BWD Trading Acct Pty Ltd v Bellamon Pty Ltd (No 2)

[2024] QSC 177

SUPREME COURT OF QUEENSLAND

CITATION:

BWD Trading Acct Pty Ltd v Bellamon Pty Ltd (No 2) [2024] QSC 177

PARTIES:

BWD TRADING ACCT PTY LTD AS TRUSTEE OF THE BELLAMON FAMILY TRUST
(Applicant)

v

BELLAMON PTY LTD ACN 134 854 032 (IN LIQUIDATION)
(First Respondent)

MP & ASSOCIATES (AUST) PTY LTD
ACN 629 738 478
(Second Respondent)

MA MONEY FINANCIAL SERVICES PTY LTD (formerly MKM NEWCO PTY LTD) ACN 639 174 315
(Third Respondent)

JIM GEORGE KOUFOS
(Fourth Respondent)

AUSTRALIAN SECURE CAPITAL FUND LIMITED
ACN 613 497 635

(Fifth Respondent)

FILE NO/S:

60 of 2024

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED EX TEMPORE ON:

12 July 2024

DELIVERED AT:

Cairns

HEARING DATE:

12 July 2024

JUDGE:

Henry J

ORDERS:

1. Pursuant to section 82(2) of the Trusts Act 1973 (Qld) (“the Act”):

a.   the land contained in title reference 5077453 being lot 22 survey plan 224676 located at 1 Riverside Parade, Trinity Park in the State of Queensland with all appurtenances thereto (Lot 22) vest in the Applicant (namely BWD Trading Acct Pty Ltd ACN 635 864 005 in its capacity as Trustee for The Bellamon Family Trust), subject to the conditions and interests set out in paragraphs 2 of this Order:

b.   It is ordered that the registrar of titles (‘the registrar’) record the Applicant as the registered proprietor of Lot 22 (as trustee under instrument 712298722).

2, 3, 4. As per signed draft order.

5.   The Applicant pay the First Respondent’s reasonable costs of both applications on a standard basis. Those costs to be assessed in the absence of agreement.

6.   The Third Respondent’s costs of an incidental to this proceeding is costs secured by its Mortgage and is payable on a full indemnity basis under its Mortgage.

7, 8. As per signed draft order.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where costs usually follow the event – where the applicant succeeded on their application – where the first respondent and third respondent during their conduct and lead up to the application did no more than protect their rights – where the third respondent had contractual entitlement to have its costs paid on an indemnity basis – whether the applicant should pay the costs of the first respondent on a standard basis – whether the Court should exercise its discretion as to costs in a manner other than in accordance with the third respondent’s contractual entitlement

Bottoms v Reser [2000] QSC 413, cited

BWD Trading Acct Pty Ltd v Bellamon Pty Ltd [2024] QSC 151, cited

HBU Properties Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd [2015] QCA 95, cited

Lee v Australia and New Zealand Banking Group Ltd [2013] QCA 284, cited

Uniform Civil Procedure Rules 1999 (Qld)

Trusts Act 1973 (Qld) s 82

COUNSEL:

M Jonsson KC for applicant
M Forrest (sol) for first respondent

S Claasen (sol) for third respondent

SOLICITORS:

Linstell Lawyers for applicant
William James Lawyers for first respondent

Dentons Australia Limited for third respondent

1. In the wake of my first decision in this application on 17 May 2024, see BWD Trading Acct Pty Ltd v Bellamon Pty Ltd [2024] QSC 151, the parties reached substantial agreement on appropriate orders to be made at today’s further hearing. Some further agreement was reached in the course of the hearing.

2. The amended draft orders now before me include the primary relief sought, namely that the land at the heart of the controversy vest in the applicant as trustee for the Bellamon Family Trust.  This will have the effect of removing the first respondent, Bellamon Pty Ltd (in liquidation), as the owner.  Other orders will have the effect of disentangling and protecting the interests of the various parties affected by that relief.  This includes the first respondent, liquidator, Bellamon Pty Ltd and the third respondent mortgagee, the finance company.

3. The only remaining dispute is as to costs.  While costs usually follow the event and the application eventually succeeded, it is clear the intervention and orders of the court were necessary for the applicant to vest as owner via relief by which the legitimate interests of parties such as the liquidator and mortgagee were also protected. 

