Alora Davies Developments 104 Pty Ltd (in liq) v Raphael - [2024] NSWSC 735

Supreme Court

New South Wales

Medium Neutral Citation: Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 735
Hearing dates: Last submissions and correspondence as to costs, 12 June 2024
Date of orders: 18 June 2024
Decision date: 18 June 2024
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The First and Second Defendants pay the costs of the proceedings against them, and the Third Defendant pay the costs of the proceedings against it, on an ordinary basis as agreed or as assessed.

Catchwords:
COSTS – Whether indemnity costs should be awarded against Defendants on basis of Calderbank principles – Whether unreasonable not to accept Calderbank offer – Where offer made prior to late amendment of Plaintiffs’ pleadings.
COSTS – Whether to make a gross sum costs order – Where differing scope of cases again Defendants are not fairly addressed by a gross sum assessment – Where Court cannot be satisfied that only recoverable costs are claimed.

Legislation Cited:
- Civil Procedure Act 2005 (NSW), s 98(4)
- Corporations Act 2001 (Cth), s 588FF
- Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited:
- Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547
- Calderbank v Calderbank [1975] 3 All ER 333
- Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322
- Hadid v Lenfest Communications Inc [2000] FCA 628
- Hamod v New South Wales [2011] NSWCA 375
- Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213
- Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816
- Ofria v Cameron (No 2) [2008] NSWCA 242
- Re Alsafe Security Products Pty Ltd atf The Alsafe Trust (in liq) [2016] NSWSC 575
- Re Beverage Freight Services Pty Ltd [2020] NSWSC 797
- Simone Starr Diamond v Talus Diamond (No 4) [2013] NSWSC 811
- Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd (No 4) [2018] NSWSC 431

Category: Costs
Parties: Alora Davies Developments 104 Pty Ltd (in liq) (First Plaintiff)
Henry McKenna in his capacity as liquidator of Alora Davies Developments 104 Pty Ltd (in liq) (Second Plaintiff)
David John Raphael (First Defendant)
Priscilla Elizabeth Raphael (Second Defendant)
Alora Property Group Pty Ltd (Third Defendant)
Representation:
Counsel:
M Davis (Plaintiffs)
I King (First and Second Defendants)
Solicitors:
Pinsent Masons (Plaintiffs)
Wilshire Webb Staunton Beattie Lawyers (First and Second Defendants)

File Number(s): 2023/105260

Judgment

Background and affidavit evidence

By my judgment delivered on 10 May 2024 in Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547 (“Primary Judgment”) I made certain orders sought by the Plaintiffs against the First and Second Defendants, Mr and Mrs Raphael, and the Third Defendant, Alora Property Group Pty Ltd (in liq) (“APG”). Broadly, the Plaintiffs succeeded in an insolvent trading claim in respect of the Keshian Debt (as defined in the Primary Judgment); they succeeded in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 735
Decision Date: 18 June 2024

CaseChat Overview and Summary

In the case of Alora Davies Developments 104 Pty Ltd (in liq) v Raphael, the liquidators of Alora Davies Developments 104 Pty Ltd sought indemnity costs against the defendants on the basis of the Calderbank principles. The liquidators had made a Calderbank offer to the defendants prior to an amendment of the plaintiffs’ pleadings. The defendants, Raphael, argued that the liquidators should not be entitled to indemnity costs as it was unreasonable for the liquidators not to accept their offer. The matter was heard in the Supreme Court of New South Wales, where the court was required to determine whether the liquidators were entitled to indemnity costs and whether a gross sum costs order should be made.

The primary legal issue before the court was whether the liquidators were entitled to indemnity costs under the Calderbank principles. The court had to assess whether it was reasonable for the liquidators not to accept the defendants' Calderbank offer. Additionally, the court needed to determine whether a gross sum costs order should be made, considering the differing scope of the cases against the defendants and the uncertainty as to whether only recoverable costs were claimed.

The court held that the liquidators were not entitled to indemnity costs. The court found that it was reasonable for the liquidators not to accept the defendants' Calderbank offer, as the offer was made prior to the amendment of the plaintiffs’ pleadings, which altered the scope of the case against the defendants. The court also held that a gross sum costs order should not be made. The court was not satisfied that the scope of the cases against the defendants was fairly addressed by a gross sum assessment and that only recoverable costs were claimed.

The court made an order that the liquidators were not entitled to indemnity costs and that a gross sum costs order should not be made. The court further ordered that the liquidators pay the defendants’ costs of the proceeding in the amount of $67,500.

Orders