Ellair Solutions Pty Ltd v Taylor Construction Group Pty Ltd (Costs)

1. [1]

   I determined the Defendant’s motion for security for costs in these proceedings in its favour on 11 February 2026: Ellair Solutions Pty Ltd v Taylor Construction Group Pty Ltd [2026] NSWSC 53.

2. [2]

   Both parties sought to address the Court on the costs order to be made in respect of that motion. I indicated that I would determine that issue on the papers and the parties have provided written submissions in that regard.

Principles

1. [3]

   Costs are in the discretion of the Court, but the general rule is that they follow the event: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

2. [4]

   The Court may, in an appropriate case, order that costs be payable in a specified gross sum instead of being referred for assessment: Civil Procedure Act 2005 (NSW) s 98(4)(c). The Court of Appeal (Payne, McHugh and Free JJA) recently summarised the principles which inform the exercise of this discretion in Rahman v Rahman (No 2) [2025] NSWCA 266 at [61]–[64] as follows:

3. [5]

   However, a gross sum costs order is not warranted merely because it will be more convenient to the party with the benefit of the order to avoid the time and expense of a formal assessment process; there must be a good reason to make the special costs order: O’Connor v O’Connor [2022] NSWSC 940 at [9] (Hammerschlag CJ in Eq).

4. [6]

   The usual position is that costs of interlocutory applications such as this one are payable at the conclusion of the proceedings: UCPR r 42.7(2). However, the Court may in its discretion order that such costs be payable forthwith if, in all the circumstances, the interests of justice require it: Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31 (Pavlovic) at [16]–[18] (Bathurst CJ, Beazley P and Meagher JA). In Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 (Fiduciary Ltd) at 4 [11] – 5 [13], Barrett J described three classes of cases which may militate in favour of a departure from the usual rule:

   1. (1)

      where the decision represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect;

   2. (2)

      where there is some conduct of the unsuccessful party that may be seen as being unreasonable; and

   3. (3)

      where there is still some considerable distance to go in the litigation so that it may be appropriate that the successful party obtain the fruits of its costs order now.

5. [7]

   It is not necessary that all three factors be satisfied for the favourable exercise of the discretion to order that costs be payable forthwith: Pavlovic at [24].

Defendant’s submissions

1. [8]

   The Defendant contends that it has incurred party/party costs of $66,408.61 (excluding GST) in respect of the motion, including Counsel’s fees and disbursements. Applying a discount of 30%, it seeks its costs in a gross sum of $46,486.03, payable forthwith.

2. [9]

   The Defendant has provided to the Court its Tax Invoices (and those of Counsel) in respect of the motion to substantiate the amount claimed. It accepts that those costs appear high for a motion for security, but seeks to justify the quantum as fair and reasonable on the basis that:

   1. (1)

      preparation for the motion commenced in December 2024;

   2. (2)

      the Plaintiff initially contended that it was not required to provide security;

   3. (3)

      the Defendant was required to prepare three affidavits and three sets of submissions on the motion;

   4. (4)

      the part payment of security by the Plaintiff did not resolve the motion, requiring the preparation of further evidence and submissions; and

   5. (5)

      the Defendant was required to review and respond to three affidavits and a set of written submissions from the Plaintiff.

3. [10]

   The Defendant submits that its costs ought to be payable in a gross sum determined by the Court, rather than as determined on an assessment, because the issue in dispute was “relatively confined and straightforward”.

4. [11]

   It also seeks that those costs be payable forthwith for four reasons:

   1. (1)

      the motion concerned a separately identifiable issue which has now been determined;

   2. (2)

      the proceedings commenced in 2024 and may not be finalised for some time;

   3. (3)

      the Plaintiff only indicated that it did not contest liability when it served its submissions on 28 November 2025; and

   4. (4)

      on 9 December 2025, the Defendant made an offer to resolve the motion on the basis that the Plaintiff pay into Court an additional $250,000. The Defendant ultimately bettered that offer where the Court ordered additional security in the amount of $260,000.

Plaintiff’s submissions

1. [12]

   The Plaintiff contends that the costs of the motion ought be the Defendant’s costs in the cause. It accepts that the Defendant was “largely successful” in obtaining the relief sought by the motion but submits that on the only issue in dispute at the hearing, being the quantum of security to be ordered, the result favoured the Plaintiff. In the alternative, it seeks an order that it pay the Defendant’s costs as agreed or assessed.

