Supreme Court New South Wales Medium Neutral Citation: David v Kazal (No 2) [2020] NSWSC 105 Hearing dates: On the papers Decision date: 20 February 2020 Jurisdiction: Common Law Before: Adamson J Decision: (1) There be no order as to the costs of the defendants' notice of motion filed on 16 August 2019 (such costs to include the hearings on 3 September 2019, 6 December 2019 and 6 February 2020), with the intention that each party bear his own costs. (2) Confirm order (4) made on 6 February 2020 that the costs of the proceedings be otherwise reserved pending the outcome of the appeal filed by the first and second defendants in the US Ninth Circuit Court of Appeals. Catchwords: COSTS — Party/Party — General rule that costs follow the event applicable to applications for security for costs — interlocutory dispute — where each party had a measure of success — no order as to costs PRIVATE INTERNATIONAL LAW — Foreign judgments and orders — costs otherwise reserved pending outcome of appeal against foreign judgment Legislation Cited: Civil Procedure Act 2005 (NSW), ss 67, 98 Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.21 Cases Cited: David v Kazal [2019] NSWSC 1763 Globus Investments Pty Ltd v William Pty Ltd [2016] NSWSC 613 Hoffmann v Challis (No 2) [2016] NSWSC 269 Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd [2019] NSWSC 187; (2019) 139 ACSR 107 Category: Costs Parties: Rodric David (Plaintiff) Tony Kazal (First Defendant) Adam Kazal (Second Defendant) Charif Kazal (Third Defendant) Representation: Counsel (for written submissions): J Hogan-Doran (Plaintiff) S Cromb (Defendants) Solicitors: Aitken Lawyers Pty Ltd (Plaintiff) HWL Ebsworth (Defendants) File Number(s): 2019/193603 Judgment Introduction 1. On 10 December 2019 I made orders, on the application of Tony, Adam and Charif Kazal (the defendants), that Rodric David provide security for costs in the sum of $20,000: David v Kazal [2019] NSWSC 1763 (the Motion Judgment). I reserved the question of costs. The parties have agreed that costs may be dealt with on the papers and have exchanged written submissions accordingly. Relevant facts 1. By summons filed on 21 June 2019 the plaintiff commenced these proceedings, seeking to register judgments obtained by him in the United States against the defendants (the US Judgments). The summons was returnable on 2 July 2019. The plaintiff failed to appear. The second defendant appeared by his solicitor, HWL Ebsworth, who asked the Court to make directions which provided that service could be effected on the balance of the defendants by service on HWL Ebsworth. Directions were also made about how applications by the parties were to proceed, including a proposed application by the defendants for a stay of proceedings and for security for costs. The matter was stood over to 16 August 2019 for further directions. 2. The plaintiff filed an amended summons on 10 July 2019. The matter came before the Registrar on 16 July 2019. On that day, the Registrar ordered the plaintiff to pay the defendants' costs of the directions hearing on 2 July 2019 on an indemnity basis "to be taxed in default of agreement". 3. On 16 August 2019 the defendants filed a notice of motion seeking security for costs. The defendants also sought a stay of the proceedings pursuant to s 67 of the Civil Procedure Act 2005 (NSW) pending determination of an appeal by the first and second defendants against the US Judgments. The matter came before the Court again for directions on 3 September 2019. On that day, directions were made to progress the preparation of the notice of motion, which was listed for hearing on 6 December 2019. The motion was heard on 6 December 2019. As referred to above, I delivered the Motion Judgment and made orders on 10 December 2019, I refused the defendants' application for a stay of the proceedings but ordered the plaintiff to provide security for costs by 23 December 2019 or the proceedings would be stayed. At [40] of the Motion Judgment, I said: "Costs 40. The parties invited me to reserve the question of the costs of the notice of motion to provide them with an opportunity to address me, in writing or orally, on the appropriate costs order. There is some attraction in an order that there be no order as to the costs of the motion as both parties have had some success. However, this is merely a preliminary view about a matter about which the parties ought have an opportunity to make submissions." 1. The plaintiff's failure to provide security by 23 December 2019 had the effect of staying the proceedings until 13 January 2020, when security was provided. 2. The matter came before me for directions on 6 February 2020. On that day, the parties handed up two competing versions of short minutes of order and asked that they be made by consent. The defendants' version of the short minutes, which formed the basis for the orders made, provided: "4. There be no order or further order (as applicable) as to the costs of and incidental to the hearings on each of 2 July 2019, 16 July 2019, 6 December 2019 or 5 [sic] February 2020. The costs of the proceeding otherwise be reserved, pending the Appeal." 1. The plaintiff, for whom Mr Li appeared, indicated that he opposed the first sentence of [4] of the draft. I made directions for the filing and service of written submissions on the appropriateness of the first sentence of [4]. Otherwise, I made the orders by consent, including an order in terms of the second sentence of [4]. The final order which I made, which was intended to capture the issue arising from the first sentence of [4] was: "The question of costs in respect of the hearings of 2 July 2019, 16 July 2019, 6 December 2019 and 5 [sic] February 2020 be determined on the papers." The parties' submissions 1. The defendants contended that there should be no order as to the costs of their application for security and for a stay (which included the costs of 6 December 2019 and 6 February 2020). 2. The plaintiff distinguished between the position of the third defendant (who did not appeal against the US Judgment against him) and that of the first and second defendants (who did appeal against the US Judgments). He submitted that, in respect of the third defendant, the order should be: "The third defendant pay the plaintiff's costs of the proceedings against him, including 1/3 only of the plaintiff's costs of the motion for security for costs and for a stay of the proceedings, subject to the order made on 16 July 2019 in respect of the directions hearing on 2 July 2019 (as to which see below)." 