Lui v Guan; Sun Link Group Pty Ltd v Lui (No 2)

1. [1]

   HIS HONOUR: By an amended statement of claim filed on 29 September 2015 ("the ASOC"), the plaintiff, Mr Kevin Yung Lui, commenced proceedings for breach of contract against the defendants, Ms Xiuyan Guan and Sun Link Group Pty Ltd ("Sun Link") (collectively, "the defendants"). Those proceedings shall hereinafter be referred to as "the primary matter". The central question which arose in the primary matter was whether Mr Lui should receive damages for breach of an agreement entered with Ms Guan, namely, the "Co-operative Agreement" dated 18 January 2015 ("the agreement"). The ASOC pleaded that the agreement was also made on behalf of Sun Link.

2. [2]

   In the primary matter, Mr Lui initially sought declaratory relief and specific performance of the agreement or, in alternative, the transfer of title of a Rolls Royce Phantom IS68 Sedan (“the vehicle”) to him. The vehicle was registered to Sun Link. The relief claimed, as pleaded, is extracted below:

3. [3]

   By a statement of claim filed on 30 July 2015, Sun Link commenced detinue proceedings against Mr Lui and sought damages with respect to the vehicle (“the second matter”). The second matter was listed with the primary matter; the matters were to be heard together.

4. [4]

   On 13 May 2016, the vehicle was sold by its mortgagee for $200,000.

5. [5]

   At the outset of the proceedings, the Court sought to confirm the status of the second matter, in circumstances where the vehicle had been sold by the mortgagee, the mortgage with the financier had been settled, and the remaining equity of around $24,434.87 was being held by the Supreme Court of Victoria. The onus was put upon Sun Link to communicate the course it intended to take, in that respect, “by communicating with your opponent what the basis of it is, how you say it comes into the proceedings now and then, what should be done with it”. Counsel for Sun Link, Mr I Leong, as to that issue, intimated an intention to raise arguments as to the issue of damages, notwithstanding the fact that pleadings in the second matter were predicated upon Mr Lui having possession of the vehicle. Ultimately, any argument, with respect to the second matter, received little development and appeared to dissipate as the proceedings progressed. The focus of the parties, in the balance of the proceedings, fixed upon the resolution of issues in the primary matter.

6. [6]

   Returning to the primary matter, following the sale of the vehicle, the relief sought in the primary matter was ultimately reduced and refined by Mr P Afshar, counsel for Mr Lui, at the outset of the hearing, and without resorting to the filing of further amended pleadings, as follows:

   1. (1)

      Prayers 1, 2 and 3 were superseded insofar as the vehicle was sold on or around 13 May 2016 and, as a result, were no longer pressed in that form.

   2. (2)

      Prayer 4 sought an order for damages followed by interest and costs. Mr Lui’s damages were particularised as $780,000, being 2% of the total bidding figure of the successful bid, and the market value of the vehicle. Given that the vehicle was sold for $200,000, that amount provided, it was submitted, the most sensible evidence of its market value.

   3. (3)

      Prayers 5 and 6, sought interest pursuant to s 101 of the Civil Procedure Act 2005 (NSW) and costs, respectively.

7. [7]

   The Court gave judgment in the matter on 28 June 2019 in Lui v Guan; Sun Link Group Pty Ltd v Lui [2019] NSWSC 803 (“Lui No 1”).

8. [8]

   In Lui No 1, the Court reached the following conclusions (at [516]-[520]):

9. [9]

   Counsel for Mr Lui correctly identified the that remaining issues arising in the proceedings after those conclusions were as follows:

   1. (1)

      as to his claim for relief under prayer 4 of the ASOC in the primary matter with respect to the vehicle;

   2. (2)

      interest (this was a dispute as to pre-judgment interest); and

   3. (3)

      costs.

10. [10]

    The Court made orders for the filing of written submissions in relation to the remaining issues. Those submissions were filed in due course and consisted of the following:

    1. (1)

       Mr Lui’s submissions post judgment (“LSPJ”);

    2. (2)

       Ms Guan’s submissions post judgment (“GSPJ”); and

    3. (3)

       Mr Lui’s submissions post judgment in reply to the defendant’s submissions (“LSPJR”).

