Wu v Yu[2018] QDC 228

DISTRICT COURT OF QUEENSLAND

1. [1]
   Judgment was delivered in this matter on 24 August 2018. Each party had partial success on the claim. The matter was adjourned for further argument in relation to the form of orders and costs. This judgment relates to the question of costs.

2. [2]
   Section 15 of the Civil Proceeding Act 2011 provides that a court may award costs in all proceedings unless otherwise provided.  It is accepted that costs whilst in the discretion of the court usually follow the event (r 681(1)).

3. [3]
   The question for determination in this instance is the structure of a costs award given the particular orders made.

4. [4]
   This case involved three different claims namely:

1. The payment of sums of money by Wu into the mortgage of Zhao for a property in China.  This claim was dismissed.
2. A declaration that certain property in Brisbane was held on trust in particular shares.  The plaintiff was successful in this claim.
3. A claim for money due and owing by Wu and Gao to Yu.  The defendant was successful in this counterclaim in part.

5. [5]
   On behalf of the defendants it is submitted that the court should treat these three matters as separate events and costs should be awarded in relation to each of these claims.

6. [6]
   In Gladstone Area Water Board & Anor v AJ Lucas Operations Pty Ltd [2015] QSC 52, Jackson J analysed the rules and procedure in relation to costs, at paragraph 11:

“Although UCPR, r 681(1) speaks of costs following the event, that is not a word which is given any particular meaning in either the UCPR or other statutory provisions.  However, the use of that word in the context of the court’s power to make an order for costs has a rich history, explained in the context of UCPR, r 681(1) (then numbered r 689(1)) by McPherson JA in Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3).^[1] For the purpose of making an order for costs, the court has the power to treat each separately determined issue as an event.  The power to separate the events in a proceeding for the purpose of making an order for costs is further informed by UCPR, r 684, under which the court may make an order in relation to a particular question in or particular part of a proceeding.

Further, in the context of a trial of a claim and counterclaim in a civil proceeding, where there may be a verdict and judgment in favour of one party on the claim and there may be a verdict and judgment in favour of the other party on the counterclaim, it has long been recognised that the judgment of the claim may be treated as one event and the judgment on the counterclaim may be treated as another event.”

7. [7]
   This approach was also recognised in McDermott v Robinson Helicopter Company (No 2) [2015] 1 Qd R 295, 302 at paragraph 30 where P Lyons J noted:

“It appears to me to follow from the decision of the Court in Interchase and by reference to the language of rr 681 and 684, that, under the current rules, events in an action are to be identified by reference to individual issues or questions in the action, and the event is not simply the result or outcome of the action; and, at least by implication, that the predilection for making orders for costs by reference to success on individual events within the action remains.  In that case, no ground for depriving the fourth defendant, successful in the action, of his costs, other than his failure on a number of issues, was identified.”

8. [8]
   The defendants accordingly seek costs as follows:

1. The first defendant should pay the plaintiffs costs on a standard basis in relation to the declaration of the property in Brisbane.
2. The defendants should pay the plaintiff’s costs on the summary judgment.
3. The plaintiff should pay the defendants’ costs in relation to the debt; and
4. The plaintiff and the defendant by counterclaim should pay the first defendant’s costs of the counterclaim on a standard basis.

9. [9]
   The plaintiff accepts that this is a permissible approach but, given that this matter has been on foot for a lengthy period and that the litigation has been fraught with difficulties, this manner of order would just lead to further argument and further costs whilst the quantum of the costs was litigated. The plaintiff instead relies on the analysis of Peter Lyons J in McDermott v Robinson Helicopter Company (No 2):^[2]

“Accordingly, on this approach it seems to me the order for costs should recognise the success of the plaintiffs on this issue.  The fact that the plaintiffs were successful on many other issues, in respect of which they do not seek any adjustment of a costs order in their favour, it seems to me, gives sufficient recognition to the principle that a successful party should not ordinarily suffer any penalty in costs in respect of an issue which it has reasonably, but unsuccessfully, advanced.

Orders could be made awarding the plaintiffs the costs of the palnut issue, and otherwise awarding the defendant the costs of the action.  That would increase the cost, and complexity, of the taxation, sometimes said to be a reason for not depriving the party which was successful in the action of any of its costs.  Nor is that the approach for which the plaintiffs primarily contend.  Accordingly I do not propose to adopt it.

It has been said that if an adjustment is to be made to reflect the relative success of each party, it should be "based largely on impression".  It seems to me that, bearing in mind the time taken up at the trial, and the likely costs by way of preparation, associated with the palnuts issue, the plaintiffs' submission that the defendant should recover only 80 per cent of its costs of the action is not unreasonable; and may, perhaps, err in favour of the defendant rather than the plaintiffs.  Although this would not be a direct application of the principle in r 681 that costs follow the event, it achieves a result which has some consistency with it.  Accordingly I propose to make an order that effect.”

10. [10]
    This approach was adopted by Justice Jackson in Aion Corporation Pty Ltd v Yolla Holdings Pty Ltd & Anor [2013] QSC 216 at paragraph 12:

“In my view, an order which divided the costs according to the events of the relief sought in the separate paragraphs, or the questions raised on the separate paragraphs of the application would be difficult or potentially difficult to assess.

