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Costs of the Proceedings – An overriding order?

Costs of the Proceedings Sydney - Pattison Hardman

The central issue in Behnia v Sarraf  [2019] NSWDC 138, was where a final order is made does it override an earlier costs orders. 

In Behnia the final order in the Supreme Court proceedings was by consent and with an order that each party pay their own costs of the proceedings.  At the time there was an existing order which the consent orders did not specifically refer to which arose from the costs of a Notice of Motion.   

The Plaintiff subsequently moved on the costs order relating to the Notice of Motion by filing for assessment.  The assessor determined that the costs payable by the cost respondent were nil, taking the view that the final order made in the Supreme Court applied to all costs (that is all former orders were vacated and merged into the final order) of the proceedings and replaced or vacated the costs order made on the Notice of Motion.   

The Assessor’s decision was affirmed by the Review Panel.  

Justice Dicker SC, on appeal to the District Court, thought otherwise and found for the plaintiff that he could move on the interlocutory costs order, noting the wording of the order, which stated: 

Makes no order as to the costs of either party to the intent that he will pay his own costs, respectively, of the proceedings.” 

Justice Dicker looked closely at a number of authorities including the following:  

In my view, this matter is governed by the principles in El-Wasfi and Ryde Developments. Neither case was referred to by the Review Panel in its reasons for decision. Paragraphs 8 and 11 of El-Wafsi appear to me to be directly relevant to the issue. Accordingly, the costs order made previously at an interlocutory stage without qualification as to the Notice of Motion is unaffected by the general order for costs in the proceedings made at the end of the litigation. The final order did not without more have the implied effect of vacating or varying the earlier orders between the parties as to discrete interlocutory aspects of the litigation: El-Wasfi at [11]. This, in my opinion, is consistent with Part 42.7(1) of the UCPR. The earlier costs order established that the court had ordered otherwise within the beginning words in Part 42.7(1) of the UCPR. 

Much clearer words would have had to have been used in the orders made on 16 August 2017 for it to be held that those orders were objectively intended to replace the earlier interlocutory order made on 20 March 2017. There is nothing in the context or surrounding circumstances of the making of the orders for them to be regarded as having the effect submitted by the defendant: see the principles stated in Wende v Horwath (NSW) Pty Ltd [2014] NSWCA 170 at [59]-[62] and [245]. 

His Honour was of the view the interlocutory order was valid and also noted rule 42.7(1) of the UCPR which states  “unless the court orders otherwise, the costs of any application or other step in any proceedings, including (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made; are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.” 

His Honour found no other order vacating the earlier order.  

Once His Honour made that finding, he went on to examine the powers of the District Court in dealing with cost appeals. We shall publish an article on this aspect shortly.

In summary – Clearly, it is preferable to avoid the argument and ensure that the final orders wrap up all other orders and/or state that any interlocutory or other orders outstanding are vacated and set aside.