11. [11]

    It may be noted that in GSPJ, it was observed that, on 4 June 2018, Sun Link had receivers and managers appointed. No submissions were made, therefore, on behalf of Sun Link.

Relevant Findings in Lui No 1 and Background

1. [12]

   In addressing the remaining issues it is convenient to extract parts of the judgment in Lui No 1.

2. [13]

   As to the pleadings, the Court identified the following (at [7]-[21]):

3. [14]

   As to the agreement, the Court found at [22]-[29]:

4. [15]

   As to property and projects having relevance to the issues in dispute, the Court found at [31]-[39]:

5. [16]

   As to the relevant persons and companies, the Court found at [40], [48]-[54]:

6. [17]

   The issues requiring resolution in the proceedings were agreed and reflected in the following passage from the Lui No 1 (at [56]):

7. [18]

   As to the vehicle, the Court found (at [167]-[169]):

8. [19]

   As to the circumstances operating at the time of the agreement and whether Sun Link was bound by the agreement, the Court found as follows (at [177]-[187]):

9. [20]

   At [205], the Court found that Mr Lui had performed his obligations under the contract by:

10. [21]

    As to the exchange of contracts for the sale of the Kensington land and the transfer of the property, the Court found as follows (at [226]-[228]):

11. [22]

    As to the terms of the agreement, the Court found (at [327]-[352]):

12. [23]

    Overall, as to Mr Lui’s performance under the contract, the Court found (at [411]):

13. [24]

    The Court dealt with the fifth issue, which was described as the “Real Estate Agent Issue” at [413]-[508].

14. [25]

    As to relief with respect to the primary matter, the Court found (at [509]-[510]):

15. [26]

    The Court made the following findings regarding the issues (at [511]):

16. [27]

    As to the “second matter”, the Court found (at [512]-[515]) as follows:

CONSIDERATION

1. [28]

   This judgment concerns the resolution of the remaining issues. There was common ground that those issues would be resolved on the papers, being the further written submissions of the parties, LSPJ, GSPJ and LSPJR, and uncontentious documents attached to those submissions. I shall deal with those issues seriatim.

Relief under Prayer 4 of the ASOC

1. [29]

   Mr Lui submitted that given the terms of the agreement and the findings made in relation to it, Ms Guan was clearly obligated to cause the transfer of the vehicle to Mr Lui. Ms Guan failed to do so, although, as sole director from 23 February 2015 (before exchange of the contract for sale of the Kensington property and its settlement), she could have done so. Thus, Ms Guan breached the terms of the agreement and is liable to pay Mr Lui damages in the amount of $200,000.

2. [30]

   As to the same, Ms Guan submitted:

   1. (1)

      The Court was correct in stating that Ms Guan did not bind Sun Link as she was not sole director. The motor vehicle belonged to Sun Link, not her.

   2. (2)

      Sun Link was not privy to the contract. There was no privity of contract.

   3. (3)

      On that basis, there should be no order of any money for the motor vehicle.

3. [31]

   I accept the submissions advanced for Ms Guan in this respect.

Interest

1. [32]

   Mr Lui submitted in LSPJ that pre-judgment interest should be ordered on the whole of the damages in this case. The starting point for the calculation of interest should be 25 March 2015 or 22 April 2015. Given the language of cl 4, the latter date is the preferable choice in the circumstances, given that it would pre-empt any argument concerning the success of the bid. The fair and reasonable rate of interest is the Supreme Court rate as set out in r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”).

2. [33]

   In draft orders accompanying the LSPJ, Mr Lui claimed $314,808.22 in interest for the period 22 April 2015 to 12 July 2019.

3. [34]

   As to the same, Ms Guan submitted:

   1. (1)

      Mr Lui did not plead pre-judgment interest. The ASOC filed 29 September 2015 pleaded post judgment interest only.

   2. (2)

      The case has always been conducted as one of strict pleading.