…

In a number of cases prior to the introduction of the UCPR, courts expressed concern that taxation of issues often had disconcerting and unfair results, as well as being troublesome and difficult to carry out.  A rough apportionment of costs “intelligently made”, has been said to lead to a fairer result.”

11. [11]
    This matter has had a long history; there has been little by way of agreement, the parties are not from this jurisdiction and there’s no reason to assume that it would be easy to divide the work done on the various issues to determine costs. By way of example, much of the trial turned on the distribution of money from one company to another and how that company’s business was handled. This was an issue that was common to all three claims. It is difficult to imagine how the parties would divide up the costs of these issues or how a registrar would be able to determine a just division of costs. In my view, in relation to this trial, the more practical approach is to take that described by Jackson J in Aion of a rough apportionment of costs intelligently made.

12. [12]
    There are also reserved costs. There are a number of reserved costs in this case which have been tabulated at pages 4 and 5 of the defendants’ submissions. A large amount of these costs are agreed and I shall deal with them in the order they appear in the table:

1. Application filed 17 September 2014 restraining Yu from dealing with property. The order on that case was to adjourn the application upon undertakings and it is agreed that there should be no order as to the cost of the hearing.
2. That application was further dealt with on 3 October 2014 appointing a trustee to sell the house and pay 60 per cent of the sale into court. It was agreed that the first defendant pay the plaintiff’s costs of the application excluding the hearing on 17 September 2014.
3. Application filed on 21 November 2014 to strike out CA of the claim.   The order was to strike out CA and the further hearing was adjourned.  In this case there is partial success for the defendant in striking out part of the claim and the remainder of the application was dismissed by consent.  The plaintiff says in this case it should be 50 per cent of the costs because there was partial success.  However in that case there were discussions which led to the application being dismissed by consent other than the striking out of the part of the claim that was asked to be struck out.  That seems to me to be an instant where there was success for the defendant and it was necessary for the defendant to come to court to have that success.  Therefore the plaintiff should be ordered to pay the first defendant’s costs of that application.
4. Application filed 21 November 2014 further heard on 24 February 2015. The order was to join Zhao. Leave to amend the claim on the balance of application filed on 21 November 2014 otherwise dismissed.  In relation to this case, the plaintiff agrees that there was partial success by both parties in relation to the joinder and that ultimately there should be no order as to costs.
5. Application filed 17 February 2016 dispense with signatures on request for trial date heard on 6 April 2016.  The order was the directions for filing amended reply and answer expert evidence application otherwise adjourned.  In relation to that matter, the plaintiffs say there was a discussion about expert evidence that needed to be obtained in relation to the Chinese law matters and whether Chinese procedural law ought to apply to debts claims that were made in China and this was a delay with the request for trial date.  The delay was at the request of the defendant.  The matter was reheard on 15 June 2016 where the plaintiff had ultimate success on the application and so on that basis the plaintiff says that the defendant should pay the costs of both days of the application. I agree with the plaintiff’s submissions in that regard, the defendant should pay the plaintiff’s costs of the two days: 6 April 2016 and 15 June 2016.

13. [13]
    In relation to the substantive costs, it was submitted on behalf of the defendants that if there was an apportionment between the parties of the total costs of the proceeding, that it would unfairly disadvantage the second defendant.

14. [14]
    The relief in respect of the house was only sought against the first defendant and it was submitted that it would therefore be unfair to order that both defendants be liable for the costs of a claim that was not pursued against the second defendant. This argument has merit. The matter upon which the majority of time was spent in the trial related to the ownership of the house in Gagarra St. Associated with that was the immigration discussions and attempts to follow money which the first defendant claimed was share dividends through various bank accounts and companies in China and Samoa. The companies were run by the plaintiff and the first defendant. The house was in the name of the first defendant. Ms Zhao was simply the wife of the first defendant and was brought into the action as a result of some debts that it was claimed she owed to the plaintiff. In those circumstances it would be unfair if a costs order was made against her where that largely pertains to the issue of the house. I note incidentally that it would be almost impossible to divide the costs incurred by the first and second defendants because they were represented by the same counsel and solicitors. The issues were not divided between the two defendants and most of the costs would be indivisible.

15. [15]
    In my view it does seem that the sensible approach in this case is an “apportionment intelligently made”, and to exclude the second defendant from the costs order to the plaintiff. I accept the submission made by the plaintiff that the orders in relation to the claim should be that the first defendant pay the 70 per cent of the costs of the plaintiff and the defendant by counterclaim, and that the plaintiff and the defendant by counterclaim pay 30 per cent of the defendants’ costs of the action.

Orders

16. [16]
    The first defendant is ordered to pay 70 per cent of the costs of the plaintiff and the defendant by counterclaim of the trial. The plaintiff and the defendant by counterclaim are ordered to pay 30 per cent of the defendants’ costs of the trial. In relation to the order of 17 September 2014 and the order of 24 February 2015 no order as to costs. In relation to the order of 3 October 2014 the first defendant is ordered to pay the plaintiff’s costs of the application excluding the hearing on 17 September 2014. In relation to the order of 3 December 2014 the plaintiff is to pay the first defendant’s costs. In relation to the 6 April 2016 and 15 June 2016 the defendant is to pay the plaintiff’s costs of the application. All costs to be assessed unless otherwise agreed.