Eastmark Holdings Pty Limited v Kabraji (No 2)
[2012] NSWSC 1255
•22 October 2012
Supreme Court
New South Wales
Medium Neutral Citation: Eastmark Holdings Pty Limited v Kabraji (No 2) [2012] NSWSC 1255 Hearing dates: 4 October 2012 Decision date: 22 October 2012 Jurisdiction: Equity Division Before: Hallen AsJ Decision: Order that the Defendants are to pay 80 per cent of the Plaintiff's costs of each of the Notices of Motion filed on 5 April 2012 by the First and Second Defendants and by the Third and Fourth Defendants, including the costs of the hearings on 28 June, 29 June and 4 October, as follows:
(a) 65% of the Plaintiff's costs to be paid by the First, Second and Fourth Defendants; and
(b) 15% of the Plaintiff's costs to be paid by the Third Defendant.
Other procedural directions and orders made by consent of the parties.
Catchwords: COSTS - Plaintiff's application for costs following failed notices of motion for summary dismissal and strike out of proceedings Legislation Cited: Civil Procedure Act 2005
Strata Schemes Management Act 1996
Supreme Court Rules
Uniform Civil Procedure Rules 2005Cases Cited: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCA 194
Eastmark Holdings Pty Limited v Kabraji [2012] NSWSC 802
Fordyce v Fordham [2006] NSWCA 274; [2006] 67 NSWLR 497
Foukkare v Angreb Pty Ltd [2006] NSWCA 335
Gattelleri v Meagher [1999] NSWSC 1279
Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84
Luxmore Pty Ltd v Hydedale Pty Ltd [2008] VSCA 212; (2008) 20 VR 481
Ohn v Walton (1995) 36 NSWLR 77
Plaza West Pty Ltd v Simon's Holdings (NSW) Pty Ltd (No 2) [2011] NSWSC 556
Sagacious Legal Pty Ltd v Westfarmers General Insurance Limited [2010] FCA 274
Traderight (NSW) Pty Ltd & Ors v Bank of Queensland Ltd (No 2) [2008] NSWSC 589Category: Procedural and other rulings Parties: Eastmark Holdings Pty Limited (Plaintiff)
Eddie Kabraji (first Defendant)
hendersenhayes Pty Ltd
(second Defendant)
The Owners Strata Plan No 74602
(third Defendant)
Kris Bruckner (fourth Defendant)Representation: Mr P W Gray SC; Ms B Oliak (Plaintiff)
Mr A S McGrath (first, second and fourth Defendants)
Ms C Amato (third Defendant)
Swaab Attorneys (Plaintiff)
Henry Davis York (first Defendant)
Henry Davis York (second Defendant)
Minter Ellison (third Defendant)
Norton Rose (fourth Defendant)
File Number(s): 2011/328524
Judgment
Introduction
HIS HONOUR: In late June 2012, I had listed before me for hearing, three notices of motion, two of which were determined in July 2012. The medium neutral citation of the reasons for judgment dealing with those two notices of motion is Eastmark Holdings Pty Limited v Kabraji [2012] NSWSC 802.
At the hearing of the notices of motion, counsel spoke to written submissions. At the conclusion of the hearing, the parties requested that I deliver judgment but not make any order as to costs and to allow them to make submissions on costs, if agreement could not be reached.
The parties were unable to reach any agreement on costs and I am now dealing with the costs of those two notices of motion. At the conclusion of the hearing on costs, I indicated to the parties that I proposed to make an order that the Plaintiff should receive 80 per cent of its costs, payable, as to 65 percent, by the first, second and fourth Defendants and as to 15 percent by the third Defendant and that I would subsequently provide reasons. These are the reasons for the orders I then proposed to make.
The third notice of motion that was listed before me in June 2012, was one filed on 7 June 2012, by the third Defendant, in which an order was sought that general access to inspect certain identified documents (by reference to an identified packet headed "Privilege"), produced by solicitors, Holding Redlich, pursuant to a subpoena issued on 20 March 2012, at the request of the Plaintiff, be restricted. (At certain times, Holding Redlich was the firm of solicitors acting for the third Defendant.)
All parties agreed that the two notices of motion filed on behalf of the Defendants, should be dealt with first, and, then, if necessary, another court date would be given to determine the third notice of motion, if agreement could not otherwise be reached. Since then, although agreement was reached on some documents, there remains an issue about others. It was hoped that I would deal with the third notice of motion at the hearing for costs.
