Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 619 (22 June 2011)

Last Updated: 24 June 2011

Supreme Court New South Wales

Case Title:	Celermajer Holdings Pty Ltd v Kopas
Medium Neutral Citation:	[2011] NSWSC 619
Hearing Date(s):	21 June 2011
Decision Date:	22 June 2011
Jurisdiction:	Equity Division
Before:	Ward J
Decision:	Costs orders made
Catchwords:	COSTS - application for costs of main proceedings and motion to vary - application for order in relation to hearing fee - consideration of import of legal Aid Commission Act s 42 - HELD - costs order in relation to main proceedings - no further order as to costs and no order as to hearing fee
Legislation Cited:	Civil Procedure Act 2005 (NSW) Landlord and Tenant (Amendment) Act (1948) (NSW) Legal Aid Commission Act 1979 (NSW) Uniform Civil Procedure Regulations 2005
Cases Cited:	Barilla v James [1964-65] NSWR 741 Dubow v Fitness First Australia Pty Ltd [2007] NSWSC 1390 Khoury v Hiar [2006] NSWCA 47 New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 950 Rathborne v Gandali [1970] 1 NSWR 297 Stanley & Ors v Layne Christensen Company & Ors [2006] WASCA 56 The Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (No 2) [2007] NSWSC 797
Texts Cited:
Category:	Procedural and other rulings
Parties:	Celermajer Holdings Pty Ltd (Plaintiff/Cross-Defendant) Jurai Kopas (Defendant/Cross-Claimant) Janice Kopas (Cross-Claimant)
Representation
- Counsel:	Counsel Ms P Wass (Plaintiff/Cross-Defendant) A E Maroya (Defendant/Cross-Claimants)
- Solicitors:	Solicitors Michael Michell & Associates (Plaintiff/Cross-Defendant) McCabe Terrill Lawyers (Defendant/Cross-Claimants)
File number(s):	06/255754
Publication Restriction:

Judgment

1. HER HONOUR : On 9 February 2011, I handed down reasons for judgment in relation to a dispute as to the plaintiff's claimed entitlement to possession of residential premises in Rose Bay as against the long term occupants of those premises (Dr and Mrs Kopas). Following that judgment, the plaintiff (Celermajer Holdings Pty Ltd) applied for an order to vary that judgment pursuant to Rule 36.16(1) of the Uniform Civil Procedure Rules 2005 (NSW), the variation in question being as to the conclusion that I had reached as to whether CHPL had satisfied the onus cast upon it by s 98A of the Landlord and Tenant (Amendment) Act of establishing that the 1984 residential lease fell within Part 5A of that Act, and hence that the premises were not controlled premises for the purposes of that Act. (At the same time, CHPL sought leave to amend its pleadings in the proceedings that had by then been determined by me - in effect so as to preserve its position on any subsequent appeal from that decision.)
   
2. For the reasons set out in my subsequent judgment of 14 April 2011, I found in favour of CHPL on both its application to vary the judgment (and on the application for leave retrospectively to amend the pleadings). The outcome of the motion to vary was that I ultimately found for CHPL on all issues in its claim, and against Dr and Mrs Kopas on their cross-claim. In particular, I found that the Notice of Termination dated 19 October 2005 was valid and that CHPL was entitled to an order for the termination of the holding over tenancy and for possession of the premises.
   
3. I had not made any determination as to costs when handing down my initial judgment (on the basis that I would hear Counsel on that issue). As it was, the motion to vary then intervened and the question of costs of the main proceedings was deferred until after the disposition of the notice of motion. When I handed down judgment on the motion to vary I indicated (at [109]), that my preliminary view was that Dr and Mrs Kopas should not bear the costs of the failure of CHPL to make clear its position in relation to Barilla v James [1964-65] NSWR 741 and Rathborne v Gandali [1970] 1 NSWR 297 in the first place, or my misapprehension as to the import of Barilla v James . I was inclined to think that an appropriate result would be that CHPL be ordered to pay Dr and Mrs Kopas' costs of the motion to vary but that those costs should be set off as against the costs of the main proceedings which should be borne by Dr and Mrs Kopas, having regard to the ultimate result in the proceedings. I have since had the benefit of written and oral submissions by both parties on that issue.
   
