Supreme Court New South Wales Medium Neutral Citation: Simon Ho v Daniel Lau and Anor [2017] NSWSC 1761 Hearing dates: 29, 30 November 2017 Decision date: 08 December 2017 Jurisdiction: Equity - Expedition List Before: Sackar J Decision: See para [17] – [18] Category: Costs Parties: Simon Ho (Plaintiff) Daniel Chi Chung Lau (first Defendant) Lilian Lim (second Defendant) Representation: Counsel: D Allen (Plaintiff) L Ang (Defendants) Solicitors: Proctor Phair (Plaintiff) M G L Lawyers (Defendants) File Number(s): 2017/196082 Judgment 1. These proceedings were fixed to be heard before me on 6 and 7 November 2017 but had to be vacated for a number of weeks due to a catastrophic flood that occurred in the court building. 2. The matter was fixed to proceed before me again on 29 and 30 November however after some dialogue with the parties and much negotiation between them the matter resolved but for two issues. I made orders accordingly on that day. 3. The two unresolved issues were the amount the Plaintiff alleges is owed pursuant to an invoice which is disputed by the Defendants, and the costs of the proceedings. 4. The amount said to be owing pursuant to the invoice was not pressed in the proceedings. The Plaintiff withdrew its case in that regard and may or may not sue in the Local Court for some $5,000 in relation to the invoice. 5. In order to save time and expense I invited the parties to consider making submissions on costs in writing and indicated I would determine that issue on the papers. 6. I received written materials from both sides, however the Plaintiff objected to some materials the Defendants seek to rely upon. As a result I was asked to relist the matter today for argument. 7. Before coming to the objectionable material I should briefly record the respective parties' submissions. The Plaintiff submits he succeeded in the proceedings in obtaining an order for specific performance and a monetary judgment. It is further submitted on behalf of the Plaintiff that he acted reasonably in seeking the assistance of the Court. Further it is asserted the Defendants had repudiated the joint venture agreement by installing a kitchen on the first floor of their residence. 8. In addition it is submitted the Defendants' conduct post commencement of the litigation was unreasonable in that the Defendants ought to have acceded to an order for specific performance. Instead, it is submitted, they unreasonably delayed proceedings by taking a number of procedural points. It is also submitted Mr Ho made a reasonable offer for compromise and that the matter should have been resolved on that basis. Finally it is submitted the counter offer made by the Defendants was reasonably rejected by Mr Ho. 9. In response, the Defendants submit the Plaintiff's submissions are an "exercise in obfuscation". The Defendants submit that the Plaintiff sought specific performance only so far as they sought orders for the Defendants to remove their non-compliant structure, sign restrictive covenants and pay monies to the Plaintiff. It is further submitted on behalf of the Defendants that the Plaintiff's Statement of Claim did not seek specific performance up to refinance and a winding up of the joint venture. 10. The Defendants further submit in their Cross Claim they sought amongst other things specific performance of the joint venture agreement up until refinance of all the joint venture mortgages and the $174,000 loan, and these were matters of some considerable dispute between the parties. The Defendants submit they made an open offer on 13 September 2017, the substance of which was to invite the Plaintiff to consent to orders for specific performance up until registration of the Strata Plan. 11. The Defendants make further and much more detailed submissions about the chronology of negotiations and discussions between the parties. In turn the Defendants submit that offers of the Defendants were unreasonably rejected by the Plaintiff. 12. The Plaintiff replies in some little detail. The thrust of the submission is to reiterate the unreasonableness on the part of the Defendants in a number of respects. In short the Plaintiff alleges the Defendants in effect have always wanted to litigate matters which were never really in dispute and that in doing so have acted unreasonably. 13. The Plaintiff submits that as they have been unsuccessful they submit the Defendants should be ordered to pay the Plaintiff's costs of the proceedings in addition the Defendants should pay the costs of the subpoena issues which were reserved on 20 October 2017. 14. The Defendants on the other hand accept the presumption that their 21 September 2017 offer is relied upon the Defendants are liable to pay the Plaintiff's costs on an ordinary basis up to the date of the offer. It is however submitted here that there are good reasons why the presumption should be displaced and that the parties should bear their own costs of the Statement of Claim up to 22 September 2017. The Defendants therefore submit that the parties should bear their own costs of the proceedings prior to 22 September 2017 (given both parties had non-compliant structures, both parties had not executed the conveyance correctly and the inconsistent manner in which the money claims were pleaded by the Plaintiff); and the Plaintiff should pay the Defendants costs on an indemnity basis from 22 September 2017. This latter submission is no doubt based on what it is submitted is the unreasonableness of the Plaintiff in rejecting the Defendants' offer of 21 September 2017. Consideration 1. The parties in this matter even as at today fought each other to a standstill. They were once friends and intended to be long time neighbours. They are now hopefully short term enemies. However the dispute or disputes between the parties have become intense and acrimonious. It remains so. 2. Wherever proceedings are resolved by way of compromise and the Court does not have the advantage of making any direct assessment of witness, as is the case here, the Court is left to determine the unresolved issues based on contemporaneous materials as are reliable, together with submissions of Counsel. Neither side has shied away from making derogatory remarks and accusations about the other. In Immigration and Ethnic Affairs, Re Minister for; Ex parte Lai Qin (1997) 186 CLR 622 at 624-62, McHugh J made a number of comments which are pertinent to the resolution of the costs argument before me. He observed unexceptionally that power to order costs in most jurisdictions (as here) is discretionary. He went on to say: Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.4 In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80% of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. (footnotes omitted). 1. It seems to me here that fault lies on both sides. It turned out to be practical matters which should have been reasonably resolved with the application of common sense escalated into a feud of some proportion. For various reasons it may spill over into other litigation which would regrettable. However there is nothing the Court can do about such consequence. 2. I have read the materials carefully that have been provided and there are a number of disputes which quite frankly the Court is incapable of resolving in this sort of application. In my view attempting to sort out accusation and counter accusation is an impossible and in my opinion futile task. In all the circumstances in my discretion the most appropriate order is that each party pay their costs of the proceedings. To that extent I include such costs, if any that have been expended on the alleged subpoena issue. ****** 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: 14 December 2017