Regrettably, the hearing of the costs argument was not completed until late in the afternoon and it was not possible to determine the third notice of motion. Unfortunately, also, the third Defendant provided to the Court, late on the afternoon before that hearing, a volume of documents that needed to be considered. The third notice of motion was then listed, tentatively, for hearing, on 6 November 2012.
The Notices of Motion
So that these reasons may be understood, it is necessary to note that the Plaintiff, Eastmark Holdings Pty Limited is, and was, the registered proprietor of nine Lots in a strata plan relating to a large strata scheme in a residential tower building in Berry Street North Sydney. There are 242 Lots in the strata scheme; that the first Defendant, Eddie Kabraji ("Mr Kabraji") is, and was, the sole director and shareholder of the second Defendant (hendersenhayes Pty Limited ("hendersenhayes") and, at relevant times, a member and the Chairperson of the Executive Committee of the third Defendant, The Owners - Strata Plan No 7460 ("the Owners Corporation"). The fourth Defendant, Kris Bruckner ("Mr Bruckner") is, and was, at relevant times, a member of the Executive Committee of the Owners Corporation.
In relation to each notice of motion, I determined that:
(a) There were real questions, whether of fact or law, to be tried and that when one considered the authorities referred to, I was unable to conclude that the assertions, made against each of Mr Kabraji and Mr Bruckner, were "untenable".
(b) In the circumstances, I was not prepared to say that the Plaintiff's lack of standing was so clear that the claims it had made were untenable on that basis.
(c) The complaint against Mr Bruckner could not be regarded as bound to fail.
(d) It would be for a trial judge to determine whether the addition of certain words in the proxy form providing for an alternative proxy holder fell within the ambit of the phrase "to the effect of" in the relevant legislation.
(e) On the issue of ratification whether there had been full and frank disclosure gave rise to another triable issue that the Court, ultimately, would have to determine.
(f) On the question of the number required for a quorum, the Defendants had not established what was asserted to the appropriate level of satisfaction.
(g) The question whether the proxy votes exercised by Mr Bruckner should have been exercised by him and whether his votes should have been counted raised an issue that a trial judge would have to determine.
(h) There were conflicts in the evidence that were, or may have been, material, and that a robust approach to those conflicts on a summary dismissal application was not appropriate.
It followed that the Defendants had not discharged the onus of demonstrating that the claims made by the Plaintiff were untenable and that they did not succeed on their two notices of motion.
During the argument on the notices of motion, I formed the view that some of the matters raised by the Plaintiff had been inadequately pleaded and that the Plaintiff would need to consider whether it should amend its Statement of Claim and also whether it should file a Reply.
After the parties were given an opportunity to consider the reasons for judgment, directions were made, one of which was for the Plaintiff to serve a proposed amended Statement of Claim and proposed Reply. It did so and the parties have now agreed on a timetable so that the pleadings can be completed. I shall incorporate in the orders that I make, the directions that have been agreed and which were made following the hearing on costs.
The Application for Costs
In relation to costs, I have received, and read, an affidavit from the Plaintiff's solicitor, three affidavits on behalf of the Defendants, transcripts from each of four directions hearings that had occurred before the hearing of the notices of motion, as well as the transcript of the hearing, five pages of submissions from senior and junior counsel for The Plaintiff, fifteen pages of submissions from counsel for Mr Kabraji, hendersenhayes and Mr Bruckner, and three pages of submissions from counsel for the Owner's Corporation.
After reading the evidence, counsel spoke to their, his or her, written submissions. As stated above, the hearing of the costs application took almost the whole day. It is unfortunate that the hearing of the notices of motion and the argument on costs, together, took almost as long as the time the parties estimate the hearing of substantive proceedings is likely to take.
In summary, the Plaintiff submitted against all Defendants:
(a) It was wholly successful in opposing the Defendants' notices of motion, the Court refusing to grant the relief sought, on either of the two bases relied upon, namely Uniform Civil Procedure Rules ("UCPR") r 13.4 or UCPR r 14.28.
(b) All four Defendants deliberately chose to bring and pursue the notices of motion, well knowing, and fully accepting, that to succeed they would have to meet the "General Steel" test. All four simply failed to do so.
(c) The general rule is that costs follow the event: UCPR r 42.1. There is no reason for departing from the general rule.
