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 711  Hogben Pty Ltd v Tadros; Tadros v 711 Hogben Pty Ltd (No 2) [2016] NSWSC 1754 (8 December 2016)

Last Updated: 12 December 2016

Case Name:	711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd (No 2)
Medium Neutral Citation:	[2016] NSWSC 1754
Hearing Date(s):	8 December 2016
Date of Orders:	8 December 2016
Decision Date:	8 December 2016
Jurisdiction:	Equity - Commercial List
Before:	Beech-Jones J
Decision:	1. The plaintiff pay the defendants’ costs of the Summons, other than the costs of the hearing of the separate determination before Stevenson J, with such costs incurred on or after 1 June 2016 to be payable on an indemnity basis. 2. The costs the subject of Order 1 to be payable forthwith.
Catchwords:	REOPENING – COSTS – no question of principle
Cases Cited:	711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 697  711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 1238  711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 1683
Category:	Costs
Parties:	711  Hogben Pty Ltd (Plaintiff/Third Cross-Defendant) Anthony Tadros (First Defendant/Second CrossClaimant) Sharon Tadros (Second Defendant/Third CrossClaimant) George Tadros (Third Defendant/First CrossClaimant) Dennis Bluth (Fourth Defendant) Bill Panopoulos (First Cross-Defendant) Peter Panopoulos (Second Cross-Defendant)
Representation:	Counsel: CJ Bevan (Plaintiff/Cross-Defendants) M Hadley (First to Third Defendants/Cross-Claimants) Solicitors: OneGroup Legal Pty Ltd (Plaintiff/Cross-Defendants) Harrington Maguire & O’Brien (First to Third Defendants/Cross-Claimants)
File Number(s):	2015/330101

EX TEMPORE JUDGMENT

1. HIS HONOUR: On 30 November 2016, I published my reasons for judgment in these proceedings ( 711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 1683; “ 711  Hogben No 4”).
2. At that time, I made orders dismissing the plaintiff's Summons and dismissing an application to stay the defendants' Cross-Claim. I made orders also for the exchange of submissions on costs, listed the matter on 7 December 2016 for argument in respect of costs and stood the balance of the proceedings over to the Commercial List on Friday, 3 February 2017 for directions. To meet the convenience of the parties the listing of the argument was moved to today.
3. Pursuant to the orders for the provision of submissions, the plaintiff filed submissions on costs but also sought an order which vacated the order dismissing the Summons. The written submissions indicate that this order was sought so as to permit the plaintiff to apply for leave to amend its Summons to seek, as alternative relief, specific performance of the Deed of Agreement for Lease between the parties (the “Deed”) in terms of what the plaintiff contends is the effect of the expert determination made by Mr Bluth. Otherwise, the plaintiff sought to resist an order that it pay the costs of the Summons.
4. In their submissions, the defendants sought an order that the plaintiff pay the costs of the Summons, that it do so on an indemnity basis, and that costs be payable forthwith.
5. Having heard further submissions in respect of both matters I will address the application to vacate the order dismissing the Summons first. This judgment should be read together with  711  Hogben No 4.

Application to Vacate

6. From the commencement of the proceedings until the publication of judgment on 30 November 2016, the relief sought by the plaintiff has been exclusively directed towards attacking the expert determination made by Mr Bluth. Prayer 3 of the plaintiff's Summons sought an order for specific performance but that was an order that only reflected what the plaintiff said should occur following the setting aside of Mr Bluth's determination and perhaps the making of a further determination. In any event, the plaintiff's attack on Mr Bluth's determination has now failed.
7. By its Cross-Claim the defendants seek various orders, which they contend are designed to give effect to Mr Bluth's determination, and various consequential forms of relief.
8. One matter that has not been litigated to date concerns what precisely may follow from Mr Bluth's determination that the Commencing Date of the lease is 18 May 2015. That aspect of Mr Bluth's determination was not the subject of any attack in the plaintiff’s Summons.
9. On this application, the plaintiff seeks to vacate the order dismissing the Summons to enable it to amend the Summons to now seek an order for specific performance of the Deed, specifically requiring the defendants to execute a lease, which, in effect, provides for a Commencing Date of 18 May 2015, and as I understand it, an obligation to pay rent from that time.
10. Clearly this represents a complete aboutface to the position it has taken to date in that it is relief predicated upon the validity of Mr Bluth's determination rather than attack upon it.
11. In my view, a question as to the appropriate form of an order of specific performance, including issues as to whether an obligation to pay rent arose on the defendants from 18 May 2015, is a matter that can be litigated in the defendants' Cross-Claim. In particular, it is abundantly clear from its Cross-Claim that the defendants seek their own form of specific performance of the lease. Questions as to the conditions upon which any such order might be made will arise in the determination of the Cross-Claim.
12. Counsel for the plaintiff accepted this to a point, but contended that, if for some reason the defendants did not pursue that aspect of their claim, then, unless the Summons that has been dismissed was re-enlivened and amended, there will be no means for his client to be able to seek an order requiring the execution and performance of the lease and that it may have to commence further proceedings.
13. Whether that represents a realistic likelihood for the proceedings is, I think, debatable. Whether the plaintiff would be able to file a fresh Summons is also a matter that is debatable and upon which I express no view. However, what is clear is that in my view the interests of finality are such that, where the plaintiff has for such a prolonged period staked its claim exclusively on an attack upon Mr Bluth's determination leading to a final judgment which dismisses the Summons maintaining that attack, they should not be allowed to now make an aboutturn in these proceedings to give effect to the determination.
14. This is particularly so in circumstances where, by the means that I have already outlined, there is a way in which it can litigate on the Cross-Claim the issues that may arise concerning the terms of any order for specific performance, including any argument over when rent may be payable from.
15. Accordingly, I refuse to vacate Order 1 made on 30 November 2016.

