Supreme Court New South Wales Medium Neutral Citation: Taxa Australia Pty Ltd v G Wang & Anor [2018] NSWSC 1668 Hearing dates: 7 – 8 August; 16 – 17 August and 23 August 2018; written submissions as to orders and costs 5, 15 October 2018; further oral hearing 29 October 2018. Decision date: 01 November 2018 Jurisdiction: Equity - Corporations List Before: Black J Decision: Determination as to form of orders and costs orders made. Catchwords: PROCEDURE – judgment and orders – application to reopen after reasons for judgment but before orders were made. COSTS – where value of the claims pressed at the hearing were below the jurisdictional limit of the District Court – where matter arguably arose out of a commercial transaction – whether r 42.34 of the Uniform Civil Procedure Rules 2005 (NSW) displaces the possibility of a costs order in favour of the successful party – where several pleaded claims were not pressed at the final hearing – whether costs order should only be made in respect of the successful claim. ORDERS – determination as to form of orders. Cases Cited: - Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 - Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 - Chen v Chan [2009] VSCA 233 - Commonwealth of Australia v Gretton [2008] NSWCA 117 - Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 - Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 - Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No 2) [2007] FCA 1040 - Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 - Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 - Re Boart Longyear Ltd (No 4) [2017] NSWSC 1357 - Southern Classic Group Pty Ltd t/as Southern Classic Cars v Arch Underwriting at Lloyd's Ltd on behalf of Syndicate 2012 (No 2) [2018] NSWSC 1530 - The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194 - Wentworth v Rogers [2002] NSWSC 921 Category: Procedural and other rulings Parties: Taxa Australia Pty Ltd (Plaintiff/Cross-Defendant to First Cross-Claim/First Cross-Defendant to Second Cross-Claim) Gang Wang (First Defendant/Cross-Claimant to Second Cross-Claim) Xue Hua Yao (Second Defendant/Cross-Claimant to First Cross-Claim) Keming Diao (Second Cross-Defendant to Second Cross-Claim) Luca Borghese (Third Cross-Defendant to Second Cross-Claim) Representation: Counsel: D F Elliott (Plaintiff/Cross-Defendant to First Cross-Claim/Cross-Defendants to Second Cross-Claim) Solicitors: Jem Lawyers (Plaintiff/Cross-Defendant to First Cross-Claim/Cross-Defendants to Second Cross-Claim) Gang Wang (Self-Represented - First Defendant/Cross-Claimant to Second Cross-Claim) Xue Hua Yao (Self-Represented - Second Defendant/Cross-Claimant to First Cross-Claim) File Number(s): 2015/367612 Judgment 1. On 14 September 2018, I delivered my judgment in proceedings brought by Taxa Australia Pty Ltd ("Taxa") against Mr Gang Wang and Ms Xue Hua Yao ([2018] NSWSC 1412) ("Judgment"). I held that Taxa was entitled to recover the amount of $160,140.52 against Mr Wang (Judgment [48]), subject to any deduction of amounts recovered against Ms Yao, and that Mr Wang's Cross-Claim against Taxa was not established. I also held that Taxa was entitled to recover the same amount against Ms Yao, and that Ms Yao succeeded in her Cross-Claim against Taxa, albeit for a lesser amount, and foreshadowed that there should be judgment for Taxa for the balance of those two amounts (Judgment [82]). I deferred dealing with the question of costs, although I noted that a question may arise as to whether the proceedings were properly brought in this Court rather than the District Court of New South Wales. 2. I directed the parties to bring in agreed Short Minutes of Order to give effect to the Judgment, including as to interest and costs, within 21 days, or, if there was no agreement between them, their respective draft Short Minutes of Order and submissions as to the differences between them. The parties have agreed some but not all of the orders that should be made to give effect to the Judgment. A preliminary issue raised by Taxa 1. By its submissions made on 15 October 2018, Taxa sought what it described as a "clarification" of an issue addressed in the Judgment. By its Interlocutory Process filed on 29 October 2018, Taxa then sought an order that paragraphs [39], [47]–[48] and [82] of the Judgment be "recalled", although that application proceeded, in a short hearing on that date, as an application to reopen the issue addressed in those paragraphs, with the outcome to be addressed in this judgment and the orders made. 2. By way of background to this issue, I had summarised Taxa's pleading under the heading "Taxa Uniform" and Mr Wang's and Ms Yao's response to it (Judgment [23]-[27] as follows: "The