As against the third Defendant, the Plaintiff also submitted:
(a) Without prior notice to the Court or to the Plaintiff, at the commencement of the hearing on 28 June 2012, counsel announced that the third Defendant only wished to press its notice of motion in relation to the allegation in the Statement of Claim that certain proxies were invalid;
(b) Even on that belatedly much-limited issue, the third Defendant did not succeed;
(c) Vis-à-vis the third Defendant, the last minute abandonment of most of its notice of motion should tell against it on costs.
The Plaintiff submitted not only that an order for costs in its favour should be made, but also that those costs should be payable forthwith.
In respect of its claim that any costs ordered to be paid should be paid forthwith, after referring to UCPR r 42.7, and a number of propositions that it gleaned from the authorities, the Plaintiff submitted:
(a) What was determined adversely to the Defendants, was a discrete and self-contained issue, namely whether the proceedings were so untenable that they could not possibly succeed;
(b) There was "much to come in the proceedings", and a final hearing of the matter is unlikely to occur for some time: amongst other things, a timetable for further evidence (including the possibility of expert evidence) is yet to be established, and there are a number of outstanding notices to produce and subpoenas.
(c) The notices of motion were doomed to failure and should not have been brought.
(d) The "demands of justice" in this case also include another very significant factor. The Plaintiff does not bring the proceedings for its own benefit; rather, it brings the proceedings to defend and uphold the rights of the third Defendant (and thus of the lot owners), in circumstances where the third Defendant, itself, refuses to do so.
Finally, the Plaintiff relied on s 229 of the Strata Schemes Management Act 1996, which provides:
"(1) This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings).
(2) The court may order in proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to such lots and in such proportions as are specified in the order.
(3) If a court makes such an order the owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy.
(4) Division 2 of Part 3 of Chapter 3 (section 78 (2) excepted) applies to and in respect of contributions levied under this section in the same way as it applies to contributions levied under that Division."
The Plaintiff sought an order, under this section, that to the extent that costs are ordered to be paid by the third Defendant, they must be paid from contributions levied in relation to lots other than those owned by the Plaintiff in shares proportional to the unit entitlements of the respective lots other than those owned by it.
Mr Kabraji, hendersenhayes and Mr Bruckner submitted that the appropriate order in respect of the costs of the two notices of motion is that all parties' costs be costs in the cause, because:
(a) The power of the Court to exercise the discretion with respect to costs is contained in s 98(1) of the Civil Procedure Act 2005 and in UCPR r 42.1 and the Act and rule apply, even though the notices of motion were interlocutory;
(b) The exercise of the Court's discretion as to costs, ultimately, requires an assessment of what is fair in all the circumstances. However, in addition to the concept of fairness, the approach to the question of costs should not be overly technical, and should adopt notions of impression and evaluation, whilst keeping in mind the mandatory overriding purpose of the Civil Procedure Act, s 56, and the UCPR.
(c) In relation to the Plaintiff's submission, that costs should follow the event, there were two events, namely the two notices of motion which were unsuccessful, and secondly, there is the "event" of the amendment of the Statement of Claim because it contained some claims which were inadequately pleaded and which require amendment and the filing of a Reply.
(d) In relation to the amendment of the Statement of Claim, the deficiencies were pointed out to the Plaintiff, at several stages, by the Defendants and by the Court and that it was invited to amend its pleading and file a Reply but did not do so. It was only after the hearing of the two notices of motion and the reasons for judgment that the Plaintiff determined to amend and to file a Reply.
In the amended pleading, the Plaintiff addressed the precise matters raised in correspondence prior to, and during the course of, the hearing. As well, in relation to the proper Plaintiff argument, it has added an entirely new section entitled "IV STANDING" comprised in the new paragraph 20 of the proposed Amended Statement of Claim in which it explicitly states the "interests of justice" exception to the proper Plaintiff rule on which it relies and, importantly, the facts on which it relies upon to assert that this exception applies. Other amendments were referred to.
In essence, the outcome of the two notices of motion has facilitated the resolution of the real issues in the proceedings, in a manner that is just, quick and cheap as required by s 56(1) of the Civil Procedure Act.
(e) The appropriate order is one that reflects the mixed outcome on the two "events". That order would also enable the party who is ultimately successful in the proceedings to recover all of its costs from the two notices of motion. Accordingly, the awarding of costs of the two notices of motion should effectively await that ultimate "event".
(f) The Plaintiff has now served a proposed Amended Statement of Claim. As a condition of any leave granted to it to file and serve the Amended Statement of Claim, pursuant to s 64(1) of the Civil Procedure Act, the court should order that it pay the Defendants' costs of and occasioned by the amendments, in accordance with the usual practice.
