Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) [2014] NSWCA 317
• Hearing dates: On the papers
• Decision date: 15 September 2014
• Before: Beazley P; Barrett JA; Gleeson JA

Decision

1. Order that the respondent pay the appellant's costs of the proceedings in this Court.

2. Order that the respondent have a certificate under the Suitors Fund Act 1951 (NSW) if qualified.

 

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: PROCEDURE - costs - appellate proceedings - respondent files in Court of Appeal submitting appearance save as to costs - respondent not represented at the hearing - appellant successful - directions made for subsequent filing of submissions on costs - respondent not thereby enabled to argue the question of costs at first instance - reservation in the notice of appearance is as to the Court of Appeal costs only - effect of submitting appearance - no general rule or expectation - the question of costs is to be determined in the whole of the context.
• Legislation Cited: Civil Procedure Act 2005 (NSW).; Suitors Fund Act 1951 (NSW); Supreme Court Rules 1970 (NSW); Uniform Civil Procedure Rules 2005 (NSW)
• Cases Cited: Cassegrain v Gerard Cassegrain & Co Pty Ltd [2012] NSWCA 435; China Shipping (Aust) Agency Co Pty Ltd v D V Kelly Pty Ltd (No 2) [2010] NSWSC 1557; Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47; Distinctive FX 9 Pty Ltd v Statewide Developments Pty Ltd [2012] NSWCA 393; Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262; Nyman v Valmas [1997] NSWCA 235:
• Category: Costs
• Parties: Kisimul Holdings Pty Ltd (Applicant); Clear Position Pty Ltd (Respondent)
• Representation: Counsel: C D Wood/D Krochmalik (Appellant); Submitting appearance (Respondent); Solicitors: Annandale Lawyers (Appellant); ERA Lawyers (Respondent)
• File Number(s): CA 2014/114146; CA 2014/114162

Judgment

 

1 THE COURT: The Court delivered judgment in each of these matters on 11 August 2014: Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262. In each case, leave to appeal was granted, the appeal was allowed and orders were made setting aside the statutory demand served on the appellant by the respondent and requiring the respondent to pay the appellant's costs of the Equity Division proceedings.

 

2 In the Equity Division, the respondent was represented by solicitors and counsel and successfully resisted the appellant's claim. In this Court, however, the respondent filed a submitting appearance (save as to costs) and was not represented at the hearing. In those circumstances, the Court ordered that costs of the appeal be reserved and made directions for the filing of written submissions on costs. Those submissions have now been received.

 

3 The respondent's submissions concentrate almost exclusively on the costs of the Equity Division proceedings, that is, costs that this Court, on determination of the proceedings before it, ordered were to be borne by the respondent.

 

4 The respondent has not, however, filed any notice of motion under rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) or taken any other step with a view to having this Court's order concerning costs at first instance set aside or varied.

 

5 Proceedings in this Court by way of appeal or application for leave to appeal are proceedings distinct from those in which the challenged judgment or order was given or made: see, for example, Distinctive FX 9 Pty Ltd v Statewide Developments Pty Ltd [2012] NSWCA 393; Cassegrain v Gerard Cassegrain & Co Pty Ltd [2012] NSWCA 435. That being so, it is only the question of the costs of the Court of Appeal proceedings that was reserved; and that reservation did not affect the order regarding the costs at first instance made on the determination of the proceedings in this Court.

 

6 The respondent cannot be permitted now to agitate any question concerning the costs of the Equity Division proceedings.

 

7 The question for determination, in the light of the written submissions received, concerns only the costs of the proceedings in this Court.

 

8 The submitting appearance filed by the respondent in this Court was qualified in the way permitted by rule 6.11(1), that is, by addition of the words "save as to costs", thus indicating that the respondent, while not intending to contest the appellate proceedings brought by the appellant, reserved its right to argue the matter of the costs of those appellate proceedings. The provisions of rule 6.11 apply to proceedings in the Court of Appeal. That is the effect of rules 51.1(3) and 51.1(4) (and see, for example, rule 51.4(6), rule 51.27(1)(h) and the definition of "submitting party" in rule 51.2).

 

9 The respondent's position as to the costs in this Court is that, because it filed a submitting appearance, it should not be required to pay costs and the Court should make no order as to costs. The appellant says that the respondent should be ordered to pay its costs on the ordinary basis and, being a company with a share capital of $1.00, should be given a certificate under the Suitors Fund Act 1951 (NSW).

 

10 No rule of court or other provision deals with the costs consequences of the filing of a submitting appearance (whether or not expressed to be "save as to costs"). This contrasts with the position formerly prevailing. Part 52A rule 12(1) of the Supreme Court Rules 1970 (NSW), now no longer operative, provided that, where a respondent in the Court of Appeal added the "save as to costs" qualification to a submitting appearance and took no active part in the proceedings, the appellant or claimant was to pay the costs of that respondent or claimant as a submitting party, unless the court otherwise ordered.

