City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2)

In the matter of City Garden Australia Pty Ltd (in administration) as trustee for the Ming Tian City Garden Unit Trust v Dai (No 2), the dispute centered around the improper appointment of a company secretary and the issuance of unauthorised loans by the former director, Dai. The case was heard in the Supreme Court of New South Wales. The plaintiff sought to hold Dai accountable for his actions, which included lying about the legitimacy of the appointments and loans, thereby complicating the proceedings and significantly increasing the plaintiff's legal costs.

The court was tasked with determining whether the former director's persistent denial of wrongdoing justified an indemnity costs order. Additionally, the court had to decide on the appropriate costs order for the plaintiff's failed claims against the lenders who had advanced the unauthorised loans, particularly in light of the plaintiff's subsequent liquidation. The court also had to consider whether equitable compensation could encompass the lenders' costs.

The court ruled that the former director's refusal to acknowledge his misconduct justified an indemnity costs order. This decision was based on the director's persistent denial, which led to the plaintiff incurring additional costs due to the extended trial. Regarding the claims against the lenders, the court opted for a gross sum costs order, applying section 98(4)(c) of the Civil Procedure Act 2005 (NSW), to avoid the unnecessary expense of a detailed assessment of costs. The court also determined that equitable compensation could include the lenders' costs, reflecting the broader financial impact of the director's actions on the plaintiff.