4. I consider, for the reasons set out below, that the offset as between the respective costs orders that would follow from my earlier findings should be incorporated in one order, namely an order that Dr and Mrs Kopas pay to CHPL its costs, on a party/party basis (as agreed or assessed) of the proceedings up to and including 9 February 2011, less such amount as is agreed or assessed to be referable to the costs incurred by Dr and Mrs Kopas of the motion to vary the judgment, and that there be no further order as to the costs of the proceedings.
   

Reasons

5. The background to the present costs dispute is set out in some detail in my reasons for judgment handed down in February and April respectively.
   
6. There are three aspects of costs in respect of which orders are now sought by CHPL: the costs of the main proceedings (as to the incidence of which the parties are in broad agreement); costs of the motion for leave to amend the pleadings; and costs of the motion to vary the judgment. CHPL also raises various discretionary matters on the basis of which it seeks orders as to particular aspects of the costs. I consider each of those matters in turn.
   

(i) Costs of the main proceedings

7. As noted above, CHPL ultimately succeeded on all of the issues in its claim and in resisting the relief sought against it in the cross-claim. The parties are agreed that in those circumstances costs in the main proceedings would follow the event, there being no circumstance to justify a departure from the ordinary course provided under Rule 42.1 of the Uniform Civil Procedure Rules .
   
8. Counsel for CHPL (Ms Wass) notes in the submissions on this application that the outcome of certain interlocutory orders made during the hearing in favour of CHPL is that CHPL has already received from the Legal Aid Commission what it believes is the statutory limit in respect of costs to be paid for Dr and Mrs Kopas as legally assisted persons pursuant to s 47(2) of the Legal Aid Commission Act 1979 (NSW). It is not anticipated that any further costs will be paid by the Legal Aid Commission.
   

(ii) Costs of the Motion for Leave to Amend the Pleading

9. This aspect of the costs dispute relates to the application that CHPL made, after publication of the judgment in February this year, for leave to amend its pleadings. Ms Wass concedes that this application was made belatedly but submits that it was to do no more than regularise or formalise the case that had been put in opening submissions by Mr Marshall SC and the way in which the case was conducted by CHPL at the hearing. The purpose in ensuring that the pleading reflected the way in which the case had been conducted and decided was (quite candidly) put by Mr Marshall as being desirable in the event of any appeal.
   
10. I had earlier observed that in my view there was no prejudice occasioned to Dr and Mrs Kopas by the conduct of the proceeding on that basis (at [376] of my earlier judgment, as noted in [106] of my April judgment).
    
11. In pressing for CHPL's costs of this motion, Ms Wass submits that it was open to Dr and Mrs Kopas to consent to the amendment and that they chose not to do so. It is said that CHPL was thus unnecessarily put to the expense of arguing that issue on the motion.
    
12. Ms Wass submits that CHPL should have its costs of the motion on this issue, as costs that follow the event, pursuant to Rule 42.1.
    
13. Mr Maroya submits that there should not be a separate order in relation to this issue (noting that it would be of little utility having regard to the fact, as I accept was the case, that most of the time spent at the hearing of the respective motions on 30 March 2011 was in relation to the motion to vary the judgment). He points out that CHPL could have applied at the trial for an order that its pleadings be amended, in line with the manner in which Mr Marshall had opened CHPL's case, but did not do so. (In that regard, I note that Mr Maroya had expressly raised in closing submissions during the main hearing the fact that no amendment to the pleadings had been sought, thus it could not be said that CHPL was not on notice of the possibility of making such an application even at that late stage of the proceedings.) Further, insofar as the application to amend sought to include a reference to s 5A(l)(f) of the Landlord and Tenant (Amendment) Act 1948 (NSW), Mr Maroya points out that this was not raised during the proceedings or at trial.
    
14. As to the fact that Dr and Mrs Kopas did not consent to the amendment, Mr Maroya submits that the application to amend the pleadings was part of, and ultimately contingent upon the success of, the application to re-open the hearing to vary the judgment (referring to [108] of the April judgment, in which I had referred to the re-opening of the hearing in order to vary the judgment as part of the circumstances in which I was prepared to permit the retrospective amendment of the pleadings).
    
15. While it is true that CHPL succeeded on this leave application, I take into account the fact that very little time was occupied in argument on this issue at the hearing on 30 March 2011 (or in the written submissions prepared in advance of that hearing) and that it seems that the fact that an amendment application was not made at trial must have been either a forensic decision on the part of Counsel or (as was suggested on the hearing of the motion on 30 March 2011) a slip on the part of Counsel at the time. Given the basis on which the amendment was sought (and the not unreasonable submission by Mr Maroya that it was unnecessary having regard to the fact that the manner in which the case had been conducted on this issue was readily able to be discerned from the principal judgment) I think it is appropriate that there be no separate order for costs on this issue and those costs be left to be dealt with as part of the overall costs of the applications heard on 30 March 2011, as Mr Maroya suggests.
    

