Campbelltown Central 2 Pty Ltd v Chief Commissioner of State Revenue (No 2)

I gave the principal judgment in these proceedings on 18 December 2025: Campbelltown Central 2 Pty Ltd v Chief Commissioner of State Revenue [2025] NSWSC 1568 (Principal Judgment). Defined terms in the Principal Judgment are used here. This judgment also presumes familiarity with the Principal Judgment.

As I recorded at [137]-[138] of the Principal Judgment, the Chief Commissioner had foreshadowed that it may be necessary to deal separately with the costs that had been incurred in relation to issues which were ultimately abandoned by the Taxpayers. In the orders I made on 18 December 2025, I directed the parties to reach an agreement to resolve the issue of costs. Failing any agreement, I also made orders providing for a timetable for the provision of written submissions by the parties on costs.

The parties could not agree on the appropriate costs orders and have provided to my Chambers written submissions in accordance with the Court’s orders. I have received and had regard to the following sets of written submissions:

The only issue remaining to be determined is costs.

The Taxpayers contend that as they were wholly successful, the Court should simply order that the Chief Commissioner pay the Taxpayers’ costs on the ordinary basis, in accordance with the usual rule that costs follow the event in r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) (TWS Costs [2]).

The Chief Commissioner submits that the Court should exercise its discretion to depart from the usual rule and instead order that:

The Chief Commissioner submits that in the alternative, the Court should order each party bear its own costs (CCWS Costs [3]).

For the reasons which follow, I have determined that there should be a departure from the general rule that costs follow the event, and that the Chief Commissioner should only pay 50% of the Taxpayers’ costs.

As is uncontroversial, s 98(1) of the Civil Procedure Act 2005 (NSW) (CPA) gives the Court a broad discretion with respect to costs, though that discretion is to be exercised judicially: Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025] NSWCA 218 (Stern and Ball JJA, Griffiths AJA); Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136] (McColl JA, Sackville AJA and Adamson J agreeing).

The general rule is that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: UCPR r 42.1.

Whether a costs order departing from the general rule should be made will depend on the circumstances of the case viewed against the wide discretionary powers of the Court, which powers should be liberally construed: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 (Elite) at [8] (Beazley, McColl and Basten JJA); State of New South Wales v Stanley [2007] NSWCA 330 at [18] (Hislop J, Beazley and Tobias JJA agreeing).

The central contention of the Chief Commissioner is that he should be compensated for “incurring the costs of preparing for large parts of a case that [he] was not required to meet” (CCWS Costs [19]). The Chief Commissioner makes this submission in the context that one of those abandoned issues, being the claim that the Properties were held on resulting or constructive trust prior to entry into the Confirmation Deeds, involved “extensive historical factual investigations into the circumstances of their acquisition”, noting the acquisition of the Properties occurred in the period December 2015 to July 2017 (CCWS Costs [7]).

As I recorded at [16] of the Principal Judgment, based on the Appeal Statements filed by the Taxpayers and the Chief Commissions and the opening submissions made by the parties, it seemed a wide range of issues were to be covered. The Taxpayers had raised five issues for determination, being:

On the second day of the trial, and before reading its evidence, the Taxpayers informed the Court that they were abandoning the first, third and fourth issues of the list of issues above.

The Chief Commissioner submits that each issue, other than the second one above, “raised complex issues of fact and law” (CCWS Costs [7]), whereas the second issue was a “narrow legal argument” (CCWS Costs [7]). The Chief Commissioner drew my attention to the Taxpayers’ opening submissions (CCWS Costs [16]). At TR P8 L46-50, the Taxpayers’ senior counsel himself described the first issue as a “a fact-rich argument” which “depends on a whole range of matters and the cross-examination and even oral evidence of Mr Bechara”, and the second issue as a “clean, neat, in fact, unrich argument” which is “a short way home”.