primary allegation pressed by Taxa at the hearing relates to a business, or at least a business name and bank account, conducted by Ms Yao under the name "Taxa Uniform". There is little factual dispute as to this claim, which is largely addressed by admissions that were properly made by Mr Wang and Ms Yao as to the relevant facts. Those admissions are consistent with the evidence to which I referred above. Taxa pleads, and Mr Wang admits, that Ms Yao caused a business name "Taxa Uniform" to be registered and has been the owner of Taxa Uniform (SOC [30]–[31]). Ms Yao admits that, on or about 12 July 2014, she caused the business name "Taxa Uniform" to be registered, but contends that she did so at Mr Wang's direction, and admits that she has been the owner of Taxa Uniform from 12 July 2014 to date. Taxa also pleads (SOC [32]) that the business name Taxa Uniform was not owned by Taxa or used in connection with any legitimate business operations of Taxa. Mr Wang and Ms Yao admit that Taxa Uniform was not a business name owned by Taxa and deny that Taxa Uniform was not used in connection with any legitimate business operations of Taxa. Taxa also pleads (SOC [33]) the existence of a bank account held or used by Taxa Uniform. Mr Wang responds that he was a director of Taxa, and that he advised Ms Yao to set up that account for reimbursing unpaid salary for Ms Yao and he had access and control of the account. Ms Yao admits that she caused the Taxa Uniform Bank Account to be opened on or about 14 July 2014; claims that bank account was held or used by Taxa Uniform; and pleads that that account was: "Not a bank account in the name of [Taxa], but as it was opened at the direction of [Mr Wang], a director of [Taxa] at the relevant time [Ms Yao] believed it was controlled by [Taxa] and does not admit that it was not controlled by [Taxa]." … Taxa pleads (SOC [34]–[35]) that, from 30 January 2012 to 1 November 2015, Mr Wang and Ms Yao directed customers of Taxa to make payments in respect of goods and services provided by it into the Taxa Uniform Bank Account or a credit card payment facility operated by Taxa Uniform and customers made such payments. Mr Elliott, who appears for Taxa, accepted in closing submissions that that allegation should be limited to the period after July 2014 when that account was established. Mr Wang responds that, from 16 July 2014 until 25 November 2015, he directed Ms Yao to direct customers of Taxa to deposit payments in respect of goods provided by Taxa to the Taxa Uniform Bank Account; and claims that Ms Yao has used the payments personally in lieu of her unpaid salary from Taxa allegedly in an amount of $155,971.01, unpaid annual leave from Taxa allegedly in the amount of $21,930.92, and unpaid superannuation from Taxa allegedly in the sum of $30,562.50 for the period between 1 March 2012 and 25 November 2015. That proposition is cross-referenced to and depends upon Ms Yao's Cross-Claim in the proceedings. Mr Wang also pleads that Taxa Uniform and its bank account have also been used for other matters unrelated to Taxa's business and accepts that an amount of approximately $136,000 banked into that account "possibly related to the [Taxa] payment had been banked to Taxa Uniform account". Ms Yao admits that, from 14 July 2014 until 25 November 2015, she directed Taxa's customers to make payments in respect of goods and services provided by it to the Taxa Uniform Bank Account or a credit card payment facility operated by Taxa Uniform, and says she gave that direction on Mr Wang's instructions and also admits that, from 14 July 2014 until 25 November 2015, Taxa's customers made payments to the Taxa Uniform Bank Account or a credit card payment facility operated by Taxa Uniform. Taxa pleads (SOC [36]–[38]) and Mr Wang does not admit that the Taxa Uniform Payments (as defined) were in respect of goods supplied by Taxa to its customers, were properly payable to Taxa and, further or alternatively, that Mr Wang and Ms Yao directed specified customers of Taxa to make payments exceeding $107,546.93 to the Taxa Uniform Bank Account or a credit card payment facility operated by Taxa Uniform, where the payments were in respect of goods and services provided to those customers by Taxa, and in circumstances where monies payable for those goods and services were properly payable by those customers to Taxa, and thereby wrongly diverted funds in excess of $107,546.93 away from Taxa. Taxa also pleads [SOC [40]) that Mr Wang and Ms Yao have received the Taxa Uniform Payments and have not passed on those payments to Taxa or otherwise accounted for them to Taxa. Mr Wang does not admit those allegations. Ms Yao admits both that the Taxa Uniform Payments were in