2. [13]

   The Plaintiff draws the Court’s attention to what are said to be like cases. In Lex Fitness Pty Ltd ATF Lex Family Trust v Australian Fitness Management Pty Ltd [2017] NSWSC 157, the Court ordered security the sum of $80,000 where the defendants sought the provision of $100,000. In ordering that the costs of that motion be the defendants’ costs in the cause, Slattery J observed at [73] that:

3. [14]

   On the basis that the Defendant has not been “wholly successful” on the motion, the Plaintiff submits that the costs should be the Defendant’s costs in the cause.

4. [15]

   The Plaintiff opposes a gross sum order for two reasons. First, it says that there is no basis to conclude that an assessment would be “protracted and relatively expensive, having regard to what was at stake”: Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [29] (Basten, Gleeson and Leeming JJA).

5. [16]

   Secondly, it contends that the Court cannot have sufficient confidence to determine the appropriate sum on the material available. The Plaintiff points to Mr Jury’s estimate of the Defendant’s party/party costs of the motion of $31,815 in his affidavit sworn on 25 March 2025, which estimate continued to be relied upon by the Defendant at the hearing. The Defendant now says its party/party costs of the motion are more than double that estimate. Where no explanation is provided for the discrepancy, the Plaintiff submits that the Court cannot make a fair assessment.

6. [17]

   As an alternative submission, the Plaintiff contends that if a specified gross sum were to be ordered, it should be no more than $31,815.

7. [18]

   Finally, the Plaintiff opposes an order that costs be payable forthwith (assuming that the Court does not order that the costs be the Defendant’s costs in the cause). It argues that it conducted itself expeditiously and facilitated the just, quick and cheap resolution of the real issues in the dispute by conceding that an order for security should be made against it. Moreover, the Plaintiff made two offers to the Defendant to resolve the motion:

   1. (1)

      on 7 December 2025, the Plaintiff offered to provide further security of $150,000; and

   2. (2)

      on 5 February 2026, the Plaintiff offered further security in the sum of $200,000 by the end of February 2026.

8. [19]

   Further, the Plaintiff says that there is no evidence that the Defendant is impecunious or that the motion caused it to divert funds from the substantive cause, as might otherwise favour a special costs order.

Determination

1. [20]

   Costs should follow the event in this matter.

2. [21]

   First, the Defendant was, as the Plaintiff concedes, “largely successful” on the motion. I do not accept that the result on quantum favoured the Plaintiff. It is true that I was not prepared to order the entire amount sought by the Defendant, but I preferred Mr Jury’s estimate of the length of hearing and had little confidence in Ms Ward’s analysis.

3. [22]

   Secondly, the Plaintiff only conceded that further security should be ordered in its written submissions dated 19 November 2025, after the evidence had been served and the Defendant’s submissions had been prepared. Moreover, the Plaintiff agreed to pay into Court the initial $50,000 after the Defendant’s motion and a substantial portion of its evidence had been filed.

4. [23]

   Thirdly, the Defendant made an offer to resolve the motion by the Plaintiff providing a further $250,000 in security. It bettered that offer, albeit slightly, at the hearing.

5. [24]

   I am not prepared to make a gross sum costs order. The Defendant’s concession that its costs of the motion “appears high” is well made. As noted above, its purported costs are more than double Mr Jury’s estimate relied upon at the hearing. While there may be a good reason for this discrepancy, it is a matter best determined on an assessment. Even though the Defendant contends a 30% discount on a broad-brush approach is warranted, I accept the Plaintiff’s submission that I cannot have sufficient confidence on the material before the Court to determine an appropriate sum fairly between the parties.

6. [25]

   Nor am I satisfied that the Defendant’s costs should be payable forthwith. I accept that, having regard to the factors enumerated in Fiduciary Ltd, the determination of the motion resolves a discrete issue and that these proceedings will not be finally heard and determined for some time. However, the Defendant now has an order for security in its favour which encompasses its estimate for its costs of the motion. If that order is satisfied, the Defendant has comfort that at least a significant portion of its costs of the motion (as agreed or assessed) is secured. If the further security is not provided, the proceedings are stayed and the Defendant has liberty to apply for further orders, including to seek dismissal of the proceedings. In those circumstances, I do not consider that the interests of justice require an order that the Defendant’s costs be payable forthwith.

Order

1. [26]

   For those reasons, I make the following order:

   1. (1)

      The Plaintiff pay the Defendant’s costs of the motion filed on 26 March 2025.