The Chief Commissioner’s written submissions on costs chronicle the evidence served by the Taxpayers in support of their case, being:

The Chief Commissioner’s submissions emphasise that, especially in relation to the first issue of the list of issues at [13] above, there were significant costs incurred in investigating the factual matters raised by Mr Antoine Bechara’s affidavit in particular, and preparing to address these matters at the hearing. On this, the Chief Commissioner refers to the following matters:

The Taxpayers’ submissions resist the suggestion that the costs incurred by the Chief Commissioner in relation to the ultimately abandoned issues were wasted costs.

First, the Taxpayers submit that the Chief Commissioner still relied upon the trust issue. They submit that the Chief Commissioner still sought a positive finding there was no resulting trust in favour of Al Maha, as I recorded at [76] of the Principal Judgment (TWS Costs [8]). The Taxpayers submit that even if they lost on the first of the issues listed at [13] above, the Chief Commissioner would still have needed to meet the argument that the Confirmation Deeds declared no new trusts. As it happened, the Chief Commissioner focused on the circumstances surrounding the execution of the Confirmation Deeds such that it was to the advantage of the Chief Commissioner to engage in a process of discovery and to issue subpoenas, to consider the documents produced, to put some of those documents on and to make submissions on the surrounding circumstances (TWS Costs [9]-[10]).

Second, the Taxpayers submit that the Chief Commissioner did ultimately tender some (approximately 35) of the subpoenaed documents in the Court Book, either by himself or jointly with the Taxpayers (TWS Costs [13]). These documents apparently came from six of eight of the subpoenaed entities (TWS Costs [13]). Additionally, documents from Ms Carroll’s affidavit were also included by the Chief Commissioner in the joint tender list (TWS Costs [15]). The Taxpayers also submit that a “critical document relied upon by the [Chief Commissioner]” was an email from Mr Fayad to Mr Bechara, in relation to which “extensive submissions” were made which were “of great importance” to the Chief Commissioner. The Taxpayers submit that this document could only have come from the discovery process and subpoenas which the Chief Commissioner issued (TWS Costs [11]-[12]). Hence, the discovery and subpoena process undertaken was not wasted.

The Taxpayers also resisted the contention that there should be adverse cost consequences flowing from the fact they abandoned issues with reference to more general principles.

In light of the Chief Commissioner seeking an order that the Taxpayers pay a portion of his costs, the Taxpayers specifically resisted any order requiring them to pay costs. They submit that costs are only awarded against a successful party in exceptional circumstances, and that narrowing the issues, even with the effect of making much of the material in the Court Book unnecessary, does not constitute exceptional circumstances and is in fact “not an unusual feature of litigation” (TWS Costs Reply [4]).

In his short reply submissions, the Chief Commissioner made the following submissions:

I accept the Chief Commissioner’s characterisation of the issues which were ultimately abandoned by the Taxpayers as involving issues of significant factual complexity. I consider it notable that the Taxpayers did not suggest otherwise.

I also accept the Chief Commissioner’s submissions which tend to establish that there were likely significant costs expended by the Chief Commissioner in preparing for issues which were ultimately abandoned. There is no evidence before the Court on this but I consider that I can safely draw inferences from the nature of the material which was before the Court in the main proceedings. As I observed in the Principal Judgment at [20] and [24], there were 8609 pages of material initially put before the Court, across two Court Books spanning 13 folders (12 large lever arch folders and one slimmer folder), but the Taxpayers’ abandonment of much of their case meant substantial portions of the Court Book, and none of the Chief Commissioner’s supplementary Court Book, went into evidence. Given the sheer volume of material which went into the Court Book, I consider it safe to infer that there must have been significant preparatory work taking up a lot of preparation time in relation to the issues which were ultimately abandoned.

I do accept the Taxpayers’ submissions that not all of the costs incurred in relation to the abandoned issues were wasted. As the Taxpayers submitted and the Chief Commissioner agreed, some of the documents in the Court Book which were likely in the Court Book by reason of the resulting and constructive trusts issue were still relied upon by the parties, whether one particular party or jointly. This includes documents that were originally exhibited to Mr Antoine Bechara’s first affidavit as well as subpoenaed documents exhibited to Mr O’Neil’s affidavit.