respect of goods supplied by Taxa to its customers and that the Taxa Uniform Payments were monies properly payable to Taxa. Ms Yao also admits the amount of approximately $136,000 for the Taxa Uniform Payments; appears to admit that she received or had the benefit of that amount, although her pleading in that respect was somewhat unclear; says that amount is subject to an offsetting claim in respect of $146,137 for her unpaid salary, $14,743.85 for unpaid annual leave and $26,962.50 for unpaid superannuation; and pleads that she paid into Court the amount of $136,000 "which amount, if any, is to be paid out of Court subject to the determination of the Cross-Claim". Ms Yao specifically accepted (Yao Defence [40]) that Taxa was entitled to that amount of $136,000, subject to the determination of her offsetting claim in the Cross-Claim. Ms Yao confirmed in closing submissions that she accepted that the amount of $136,000 was due to Taxa in respect of the Taxa Uniform Bank Account, subject to her Cross-Claim, but contended that Taxa had not satisfied an onus of proof to establish that any greater amount was due to it from that account." 1. I pause to note that this pleading advanced alternative claims, for the total amount paid into the Taxa Uniform Bank Account in SOC [30]–[37] and for the lesser amount referable to the identified transactions in SOC [38] and Annexure A. I then dealt (Judgment [42]–[46]) with several adjustments on which Ms Yao relied, relating to payments from a hobby business she operated such four transactions which she contended should be deducted from the claim in respect of the Taxa Uniform Bank Account, one of which was not contested by Taxa. I then observed (Judgment [47]–[48]) that: "Mr Elliott [who appeared for Taxa] also accepted Ms Yao's submission that there should be several deductions from the amount claimed by Taxa in respect of Taxa Uniform, in respect of transactions numbered 9, 13, 31, 43, 46–47, 50, 61, 68, 77, 80, 82, 90, 93, 96, 101, 114–116 and 129 in Annexure A to Taxa's Statement of Claim, totalling $21,935.45. Ms Yao in turn accepted in oral submissions (T222) that those deductions fully addressed issues that she had raised in respect of duplications in the amounts claimed against her. Those deductions reduce the total of the identified diversions in the schedule to the Statement of Claim to $85,611.48 and the total of deposits into the Taxa Uniform Bank Account to $162,164.51, which are reduced further to $83,587.49 and $160,140.52 respectively after deducting the further amount of $2,023.99 in respect of Ms Li. Mr Elliott submits, and I accept, that the Court should be satisfied that all of the funds paid into the Taxa Uniform Bank Account were in respect of goods supplied by Taxa to customers of Taxa, and were monies properly payable to Taxa. The amount recoverable on that basis against Mr Wang in respect of this claim is $160,140.52, after the deductions to which I have referred, and subject to his Cross-Claim in respect of salary and other entitlements which I address below. I also address the corresponding claim against Ms Yao, and her Cross-Claim, below. Taxa could not, of course, recover the amount claimed against Mr Wang, in respect of monies paid into the Taxa Uniform Bank Account, to the extent that it recovers any part of those funds against Ms Yao, where that would amount to double recovery. Although Taxa submitted a calculation of interest on this amount, I will address the question of interest in dealing with the orders to be made to give effect to this judgment." [emphasis added] 1. Taxa pointed out in its submissions made on 15 October 2018 that deposits made into the Taxa Uniform Bank Account during the period 16 July 2014 and 6 October 2014 totalled $184,099.96 (Ex P4, Judgment [39]-[40]), and that I had found (Judgment [48]) that all of the funds paid into the Taxa Uniform Bank Account were in respect of goods supplied by Taxa to customers of Taxa, and were monies properly payable to Taxa. Taxa also pointed out that I had recorded (at Judgment [47]) the concession made by Mr Elliott that transactions numbered 9, 13, 31, 43, 46–47, 50, 61, 68, 77, 80, 82, 90, 93, 96, 101, 114–116 and 129 ("Excluded Items") in Annexure A of the Statement of Claim, totalling $21,935.45, were not pressed. Taxa recognised that those deductions reduced the total identified diversions in Schedule A of the Statement of Claim to $85,611.48 (Judgment [47]). 