   3. (3)

      There is no requirement for the Court to repair a deficiency in Mr Lui’s pleading. Ms Guan noted, in that respect, that she was not allowed to argue Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 and uncertainty on the contractual interpretation point on the basis of the pleadings.

   4. (4)

      Section 100 of the Civil Procedure Act 2005 (NSW) uses the phrase “as the Court thinks fit” for pre-judgment interest.

   5. (5)

      Reliance was placed upon r 6.12(6)-(8) of the UCPR.

   6. (6)

      Rule 6.12(6) would appear to be sufficient to dispose of Mr Lui’s claim for pre-judgment interest. There was no specific claim pleaded.

   7. (7)

      If it does not, Ms Guan submitted, that Mr Lui’s Table in Schedule 3 (attached to the LSPJ) is in error. It was contended the rate is “+4%” and not “+6%”.

   8. (8)

      Ms Guan also respectfully requested that the Court check, if possible, the calculation of each row in Schedule 3. Even assuming a +6% rate, the calculation of each row appears, it was submitted, to be mathematically incorrect if one adopts the calculation: “(Number of days in date range/365) x (Rate / 100) x $780,000 = Result” (or, at the very least, Ms Guan did not understand how each row is calculated).

   9. (9)

      An example was provided with respect to the first row in Schedule 3. There are 15 days between 22 April 2015 and 6 May 2015. Assuming a +6% rate (notwithstanding the contention that it should be “+4%”), the calculation would appear to be: “(15/365) x (0.0825) x $780,000 = $2,644”, whereas the result in Schedule 3 appears to be $2,879.59.

4. [35]

   In LSPJR, Mr Lui submitted:

   1. (1)

      Section 14 of the Civil Procedure Act 2005 (NSW) (“CPA”) permits the Court to dispense with the application of r 6.12(6)-(8) of the UCPR.

   2. (2)

      Under s 90(1) of the CPA, the Court is obliged to give judgment or make such order as the nature of the case requires.

   3. (3)

      The party seeking dispensation from compliance with a rule is required to demonstrate reason(s) why such dispensation is appropriate in the circumstances.

   4. (4)

      In his Statement of Claim filed on 29 May 2015 (“the Statement of Claim”), the plaintiff claimed interest up to judgment (see relief at paras 2 and 8 of the Statement of Claim). In an application for default judgment filed on 1 July 2015, the plaintiff sought an amount that included an amount for pre-judgment interest, the calculation of which was set out in an affidavit sworn by the plaintiff on 1 July 2015. Accordingly, at all times, the defendants were aware that the plaintiff sought interest up to judgment.

   5. (5)

      In the context of the matters set out in the aforementioned paragraph, the failure to transpose the claim for pre-judgment interest into the ASOC appears to be a typographical error, given that liability to pay interest after judgment, under s 101 of the CPA, operates automatically by virtue of the operation of s 101(1) (the relief pursuant to s 100 of the CPA is discretionary).

   6. (6)

      Further, other than the highly technical objection to an order for interest, the defendants have made no submission that the Court should not exercise its discretion, pursuant to s 100, if r 6.12 of the UCPR did not preclude the plaintiff from claiming pre-judgment interest. Given that this proceeding concerned the non-payment of monies and damages and given that the plaintiff has been kept out of funds for many years, it is just in the circumstances for the plaintiff to be awarded pre-judgment interest.

   7. (7)

      For the above reasons, it was contended, the Court would dispense with the requirements of r 6.12 of the UCPR and award the plaintiff interest.

   8. (8)

      Annexed to LSPJR was a further schedule that contained two tables, the contents of which are summarised below:

5. [36]

   Both Table 1 and Table 2 are extracted below:

6. [37]

   Section 14 of the CPA provides:

7. [38]

   Section 90(1) of the CPA provides:

8. [39]

   Section 100 of the CPA provides:

9. [40]

   Section 101 of the CPA provides:

10. [41]

    Rule 6.12(6)-(8) of the UCPR provides:

11. [42]

    Rule 36.1 of the UCPR provides:

12. [43]

    Under s 90(1) of the CPA, the Court is obliged to give judgment or make such order as the nature of the case requires.