However, as the Chief Commissioner submitted, it still is the case that a large portion of the documents in the Court Book were not relied upon. Additionally, the time spent preparing what the Chief Commissioner says would have been a lengthy cross-examination of Mr Bechara was ultimately wasted given the abandonment of the issues to which his cross-examination would have related. Similarly, the costs incurred referable to the analysis of the “large volume of financial evidence” and “contemporaneous communications” were also likely mostly wasted, given, as the Chief Commissioner submitted, the focus of his arguments as to the circumstances surrounding the entry into the Confirmation Deeds concerned a much more limited period of time.

Accordingly, I accept the contention there were meaningful costs incurred by the Chief Commissioner which were ultimately wasted.

The question then is what, if any, costs consequences ought to flow from that?

The Chief Commissioner’s primary position is that the Taxpayers should pay 75% of his costs prior to the hearing. I will not make this order.

First, I accept the Taxpayers’ contention that they should not necessarily be ordered to pay the Chief Commissioner’s costs. I accept their point that the Taxpayers were ultimately still required to come to Court by reason of a decision of the Chief Commissioner which was ultimately revoked by a decision of this Court. It would be exceptional to order a successful party to pay the costs of an unsuccessful party and such an order requires strong justification: Arian v Nguyen (2001) 33 MVR 37; [2001] NSWCA 5 at [37] (see also at [38]) (Ipp AJA, Foster AJA agreeing); cited in NHB Enterprises Pty Ltd v Ghaly [2022] NSWSC 96 at [12] (Bell P). I accept the Taxpayers’ submissions that exceptional circumstances have not been made out so as to require them to pay the Chief Commissioner’s costs.

Second, the costs prior to the hearing would also necessarily involve the costs in relation to the two issues which were ultimately determined in the Principal Judgment. It is not apparent to me that the Chief Commissioner’s proposed order accounts for the pre-hearing costs referable to those issues, even in a broadbrush way. The Taxpayers were successful in revoking the Duties Notices of Assessment under challenge. That should not be forgotten.

I instead consider that the appropriate course is to reduce the costs payable by the Chief Commissioner to the Taxpayers in relation to the issues which were abandoned by the Taxpayers. No doubt parties should be encouraged to narrow the issues in dispute in any given litigation. But given the abandonment of significant parts of their case in relation to which significant expenses would no doubt have been incurred, I do not consider it just for the Taxpayers to be compensated by a costs order for those aspects of the proceedings, in the circumstances of this case, given, as I accepted, it has resulted in significant wasted costs for the Chief Commissioner.

Of course, some allowance should still be made in the Taxpayers’ favour for the fact that not all of the preparation in relation to the resulting/constructive trusts issue was wasted. I will address that in fashioning a final costs order below.

The Court was ultimately called on to determine two issues. The first was whether the Confirmation Deeds were declarations of trust (which I called “issue 1”). The Taxpayers succeeded on that issue. I determined that the Confirmation Deeds were not declarations of trust and that, as a consequence, the Taxpayers were entitled to have the relevant Duties Notices of Assessments revoked: Principal Judgment at [90].

The second issue was as to the dutiable value of the Properties (which I called “issue 2”). As I said at [91] of the Principal Judgment, I only needed to determine this issue if I determined the Taxpayers were liable to pay duty. However, I nonetheless dealt with this claim “in the alternative” in accordance with the general principle that a trial judge should determine all issues. By the end of the hearing, the value of two of the Properties were agreed. As to the two properties whose value remained in dispute, as recorded in the Principal Judgment at [107], had it been necessary to decide, I would have not accepted either the Taxpayers’ or the Chief Commissioner’s valuation evidence, and, therefore, the Taxpayers would have failed to meet their onus in proving that the dutiable value of the properties was different from the Chief Commissioner’s assessment of dutiable value. The Chief Commissioner would have thus succeeded in defending his assessments of dutiable value.