2. Taxa submitted that the Excluded Items were not pressed "as those payments do not appear in the Taxa Uniform Bank Account". It does not seem to me to be necessary or relevant to explore Taxa's motivation for not pressing those items at this point, beyond noting that Ms Yao had advanced apparently cogent criticisms of them, which it was not necessary to resolve when Taxa did not press them. However, Taxa goes on to submit that, in light of the finding (Judgment [48]) that all of the funds paid into the Taxa Uniform Bank Account were in respect of goods supplied by Taxa to customers of Taxa, and were monies properly payable to Taxa, there is a question whether the Excluded Items should have been deducted from the payments made into the Taxa Uniform Bank Account (as I did in the italicised passage above) or only from the list of payments identified in Annexure A of the Statement of Claim, which provided the basis of Taxa's alternative claim. 3. In further written submissions made for the short oral hearing on 29 October 2018, Mr Elliott, who appears for Taxa, set out the way in which these issues arose at the hearing and submitted that: "Black J found at [48] that "that all of the funds paid into the Taxa Uniform Bank Account were in respect of goods supplied by Taxa to customers of Taxa, and were monies properly payable to Taxa." Given that the concessions concerned either duplicates or payments that were, in fact, made to Taxa as opposed into the Taxa Uniform Bank Account – it is respectfully submitted that they would not be deducted from the total of deposits into the Taxa Uniform Bank Account (as occurred at [39] and [47] of the Judgment." Ms Yao responded by reference to the off sets to which I had addressed in Judgment paragraphs [42]–[46], to which I referred above. 1. A reopening may be appropriate to allow a matter to be addressed by a trial judge which would otherwise be open on appeal, and the court's discretion whether to permit that course must be exercised in the interests of justice, and guided by the provisions of s 56 of the Civil Procedure Act 2005 (NSW): Wentworth v Rogers [2002] NSWSC 921 at [9]; Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No 2) [2007] FCA 1040 at [13]; Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 at [15]; Re Boart Longyear Ltd (No 4) [2017] NSWSC 1357 at [12]. The jurisdiction to reopen at least exists where the court has proceeded under a misapprehension of the facts or the relevant law and that misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing, although an application to reopen may be allowed even if the party seeking it is not entirely blameless: Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 303; Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 at [773]. I am satisfied that leave to reopen should be granted to Taxa on this issue, where I did not appreciate that the concession made by Taxa as to corrections to its calculation was, as a matter of the logic of its claims, necessarily limited to its alternative claim. 2. I am also satisfied that my judgment requires correction. Other than for one deduction in the amount of $2,023.99 which Taxa did not contest (Judgment [45]), each of the adjustments identified by Ms Yao affected only the alternative claim in respect of identified transactions, not the larger claim made by Taxa for the total payments into the Taxa Uniform Bank Account (as defined) and should not have been deducted from the judgment in favour of in respect of that larger claim. As Taxa points out, it follows that the amount recoverable against Mr Wang and Ms Yao is $182,075.97, after deducting $2,023.99 in respect of Ms Li, and not $160,140.52 as stated in the Judgment, before adjusting for the amount of the judgment in favour of Ms Yao in respect of her Cross-Claim. Taxa's claim against Mr Wang and the Second Cross-Claim brought by Mr Wang 1. Taxa initially proposed that there be an order for judgment for it against Mr Wang and Ms Yao in the sum of $160,140.52, now amended to $182,075.97 as noted above, and that they pay interest on the judgment sum in accordance with s 100 of the Civil Procedure Act. Mr Wang and Ms Yao, who were not legally represented, did not oppose those proposed orders. Taxa and Ms Yao subsequently agreed the amount of interest payable as $34,539.17, on monies deposited into the Taxa Uniform Bank Account of $182,075.97, and Mr Wang did not contest that calculation. There should be judgment for Taxa against Mr Wang in the higher amount now claimed and for interest on that amount as quantified above. I note, for completeness, that Taxa cannot enforce its judgment for the full amount against Mr Wang, to the extent that it recovers judgment against Ms Yao (to which I refer below) where the claims against Mr Wang and Ms Yao are in respect of the same loss. 2. Taxa also proposed that an order should be made dismissing the Second Cross-Claim brought by Mr Wang against it. Mr Wang and Ms Yao indicate, in