The third Defendant submitted that the appropriate order in respect of the costs of the notice of motion was that they be costs in the cause because:
(i) an award of costs against the third Defendant in favour of the Plaintiff is premature, given the issue of standing. Ultimately, if the Plaintiff makes good "the standing point", then the action will have been brought for the benefit of the third Defendant and it will enjoy the fruits of the action. Until such a time, an award of costs against the third Defendant is premature.
(ii) In the alternative to (i), the third Defendant, in practical terms, has enjoyed the same measure of success and failure as Mr Kabraji, hendersenhayes and Mr Bruckner on the two relevant "events" (being the notices of motion and the identification of pleading deficiencies necessitating amendment and filing of a Reply).
(iii) of the submissions made by the other Defendants.
Some Factual Matters
I do not propose to detail all of the factual, and other, matters to which the parties referred in the submissions. However, I should refer to the following matters which I consider are revealed by the evidence:
(a) In the correspondence sent by the solicitors for one, or other, of the Defendants, although there were requests for more particulars, an assertion that the Plaintiff was not the proper Plaintiff, and an assertion that the "pleading does not sufficiently particularise the basis upon which it is asserted that the Agreement is unfair or contrary to the legitimate interests of the Owners", in only one letter, dated 19 June 2012, from the solicitors for Mr Bruckner, was there a request that the Plaintiff's solicitors "please inform us whether your client proposes to seek to amend the statement of claim".
(b) In the letter referred to, there was a reference to the Plaintiff not having filed any Reply to positive defences. There was a response to that letter which included the statement that "[I]f contrary to our view, the Court were to consider that a Reply should be filed, we would seek leave to do so".
(c) In the pre-trial directions hearing held on 7 June 2012, the following exchange between Mr McGrath, counsel for the first, second and fourth Defendants, and the Bench occurred:
"HIS HONOUR: In relation to the notice of motion in each case do I take it from your earlier answer there is no issue regarding the form of pleading? You are not saying there is an issue with the form of the [pleading]?
McGRATH: There is no issue with the pleading."
(d) In different directions hearings, the thrust of what was required to be established in claim for summary dismissal was raised. For example, in the directions hearing of 14 June 2012, I said:
"... I will stand the Notice of Motion over to 28 June. At the moment I have a directions hearing at 9.30 and otherwise the rest of the day is yours but I have made it clear, both today and previously, that careful consideration better be given by the defendants to this Notice of Motion on the grounds that have been raised by you Miss Oliak and also by the Court in relation to whether it proceeds, because if it has no prospect of success ultimately there may be an appropriate costs order made."
(e) Almost at the commencement of the hearing of the notices of motion, the following exchange took place:
"HIS HONOUR: Do you say that the members of the executive committee didn't owe any fiduciary duty whatsoever to the owners corporation?
McGRATH: No, we say for the purposes of this application that point is arguable.
HIS HONOUR: You accept that members of the executive committee owed fiduciary duties to the owners corporation and presumably it follows to the lot owners or not?
McGRATH: That might be a separate question. In the context of the meeting the lot owners who had run proxies there may be fiduciary duties in respect to that individually in respect of the proxies.
HIS HONOUR: And in relation to lot owners who signed proxies to those lot owners?
McGRATH: Yes."
(f) At the hearing, the Plaintiff did accept that in at least one respect, it may be necessary to amend. Senior counsel said:
"Now fourthly, there is perhaps a question as to whether the statement of claim in paragraph 12 in its present language properly captures this fundamental point. We say for the purposes of these motions, summary dismissal, strike out. That it does do so adequately if not felicitously. If the Court considers that the position is otherwise then we would seek leave to amend to make the position absolutely clear."
As to a Reply, he said:
"It may be we put a reply on. In one respect but only one respect if we want to rely upon it I am inclined to think after today's discussion we might need to, but in all but that one there is no requirement on us to do so."
The Legislation and Principles
The Civil Procedure Act 2005, s 98(1), provides that subject to the rules of Court, and that, or any other, Act, costs are in the discretion of the Court. The discretion is broad but not unconfined. It is a judicial discretion to be exercised on a principled basis.
Uniform Civil Procedure Rules ("UCPR"), r 42.1, provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs. The rule provides that the discretion to award costs will ordinarily require an order that the successful party's costs will be paid by the unsuccessful party.
The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made: Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ.
