Rema Tip Top Asia Pacific Pty Ltd v Grüterich (No 2)

The principal judgment was delivered in this matter on 4 May 2018: Rema Tip Top Asia Pacific Pty Ltd v Grüterich [2018] NSWSC 591.

The parties to the proceedings are the plaintiff, Rema Tip Top Asia Pacific Pty Ltd, and the defendant, Mr Christian Grüterich. The latter was for some time an employee of the former.

I declined to set aside a freezing order made by Parker J on 13 April 2018 against Mr Grüterich in respect of his assets up to an amount of $500,000, but I reduced the amount covered by the freezing order going forward to $250,000.

The parties are at issue as to the costs order that the Court should make in relation to the plaintiff’s 13 April 2018 notice of motion, including the application before me in the Duty List on 17 and 20 April 2018. These reasons deal with the resolution of that dispute.

The plaintiff argues that the Court should order the defendant to pay its costs of the notice of motion by which it sought the freezing order, or alternatively a proportion of those costs as determined by the Court.

The defendant counters by submitting that his costs should be ordered to be paid by the plaintiff, or in the alternative the Court should make an order that the costs be the parties’ costs in the cause.

Neither party sought an order that the costs be its costs in the cause.

It will be both appropriate and sufficient on an application such as the present for the Court to set out the following extract from the joint judgment of the Court of Appeal (Beazley, Giles and Hodgson JJA) in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142:

In my view it would clearly not be warranted in the present case that the Court make an order that either party pay the whole of the costs of the interlocutory application to the other. In the first place, although the plaintiff succeeded in extending the freezing order, the defendant had a substantial measure of success in causing the amount of his assets covered by the order to be halved. In doing that, he freed himself from very restrictive terms of the original freezing order which allowed him only a very small amount for living expenses and legal fees.

In short, I take the view that neither party succeeded on the interlocutory application to the exclusion of the other so that the outcome should be regarded as the “event” in favour of one party such that an order for costs in favour of that party should follow.

I consider the present case to be a quintessential example of the type of case referred to at [19] of the Court of Appeal’s reasons, where the case was “finely balanced” and where “a slight turn in the evidence might have made all the difference to the outcome”. The case was, and properly so, a complex, contentious and fiercely fought dispute in which the Court was required to make many interlocutory judgments in circumstances where the issues could not be fully litigated. In that sense, almost all of the findings should be considered to be provisional, with the consequence that changes in the available evidence could well justify different findings.

The plaintiff argued that it should get its costs because at the hearing the defendant readily conceded its claim to be entitled to a return of the motor vehicle that the defendant had been given for the purposes of his employment. It is true that the concession was made at the hearing, and perhaps it could have been made earlier. However, to my observation that aspect of the plaintiff’s claim was peripheral as a forensic matter and the defendant did not in any real way put the plaintiff to proof of that claim.

The plaintiff then relied upon the fact that a freezing order had been made in the substantial sum of $250,000, even though that amount was substantially less than the initial amount sought of $661,113.56 (in the application before Parker J). I have already explained above why I consider both parties to have obtained a substantial measure of success in the interlocutory application before me.

I place little significance on the plaintiff’s next argument that the Termination Payment Claim upon which the plaintiff enjoyed the least success involved virtually no time at the hearing. I do not think it is appropriate on an interlocutory application such as the present for the Court to consider making cost orders based upon assessments of the amount of time taken up in dealing with particular issues.

The plaintiff then sought to explain why there was no basis to the defendant’s criticisms of the plaintiff’s conduct of the matter before Parker J, in so far as the defendant argued that the plaintiff had presented a case on the ex parte application that suggested that the defendant had been more dishonest than could be supported, having regard to the information that the defendant in fact disclosed to the plaintiff. This may be a good reason for the Court to not order the plaintiff to pay the defendant’s costs, but it does not support any argument that the defendant should pay its costs.