submissions, that they do not oppose that proposed order. That proposed order is consistent with the Judgment and should be made. Taxa's claim against Ms Yao and the First Cross-Claim brought by Ms Yao 1. As I noted above, Taxa initially proposed that there be an order for judgment for it against Mr Wang and Ms Yao in the sum of $160,140.52, now amended to $182,075.97 as noted above, and interest on the judgment sum in accordance with s 100 of the Civil Procedure Act, now agreed as $34,539.17. Taxa also recognises that there should be judgment for Ms Yao against it in respect of the First Cross-Claim brought by Ms Yao in the sum of $85,845.15 and recognises that it must pay interest on the judgment sum ordered in favour of Ms Yao in accordance with s 100 of the Civil Procedure Act. Ms Yao quantified interest on her claim as $29,958.45 and Taxa did not contest that calculation. 2. I consider that an order should be made for set-off of the judgments as between Taxa and Ms Yao pursuant to s 90 of the Civil Procedure Act. That section provides that, inter alia, if there is a claim by a plaintiff and a cross-claim by a defendant, the Court may give judgment for the balance only of the sums of money awarded on the respective claims, or may give judgment in respect of each claim. I am satisfied that it is appropriate to give judgment in respect of the balance of the claims as between Taxa and Ms Yao, to avoid exposing Ms Yao, who is (as I noted above) not legally represented, to the additional costs and inconvenience of enforcing her judgment against Taxa and the risk that such a judgment might ultimately not be met. Taxa did not oppose an order of that form in supplementary submissions and Mr Wang and Ms Yao did not make any submission about it. On that basis, there would be judgment in favour of Taxa against Ms Yao, excluding interest, of a net amount of $96,230.82, and of interest in a net amount of $4,580.72, totalling $100,811.54. The last of those figures was also agreed between the parties. Payment of funds out of Court 1. Taxa initially proposed that an order be made under r 41.3 of the Uniform Civil Procedure Rules 2005 (NSW) that an amount previously paid into Court by Ms Yao of $136,000 plus any interest be released and paid to Taxa. Mr Elliott did not seek to support that order in submissions and instead submitted that an order should be made that the amount Taxa has recovered against Ms Yao in respect of its claim be released and paid to it and the balance be retained in Court, or paid into a controlled monies account, on account of Taxa's claim for costs against Ms Yao. Although Ms Yao's submissions as to this order were not entirely clear, its seems that her ultimate position was that the amount that Taxa was entitled to recover from her and interest should be paid to it and the balance of the amount paid into Court should be paid to her. 2. I cannot see a basis for the wider order proposed by Taxa, where the amount of the judgment against Ms Yao (after the set-off to which I referred above) and interest against Ms Yao is likely to be less than the amount that she paid into Court. I will make an order for payment of the funds recovered by Taxa from Ms Yao out of Court to it, subject to the set-off to which I have referred above. I will not order that the balance of the amount paid by Ms Yao into Court be retained in Court or paid into a controlled monies account, where there is no principled basis on which Taxa should be secured for its claim for costs against Ms Yao, where Ms Yao is not secured for her claim for costs against Taxa. 3. Ms Yao also seems to seek an order that Mr Wang pay an amount in reimbursement to her. I cannot make such an order where there was no Cross-Claim and no relief sought as between Ms Yao and Mr Wang in the proceedings. Costs 1. Taxa seeks order for costs as follows: "7. Order that [Mr Wang and Ms Yao] pay 80% of [Taxa's] costs of the proceedings as agreed or assessed apportioned on the following basis: (a) Ms Yao and Mr Wang be jointly and severally pay 1/3 of [Taxa's] costs of the proceedings; and (b) Mr Wang pay 2/3 of [Taxa's] costs of the proceedings (inclusive of the costs order in 7(a)). 8. Order that [Taxa] pay [Ms Yao's] costs of the first cross-claim as agreed or assessed. 9. Order that [Mr Wang] pay [Mr Diao's] and [Mr Borghese's] costs of the Second Cross-Claim as agreed or as assessed." 1. Mr Wang and Ms Yao oppose the making of an order for costs in respect of Taxa's claim against them and refer to r 42.34 of the Uniform Civil Procedure Rules to which I had also referred in the Judgment. That rule relevantly provides that: "42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied that: (a) for proceedings that could have been commenced in the District Court--the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted ..." 