It may be necessary to analyze the whole of the proceedings to determine the appropriate costs order: Fordyce v Fordham [2006] NSWCA 274; [2006] 67 NSWLR 497at [67] per McColl JA. A relevant consideration is whether the Plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCA 194 at 201 (cited with approval in Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [66]); all the relevant circumstances, and not just the fact of dismissal, should be considered.
The rule requires the court to make such order as it thinks just in the particular circumstances of the case. In Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd [2010] FCAFC 5; (2010) 182 FCR 84, Gray J, at [17], observed that:
"The overriding principle that costs are in the discretion of the Court can also be expressed in terms of the negative proposition that no rule or principle should be applied mechanically in the determination of the question where costs should lie in any particular case. Attention must always be paid to the particular circumstances of the individual case. The aim is to do substantial justice in relation to costs, based on the outcomes of the various issues in the proceeding, as between the entities that are parties to that proceeding."
The usual order is that costs ordered to be paid are assessed on the ordinary basis (UCPR r 42.2). Indemnity costs may be ordered in certain circumstances, including when a costs order for assessment on the ordinary basis is insufficient in the circumstances to compensate for costs unreasonably incurred due to the misconduct of the other party, which misconduct, for example, causes the prolongation of the proceedings or the making of allegations which ought never to have been made. None of the parties seeks costs calculated on the indemnity basis.
On the question whether the Plaintiff's costs should be payable forthwith, as stated, the general principle is that costs of a notice of motion await the final judgment of all issues between the parties: UCPR rule 42.7. There is thought to be a presumption against the making of an order for costs payable forthwith.
In Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432, at [11] - [13]; 55 NSWLR 1, at 4 - 5, Barrett J (as his Honour then was) identified the following factors, which are not exhaustive, on an application for the payments of costs forthwith under the predecessor to UCPR rule 42.7 (Pt 52A r 9 of the Supreme Court Rules):
"(i) where the costs order is relevant to a discrete, separately identifiable aspect of the proceedings;
(ii) where there is demonstrated some unreasonable conduct on the part of the party against whom the costs have been ordered;
(iii) where the proceedings have some distance and time to run, and it may be some time before ultimate disposition."
A fourth category was suggested by Palmer J in Traderight (NSW) Pty Ltd & Ors v Bank of Queensland Ltd (No 2) [2008] NSWSC 589 at [8]:
"I do not think it could reasonably be gainsaid that the Bank would be in a better position than the Plaintiffs to bear the ongoing costs of the that litigation until its conclusion. I see no reason why the costs burdens on the Plaintiffs should be increased by withholding payment of costs to which they are entitled, possibly for a very long time indeed."
However, it is probably best not to categorise the circumstances in which the discretion may be exercised as it must depend upon all the circumstances of the case before the court: Plaza West Pty Ltd v Simon's Holdings (NSW) Pty Ltd (No 2) [2011] NSWSC 556, per Gzell J at [13].
Determination
In Luxmore Pty Ltd v Hydedale Pty Ltd [2008] VSCA 212; (2008) 20 VR 481, Maxwell P and Kellam JA said, at [12]:
"In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This Court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons."
I respectfully agree with what their Honours said and I propose to follow the approach that they have recommended.
I have carefully considered the submissions of each of the parties. There is some merit in each. In this regard, I note that the Defendants relied upon UCPR, r 13.4, as well as UCPR, r 14.28. As I stated at [112] of the reasons for judgment:
"It can be seen that UCPR rule 14.28 deals with the sufficiency of the pleadings whereas UCPR rule 13.4 allows the Court to inquire into the actual facts of the case rather than being limited to the way in which the pleading is framed: Pountney v Dang (NSWSC, Barr J, 22 August 1997, unreported) at 3."
Ultimately, in my view, the issue of costs crystallises to balancing the fact that the Plaintiff succeeded in the notices of motion, in that I refused the relief sought, but, in achieving that success, discussion occurred which has resulted in the Plaintiff proposing to amend its pleadings and also proposing to file a Reply, which have made clearer the issues to be decided at the substantive hearing.
Even if, as senior counsel for the Plaintiff submitted, none of the amendments were absolutely necessary, I am reminded of what Allsop J (as his Honour then was) said in Sagacious Legal Pty Ltd v Westfarmers General Insurance Limited [2010] FCA 274, about litigation being "conducted on the basis that parties cannot leave footprints in the sand and must lay their cards on the table promptly and early so that all the true issues are identified and can be fairly tried in due course".