13. [44]

    Under r 36.1 of the UCPR, the Court may give such judgment or make such order as the nature of any particular case requires, whether or not a claim for relief extending to that judgment is included in any originating process: see Farrell v Mulroney [1978] 1 NSWLR 221 at 225 (per Rath J); NSW Trustee and Guardian v Schneider [2011] NSWSC 424 at [224]; In the matter of Dungowan Manly Pty Ltd (in liq) [2015] NSWSC 915 at [40] (per Black J) .

14. [45]

    In Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15, the Full Court of the Federal Court of Australia observed at [13]:

15. [46]

    Section 14 of the CPA permits the Court to dispense with the application of r 6.12(6)-(8) of the UCPR.

16. [47]

    The party seeking dispensation from compliance with a rule is required to demonstrate reasons why such dispensation is appropriate in the circumstances.

17. [48]

    The Court may order pre-judgment interest on damages pursuant to s100 of the CPA. An order for the payment of interest is discretionary: Maestrale v Aspite (No 2) [2014] NSWCA 302 at [8]. In New South Wales v Abed [2014] NSWCA 419, Gleeson JA (with Bathurst CJ and Macfarlan JA agreeing) stated (at [240]):

18. [49]

    Similarly, in Secure Parking Pty Ltd v Woollahra Municipal Council (No 2) [2017] NSWCA 51, the Court of Appeal stated at [5]:

19. [50]

    It is true that that ASOC did not plead pre-judgment interest. However, in my view, Mr Lui has amply demonstrated why a dispensation should be given from complying with r 6.12 of the UCPR and why he should be permitted to pursue the claim, notwithstanding the deficiency in the pleading.

20. [51]

    There are three reasons for this conclusion:

    1. (1)

       The defendants were plainly on notice of the plaintiff’s claim for interest up to judgment by the statement of claim and the application for default judgment.

    2. (2)

       The omission from the ASOC appears to be a mere slip, given the prior handling of the claim and, as Mr Lui put it, the liability to pay interest under s 101 of the CPA, operated automatically by virtue of s 101(1) of the CPA. Ms Guan sought no order under s 101(1).

    3. (3)

       The defendants have not squarely addressed whether the Court should or should not address its discretion under s 100, if r 6.12 did not preclude the plaintiff from claiming pre-judgment interest.

21. [52]

    In my view, there is ample discretionary basis to award pre-judgment interest, having regard to the non-payment of monies that Mr Lui has been deprived of over many years. That is the result which best reflects a just outcome in the circumstances.

22. [53]

    Mr Lui provided fresh calculation as to pre-judgment interest in the Tables, which appear at [36] above.

23. [54]

    Mr Lui sought that the higher amount due under Table 1 should be awarded based upon Ms Guan’s conduct and the Court’s findings as to the same in Lui No 1.

24. [55]

    I have come to the view that the amount under Table 2 should be awarded for the following reasons:

    1. (1)

       The Court does have a broad discretion in determining pre-judgment interest (see Lahoud v Lahoud [2011] NSWSC 994 (“Lahoud”) at [31]). However, the only factor relied upon by Mr Lui was the conduct of Ms Guan and the Court’s findings as to the same. No explanation was provided as to how specifically those factors may warrant the higher amount of pre-judgment interest sought in this case.

    2. (2)

       If that proposition is advanced on the basis of the decision of the Court being purely punitive in nature, then it is not available to Mr Lui. In Calarco v Liverpool City Council (No 2) [2018] NSWSC 355 at [12], citing Lahoud, Johnson J held:

    3. (3)

       This remedy is compensatory in nature.

    4. (4)

       That conclusion does not necessarily preclude reference to conduct in this context. For example, in Checchia at [26], Hall J considered a relevant consideration would be that delay occurred “before the plaintiff’s entitlement was established” which may be “attributable to his own fraudulent or deceptive conduct”.