The Chief Commissioner submits that the two issues determined by the Court in the Principal Judgment were “clearly separable”. He submits that issue 1 was a question of construction whereas issue 2 was one of expert evidence. While acknowledging the value of two of the Properties were agreed, the Chief Commissioner observed that the Taxpayers “failed to discharge their onus with respect to the remaining two properties” (CCWS Costs at [23]). The Chief Commissioner submits that the “ready separability of the issues and the [Taxpayers’] failure to discharge their onus are circumstances in which the Court applying a broad-brush ought to order that the [Chief Commissioner] pay 50% of the [Taxpayers’] costs of the hearing as agreed or assessed” (CCWS Costs at [23]).

In their submissions in reply, the Taxpayers noted that while the Taxpayers failed to establish their asserted valuations of two of the Properties, the Chief Commissioner’s valuations also were not accepted by the Court. The Taxpayers submitted that “[h]ad it been necessary to reach this issue, the fairest way to characterise it would have been as a nil-all draw” (TWS Costs Reply at [7]). The Taxpayers also submitted that it was not necessary to reach this issue because they had already been successful in the liability part of the case, and that it is not ordinarily relevant to the costs discretion to consider the fate of an argument the Court did not need to determine because one of the parties had been successful on another issue or issues (TWS Costs Reply at [8]).

It is well established, and the Taxpayers did not suggest otherwise, that while the general approach is to order costs in accordance with the outcome of proceedings as a whole, the costs of proceedings may be ordered by reference to the determination of different issues: Avopiling Pty Ltd v Bosevski (2018) 98 NSWLR 171; [2018] NSWCA 146 at [172] (Payne JA, McColl and White JJA agreeing). The principles governing such a costs order were recently summarised and elaborated on by the Court of Appeal (Bell CJ, Payne JA and Basten AJA) in Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274 (Michael Hill (No 2)) at [17]-[22]:

I accept the Chief Commissioner’s submission that the valuation dispute between the parties was a clearly separate issue from whether the Confirmation Deeds constituted declarations of trust. The Taxpayers’ submissions on this aspect of the costs dispute do not seem to take issue with that aspect of the costs. In any event, the two issues before the Court were clearly discrete. As to dominance, the cross-examination of Mr John Bechara and the experts took up a substantial portion of the hearing time which was ultimately used.

The Taxpayers are right when they submit the Chief Commissioner’s expert evidence as to the dutiable value of the two Properties whose value was still in dispute was rejected for essentially the same reasons as the Taxpayers’ expert evidence. However, to my mind, the onus was still on the Taxpayers and, notwithstanding the Chief Commissioner’s expert evidence was not accepted, he still successfully persuaded the Court that the Taxpayers had not discharged their onus. Accordingly, I am not persuaded that my rejection of the Chief Commissioner’s expert evidence detracts from his success on issue 2 as far as costs go, if the Court is otherwise persuaded to separate out the costs of this issue.

The Taxpayers also submitted that the determination of issue 2 should not affect the costs discretion given it was not necessary to determine in light of issue 1. I reject this submission; however, I accept the issue is rather finely balanced.

The Taxpayers did not point me to any authority for the proposition that it is not ordinarily relevant to the exercise of the costs discretion to consider the fate of an argument the Court did not need to determine because a party had been successful on another issue or issues. In fairness, I have not been able to find a case squarely addressing this issue either.

As a matter of general principle, given it is accepted that:

I have found in my research an example of a case where a successful party did not receive all of its costs by reference to issues on which it would have been unsuccessful, had it been necessary to decide those issues. In In the matter of Cooperbrown Pty Ltd [2019] NSWSC 1521, Black J ordered that an unsuccessful defendant pay only 50% of the plaintiff’s costs. His Honour, at [14], had regard to the fact that evidence was led and time was spent “on issues as to which [the plaintiff] was unsuccessful or was likely to have been unsuccessful, had it been necessary to decide the question” (emphasis added). It is not apparent from his Honour’s reasons that his Honour had to address an argument analogous to the argument put forward by the Taxpayers which I summarised in [42].

The principles concerning the apportionment of costs between issues summarised and elaborated on in Michael Hill (No 2) do not obviously support the proposition for which the Taxpayers contend.

