Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2)

1. [1]

   THE COURT: The Court delivered judgment in this matter on 21 December 2017: Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339. In this judgment, which solely concerns costs, familiarity with the principal judgment is assumed. Although the appellant succeeded in one respect on the appeal, no orders for costs were then made for the reasons explained by Payne JA:

2. [2]

   In accordance with orders made on 21 December 2017, the parties filed written submissions on the question of costs of the hearing before the primary judge and the costs of the appeal as follows:

   1. (1)

      submissions in chief were filed by the appellant on 29 January 2018;

   2. (2)

      submissions by the respondent were filed on 14 February 2018; and

   3. (3)

      submissions in reply by the appellant were filed on 21 February 2018.

3. [3]

   The matter was considered by the Court on the papers.

4. [4]

   The appellant submitted that the following orders should be made:

   1. (1)

      costs of the appeal - the respondent should be ordered to pay the appellant’s costs of and incidental to the appeal. Alternatively, the respondent should be ordered to pay 80 per cent of the appellant’s costs of and incidental to the appeal; and

   2. (2)

      costs of the trial - the respondent should be ordered to pay 50 per cent of the appellant’s costs of the Amended Summons, as agreed or assessed, and the appellant should be ordered to pay 50 per cent of the respondent’s costs of the Amended First Cross-Summons, as agreed or assessed.

5. [5]

   The respondent submitted that that the following orders should be made:

   1. (1)

      costs of the appeal - the respondent should be ordered to pay 30 per cent of the appellant’s costs of the appeal, and the appellant should be ordered to pay 70 per cent of the respondent’s costs of the appeal ; and

   2. (2)

      costs of the trial - the appellant should be ordered to pay the respondent’s costs . Alternatively, if the appellant is entitled to a discount for its success on certain issues, then any discount should be minimal and no more than 10 per cent .

Applicable Principles

1. [6]

   Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the general rule is that the Court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the "event" refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per Ward, Emmett and Gleeson JJA. Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

2. [7]

   The relevant principles for the determination of costs on an issue-by-issue basis were stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA:

Costs of the Appeal

1. [8]

   In relation to the costs of the appeal, the appellant submitted that the “event” was best described as the Court allowing the appeal, the effect of which was to reduce the appellant’s liability by an amount of around $2,000,800 (apparently comprising commission totalling $1,640,000 plus interest). It was submitted that the appellant has had a significant measure of success and that, as there are no exceptional circumstances warranting any other order, the Court should make the usual order as to costs.

2. [9]

   The appellant submitted that it was substantially successful on ground 1 of the appeal, that the issues in ground 1 on which the appellant was unsuccessful were not dominant or separable issues in the appeal, that ground 2 of the appeal, upon which the appellant was unsuccessful, was closely related to ground 1 and that while ground 3 of the appeal raised separate issues, they were relatively minor and did not increase the time taken to hear the appeal.

3. [10]

   That submission should not be accepted. This is a case where it is appropriate to deprive the successful appellant of a portion of its costs because the matters upon which it was unsuccessful took up a significant and separable part of the appeal. The separable issues here comprised the subject matter of grounds 2 and 3 of the notice of appeal. The exercise in apportionment is necessarily relatively broad brush involving a matter of impression and evaluation by the Court.

4. [11]

   In conducting this evaluation, the Court does not propose to make the order suggested by the respondent in relation to the costs of the appeal, namely that the respondent should be ordered to pay 30 per cent of the appellant’s costs of the appeal, and the appellant pay 70 per cent of the respondent’s costs of the appeal. There is no basis on the facts of this case for an award of costs in favour of the unsuccessful respondent.

5. [12]

   The relevant “event” for the purposes of UCPR r 42.1 should be understood in the context of the appellant’s unsuccessful challenge to virtually all of the judgment below. The appellant made three claims on the appeal. The total quantum of the claims was approximately $5,500,000 plus interest. The appellant was successful in the first claim only to the extent that it established the respondent had breached Sch 8, cl 7, which had the consequence that it was entitled to a little over $1,640,000 plus interest. The issues in respect of which the appellant was unsuccessful were separable and had the consequence that the respondent was entitled to retain almost $4,000,000 plus interest that had been awarded by the primary judge. The issues raised by the separate grounds of appeal were discrete and dealt with as discrete by the parties. The appellant was unsuccessful in the second and third claims. The appellant was, however, successful in resisting the respondent’s notice of contention. As a rough evaluation, approximately 30 per cent of the monetary value of the appeal and 30 per cent of the time taken in the appeal was devoted to issues upon which the appellant succeeded.

6. [13]

   Any mathematical precision in the appropriate order is illusory. In the exercise of the discretion and relying on the matters of impression and evaluation identified above, the appropriate order is that the respondent pay 30 per cent of the appellant’s costs of the appeal as agreed or assessed.