1. The plaintiff submitted that, in respect of the first and second defendants, the costs of the notice of motion ought be reserved pending determination of the appeal from the US Judgments. He submitted that a stay, if granted, was the only basis on which the first and second defendants could have resisted the entry of judgment in this court and that they failed in that application. The plaintiff contended that, if the first and second defendants are unsuccessful in the appeal against the US Judgments, the first and second defendants ought be ordered to pay the costs of the current proceedings. He submitted that that was the time at which it was appropriate to determine the costs of the application for a stay and security for costs. Further, the plaintiff contended that, if the appeals are dismissed, "it will finally have been determined that they [the first and second defendants] had no basis to seek a stay, or security." 2. The plaintiff submitted that the following order ought be made in respect of the second and third defendants: "The costs of the proceedings against the first and second defendants be reserved including the costs of the motion for stay and security, pending the determination of the appeals by each of them in the Ninth Circuit Court of Appeals." Consideration 1. Costs are in the discretion of the court: s 98 of the Civil Procedure Act 2005 (NSW). The general rule is that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. The identification of the "event" may be relatively easy in final judgments but may require a more nuanced approach in interlocutory disputes where there has been, as in the present case, a measure of success for each party. Where a defendant applies for security for costs, the question arises whether the event ought be defined as the application or the proceedings as a whole. Decisions of this Court have followed the approach of applying the general rule that "costs follow the event" to an application for security, rather than ordering that the costs of the motion be the defendant's costs in the cause, which would treat the "event" as the proceedings as a whole: see, for example, Hoffmann v Challis (No 2) [2016] NSWSC 269 at [22]-[23] (Campbell J); Globus Investments Pty Ltd v William Pty Ltd [2016] NSWSC 613 at [45]–[46] (Campbell J), cited with approval in Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd [2019] NSWSC 187; (2019) 139 ACSR 107 at [68] (Ward CJ in Eq). 2. The plaintiff has been successful in resisting the stay of proceedings but unsuccessful in resisting the defendants' application for security for costs. The defendant has been successful in obtaining an order for security for costs but unsuccessful in obtaining the amount sought since the order was for a significantly lower sum. I note that, although no stay of the proceedings has been ordered, the parties have since agreed that enforcement of the judgments entered by consent be stayed pending determination of the appeals against the US Judgments. 3. I reject the plaintiff's submission that, if the first and second defendants' appeal is dismissed, it will have been determined that they had no basis to seek a stay or security. This kind of retrospective analysis is not appropriate in a case such as the present. The first and second defendants were entitled to seek security for costs since the plaintiff is a resident of the United States with no assets in New South Wales: UCPR, r 42.21(1)(a). This was the basis on which security was ordered. They were entitled to protect their position against the prospect that the appeal against the US Judgments would be upheld and this Court would, accordingly, dismiss the amended summons. Any costs order made in their favour by this Court might, in the absence of security for costs, be either valueless or difficult to enforce. In accordance with the approach taken in the decisions cited above, I am persuaded that the preferable course is to treat the "event" as the result of the notice of motion, rather than the result of the proceedings as a whole. 4. Further, I do not consider that, in the circumstances of the present case, it is appropriate to make a separate order against the third defendant requiring him to pay a portion of the costs of the proceedings. The defendants have, since shortly after the first directions hearing, been jointly represented. The position of the third defendant did not materially add to the length of the hearing of the notice of motion and was, in substance, irrelevant to it. I am not persuaded that the third defendant's delay in paying the money claimed has led to any material increase in the costs incurred by the plaintiff. 5. The plaintiff was entitled to accept or reject the defendants' offer that there be no order as to the costs of 2 July 2019, 16 July 2019 or the costs of the motion (which comprise the costs of 3 September 2019, 6 December 2019 and 6 February 2020). However, as the plaintiff rejected the defendants' offer (which involved a significant concession to forego the benefit of the costs order made on 2 July 2019), I do not consider it to be appropriate for me, in the absence of an application for review of the costs order made on 2 July 2019, to make any order for the costs of that day or 16 July 2019. 6. While it would be open to me to reserve the question of the costs of the motion, I do not consider that it would be desirable to do so. I determined the motion and am in a better position than the judge before whom the matter will come after the determination of the appeal to adjudge the respective merits of the parties' positions on the motion. I consider, for the reasons given above, that the motion for a stay and for security was properly and appropriately brought to protect the defendants' position, having regard to the plaintiff's lack of assets in this jurisdiction. In my view, an order that there be no order as to costs, with the intention that each party pay his own costs of the motion, adequately reflects the respective successes and failures of the parties in bringing and opposing the motion, as the case may be. Orders 1. For the reasons given above, I make the following orders: 1. There be no order as to the costs of the defendants' notice of motion filed on 16 August 2019 (such costs to include the hearings on 3 September 2019, 6 December 2019 and 6 February 2020), with the intention that each party bear his own costs. 2. Confirm order (4) made on 6 February 2020 that the costs of the proceedings be otherwise reserved pending the outcome of the appeal filed by the first and second defendants in the US Ninth Circuit Court of Appeals. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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