpinned his Honour's costs orders, those orders have been set aside. It is therefore necessary for this Court to re-exercise the discretion to award the costs of the trial. This is not an easy task as the primary Judge's costs orders were influenced by a number of considerations concerning the conduct of the trial not all of which have been addressed on the appeal. NGI and the Vendors Costs of the trial 1. NGI acknowledges in its submissions that the Vendors, in effect, were obliged to bring the proceedings because NGI had lodged caveats over the titles to the Turramurra Properties. NGI ultimately removed the caveats, thereby permitting the Vendors' sale of the Turramurra Properties to GDI to proceed. It has now been held by this Court that the Vendors were not entitled to compensation pursuant to s 74P of the RP Act because NGI did not lodge and maintain the caveats without reasonable cause. Nonetheless, the Vendors succeeded at trial in requiring NGI to remove the caveats that prevented completion of the Vendors' contracts of sale with GDI. They also succeeded in establishing that NGI did not have a caveatable interest in the Turramurra Properties, a finding upheld on appeal. A further factor to take into account in determining the appropriate costs order between NGI and the Vendors is that NGI conceded at the trial that it was not in a position to complete the contracts of sale on which it relied and that its cross-claim against the Vendors was dismissed. [6] 2. NGI should be ordered to pay 50 per cent of the Vendors' costs of the proceedings in the Equity Division including the Vendors' costs of NGI's cross-claim up to 21 August 2015. Costs of the appeal 1. NGI succeeded on appeal in setting aside the orders based on the primary Judge's finding that NGI lodged and maintained the caveats over the Turramurra Properties without reasonable cause. However, NGI did not succeed in its challenge to the declaration by the primary Judge on 20 November 2015 that it had no caveatable interest in the Turramurra Properties (Order 1). 2. One circumstance in which a successful appellant may be deprived of part of its costs is where it loses on a separate issue which has increased the time taken on appeal. [7] In this case, the question of whether NGI had a caveatable interest in the Turramurra Properties was one of the two central issues on the appeal. It was clearly separate from the question of whether NGI had lodged and maintained the caveats without reasonable cause. NGI succeeded on that issue notwithstanding that this Court held that it did not in fact have a caveatable interest in the Turramurra Properties. The argument on the latter question took up more time on the appeal than the argument as to whether NGI lodged its caveats without reasonable cause. 3. This is not merely a case where a respondent seeks to deprive a successful appellant of costs because the appellant relied on two distinct arguments only one of which was accepted by the Court. NGI challenged the declaration made by the primary Judge that it did not have a caveatable interest in the Turramurra Properties. That challenge failed and the declaration remains in force. Thus NGI's appeal was not wholly successful. 4. In view of those matters, NGI's submission that the Vendors should be required to pay NGI's costs of the appeal should not be accepted. On the other hand, the Vendors' submission that NGI should be required to pay 75 per cent of their costs of the appeal can properly be described as a rather unrealistic ambit claim. 5. An order that the Vendors pay 50 per cent of NGI's costs of the appeal insofar as those costs concern the issues between NGI and the Vendors, fairly reflects NGI's success in setting aside the orders requiring it to pay compensation and allows for its failure to set aside the declaration that it had no caveatable interest in the Turramurra Properties. NGI and GDI and Ms Lin Costs of the trial 1. NGI should pay Ms Lin's costs of NGI's cross-claim against her up to 21 August 2015 on the ordinary basis. NGI's cross-claim against Ms Lin was dismissed and NGI did not challenge the dismissal on appeal. Ms Lin does not seek indemnity costs. 2. NGI contends in its written submissions in reply that no separate orders should be made in favour of Ms Lin because her involvement in the proceedings was "tangential" and she was jointly represented with GDI. However, NGI's cross-claim against Ms Lin raised issues that were distinct from those arising between NGI and GDI. Any costs issue relating to the fact that GDI and Ms Lin were jointly represented can be addressed by a costs assessor. 3. GDI was successful in defending NGI's cross-claim against it. GDI should have its costs of NGI's cross-claim. 4. GDI succeeded in its cross-claim against NGI at the trial. The primary Judge's award to GDI of compensation pursuant to s 74P of the RP Act has been set aside on appeal. However, as GDI points out in its written submissions, it succeeded in its alternative claim to damages under the ACL. The damages awarded on GDI's ACL claim were identical to the compensation claimed by GDI under s 74P of the RP Act. [8] 5. It is true, as NGI submits, that some time was spent at the trial on GDI's claim for compensation under s 74P of the RP Act and that that claim ultimately failed. But GDI succeeded in obtaining the relief it sought in its cross-claim. NGI should pay GDI's costs of the latter's cross-claim. 