(iii) Costs of the Motion to Vary Judgment

16. On this question, CPHL made two submissions in arguing against the costs order that I had indicated as my preliminary view and in pressing instead for an order in CHPL's favour. First, it is said that the understanding as to the import of Barilla v James expressed in my initial reasons (which I have since been persuaded is incorrect) was one that had been urged upon me by Mr Maroya (but subsequently disavowed in the motion to reopen). I have, in my April reasons, gone in some detail into my reasoning at the time and I do not propose to repeat it here. However, I think it fair to say that the debate at the trial as to the import of Barilla was limited and I do not accept that Mr Maroya should bear responsibility for any misapprehension on my part that ensued from that debate.
    
17. Ms Wass points out that when the motion to reopen was first served it was accompanied by detailed submissions on behalf of CHPL, setting out the basis upon which it would be argued that the court had been led into error and, again, that it would have been open for Dr and Mrs Kopas, on receipt of those submissions, to have consented to the application. It is submitted that, instead, Counsel for Dr and Mrs Kopas served (what were criticised as unnecessarily prolix) lengthy submissions, putting CHPL to the expense of responding to the submissions and arguing the motion.
    
18. On that basis, it is submitted by Ms Wass that it is appropriate that, having succeeded on the motion to vary, CHPL have its costs of the motion on this issue, or at least its costs excluding the preparation of the motion and its initial submissions. Alternatively, it is submitted that no order as to costs of the motion ought be made.
    
19. For Dr and Mrs Kopas it is submitted that the approach I had foreshadowed at [109] of my judgment on the variation application should be followed.
    
20. In particular, it is submitted by Mr Maroya, in effect, that there is no warrant for any suggestion that Dr and Mrs Kopas should have capitulated, without more, to the variation of the judgment in CHPL's favour and that it was necessary (for relief of this kind to be granted) for the Court to address the merits of the application. I agree. In my April reasons I referred to various cases in which the cautious attitude exhibited by the courts towards such applications has been emphasised (see discussion at [25] - [31]). I accept that what CHPL sought by its motion to vary was relief that was by no means a foregone conclusion (however compelling its submissions), for the reason that a single judge, whose decision is susceptible to appeal through readily available channels, will be cautious (as I was) to avoid being cast in the position of hearing an appeal against his or her own decision (to adopt the dicta of Barrett J in New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 950). What was therefore necessary was that I be satisfied that there had been an error in reasoning because of some misapprehension of the relevant law. That is not a matter that one would ordinarily be dealt with simply on the basis that the parties had consented thereto.
    
21. In circumstances where I consider that it would have been necessary, whatever the position that Dr and Mrs Kopas had taken to the application, for CHPL to make out its case for a variation of the judgment, the most that could be said is that (in seeking, not surprisingly, to preserve a judgment favourable to them) Dr and Mrs Kopas had caused additional costs to be incurred in presenting an argument against the application. I do not consider that they can be criticised for so doing.
    
22. Mr Maroya, in oral submissions on this costs application, has taken me to Stanley & Ors v Layne Christensen Company & Ors [2006] WASCA 56 and to The Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (No 2) [2007] NSWSC 797 for the proposition that where what is sought is, in effect, an indulgence then the general rule is that the party seeking that indulgence will be required to pay the costs of the application including the costs thrown away as a result and will not normally receive the costs of the application.
    
23. In Stanley , Wheeler JA having noted that general rule added (at [52]):
    

However, it is also a normal rule that the Court will have regard to the extent to which it might be said that costs were unnecessarily incurred by a party, and will have regard to the reasonableness of the party's conduct in determining how costs should be awarded. In particular, where a contested application, even for an indulgence, is unnecessary because a party acting reasonably would have consented to appropriate orders, the party who has caused the costs to be unnecessarily incurred will not obtain its costs of such a proceeding merely because the application is for some indulgence. That is implicitly recognised in Briggs at 14, where Owen and Parker JJ appear to accept that an unreasonable withholding of consent might form an appropriate basis for a ruling on costs which departed from the "normal rule" relating to indulgences. However, in that case their Honours considered that it could not be said that the other party was unreasonable to require that the proposed amendment be justified to the satisfaction of a judicial officer.