1. Mr Elliott submits that Taxa had properly commenced its claim in this Court where that claim as originally formulated exceeded the jurisdictional limit of the District Court, and he refers to the fact that Taxa had obtained an expert report from a forensic accountant that quantified its losses at $324,930 in respect of diversion of funds and $731,874 in respect of dissipation of stock, and, on the basis of that evidence, the continuance of the proceedings before the Court was warranted. The difficulty with that proposition is that, first, that expert report was not read; second, the claim in respect of dissipation of stock was not pressed, and a claim that was not pressed does not support the reasonableness of the commencement, still less continuance, of that claim or the proceedings in this Court; and, third, Taxa recovered substantially less than it claimed against each of Mr Wang and Ms Yao. 2. Second, Mr Elliott submits that the District Court did not have jurisdiction to hear Mr Wang's Cross-Claim and that, had the proceedings been commenced in the District Court, it would have been necessary for proceedings to be transferred to this Court. Mr Elliott submits, and I accept, that Mr Wang sought relief under s 233 of the Corporations Act which could only have been determined by a "Court" within the meaning of s 58AA and s 1337E of the Corporations Act and the quantum of Mr Wang's Second Cross-Claim exceeded the jurisdictional limit of the District Court. It is, of course, now impossible to know whether Mr Wang would have brought that Cross-Claim in that form, had Taxa originally limited its claim to the narrower claim for a lesser amount which it ultimately pressed in the proceedings. 3. Third, Taxa submits that the District Court lacked, or that there was a real possibility that it lacked, jurisdiction to hear Taxa's claims, on the basis that the claims arose out of "commercial transactions". There is some force in that submission, given recent case law including The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 and the other authorities to which Mr Elliott refers in submissions. With hesitation, I have formed the view that at least this matter has the result that Taxa reasonably commenced and continued the proceedings in this Court, rather than the District Court, where could otherwise be plausibly contended that the District Court lacked jurisdiction to the extent that the matter arose out of "commercial transactions". I note that Stevenson J has recently reached a similar result in Southern Classic Group Pty Ltd t/as Southern Classic Cars v Arch Underwriting at Lloyd's Ltd on behalf of Syndicate 2002 (No 2) [2018] NSWSC 1530. Rule 42.34 of the Uniform Civil Procedure Rules therefore does not displace the possibility of an order for costs in Taxa's favour. 4. Taxa's primary submission, consistent with its proposed orders as set out above, is that Mr Wang and Ms Yao should pay 80% of its costs of the proceedings as agreed or as assessed apportioned on the basis that Ms Yao and Mr Wang be jointly and severally liable for one-third of its costs of the proceedings and Mr Wang pay two-thirds of its costs of the proceedings (inclusive of the former costs order). Mr Elliott submits that a discount of 20% ought to be applied to Taxa's costs to account for the issues that were not pressed at the final hearing, so that 80% of its costs ought to be recoverable. 5. In support of that submission, Mr Elliott draws attention to well-established principles as to the circumstances in which an order for costs will be ordered, and refers to r 42.1 of the Uniform Civil Procedure Rules and the purpose of an order for costs, as reflected in the case law. Mr Elliott fairly draws attention to the judgment of the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], where the Court observed that: "The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this court in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: ● Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed ... ● In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument … A similar approach is adopted on appeal. ● If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue ... ● Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed ... ● A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter ... ● Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation." [omitting citations] 1. Mr Elliott also refers to the observations of the Court of Appeal of the Supreme Court of Victoria in Chen v Chan [2009] VSCA 233 at [10] as follows: "The principles relevant to these questions can