It is acknowledged that the Court of Appeal in Michael Hill (No 2) said, at [22], that “generally it would not be appropriate to deprive a successful party of costs of claims or defences which were not unreasonably maintained, even if not made good” (emphasis added). However, the Court of Appeal also observed, in the same paragraph of Michael Hill (No 2), that “there is also a risk that there will be demands on the Court to resolve all issues, where that is not necessary to dispose of the proceedings, so that the unsuccessful party can seek to reduce the expected adverse costs order”. As I read that sentence, the premise underlying the Court of Appeal’s observation must be that if the Court did go on to determine issues strictly unnecessary to decide, costs could be apportioned by reference to how those issues were determined.

The Court of Appeal has repeatedly observed that generally a first-instance judge should determine all the issues litigated before it, including those which may become non-dispositive in light of findings made in relation to logically anterior issues: eg, Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227 at [99] (Bell CJ, Leeming and Mitchelmore JJA); Kronenberg v Macaulay [2025] NSWCA 195 at [20]-[22] (Leeming JA, Mitchelmore and Free JJA agreeing); Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174 at [131] (Ward ACJ, Leeming and Kirk JJA); Peter Sleiman Investments Pty Ltd v Deputy Commissioner of Taxation (2017) 105 ATR 431; [2017] NSWCA 81 (Peter Sleiman) at [70] (Leeming JA, Beazley P agreeing, Emmett AJA “generally” agreeing). Doing so is justified on the basis that it is preferable to avoid as much as possible the “evil” of a retrial in the case of a successful appeal. The most common application of this principle is that personal injury cases should determine damages even if they conclude a defendant ought to succeed (Peter Sleiman at [70]; Gulic v Boral Transport Ltd [2016] NSWCA 269 (Gulic) at [7]-[9] (Macfarlan JA, Gleeson JA and Garling J agreeing); Nevin v B & R Enclosures [2004] NSWCA 339 at [74]-[75] (Tobias JA, Sheller and Beazley JJA agreeing)). This common application of the principle is a neat illustration of the expectation that non-dispositive issues ought to be decided.

It is not invariably the case that a trial judge should decide all issues – there may be good reasons not to do so in a given case. Additionally, the parties certainly have no right to demand a judge decide all issues. But even then, the Court of Appeal has said that reasons should be given for when courts do not deal with issues raised before them (see, eg, PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 (PPK Willoughby) at [15] (Leeming JA, Basten JA and Simpson AJA agreeing); Chief Commissioner of State Revenue v Adams Bidco Pty Ltd (2019) 109 ATR 754; [2019] NSWCA 34 at [3]-[5] (Leeming JA); Gulic at [7]).

It follows then that on a reasonably frequent basis, first instance judges will determine arguments which are not necessary to reach. In light of these repeated statements by the Court of Appeal, parties in this Court ought to know that if alternative claims are put, then it is reasonably likely that a trial judge will need to address those claims. It would be unsurprising, then, if parties have an expectation all issues will be addressed, especially where there time and money are spent by parties in addressing all issues raised in a proceeding (PPK Willoughby at [15]).

To the extent that, in Michael Hill (No 2) at [22], the Court of Appeal suggests that ordinarily trial judges may not need to determine non-dispositive issues (such that parties should not be incentivised by the potential of costs orders involving departures from the general rule that costs follow the event in their favour to ask for non-dispositive issues to be determined), that suggestion could be in tension with its numerous pronouncements that trial judges should, generally speaking, determine even non-dispositive issues.

If it is the case that parties either should know, or in fact do expect, that a trial judge will address all issues, then I do not see a reason in principle why the fate of issues that did not strictly need to be reached should not be considered relevant to a final costs order in a case where costs otherwise ought to be apportioned on an issue-by-issue basis.

Going back to first principles, the principle underlying the usual rule as to costs is that it is fair and just for a successful party to be compensated for the costs incurred in bringing a successful action (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J)). Even more generally, the exercise of the costs discretion, whether it be following the general rule as to costs or departing from it, is based on fairness, having regard to the responsibility of parties in incurring costs (Commonwealth of Australia v Gretton [2008] NSWCA 117 at [85] (Beazley JA), [121] (Hodgson JA)).