4. It is true common ground was eventually substantially reached between them by today, however on my perusal of the parties’ correspondence, the liquidator and mortgagee have previously done no more than protect their rights in their conduct in the lead up to and during this application.  The applicant did not propose any resolution to them in advance of bringing the application that adequately protected their rights as a realistic alternative to the application.  Thus, while the matter was eventually the subject of substantial agreement, I, in the course of argument today, held the liquidator and mortgagee were at the very least entitled to costs on the standard basis. 

5. The liquidator did not seek other than costs on the standard basis.  The mortgagee does.  It is necessary, then, to determine whether the mortgagee third respondent should have its costs on the indemnity basis.

6. The applicant contended I ought reserve the issue of the mortgagee’s costs until the other orders are carried into effect, apparently on the basis the end result may bear on what order is appropriate.  I perceive no advantage in that course, for the legal equation at the heart of the indemnity costs argument will not be altered by those future events.  The equation turns not on the usual debate as to whether a party’s conduct has been so unreasonable as to justify an indemnity costs order.  Rather, it turns on the influence, which a party’s contractual entitlement as regards costs has, upon the court’s exercise of its costs discretion.

7. The applicant contended that the Uniform Civil Procedure Rules covers the field, effectively codifying, in the present context, the court’s power to award costs.  Its counsel cited Bottoms v Reser [2000] QSC 413 in which de Jersey CJ held the Uniform Civil Procedure Rules specifies the only basis for modern day assessment of costs, that is, either the standard basis or the indemnity basis.

8. That conclusion is uncontroversial, but is not to the point.  Those observations were made in a case where a judge had ordered costs on the solicitor and own client basis overlooking the recently introduced Uniform Civil Procedure Rules, which deployed the nomenclature of standard and indemnity costs.  The latter is the category consistent with the solicitor and own client basis that had been ordered in the case the then Chief Justice was dealing with.  His Honour was not, by his observations, suggesting that a court could not have regard to a party’s contractual entitlement in a case where that entitlement is to reimbursement for costs on a particular basis.  

9. Authorities since then leave no doubt that in the court’s exercise of its costs discretion under the Uniform Civil Procedure Rules the court can take into account the existence of a party’s contractual entitlement for the payment of its costs on an indemnity basis – see, for example, Lee v Australia and New Zealand Banking Group Ltd [2013] QCA 284 at [9] and HBU Properties Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd [2015] QCA 95 at [26].

10. It was observed by McMurdo JA in Lee’s case that in such cases:

    “It remains a discretionary judgment for the court, although the discretion should ordinarily be exercised in a way which corresponds with the mortgagee’s contractual entitlement.  The question then is whether the discretion should be exercised other than according to the respondent’s contractual right.”

11. In the present case the mortgage contract provided amongst other things:

    “You must also pay to the mortgagee on demand any costs or liabilities of the mortgagee arising in relation to the mortgage, the land, or any collateral security, including the costs of the mortgagee exercising its rights under the mortgage or recovering the debt or dealing with the land (eg, lawyer’s fees on the full indemnity basis, valuer’s fees and real estate agent’s commissions).

    …

    You must pay on demand and we may debit your account with our costs in connection with any exercise or non exercise of rights arising from any default including:

    (a) legal costs as expenses on the full indemnity basis or solicitor and own client basis, whichever is higher;

    (b) our internal costs.”

12. The contract clearly contemplated the payment of costs on an indemnity basis.  The triggering event for entitlement is a demand.  It is not seriously contended other than a demand has either occurred or has been manifested by what was said in the course of today’s argument or, in any event, will occur in the lead-up to the payment process contemplated by the agreed orders.

13. It cannot be doubted that the mortgagee’s inclusion and participation in the present application arose in relation to the mortgage and the mortgagee’s protection of its rights under the mortgage.  I have accepted that it was no fault of the mortgagee that the applicant had to make the application.  No other reason exists to suggest the discretion should be exercised other than according to the mortgagee’s contractual rights. 

14. Accordingly, I find the third respondent mortgagee should have its costs on the indemnity basis.  The amended draft order will have that effect. 

15. I order as per the amended draft order, signed by me, and placed with the papers.