Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd (Costs)

On 13 March 2020 judgment was entered in favour of the Plaintiff against the Second and Third Defendants, with reasons published (“the March Reasons”): see Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd [2020] NSWSC 254. I shall use the same abbreviations here as are used in the March Reasons and regard should be had to the March Reasons, particularly [1]-[14], [30]-[44], [91]-[98], [117], [124] and [178]-[182].

The Jagatramkas seek a variation of the usual order on costs, which is that the unsuccessful party pays the costs of the successful party, namely that the Jagatramkas only be required to pay 80 per cent of WCL’s costs. It was agreed that the matter should be determined on the papers. I directed a regime for written submissions, and I have received the Jagatramkas’ submissions dated 20 March 2020 (“DSCosts”), the WCL submissions in response dated 27 March 2020 (“PSCosts”) and the Jagatramkas’ submissions in reply (“Reply on Costs”).

The basis advanced in DSCosts for the order sought is that WCL did not succeed on all of the claims it advanced in its Further Amended Statement of Claim:

The usual rule, which finds expression in r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), is that costs should follow the event unless the Court otherwise orders. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304, the Court (Beazley, Ipp and Basten JJA) summarised the law as follows at [38]:

Both the Jagatramkas and WCL accept that the above statement authoritatively summarises the law. The Jagatramkas also refer to Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219, in which at [17] it was noted that the usual circumstances in which a Court will deprive the successful party of costs is where it has failed on a clearly dominant or separable issue.

WCL in PSCosts points to Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24], in which it was said:

In Yazgi, the Court of Appeal, in rejecting the contention that the Plaintiff should be deprived of her costs, noted, inter alia:

In relation to the Third Component, the issue of the debt to equity swap and sale of the shares was, as WCL submits through PSCosts, integrally linked to the question of whether the Jagatramkas had the improper purpose in 2008: see [95] and [121] of the March Reasons.

It is true that WCL failed to establish any specific loss arising out of the sale of the shares in Properties, but the circumstances of the sale were relevant to, and closely connected with, WCL’s principal case on which it succeeded, namely that the Jagatramkas had an improper purpose in 2008: see [93]-[95] and [121] of the March Reasons. The sale was also relevant in determining what loss WCL had in fact incurred as a result of WCL’s claim on the First and Second Components. I do not think that the debt to equity swap and sale ought to be treated as a separate or discrete matter to warrant a reduction of WCL’s costs.

WCL in the PSCosts contends that the Jagatramkas relied on the ESA to explain their occupation of Cliff Road, so the ESA was a matter relevant to their defence. That may be so, but WCL had sought to impugn the ESA and its terms and that is a different matter. The fact is, however, that no time was spent on this at the hearing and I am not able, even on the broad brush approach with which the Court is encouraged to take (see Doppstadt at [19] and Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6]), to assess what would be a fair percentage figure to ascribe to this. There is also the problem that the Jagatramkas’ reliance on the ESA as the basis for their occupation of Cliff Road renders it closely interwoven with the case on which WCL has been successful, so I do not think any broad brush reduction in respect of the ESA would be appropriate in any event. It is appropriate, however, to permit the Jagatramkas to offset against the costs payable by them the cost of the expert report obtained to establish that the rate of remuneration in the ESA was appropriate, the costs of obtaining that report, and nine per cent of the fees of Counsel for the written submissions of 29 October 2019 (i.e. 5 out of 57 pages of that document).

In relation to the payments to subsidiaries – this was abandoned late in the hearing but it is a matter on which very little time was spent. The Jagatramkas’ Reply on Costs seemed to accept that this was so, but contended that this issue could be coupled with the other matters. Since I do not accept that there should be any percentage reduction for the other matters, I do not accept that any reduction should be made for this minor issue.

I should mention that in the Reply on Costs, the Jagatramkas sought to raise new matters not canvassed in the DSCosts: see paragraphs 3(d) and 4. I do not think that those additional matters should be considered but, in any event, I would not regard the fact that additional time was spent in cross examination of witnesses to deal with aspects of WCL’s case, on which it was overall successful, as providing a basis for varying the usual costs order.

I, therefore, will order the Jagatramkas to pay WCL’s costs on the ordinary basis, as agreed or assessed, but subject to offset of an amount, as agreed or assessed, representing the cost of the expert report obtained by the Jagatramkas in respect of the ESA, the costs (as agreed or assessed on the ordinary basis) of obtaining that report, and nine per cent of Counsel’s fees for the written submissions of 29 October 2019.

The WCL costs are to include 75 per cent of the costs (on the ordinary basis) of this application for costs, to reflect the fact that the Jagatramkas have had a limited measure of success.