be summarised as follows: (1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim. (2) The Rules of Court permit significant flexibility in determining questions of costs. In particular, the Court is entitled to examine the realities of the case and will attempt to do 'substantial justice' as between the parties on matters of costs. (3) Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount. (4) A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice. (5) Where a Court determines to make an order apportioning costs, then it does so primarily as 'a matter of impression and evaluation,' rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter." 1. Mr Elliott also refers to the observation of Hodgson JA in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], cited with approval by the Court of Appeal in Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98], that: "… underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs." 1. Mr Elliott submits that Taxa was successful at the hearing in respect of its claim to funds paid into the Taxa Uniform Bank Account, as defined in the Judgment. Mr Elliott fairly accepts that Taxa did not press, at the hearing, several claims in respect of diversion of business, receipt of cash payments, payments to Schannel Pty Ltd, dissipation of stock and several specific items and that a discount should be applied to the costs it has incurred given the abandonment of those causes of action. Mr Elliott also accepts that Taxa should not have its costs concerning the preparation of the expert report that was not read at the hearing. 2. Mr Elliott submits that a discount of 20% of Taxa's costs incurred in relation to the proceedings fairly accounts for its costs in relation to the abandoned claims. Taxa submits that, first, those causes of action were promptly abandoned either at the commencement of or during the hearing. That submission does not address the difficulty that those causes of action were maintained throughout the preparation of the proceedings for trial and that Mr Wang and Ms Yao should not be required to pay Taxa's costs of preparation of claims that it abandoned at the hearing. Second, Taxa submits that a limited part of its lay evidence dealt with abandoned claims, but that proposition appears to be directed to the affidavit evidence rather than the substantial quantity of documentary evidence that related to the abandoned claims and which was ultimately not tendered at the hearing. Again, Mr Wang and Ms Yao should not be required to pay the costs associated with the preparation of Taxa's documentary case as to those abandoned claims. Third, Taxa submits that each of its claim, Ms Yao's Cross-Claim for unpaid salary and entitlements and Mr Wang's Cross-Claim occupied an equal amount of time at a hearing and that Taxa's costs ought to be evenly divided between those claims. I do not accept that submission, where the time spent at the hearing is not a fair guide to the costs of preparation work, which are likely to relate in significant part to claims that Taxa abandoned. Fourth, Taxa submits that it was justified in bringing a freezing order in respect of Mr Wang and Ms Yao, given the nature of their conduct. I have had regard to the making of that order in respect of the question of costs. 3. It seems to me that the discount proposed by Taxa significantly understates the amount of costs that are likely to be attributable to the issues which were not pressed by it at the hearing. The amount Taxa initially claimed in respect of dissipation of stock, but ultimately did not press, was more than double the amount it claimed in respect of improper payments and Taxa would reasonably have had regard to the amounts claimed in determining the extent of costs that could sensibly be incurred in respect of those issues. Several claims to particular amounts brought by Taxa were abandoned in the course of the hearing, including in final submissions. I do not consider that an order could fairly be made that Mr Wang and Ms Yao pay 80% of Taxa's costs of the proceedings, as Taxa contends, where substantial aspects of Taxa's claim against them were not pressed and expert evidence which Taxa had apparently prepared over a considerable time and presumably at considerable cost was not read by it. 4. Taxa also proposes that costs be apportioned in percentages in respect of its successful claim against Mr Wang and Ms Yao and Mr Wang's unsuccessful Cross-Claim against it. It seems to me that the preferable course is that those costs be assessed separately, in fairness to Ms Yao who succeeded in her Cross-Claim against Taxa. 5. Alternatively, Taxa submits that, if the Court is not confident that it can fairly fix a proportion of