 

11 Since no corresponding provision is now in force, rule 42.1 of the Uniform Civil Procedure Rules requires that costs follow the event unless it appears to the court that some other order should be made. The making of some other order lies within the discretion conferred on the Court by s 98 of the Civil Procedure Act 2005 (NSW).

 

12 Since the prima facie position under rule 42.1 is that the respondent should pay the appellant's costs in this Court, the issue is whether, in the principled exercise of the s 98 discretion, the Court should make an order that deprives the appellant of that prima facie entitlement.

 

13 In approaching that issue, one immediately encounters what has been said to be another prima facie expectation. In China Shipping (Aust) Agency Co Pty Ltd v D V Kelly Pty Ltd (No 2) [2010] NSWSC 1557 at [8], Rein J noted that "a defendant who files a submitting appearance save as to costs is prima facie only liable for costs up to the time of service of the submitting appearance and not thereafter". His Honour referred, in that connection, to Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47 where Bignold J (at [42]) extracted the following proposition from decided cases:

 

"In my judgment, the effect of the Respondent's submitting appearance in the present case, where that appearance has not been challenged or impugned, is that the submitting party is generally to be regarded as immune from any liability for costs incurred in the proceedings after the filing of the submitting appearance save as to costs (although conformably to principle and case law, the submitting party will be liable for costs incurred by the plaintiff up to the date of the filing of the submitting appearance)."

 

14 The true position is that the question should be approached not by reference to prima facie expectations but according to an appraisal of the circumstances of the case. In particular, attention must be paid to the context in which the submitting appearance was filed. Pertinent, in that connection, are the following observations of Beazley JA (as she then was) in Nyman v Valmas [1997] NSWCA 235:

 

"In my opinion, the filing of a submitting appearance does not denote consent to the orders sought. A submitting appearance (both at first instance and in this Court) may be filed for a variety of reasons. The typical situation is where a party has no vested interest in the outcome of proceedings. This typically occurs in statutory appeals where a necessary respondent is the Court or Tribunal from which the appeal is brought. Another is where a party holds funds as a stakeholder or on trust. However, the occasions where a submitting appearance is filed are by no means limited to such obvious circumstances. A party might submit where the costs of appeal outweigh the amount in dispute so that it was too prohibitive or simply not worth the while of a party to contest the matter. The procedure provided by the submitting appearance is a means of facilitating notice to the Court that the party does not propose to put any argument to the court."

 

15 In the present case, the appellant and the respondent were the only parties to the particular litigation. The appellant sued the respondent in the Equity Division and was unsuccessful. It then appealed and met with success. The litigation was not of a kind in which one party played a role akin to that of a tribunal or decision-maker having no vested interest. To the contrary, the respondent, by defending the Equity Division proceedings, strove to obtain the commercial benefit of a presumption of insolvency against the appellant and successfully resisted the appellant's attempt to deny it that benefit. When the appellant later renewed that attempt in this Court, the respondent had at its disposal four possible responses: file an unqualified appearance and oppose the grant of the relief the appellant sought; consent to the grant of that relief; file a submitting appearance; or simply ignore the matter.

 

16 The stance adopted by the respondent in this Court (the third possibility) did not relieve the appellant of the need to prove its case in this Court. That stance was the same, in that respect, as the fourth possibility. Only if the respondent had consented to the grant of the relief sought would the appellant have been relieved of that need.

 

17 In the events that happened, it was necessary for the appellant to make all pre-hearing preparations, to brief counsel and to present its case to the Court. It may well be that the lack of active opposition meant that the appellant's task was less onerous than it would otherwise have been. But effort and expenditure were incurred beyond that which would have been necessary had the respondent consented.

 

18 Nothing in the conduct of the appellant would justify an order depriving it of its costs. Nor is there any reason why the respondent should not be required to pay those costs - costs that, as has been noted, may be assumed to be less than those that would have been incurred if the appellant had succeeded against active opposition.

 

19 In the circumstances of this case, the filing of a submitting appearance by a party occupying a true adversarial position in a commercial dispute and concerned with nothing but its own economic welfare cannot be allowed to operate as some form of insulation from the costs consequences of requiring the appellant's claim to proceed to curial determination rather than cooperating in a consensual resolution of it.

 

20 Accordingly, orders are made as follows in each proceeding:

 

1. Order that the respondent pay the appellant's costs of the proceedings in this Court.

 

2. Order that the respondent have a certificate under the Suitors Fund Act 1951 (NSW) if qualified.

 

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Amendments

23 February 2015 - Para [15} last line, delete "make"

Decision last updated: 23 February 2015