Costs of the Trial

1. [14]

   As the appellant has now enjoyed some success it is also appropriate to re-visit the costs order made by the primary judge concerning the trial. The appellant submitted that the respondent should be ordered to pay 50 per cent of the appellant’s costs of the Amended Summons as agreed or assessed, and the appellant should be ordered to pay 50 per cent of the respondent’s costs of the Amended First Cross-Summons as agreed or assessed. The appellant accepted that its success was only partial, and that it raised issues on which it was unsuccessful. These issues, the appellant submitted, were:

2. [15]

   The appellant submitted that the respondent was similarly unsuccessful on several issues as it was only successful on 4 out of 14 grounds of relief pleaded in its Amended First Cross-Summons. The most important of the “separate and distinct” issues, the appellant submitted, were the claims that the respondent was not acting as the appellant’s “agent” selling the units the subject of each Agreement, but rather was a “principal” in a joint venture with the appellant. It was submitted that the respondent also failed in establishing a contention that the Property, Stock and Business Agents Act 2002 (NSW) (“the Act”) and the Property, Stock and Business Agents Regulation (2003) (“the Regulation”) did not apply to either Agreement. Finally, the respondent failed in the claim that the appellant was estopped from relying on s 55 of the Act to deny the respondent commission under each Agreement.

3. [16]

   The appellant also submitted that the respondent should be deprived of a significant proportion of its costs because its wrongful actions in failing to comply with Sch 2 cl 2 and Sch 8 cl 7 of the Regulation and s 37 of the Act was the conduct that led to the proceedings to obtain relief under s 55A of the Act in which the respondent was successful: see eg Ritter v Godfrey [1920] 2 KB 47 at 60; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 2 FLR 213 at 220-221; McCusker v Rutter [2010] NSWCA 318 at [28]-[32].

4. [17]

   The respondent submitted that the appellant should pay the respondent’s costs below as agreed or assessed as the “event” the subject of the proceedings below was the overall outcome. Following the judgment on appeal, the overall outcome of the proceedings below was that the respondent was entitled to judgment of $3,896,804 plus interest.

5. [18]

   For essentially the same reasons as in relation to the appeal, we are of the view that there was at the trial a distinct and separable issue upon which we have concluded the appellant was entitled to succeed. The place of that issue, in the context of the issues determined by the primary judge, however, needs to be evaluated. While it is true that the respondent raised a number of issues upon which it did not succeed, with the exception of the estoppel argument, those matters were of minor importance and would not warrant any apportionment of costs. The principal differences between the issues raised at the trial and on the appeal were:

   1. (1)

      The respondent’s successful claim to relief under s 55A required consideration of a number of factual and credit issues to determine whether the appellant would have acted differently if the asserted breaches of Sch 8, cll 4, 7 and 8 had not occurred;

   2. (2)

      The appellant’s failed contention that the respondent breached its fiduciary duties in connection with the second agreement, which also required the primary judge to resolve several factual and credit issues; and

   3. (3)

      The appellant’s failed contention that the respondent engaged in misleading or deceptive conduct during the negotiations for the second agreement, which also took up a good deal of time.

6. [19]

   We reject the submission that the respondent should be deprived of a proportion of its costs because of its wrongful actions in failing to comply with Sch 2 cl 2 and Sch 8 cl 7 of the Regulation. Any breach of the Act or the Regulation was irrelevant to the proceedings beyond the issue upon which the appellant succeeded. The failure of the respondent to comply is relevant only to the extent that it did not succeed on that separable issue. Whilst it is true, as the appellant submitted, that the respondent’s conduct necessitated the conduct of the s 55A proceedings, the appellant was not under an obligation to incur costs and resources by resisting the respondent’s application. It is appropriate in those circumstances that the appellant pay the respondent’s costs of that issue.

7. [20]

   We accept, as the respondent submitted, that a single costs order is preferable to an order differentiating between the costs of the Amended Summons and the Amended First Cross-Summons because the issues in each were “significantly intertwined” and a discount could be incorporated into a single costs order. Again, any mathematical precision in the appropriate order is illusory. In the exercise of the discretion and relying on the matters of impression and evaluation identified above, including those issues where the respondent’s case failed, the appropriate order is that the appellant pay 75 per cent of the respondent’s costs of the Amended Summons and the Amended First Cross-Summons as agreed or assessed.

8. [21]

   We should also make clear in making this order that, as the respondent correctly submitted, nothing in this judgment affects the costs orders already made in interlocutory hearings which continue to apply and should not be re-tried in this determination. As this Court has said recently in El-Wasfi v State of New South Wales; Kassas v State of New South Wales (No 2) [2018] NSWCA 27:

Orders

1. [22]

   The Court makes the following orders:

   1. (1)

      The respondent pay 30 per cent of the appellant’s costs of the appeal as agreed or assessed.

   2. (2)

      The appellant pay 75 per cent of the respondent’s costs of the Amended Summons and the Amended First Cross-Summons as agreed or assessed.