costs payable by Mr Wang and Ms Yao, it should order that Mr Wang and Ms Yao pay Taxa's costs of and incidental to its claim in respect of funds paid into the Taxa Uniform Bank Account, as pleaded in paragraphs 30–40 of the Statement of Claim, as agreed or as assessed, and that Mr Wang pay Taxa's costs of the Second Cross-Claim as agreed or as assessed. I am satisfied that the difficulties in setting a percentage of costs that should be recovered by Taxa, to which I have referred above, support an order in the alternative form proposed by Taxa against Mr Wang and Ms Yao. However, that order should not extend to costs "incidental" to that claim, where that extension would raise too great a risk that costs properly attributable to claims that Taxa abandoned could be claimed within that extended category. Taxa must similarly pay Ms Yao's costs of her Cross-Claim against it to the extent that they are properly recoverable by her. 6. Ms Yao also made detailed submissions as to the impact of the wider claims brought by Taxa upon her and Mr Wang also advanced several criticisms of the conduct of the proceedings by Taxa in respect of the question of costs. It does not seem to me that these matters provide a basis for Taxa not to recover the more limited costs of (but not extending to costs incidental to) the claim as to which it was successful as against Mr Wang and Ms Yao. 7. Ms Yao submits that Taxa should be ordered to pay her costs of the First Cross-Claim as agreed or as assessed and also seeks an order that Taxa not request legal costs recovery for the First Cross-Claim. The former order should be made. The latter order is not necessary where Ms Yao has succeeded in the First Cross-Claim and has an entitlement to costs against Taxa, rather than the reverse. Ms Yao also seeks an order that any recoverable legal costs be calculated separately for herself and Mr Wang. I am not satisfied that such an order should be made, where I have found above that Taxa should recover only its costs of the claim referable to amounts paid into the Taxa Uniform Bank Account, which had substantially the same factual basis as against each of Mr Wang and Ms Yao. 8. Ms Yao sought two further orders as to the costs of any change or amendment to the judgment or reopening of the proceedings. This appears to be directed to Taxa's application to reopen that I have addressed above. I do not see any basis on which Taxa should not have its costs of that application, to the extent they otherwise fall within the costs order noted above. 9. The Second and Third Cross-Defendants to the Second Cross-Claim, Mr Diao and Mr Borghese, submit, and I accept, that an order should be made that Mr Wang pay their costs of the Second Cross-Claim as agreed or as assessed. Discharge of freezing order 1. Taxa accepts that an order should be made that the freezing orders made by Bergin CJ in Eq on 16 February 2015, as amended on 17 June 2016 be discharged. Orders 1. Accordingly, I make the following orders: 1 Judgment for the Plaintiff ("Taxa") against the First Defendant ("Mr Wang") and the Second Defendant ("Ms Yao") in the sum of $182,075.97. 2 Order that Mr Wang and Ms Yao pay interest on the judgment sum in favour of Taxa in accordance with s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $34,539.17. 3 Judgment for Ms Yao against Taxa in respect of the First Cross-Claim filed 8 July 2016 in the sum of $85,845.15. 4. Order that Taxa pay interest on the judgment sum in favour of Ms Yao in accordance with s 100 of the Civil Procedure Act in the sum of $29,958.45. 5. Order pursuant to s 90 of the Civil Procedure Act that Taxa's liability to Ms Yao be set-off against Ms Yao's liability to Taxa such that the balance payable by Ms Yao to Taxa is $100,811.54. 6 Order pursuant to r 41.3 of the Uniform Civil Procedure Rules 2005 (NSW) that the funds paid into Court by Ms Yao plus any interest be released and paid as follows: (a) the amount of $100,811.54 be paid to Taxa to [account details redacted] and (b) the balance be paid to Ms Yao to [account details redacted]. 7 Mr Wang and Ms Yao pay Taxa's costs of its claim in respect of funds paid into the Taxa Uniform Bank Account as pleaded in paragraphs 30–40 of the Statement of Claim, as agreed or as assessed. 8 Taxa pay Ms Yao's recoverable costs of the First Cross-Claim as agreed or as assessed. 9 The Second Cross-Claim filed 22 February 2017 be dismissed. 10 Mr Wang pay the costs of the Cross-Defendants to the Second Cross-Claim as agreed or as assessed. 11 Order that the freezing orders made by Bergin CJ in Eq on 16 December 2015, as amended on 17 June 2016, be discharged. ********** 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: 02 November 2018