Costs

16. In relation to the application for costs, the plaintiffs sought to resist a costs order on the principal basis that the matters raised by its Summons were really part of a broader commercial dispute between it and the defendants and, until the questions raised by the defendants' Cross-Claim have been determined, the Court cannot reliably determine the true “event” or outcome of the proceedings as a whole.
17. I do not accept that contention. In my view, the attack upon the expert determination was a discrete issue, which the plaintiff has been litigating for a sustained period. There is no proper reason why the defendants should not obtain a costs order representing its success on that question.
18. The defendants sought an order for their costs to be paid on an indemnity basis. It appears that an order has already been made requiring the plaintiff to pay the costs of the separate question that was determined by Stevenson J in  711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 697. As I understand it, the defendants' application concerns the balance of its costs of the plaintiff's Summons.
19. The principal argument in support of the application that the order be made on an indemnity basis is that it is contended that the plaintiff conducted the proceedings in an unreasonable manner and with relevant delinquency, in particular, by its failure to argue all the relevant matters that were embraced by the separate question posed by Hammerschlag J in the proceedings before Stevenson J. Instead, it is said that the plaintiff insisted on arguing some of those matters at a later hearing, thereby delaying the proceeding and wasting the Court's time and the defendants’ time.
20. In  711  Hogben No 4 at [47] to [68], I traced the course of the proceedings from the time of their commencement until the giving of reasons by Stevenson J on 2 September 2016 in  711  Hogben Pty Ltd v Tadros; Tadros v  711  Hogben Pty Ltd [2016] NSWSC 1238. I noted (at [50]) that the order made by Hammerschlag J posing separate questions required that there be a hearing on “all issues arising on the plaintiff's Commercial List Summons and Statement.” That clearly extended to the allegations in the Commercial List statement that Mr Bluth's determination was subject to manifest error ( 711  Hogben No 4 at [47]).
21. Nevertheless, in the hearing before Stevenson J the plaintiff put forward only a narrow set of issues, namely those which supported its contention that Mr Bluth's determination was not made in accordance with the Deed. Counsel for the plaintiff submitted that this reflected a view taken that there is a distinction to be drawn between whether an expert determination is made in accordance with the contract, and whether it is subject to manifest error, and that logically if a party is successful in contending that a determination is not made in accordance with the contract, then one does not consider any argument about whether manifest error have been established.
22. However, accepting that distinction for present purposes, that does not address why one cannot argue in the same hearing that a determination is not made in accordance with the contract and is also subject to manifest error.
23. In circumstances where Hammerschlag J had made it completely clear that the question being posed concerned all issues raised by the Summons, I cannot see any valid basis for the plaintiff having formed the view that it was somehow entitled to turn up before Stevenson J and only argue that the determination was not in accordance with the Deed and then later have some entitlement to argue that, even if it was, it was subject to manifest error.
24. That approach was inconsistent with his Honour's orders. It was also inconsistent with the common approach adopted in numerous cases where, even if there is a threshold issue, the parties nevertheless litigate all consequential issues at the same time. Separate questions are an exception to that general approach and the posing of the separate question here did not justify the approach adopted by the plaintiff. I cannot see any valid or proper basis upon which the plaintiff could believe it was entitled to approach the case in that way.
25. The consequence of what I consider to be an unreasonable position was that the defendants were put in the position of having to fight two hearings spread apart by some five months, when they should have had to face only one. There was a submission put that if they had all been run together then the matter would have occupied two days before Stevenson J, rather than the one day it occupied before each of his Honour and myself. I am doubtful about that. It does not affect the order I will make.
26. In my view, the nature of that delinquency, especially in the context of a Commercial List which demands high standards of efficiency in the conduct of the proceedings, is such that an indemnity costs order can and should be made in respect of the conduct of the proceedings since the time of the publication of judgment by Stevenson J.
27. The defendants also seek an order that the costs be payable forthwith. Given the finding I have made, and that an order has previously been made that the costs of the separate application before Stevenson J be paid forthwith, I think that order should be made also.
28. The formulation of the costs order will reflect the fact that costs would have been incurred, or may have been incurred, on the Summons at the commencement of the proceedings that are not embraced by the order that the costs of the separate determination heard before Stevenson J be payable by the plaintiff, as well as the fact that costs have been incurred since his Honour published reasons.
29. Accordingly, the Court orders that:
    • (1) The plaintiff pay the defendants’ costs of the Summons, other than the costs of the hearing of the separate determination before Stevenson J, with such costs incurred on or after 1 June 2016 to be payable on an indemnity basis.

(2) The costs the subject of Order 1 to be payable forthwith.

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