    5. (5)

       Whilst the Court in Lui No 1 (at [84] and [85]) found Ms Guan’s evidence to be unreliable and that she could not be accepted as a witness of truth, together with particular adverse findings, such as Ms Guan’s evidence portrayed intentional fabrication, and Mr Lui had submitted that Ms Guan had engaged in “truly egregious behaviour in the witness box”, Mr Lui has not demonstrated how such findings might properly warrant the higher amount of pre-judgment interest in Table 1.

    6. (6)

       For example, Mr Lui did not demonstrate that he was kept out of money, by the defendant’s conduct (other than the defence of the proceedings), that was due to him prior to the delivery of judgment for which he should be compensated (see Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3) [2007] NSWCA 298 at [10]).

25. [56]

    In the result, the pre-judgment interest should be calculated in accordance with Table 2.

Costs

1. [57]

   On 5 October 2016, the defendant’s solicitor, Mr Arvin Kong, communicated an Offer of Compromise to the solicitor for the plaintiff, Mr Greg Dunstan, stating that the plaintiff is unlikely to succeed having regard to a series of factors. The offer proposed judgment in favour of the defendants.

2. [58]

   At 11.26am on 6 October 2017, Mr Dunstan sent an email to Mr Kong in the following terms:

3. [59]

   The response from Mr Kong was made at 3:49pm on the same day and stated:

4. [60]

   In summary, Mr Lui made the following submissions as to costs:

   1. (1)

      In the primary matter, Mr Lui succeeded wholly against Ms Guan and failed in relation to Sun Link on the basis of the Court’s decision in Lui No 1 at [186]. The central focus of the case was, however, on Ms Guan’s liability. In contrast, the question of Sun Link’s liability was very limited in scope.

   2. (2)

      The hearing was conducted in parts. The first portion (on 27 and 28 June 2017) was comprised of Mr Lui’s opening, the defendants’ short-lived application to amend (which was withdrawn) and Mr Lui’s cross-examination. At that time, the defendants had exhausted their opportunity to challenge Mr Lui’s evidence and had before them all of the materials on which Mr Lui relied.

   3. (3)

      The hearing was scheduled to continue on 10 and 11 October 2017.

   4. (4)

      On 5 October 2017, the defendants made an Offer of Compromise. The effect of the offer was that judgment would be entered in favour of both defendants and that Mr Lui would be required to pay their costs (r 42.13A of the UCPR). Given the outcome, the Offer of Compromise is of no consequence but remains as evidence at least of the defendants’ ability to send and receive offers. This fact is important, given what transpired on the next day.

   5. (5)

      On 6 October 2017 (the Friday before the hearing continued), Mr Lui made a Calderbank offer to the defendants.

   6. (6)

      The offer made by Mr Lui constituted a significant compromise. It was a walk away offer by a plaintiff, whose evidence had withstood cross-examination and whose case was strong. The concerns raised by Mr Dunstan’s email in relation to recoverability were, as it later turned out, very real. A reference was made to the fact that the company, Shuang Fu Development Pty Ltd, of which Ms Guan was a director and sole shareholder, had entered liquidation.

   7. (7)

      In light of their readiness to make an offer the day before, the defendants’ response was disingenuous. In effect, therefore, before 4pm on the Friday the defendants rejected Mr Lui’s offer. That rejection was unreasonable.

   8. (8)

      In relation to the primary matter, Ms Guan should be ordered to pay Mr Lui's costs of and pertaining to that proceeding on the ordinary basis until 6 October 2017 and on an indemnity basis thereafter. The defendants' position, in relation to Mr Lui's offer, was clearly unreasonable, given:

   9. (9)

      Whilst, usually, costs follow the event, the Court would depart from that position in relation to Sun Link. There should be no order for costs in Sun Link’s favour for the period up to and including 6 October 2017. Thereafter, Sun Link should be ordered to pay Mr Lui’s costs on the ordinary basis. First, Sun Link’s case was very limited in scope and had not opened by the time the abovementioned offer was made. Second, those costs would, in any event, be minimal. Third, the continuation of the case after 6 October 2017 was unreasonable. Fourth, any costs order in favour of Sun Link would be, in effect, a costs order, of which Ms Guan would benefit and because it is likely that the Sun Link would soon be deregistered.