24. In the Presbyterian Church case, Young CJ in Eq (as his Honour then was) said (at [6]):
    

Despite what the Court of Appeal said in Fordham v Fordyce [2007] NSWCA 129, that there was no overarching principle known as "The Indulgence Principle", there are a series of decisions in this Division which made it clear that where one is seeking a boon one usually has to pay the costs and even if the boon is granted, that those principles should be applied.

25. I remain of the view expressed in my 14 April 2011 reasons that CHPL should bear the costs of its application to vary the judgment (and for leave to amend). The cases to which Mr Maroya has referred fortify me in that view.
    
26. In circumstances where the occasion for those costs to be incurred might not have arisen had there been a more focussed debate on the issue at the trial, I remain of the view that Dr and Mrs Kopas should not be required to bear the costs of such an exercise after the event, so to speak. Although I accept that in the ordinary course costs will follow the event, I consider that this is an instance of an exceptional circumstance in which there should be a departure from that rule and, as Mr Maroya submits, a costs disposition of the kind foreshadowed at [109] of the judgment on the variation application is the price that CHPL should now pay for its success on that motion.
    
27. The only question then is to how the offsetting arrangement that I had foreshadowed should be put in place. What I had envisaged was that the outcome of the orders would be to offset one costs order against the other such that a reduced sum would at the end of the day be payable to CHPL (since, fairly obviously, the costs of the motion to vary would be expected to be substantially less than the costs of the main proceedings).
    
28. What was raised by CHPL was the potential unfairness in the operation of the proposed set-off as between opposing costs orders because of the fact that Dr and Mrs Kopas have (for at least some time prior to and during the hearing before me) been the recipient of legal aid.
    
29. Ms Wass submits that it is likely that Dr and Mrs Kopas will not in fact have to pay any costs as it has been asserted by the Legal Aid Commission that they are both relevantly legally assisted persons under the Legal Aid Commission Act . Thus there is a concern that Dr and Mrs Kopas may be able to enforce a costs order against CHPL (for the motion to vary) in circumstances where CPHL would not be able to enforce the costs order in its favour against Dr and Mrs Kopas (giving rise to what is said to be an unintended unfairness).
    
30. Mr Maroya submits that no such unfairness would operate against CHPL (largely, as I understand it, because of the submission that the costs of the motion to vary should be regarded as the price for the relief obtained on that application). Mr Maroya characterises this as an incident of the particular step that CHPL chose to take in the litigation. (Mr Maroya further submits that if a costs order of the kind I foreshadowed during oral submissions were to be made, then this would have the effect that CHPL would not actually pay the price for the indulgence it had received.)
    
31. Both Ms Wass and Mr Maroya have noted that s 42 of the Legal Aid Commission Act requires the court to make an order as to costs in respect of a legally assisted person as if he or she were not a legally assisted person. In Khoury v Hiar [2006] NSWCA 47, the Giles JA, with whom Beazley and Bryson JJA agreed, noted that s 42 not only contemplates but also required that the Court "make an order [there, referring to circumstances in which the court would have made an ordinary in the instant case against a party not being legally assisted] against a party for costs for which, by s 47, the party was not liable". Thus an order for payment of costs could be made but s 47(1)(b) would mean that the legally assisted person was not liable to pay those costs. In his Honour's words, "the non-liability was qualified in that the words permitted the co-existence of the order for payment of the costs".
    
32. Mr Maroya thus submits that s 42 has no effect upon the costs disposition that I had put forward as my preliminary view in [109] of the April judgment.
    
33. Somewhat ironically, however, both Ms Wass and Mr Maroya (albeit from different perspectives) in their submissions on the operation of the set-off I had proposed, appear to draw in aid the consequences of Dr and Mrs Kopas being legally assisted - Ms Wass in pointing to the potential unfairness of the proposed set-off (in circumstances where CHPL is unlikely to recover any further payment for its costs) and Mr Maroya in submitting that the set-off would mean that CHPL does not actually pay the price it should for the indulgence it has received on the motion to vary (since that effect only arises on the assumption that there is otherwise no effective set-off).
    