If a party has made a claim, costs need to be expended to deal with it by opposing parties. Additionally, parties would expect that a claim will be determined by a trial judge, even if it is in the alternative or strictly non-dispositive in light of how other issues are determined. If those non-dispositive issues are “dominant and separable”, then it is not apparent to me the fact that such an issue is non-dispositive should affect its character as a “dominant and separable issue” which may be relevant to a reduction in the costs payable to an otherwise successful party. If an otherwise dominant and separable issue has been fully litigated, costs have been incurred in relation to it and a determination is reached on it, then it would seem that fairness and justice would suggest that the otherwise successful party should not necessarily be compensated for that dominant and separable issue, notwithstanding that the issue was decided in the alternative.

It should be reiterated that as the Court of Appeal stated in Michael Hill (No 2), the norm is not to award costs on an issue-by-issue basis. For that to occur, a party still needs to establish than an issue is (or issues are) truly able to be characterised as “dominant and separable”. For the reasons articulated in Michael Hill (No 2), many cases will probably have no issues which are clearly dominant or separable from other issues, such that the costs of the proceedings can be dealt with as one whole. Thus, in many (perhaps most) cases, deciding issues in the alternative will not have any impact on the costs order (setting aside all the other reasons the general rule that costs follow the event may be departed from).

Accordingly, as the Chief Commissioner has established the valuation dispute was a dominant and separable issue, which I had decided he would have succeeded on if that issue was reached, I consider that, applying the principles in Michael Hill (No 2), this justifies a reduction in the costs he must be ordered to pay to the Taxpayers.

Even if I am wrong in rejecting the Taxpayers’ starting point, and I should start from the view it is ordinarily not relevant to the exercise of the costs discretion to consider the fate of an argument the Court did not need to determine because a party had been successful on another issue or issues, I consider it appropriate to consider the valuation dispute in the circumstances of this case, viewed against the wide discretionary powers of the court, which should be liberally construed (Michael Hill (No 2) at [18], citing Elite at [8]). I still come to the conclusion that the costs of the valuation issue should be separated out and the costs order in favour of the Taxpayers reduced. For one, this issue did occupy a substantial portion of the hearing time and the Taxpayers would not have succeeded on this issue had it been necessary to determine. I also consider it relevant to address why the Taxpayers would not have discharged their onus. I considered I could not accept the evidence of Mr Konidaris, the Taxpayers’ expert witness, because he did not have the relevant expertise to opine on the matters to which his evidence related. By this, I am not suggesting the Taxpayers unreasonably maintained a dispute as to the dutiable values of the Properties for which a dispute was maintained. But the Chief Commissioner was put to the expense of dealing with expert evidence which faced a fundamental issue. It would not be fair, in my opinion, to require him to pay the costs of that issue, given the views I expressed in the Principal Judgment.

This being said, I also accept that the Taxpayers were also similarly put to the expense of dealing with expert evidence from the Chief Commissioner which had a similar fundamental flaw. Whilst I did say earlier that I did not consider my rejection of the Chief Commissioner’s expert evidence was fatal to his argument that the Chief Commissioner should not have to pay the Taxpayers’ costs of the valuation dispute, I also consider it would be unfair to not compensate the Taxpayers somewhat for themselves having to deal with the Chief Commissioner’s own flawed evidence, in the circumstances where they were ultimately required to come to Court by reason of the Chief Commissioner’s decision which I determined was in error.

The starting point from r 42.1 of the UCPR is that the Chief Commissioner should pay 100% of the Taxpayers’ costs. However, I have determined that there should be a departure from this starting position. In particular, I consider that the Chief Commissioner’s costs liability to the Taxpayers should be reduced on account of:

Applying a broadbrush approach to address these considerations, I consider that the Chief Commissioner should only pay 50% of the Taxpayers’ costs.

For the reasons set out above, I make the following order in each of proceedings 2022/00385284; 2022/00385988; 2022/00385268; and 2022/00386018: