Business Finance Pty Ltd (Receivers and Managers Appointed) v Casula Projects Pty Ltd

[2021] NSWSC 674

Supreme Court

New South Wales

Medium Neutral Citation:

Business Finance Pty Ltd (Receivers & Managers Appointed) v Casula Projects Pty Ltd [2021] NSWSC 674

Hearing dates:

On the papers

Date of orders:

10 June 2021

Decision date:

10 June 2021

Jurisdiction:

Equity

Before:

Darke J

Decision:

No order made for costs of the Notice of Motion, to the intent that each party bear its own costs of the motion, including the present costs application.

Catchwords:

COSTS – plaintiffs filed a Notice of Motion to amend their Statement of Claim – defendant initially opposed the motion but eventually consented to the amendments – leave granted to file Amended Statement of Claim – plaintiffs seek their costs of the motion – merits of the motion not determined – parties did not act unreasonably in the litigation – defendant’s change of position not merely a belated surrender or capitulation – appropriate to make no order as to costs

Cases Cited:

Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia, Re; Ex parte Lai Qin (1997) 186 CLR 622

Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84

Category:

Principal judgment

Parties:

Business Finance Pty Ltd (Receivers and Managers Appointed) (First Plaintiff)
Marcus William Ayres & Adam Paul Nikitins in their capacity as receivers and managers of Business Finance Pty Ltd (Second Plaintiff)
Casula Projects Pty Ltd (Defendant)

Representation:

Counsel:
Mr S Ipp (Plaintiffs)
Mr D Barlin (Defendant)

Solicitors:
Corrs Chambers Westgarth (Plaintiffs)
Pointon Partners (Defendant)

File Number(s):

2021/60376

Publication restriction:

None

Judgment

1. This judgment concerns the costs of a Notice of Motion that was filed by the plaintiffs on 30 April 2021 seeking leave to amend the Statement of Claim. The proposed amendments included entirely new causes of action against persons who were not then parties to the proceedings. The motion was listed for hearing on 28 May 2021.

2. The defendant had initially opposed the grant of leave to amend, including on the basis that there had been unreasonable delay on the part of the plaintiffs. However, in the week leading up to the hearing date the parties engaged in negotiations about the motion, and also about an application made by the defendant for expedition. Those negotiations culminated in the defendant consenting to the proposed amendments.

3. Accordingly, on 28 May 2021 orders were made by consent granting leave to the plaintiffs to join two new parties to the proceeding, and file an Amended Statement of Claim. The application for expedition was referred to the Expedition List, and directions were made for the filing of submissions and affidavits on the unresolved question of costs of the motion, with a view to that question being dealt with on the papers.

4. In that regard, the plaintiffs filed an affidavit of Craig Ensor, solicitor, affirmed on 4 June 2021, and written submissions of Counsel dated 6 June 2021; the defendant filed an affidavit of Simon Della Marta, solicitor, sworn on 4 June 2021, and written submissions of Counsel dated 4 June 2021.

5. The plaintiffs seek their costs of the motion against the defendant on two grounds. First, that the plaintiffs and the defendant entered into a binding agreement on 27 May 2021 which included a term that the defendant would pay the plaintiffs’ costs of the motion; and secondly that the defendant had unreasonably opposed the grant of leave to amend and then surrendered at the last moment, and also made groundless or unfounded allegations against the plaintiffs and their lawyers which caused the incurring of unnecessary costs.

6. The defendant contends that the appropriate order for costs of the motion is that the costs be costs in the cause in circumstances where the leave of the Court was required for the amendments, which would add new parties, such that it was not a matter that was dependent upon the defendant providing consent.

7. I have considered the correspondence that passed between the solicitors in the period from 24 May 2021 to 27 May 2021. I am not satisfied that any concluded agreement was reached as alleged by the plaintiffs. In particular, I do not accept that Mr Della Marta’s email sent at 3:02pm on 27 May 2021 gave rise to a concluded agreement. The email was expressed to be “subject to obtaining specific instructions”. Moreover, I do not think that the statement that the defendant “will consent to the motion for amendment” ought be read as extending beyond the substantive relief sought to effect the proposed amendments, so as to include the costs order sought in the motion. Further, the email sent by Mr Della Marta to the Court later on 27 May 2021 (which was copied to Corrs Chambers Westgarth) referred only to the giving of consent to having the Statement of Claim amended by the joining of the two additional defendants. Finally, the correspondence between the solicitors (including Mr Della Marta’s email of 26 May 2021 and the Corrs Chambers Westgarth email sent at 6:02pm on 27 May 2021) indicates that the parties contemplated that any agreement as to orders would be embodied in Short Minutes of Order to be signed by the legal representatives of the parties. I also observe that the abovementioned Corrs Chambers Westgarth email refers only to an “in principle agreement between the parties”.

8. I am also not persuaded that the defendant’s opposition to the motion should be considered unreasonable, or that its eventual consent should be characterised as a belated surrender. The proceedings had been on foot since August 2019 in the Supreme Court of Queensland, prior to the transfer to this Court earlier this year. A process of disclosure or discovery was undertaken in the Supreme Court of Queensland. That process, which concluded in March 2020, yielded documents which form the basis, or part of the basis, for the claims the subject of the amendments. In circumstances where the defendant asserts that there is some urgency in the matter (and I note that the first plaintiff maintains a caveat over a property owned by the defendant), it does not strike me as unreasonable for the defendant to raise the issue of delay, and thus require the plaintiffs, in accordance with established principles, to provide an explanation.

9. Of course, the motion has not been determined on the merits, and it is not appropriate for the Court to hypothetically hear the amendment application for the purposes of deciding the question of costs (see Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia, Re; Ex parte Lai Qin (1997) 186 CLR 622 at 624; Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [25]-[26]). Importantly, it is far from manifest, by reference to undisputed facts or circumstances, that the defendant unreasonably resisted the amendment application or made unmeritorious allegations of delay (see Nichols v NFS Agribusiness Pty Ltd (supra) at [8]). That the application was apparently contestable is reflected in the Corrs Chambers Westgarth letter of 24 May 2021 which states that for the reasons set out in an earlier letter “the Court is likely to grant our clients the relief sought in the Amendment Motion”. The letter went on to suggest that, in the interests of commercial expedience and minimising costs, the plaintiffs would consent to the relief sought in the Expedition Motion if the defendant would consent to the relief sought on the Amendment Motion. Viewed in this context, the defendant’s eventual consent to the proposed amendments cannot be fairly described as merely a belated surrender or capitulation.

10. The plaintiffs complain that the defendant made groundless or unfounded allegations of improper conduct against the plaintiffs and their lawyers. This is a reference to the statements made by the defendant’s solicitor:

1. that the plaintiffs were aware of their intention to join other defendants at the time of preparing the application for transfer but did not inform the defendant or the Court; and

2. that this was a material non-disclosure which would have affected the defendant’s consent to the transfer application and the Court’s willingness to make the transfer order.

11. These statements were met by evidence to the effect that the plaintiffs’ solicitors did not inform the defendant’s solicitors prior to the transfer that the plaintiffs were taking steps to prepare a draft Amended Statement of Claim because it was considered that there was no duty to do so. It was further noted that the case in Queensland was not the subject of judicial case management so no occasion presented itself for, or required, disclosure of the plaintiffs’ intentions.

12. I do not think that this issue would have been particularly relevant to the question of leave to amend. However, it is plain that there was no such disclosure made to the defendant, even if there was no obligation to do so, or no occasion where it may have been appropriate to do so. It is not necessary for me to express any opinion on those matters. It is sufficient to state that I am not satisfied that the defendant is guilty of making groundless or unfounded allegations against the plaintiffs or their lawyers. At most, the defendant raised a matter of minor significance to the question of leave to amend. The plaintiffs then chose to meet the matter with evidence, and incur the cost of doing so.

13. Taking into account all of the circumstances, it is my opinion that it would not be appropriate to order that the defendant pay the plaintiffs’ costs of the motion.

14. In my opinion, it is appropriate that each party bear its own costs of the motion. The motion was resolved without a hearing on the merits and both parties appear to have acted reasonably, or at least not unreasonably, in relation to the motion (see Nichols v NFS Agribusiness Pty Ltd (supra) at [30]). That seems to me to be preferable to an order that the costs of the motion be costs in the cause. There is no strong reason why the costs burden of this discrete application (which involves the addition of new parties) ought depend on the ultimate result in the proceedings.

15. Accordingly, there will be no order as to the costs of the Notice of Motion filed on 30 April 2021, to the intent that each party bear its own costs of the motion, including the present costs application. The costs of the present application were incurred, regrettably, because the parties failed to reach an agreement that extended to costs. Whilst the defendant can be seen to have achieved some success on the application, I do not think that the costs of the application should be treated separately from, or in a manner different to, the costs of the motion generally.

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Decision last updated: 10 June 2021