6. Accordingly, NGI should be ordered to pay GDI's costs of (a) NGI's cross-claim against GDI and (b) GDI's cross-claim against NGI, up to 21 August 2015 on the ordinary basis. Costs of the appeal 1. The outcome of NGI's appeal has placed GDI in a position similar to that of the Vendors. NGI succeeded in setting aside the order that it pay GDI compensation pursuant to s 74P of the RP Act but failed in its challenge to the declaration that it had a caveatable interest in the Turramurra Properties. NGI also failed in its contention that it was entitled to payment of some or all of the Court Fund. 2. GDI relied on the primary Judge's finding that it was entitled to damages under the ACL. That finding was not challenged by NGI but on appeal GDI nonetheless sought to uphold its entitlement to compensation under s 74P of the RP Act. 3. GDI should be ordered to pay 50 per cent of NGI's costs of the appeal, insofar as the costs concern the issues between NGI and GDI. 4. As Ms Lin's submissions acknowledge, she had an interest on the appeal in maintaining the primary Judge's order for indemnity costs in her favour. NGI has succeeded against Ms Lin on that aspect of the appeal. 5. Ms Lin's submissions suggest that she also had an interest in preserving the Court Fund as moneys paid into Court. The submissions do not explain why Ms Lin had such an interest and it is not apparent that she did. 6. GDI and Ms Lin had the same representation on appeal and very little time was spent on issues of concern only to Ms Lin. Instead of making a separate costs order as between GDI and Ms Lin, it is appropriate that Ms Lin be required, together with GDI, to pay 50 per cent of NGI's costs of the appeal, insofar as the costs concern the issues arising on appeal between NGI (on the one hand) and GDI and Ms Lin (on the other). NGI and MVGDD Costs of the trial 1. The primary Judge ordered indemnity costs against NGI in favour of the Vendors, GDI, MVGDD and Ms Lin on the ground, among others, that NGI had no reasonable basis for lodging and maintaining the caveats. [9] Contrary to MVGDD's submissions, NGI's appeal challenged the costs order made by the primary Judge in favour of MVGDD. Since one of the bases for that order has not survived NGI's appeal, this Court must re-exercise the discretion as to the costs of the trial. Accordingly, MVGDD's contention that Order 4 made by this Court (setting aside the primary Judge's order that NGI pay costs on an indemnity basis) should be corrected under the slip rule must be rejected. Order 4 was not made in error and does not have legal consequences that were "unforseen and unintended" by this Court. [10] 2. MVGDD filed a cross-claim in the Equity Division proceedings seeking orders enforcing an undertaking as to damages given by NGI in the course of an interlocutory application by MVGDD for the removal of NGI's caveats. The cross-claim has not yet been resolved by the primary Judge. [11] 3. The question of the costs of the trial as between NGI and MVGDD should be determined by the primary Judge. As submitted by NGI, the appropriate order to achieve that result is that the costs incurred by NGI and MVGDD in the Equity Division proceedings between themselves be costs in the cross-claim. Costs of the appeal 1. NGI has succeeded in setting aside the order for indemnity costs in favour of MVGDD. Although MVGDD was to some extent caught up in the appeal on issues that did not directly concern it, costs as between it and NGI should follow the event. MVGDD should be ordered to pay NGI's costs of the appeal, limited to the costs directly associated with the issue of the indemnity costs order made by the primary Judge in favour of MVGDD against NGI. Orders 1. The following orders should be made: 1. The appellant (NGI) pay 50 per cent of the costs of the first to tenth respondents (Vendors) of Supreme Court proceedings No 2014/228930 (Equity Division Proceedings), including the Vendors' costs of NGI's cross-claim against them, up to 21 August 2015 on the ordinary basis. 2. The Vendors pay 50 per cent of NGI's costs of the appeal, insofar as those costs concern the issues arising on the appeal between NGI and the Vendors, on the ordinary basis. 3. NGI pay the costs of the thirteenth respondent (Ms Lin) relating to NGI's cross-claim against her, up to 21 August 2015 on the ordinary basis. 4. NGI pay the costs of the eleventh respondent (GDI) of (a) NGI's cross-claim against GDI and (b) GDI's cross-claim against NGI, up to 21 August 2015 on the ordinary basis. 5. GDI and Ms Lin pay 50 per cent of NGI's costs of the appeal insofar as the costs concern the issues arising on the appeal between NGI (on the one hand) and GDI and Ms Lin (on the other) on the ordinary basis. 6. The costs of NGI and the twelfth respondent (MVGDD) in the Equity Division Proceedings, insofar as the costs concerned issues arising between NGI and MVGDD, be costs in MVGDD's cross-claim. 7. MVGDD pay NGI's costs of the appeal, limited to the costs directly associated with the issue of the indemnity costs order made by the primary Judge in favour of MVGDD against NGI, on the ordinary basis. 1. Because of the complicated history of this matter it is possible that some existing orders have been overlooked. If this has occurred, the parties have 14 days in which to seek a variation of the orders. [12] ********** Endnotes 1. New Galaxy Investments Pty Ltd v Thomson [2017] NSWCA 153 (Principal Judgment). 2. Thomson v Golden Destiny Investments Pty Ltd [2015] NSWSC 1176 (Primary Judgment). 3. Thomson v Golden Destiny Investments Pty Ltd (No 2) [2015] NSWSC 1929 (Second Judgment). 4. Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.17. 5. Australian Receivables Ltd v Tekitu Pty Ltd [2011] NSWSC 1425 at [24]-[26], [54]-[60], cited with approval in Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per curiam. 6. Principal Judgment at [138], [211], [219]. 7. Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per curiam; Doppstedt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [18] per curiam. 8. Primary Judgment at [503]-[504]. 9. Second Judgment at [39]-[41]. 10. Compare Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 at [41], [58], [60] (Spigelman CJ, Santow JA and Handley AJA agreeing). 11. See Principal Judgment at [140]. 12. UCPR r 36.16(3A). 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: 26 March 2018