34. What I had in mind at the time of my April judgment was that, while CHPL should be required to bear the costs of the motion it had brought, it should at the same time be able to set-off the burden of the costs orders in favour of Dr and Mrs Kopas against its entitlement to the benefit of costs orders in respect of the main proceedings. The practical effect of what I had envisaged was that the total amount of the costs payable to CHPL would be reduced. (That remains the result irrespective of the position of Dr and Mrs Kopas as legally assisted persons.) In other words, what I had in contemplation was the net result of the respective costs orders.
    
35. Leaving aside (as the Act requires the court to do) the status of Dr and Mrs Kopas as legally assisted persons, what I consider appropriate is that the amount payable to CHPL should be reduced by an amount referable to the motion to vary. One way that such a result could be achieved would be to make off-setting orders and for each to be separately enforced. That would in the ordinary course give rise to the potential for separate costs assessments and increased fees arising by what seems likely to be the inevitable duplication of costs in that regard. (Just such a scenario was considered undesirable by Hulme J in Dubow v Fitness First Australia Pty Ltd [2007] NSWSC 1390, where his Honour made separate costs orders but stayed their execution, though permitting the parties to seek a costs assessment, with the expressed intent that there be a set-off with only one lump sum payment ultimately to be made.) An alternative way would be to make an order that would have the effect that the process of set-off take place upfront.
    
36. The merit of the alternative approach (irrespective of whether one of the parties is legally assisted) is that only one cost assessment process is necessary and the only order that would need to be enforced is for the net figure.
    
37. In the circumstances, that is the order that I consider best meets the statutory objectives under the Civil Procedure Act and is the order that ought to be made irrespective of the fact that Dr and Mrs Kopas are legally assisted persons. It is therefore the order that, in accordance with s 42 of the Legal Aid Commission Act , is required to be made as if they were not legally assisted persons.
    
38. Accordingly, as foreshadowed during the course of oral submissions, I will order that Dr and Mrs Kopas pay the costs of CHPL (on a party/party basis) as agreed or assessed of the proceedings up to and including 9 February 2011, less such amount (as agreed or assessed) as represents the costs incurred by Dr and Mrs Kopas of the motion to vary the February judgment and that there be no other order as to costs.
    
39. Finally, I note that there was a submission made by Ms Wass that (in circumstances where Dr and Mrs Kopas are unlikely to pay any costs and notwithstanding any other orders made), Dr and Mrs Kopas should be required to pay the outstanding Court hearing fees (in the order of around $7,000) (which are payable by CHPL in its capacity as the plaintiff but which would be recoverable in the ordinary course from the defendants as part of the costs order in its favour). This submission is put on the basis that, had the matters in the cross-claim not been raised, the matter would have been a one-day hearing (the fee for which has already been paid by CHPL). It is submitted by Ms Wass that it is appropriate, in the exercise of the Court's discretion, that Dr and Mrs Kopas be ordered to pay the remainder of the fees pursuant to clause 10(1)(b) of the Uniform Civil Procedure Regulations 2005 .
    
40. Mr Maroya resists that application as an inappropriate exercise of curial discretion, being inconsistent with clause 13(2)(a) of the Uniform Civil Procedure Regulations 2005 that provides that:
    

(2) The fee is not to be taken at all, or if taken must be remitted, if:

(a) judgment in the proceedings is against the legally assisted person.

41. Mr Maroya further submits that such an order would be of no utility (as I understand it, on the basis that any such payment would be required to be remitted).
    
42. It seems to me that an order of the kind now sought by Ms Wass would be inconsistent with the requirements of s 42 of the Legal Aid Commission Act (since the only basis for the order is that Dr and Mrs Kopas are legally assisted persons and CHPL will therefore not be able to recover from them the fee that under the regulations it is required to meet). What CHPL is, in effect, seeking to do by this particular application is to obtain a waiver of the hearing fee for which it is liable and which it anticipates (probably correctly) that it will be unable to recover.
    
43. If CHPL wishes to make an application for waiver of the fee then it should do so in the normal course (though I note that the published guidelines suggest that there will not generally be a waiver of the fee where the party liable to pay it is a corporation).
    
44. In the circumstances, I do not consider it is open to me (and in any event I am not prepared) to make any order in relation to the hearing fee.
    

Orders

45. I make the following orders:
    

1. Order Dr and Mrs Kopas to pay the costs of CHPL (on a party/party basis) as agreed or assessed of the proceedings up to and including 9 February 2011, less such amount (as agreed or assessed) as represents the costs incurred by Dr and Mrs Kopas of the motion to vary the February 2011 judgment.

2. There be no other order as to costs.

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