   10. (10)

       Mr Lui should have costs of the second matter on an indemnity basis.

5. [61]

   Ms Guan replied as follows:

   1. (1)

      Mr Lui’s Calderbank offer only gave Ms Guan 4 hours and 34 minutes to consider it. It was not a reasonable amount of time. Mr Lui’s Calderbank offer was made on 6 October 2017 at 11.26am and gave until 4pm that day for acceptance.

   2. (2)

      Mr Lui’s Calderbank offer was also made mid-trial. The offer was made on 6 October 2017. The first two days of trial were 27 and 28 June 2017. The next two days of trial were 10 and 11 October 2017. The last day of trial (not counting the oral submission day of 12 March 2018) was 6 December 2017.

   3. (3)

      The reasonableness of Ms Guan’s rejection of the Calderbank offer depends on the circumstances of the case. A central issue was the operation of the Property, Stockland and Business Agents Act 2002 (earlier described as “the Real Estate Agent issue”). It was a very complex, hard fought issue (as shown by the length of submissions and the judgment).

   4. (4)

      Mr Lui’s counsel in opening address on Day 1, 27 June 2017, mentioned a certain authority/authorities that would result in Ms Guan failing on the Real Estate Agent issue. On the first day of hearing, counsel for the plaintiff stated as follows:

   5. (5)

      The Calderbank offer itself again mentioned those authorities when it said, “It is based on a misreading of the authorities…”.

   6. (6)

      This explains why Ms Guan asked Mr Lui to identify the authority or case via a 6 October 2017 email at 3.49pm (i.e. before 4pm). That is, Ms Guan took reasonable steps to clarify the Calderbank offer and Mr Lui never identified the authority or case (possibly for tactical purposes). Furthermore, four and a half hours was insufficient time to research the law and attempt to identify it.

   7. (7)

      Accordingly, Ms Guan’s rejection of the Calderbank offer was not unreasonable in light of the time she had to consider it and in light of Mr Lui’s forensic decision to not identify the critical authorities.

   8. (8)

      Ms Guan submitted that the Court, in its discretion, should not act on the Calderbank offer.

6. [62]

   Mr Lui relied upon the following principles:

   1. (1)

      Costs are discretionary: s 98 of the CPA. The Court has a discretion to order costs to be paid on the indemnity basis: Sze Tu v Jam Studios Pty Ltd v Sze Tu (No 2) [2018] NSWSC 1611 at [32].

   2. (2)

      In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 (“Miwa”) at [8], Basten JA (with whom McColl and Campbell JJA agreed) stated:

   3. (3)

      In Miwa, their Honours dealt with the question of the genuineness of the offer at [9] and dealt with principles that apply to assess the reasonableness of the refusal of the offer at [10]-[23].

7. [63]

   Some additional authorities were referred to by counsel for Ms Guan, which are relevant to the consideration of the reasonableness of the refusal of an offer regarding costs.

8. [64]

   In Carr v Fischer [2005] NSWSC 31, Levine J held at [7], [14] and [16]:

9. [65]

   In LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd (No 2) [2002] NSWSC 72 at [53]-[55], Barrett J held that the Calderbank offer before him was not unreasonably rejected because the trial was complex:

10. [66]

    The Court’s primary task is to determine whether the facts of the case or specific costs provisions impact upon the Court’s jurisdiction to make costs orders. Unless there are statutory provisions to the contrary, the Court’s discretion to determine such issues is unfettered: s 98(1) of the CPA. The discretion may be exercised whenever the circumstances warrant, having regard to the scope and purpose of the s 98 of the CPA (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (“Oshlack”); Hamod v NSW [2011] NSWCA 375 at [813] (per Beazley, Giles and Whealy JJA)).

11. [67]

    However, the central and overriding principle, in this regard, is that of doing justice to the parties in each particular case. This involves a heavily contextual assessment that focuses upon the conduct of the litigation itself. A discretion exercised on grounds unconnected with the litigation, or on no grounds at all, is arbitrary or capricious rather than fair or just (see Peters v Peters (1907) 7 SR (NSW) 398 at 399 (per Street J); Cretazzo v Lombardi (1975) 13 SASR 4 at 11 (per Bray CJ); Scharer v Counting Instruments Ltd [1986] 1 WLR 615 at 621 (per Buckley LJ).

12. [68]

    The discretion must be exercised judicially and “according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy”: Williams v Lewer [1974] 2 NSWLR 91 at 95. The discretion must be exercised on a principled basis (see Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62 at [11]), and in accordance with the principles of proportionality: s 60 of the CPA.

13. [69]

    Thus, in Oshlack, McHugh J observed the discretion, whilst unfettered, is not to be applied without guidance or qualification (at [65]-[67]):

14. [70]

    Equally, the “general rule” (or “usual order as to costs”) does not amount to a fetter on the Court’s discretion. The terms of r 42.1 of the UCPR, “unless it appears to the court that some other order should be made”, clearly envisage that the Court may, in its discretion, make a costs order other than one following the event.

15. [71]

    The most common circumstance in which the general rule may be displaced is evidence of disentitling conduct on the part of the successful party: Oshlack at [40] and [69]; G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 at [17]. The disentitling conduct does not necessarily need to amount to misconduct; it may simply be any conduct “calculated to occasion unnecessary expense”: Lollis v Loulatzis (No 2) [2008] VSC 35 at [28]; Keddie v Foxall [1955] VLR 320 at 323-324.

16. [72]

    In Commonwealth v Gretton [2008] NSWCA 117, Hodgson JA addressed the principles of fairness underlying the making of a costs order, which may at times warrant departure from the general rule (at [121]):

17. [73]

    Further factors identified as relevant to informing judicial discretion were identified in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256 at [97]-[98] (per Campbell JA) (see also, Oshlack at [69] (per McHugh J); and Ritter v Godfrey [1920] 2 KB 47). They include, but are not limited to, the following:

    1. (1)

       whether the successful party effectively invited the litigation;

    2. (2)

       whether the successful party unnecessarily protracted the proceedings;

    3. (3)

       whether the successful party succeeded on a point not argued before a lower court;

    4. (4)

       whether the successful party prosecuted the matter solely for the purpose of increasing the costs recoverable; and

    5. (5)

       whether the successful party had obtained relief which the unsuccessful party had already offered in settlement of the dispute.

18. [74]

    The onus lies on the losing party to establish a basis for any departure from the general rule: Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10]. Only in an exceptional case would a successful party both be deprived of costs and also ordered to pay the opponent’s costs: Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5.

19. [75]

    The Court should, however, have careful regard to the facts of the case: EKO Investments Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 371 at [18]-[23]; Knight v Clifton [1971] Ch 700 at 725.

20. [76]

    Additionally, in a case where there are multiple issues litigated, the Court may, in the exercise of its discretion, order that a successful party have only part of its costs. It may be appropriate to order that a successful party be deprived of costs or a portion of the costs if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument: see Yazgi v Permanent Custodians Ltd (No 2) (2007) 13 BPR 24; [2007] NSWCA 306 at [24].

21. [77]

    The appropriate starting point, nonetheless, remains the presumption under r 42.1 of the UCPR, and the inquiry then becomes whether, in the exercise of the Court’s discretion, the presumption should be displaced, or whether some other order is to be preferred.

22. [78]

    The power to award indemnity costs is found in s 98(1)(c) of the CPA and r 42.5 of the UCPR. Section 98(1) is extracted below:

23. [79]

    Rule 42.5 of the UCPR is as follows

24. [80]

    The overriding purpose of the CPA is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1). A party to civil proceedings is under a duty to assist the Court to further the overriding purpose and, to that effect, to participate in the processes of the Court and to comply with directions and orders of the Court: s 56(3) of the CPA.

25. [81]

    One of the leading authorities on indemnity costs remains Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801. In that case, Sheppard J noted some of the circumstances which have been thought to warrant the exercise of the discretion to order indemnity costs (at 233-234):

26. [82]

    A summary of the relevant authority was set out by Slattery J in Ly v Dong [2018] NSWSC 122. His Honour observed (at [45]-[46]):

27. [83]

    In Oshlack at [44], the Court noted:

28. [84]

    An award of indemnity costs should be compensatory and not punitive: Hamod v NSW (2002) 188 ALR 659; [2002] FCA 424 at [20].