The plaintiff made a submission that, by reason of tactical decisions made by the defendant, substantially the whole of the hearing of 17 April 2018 was wasted, before the defendant made an adjournment application to enable him to put on additional evidence to flesh out his case. It is true that, as a result of discussion between counsel for the defendant and the Court the defendant late in the day made a tactical decision to apply for an adjournment. It is fair to conclude that the tactical decision was made as a result of a realisation that the defendant may be unsuccessful in his attempt to persuade the Court that the concerns expressed by the Court should be resolved by the defendant’s existing evidence. However, I do not accept that the timing of the defendant’s change of tactical position justifies the making of a costs order against him, even if that order be limited to that one day. First, it must be noted that the plaintiff obtained from Parker J a freezing order that only allowed the defendant to pay up to $15,000 on his reasonable legal expenses. It was only late on 17 April 2018 that I made a somewhat arbitrary increase to that limit. I have considerable sympathy for the defendant’s position that before that increase the defendant was pressed to try to resist the extension of the freezing order on the first day of the hearing before me, because there was a risk that if there was an adjournment and costs were required to be incurred in further preparation and on a new hearing date the limit of the amount that the defendant was entitled to employ defending himself might be exceeded. Secondly, it is my judgment that more likely than not, given that the application had to be dealt with in the Duty List, the hearing would have taken more than one day in any event.

This is a case, in my view, in which the appropriate order is that the costs of the plaintiff’s 13 April 2018 notice of motion, in so far as it sought the making of a freezing order against the defendant, should be each party’s costs in the cause. That is the appropriate order, whether or not it be thought that such an order is the “usual order” in the sense discussed by the Court of Appeal.

Even though, in this case, the plaintiff has not sought an order that the costs of the notice of motion be the plaintiff’s costs in the cause, I will mention briefly why I do not think that would be an appropriate order. I do not generalise, but in a great proportion of applications for interlocutory relief the order sought is an interlocutory injunction in the same terms as a final injunction that will be sought at the hearing. The issue at the interlocutory stage is whether there is sufficient evidence to support the plaintiff’s claim, whether that evidence be thought to establish that there is a serious case to be tried or a prima face case. The point relevant to present purposes is that the final hearing is likely to decide on the basis of the evidence whether the plaintiff indeed had any case to support the granting of the interlocutory injunction. Sometimes, where in a case of this type the defendant unnecessarily makes an issue of whether the evidence is sufficiently strong to satisfy the threshold before the Court goes on to consider the balance of convenience, the appropriate order is that the costs of the interlocutory application be the plaintiff’s costs in the cause (if the interlocutory injunction is granted), and that the plaintiff pay the defendant’s costs (if it is not).

Interlocutory applications for freezing orders are somewhat different. The plaintiff must demonstrate a sufficiently strong case for final relief, but that relief may be, as in this case, a claim for damages or compensation, and thus be a money claim. Although a sufficiently strong case must be proved, the issue then becomes whether on the evidence there is a sufficient risk that the defendant will act in a way such that the defendant’s assets are put beyond the reach, for one reason or another, of the Court’s enforcement processes in the event that the plaintiff is successful at the final hearing. As is generally accepted, the making of a freezing order is a significant intrusion upon the personal rights of the defendant. The order is not made to provide the plaintiff security to protect a possible future judgment. It is made to protect the processes of the Court.

The point for present purposes is that, once the Court has made the freezing order, the issue of whether the facts warranted the making of such an order will rarely be decided fully at a contested hearing, because the likelihood that the defendant would have placed his assets beyond the reach of the court’s judgment will not be an issue. If the order was that the costs be the plaintiff’s costs in the cause, it would always follow that the plaintiff would get its costs of the interlocutory application, provided it succeeded on its substantive case at trial, even if only for a relatively small amount in relation to what was originally claimed. If the plaintiff failed at the final hearing, no order would be made in respect of the costs of the interlocutory hearing at which the freezing order was made. In no event would the defendant get his costs of the interlocutory hearing. That result could be unfair to the defendant, who although losing in some respect on the substantive case, may have been able to prove that there was in fact no real risk that the defendant would have put his assets beyond the reach of the court’s judgment. In the ordinary case, the defendant will not get the opportunity at the final hearing to prove that the making of the freezing order was unwarranted. If the costs order made is that the costs of the interlocutory application are each party’s costs in the cause, then at least the defendant has a chance of recovering the costs of the interlocutory application, if he is able to defeat the plaintiff’s substantive claim on its merits.

It may well be that in this context even an order that the costs of the interlocutory application be each party’s costs in the cause is somewhat arbitrary and blunt, and such an order does not logically remedy the problem faced by the defendant that I have outlined above. However, it is at least to some degree even-handed, and gives the defendant some prospect of being awarded the costs of the interlocutory hearing if the defendant can succeed on the final claim.

Accordingly, I order that the costs of the plaintiff’s notice of motion filed on 13 April 2018, in so far as it sought a freezing order against the defendant, be each party’s cost in the cause.