29. [85]

    As to the primary matter, Mr Lui sought costs on the ordinary basis until 6 October 2017, and on an indemnity basis thereafter, upon the basis of an offer made on 6 October 2017.

30. [86]

    As to costs of the proceedings prior to 6 October 2017, Mr Lui succeeded wholly against Ms Guan. Ms Guan has not demonstrated any basis to depart from the general rule that costs are to follow the event and none is evident from the proceedings. Mr Lui should have his costs on the ordinary basis up to and including 6 October 2017.

31. [87]

    Mr Lui failed against Sun Link. However, I accept the submissions for Mr Lui that the central and predominant focus of the case was upon Ms Guan’s liability. The question of Sun Link’s liability was of very limited scope. Any awarding of costs in favour of Sun Link would be minimal and indirectly flow to Ms Guan. In the circumstances, the general rule should be departed from and each party should pay its own costs up to and including 6 October 2017.

32. [88]

    The question of indemnity costs must be resolved in accordance with the above principles on the facts and circumstances of the case. Costs are not punitive and there is no presumption that the non-acceptance of an offer that is superior to the ultimate judgment of the Court will necessarily result in an award of indemnity costs.

33. [89]

    It may be readily accepted that the offer by Mr Lui was genuine. The compromise was significant, particularly given the state of Mr Lui’s case at the time the offer was made and its “walk away” nature. The offer was clear in detail and advice was that reliance could be placed upon the letter in respect to the question of costs.

34. [90]

    I also accept that the defendants’ response was ill conceived, so far as it sought assistance from the lawyers for Mr Lui as to authorities bearing upon the central component of its case, namely, the Real Estate Agent issue.

35. [91]

    I do not accept the response was, however, disingenuous, although it did represent an implicit rejection of the offer.

36. [92]

    Nonetheless, I have come to the view that Mr Lui should not have indemnity costs from 6 October 2017, but rather, should be awarded ordinary costs as against Ms Guan. Similar to my earlier ruling, Sun Link and Mr Lui should pay their own costs from that date.

37. [93]

    The offer was made mid-trial with a very limited time being given to consider the offer. There had been two days of hearing. True it is that Mr Lui was found to be a witness of credit, but there was substantial liability issues remaining in the proceedings, including the Real Estate Agent Issue, which was accompanied by some complexity. As to the second matter in Lui No 1, the Court dismissed the second matter with costs (see Lui No 1 at [515]). That matter involved various interlocutory applications by Sun Link in 2015, including an application, which was referred to McCallum J (as her Honour then was) on 25 August 2015. The costs of those applications were not insignificant. Those costs should be incorporated in the costs order made in favour of Mr Lui.

38. [94]

    Mr Lui made an application for indemnity costs in the second matter. In my view, that application should be granted.

39. [95]

    Sun Link did not pursue its claim in that respect and, in effect, abandoned it. The entirety of Mr Lui’s costs of and pertaining to the second matter were entirely wasted. I accept Mr Lui’s submission that the entirety of this aspect of the proceeding, including that it failed to maintain repayments on the vehicle was, on the whole, unreasonable.

CONCLUSION

1. [96]

   In the result, the Court rejects the claim by Mr Lui for relief under prayer 4, has granted pre-judgment interest pursuant to Table 2 and granted costs to Mr Lui of the primary claim, although not on an indemnity basis, and indemnity costs with respect to the second matter. Sun Link and Mr Lui should pay their own costs of the second matter.

2. [97]

   The balancing of the disposition of this matter, in my view, the parties should bear their own costs of the further proceedings giving rise to this judgment.

3. [98]

   Mr Lui should bring in short minutes of this order reflecting Lui No 1 and this judgment.

ORDER

1. [99]

   Mr Lui shall bring in short minutes of order, reflecting this judgment, within 7 days of its publication.