I am satisfied that the proposed amended Statement of Claim and the proposed Reply, when filed, will make clearer the issues in the proceedings.
Having said that, I am far from satisfied that amending the pleadings or filing the Reply prior to the hearing of the notices of motion would have resolved the need for a fully contested summary dismissal hearing. In my view, the Defendants were seeking to avoid the need for a fully contested hearing on the merits. They were concerned with substance and not merely with form.
It ought to have been reasonably clear, on the pleadings as they then were, that there were some issues of fact and law raised, which would make the success of the notices of motion difficult, if not impossible.
In all the circumstances, I am satisfied that the Plaintiff should receive its costs of the hearing of the notices of motion and the costs argument, but that it should not receive all of its costs. In exercising my discretion, I consider that the Plaintiff should receive 80 per cent of its costs from the Defendants, such costs to be calculated on the ordinary basis. Otherwise, each party should bear its own costs of the notices of motion.
In my view, even though the third Defendant filed a notice of motion also, it played a much more limited role than did the other Defendants. At the commencement of the hearing of its notice of motion, counsel stated that the third Defendant wished to agitate only one point. In my view, doing so lessened the time involved in the hearing of the notices of motion. It left it to the other Defendants to argue the other issues. It follows that it should bear less of the burden of the costs order that I propose to make.
On the question whether the Plaintiff's costs should be payable forthwith, whilst the costs order is relevant to a discrete and separately identifiable aspect of the proceedings, if the Plaintiff is not successful in the principal proceedings, it may be ordered to pay the Defendants' costs and they may submit that the costs of the notices of motion ordered to be paid should be set off against any costs ordered to be paid by the Plaintiff. It is likely that the costs of the principal proceedings will be greater than the interlocutory proceedings.
Furthermore, there is nothing to prevent the Plaintiff from commencing the process of having its costs of the notices of motion assessed. As I understand the procedure, it is likely to be some time before the assessment process will be completed. One thing is clear from the way the parties have approached the litigation - agreement on the quantum of the costs of the interlocutory proceedings is unlikely.
In Gattelleri v Meagher [1999] NSWSC 1279, Simpson J, at [5], confirmed that the "fact that the plaintiff was unsuccessful in [the] application does not of itself establish that the conduct was unreasonable". Similarly, that the Defendants, in this case, were unsuccessful does not mean that their conduct was unreasonable.
Following the determination of the third notice of motion, it is likely that a hearing date will be able to be obtained. I refer to the directions upon which the parties agreed below that will lead to the matter being ready for hearing. Whilst a hearing may be some months away, that is not so long bearing in mind the delay in having the substantive proceedings heard.
Finally, none of the parties relied on any material as to financial consequences for it, or him, should an order be made or not made, although there was a suggestion that the Plaintiff was bearing the burden of having to pay its costs whilst some of the Defendants were not.
The Defendants did not make any submissions regarding the applicability of s 229(2) of the Strata Schemes Management Act to which I have earlier referred. It seems to me that whether that section should apply should be left to the final hearing, since whether the Plaintiff succeeds on the matters it has raised, as against the third Defendant, may be relevant.
Accordingly, I do not propose to make an order under s 229(2) at this time, but shall reserve liberty to the parties to argue that issue if thought appropriate following the determination of the proceedings.
Orders
For these reasons, I order that the Defendants are to pay 80 per cent of the Plaintiff's costs of each of the Notices of Motion filed on 5 April 2012 by the First and Second Defendants and by the Third and Fourth Defendants, including the costs of the hearings on 28 June, 29 June and 4 October, as follows:
(a) 65% of the Plaintiff's costs to be paid by the First, Second and Fourth Defendants; and
(b) 15% of the Plaintiff's costs to be paid by the Third Defendant.
By consent of the parties, I make the following directions:
(a) The Plaintiff to have leave to file and serve an Amended Statement of Claim substantially in the form proposed by Thursday, 11 October 2012.
(b) The Defendants to file and serve Defences to the Amended Statement of Claim substantially in the form proposed by Thursday, 18 October 2012.
(c) The Plaintiff to file and serve any Reply substantially in the form proposed by Thursday, 25 October 2012.
(d) The parties to serve on each other a list of any objections to the following affidavits by Tuesday, 30 October 2012:
(i) Affidavit of Antonio D'Agostino affirmed 30 May 2012;
(ii) Affidavit of Antonio D'Agostino affirmed 26 June 2012;
(iii) Affidavit of Marie Charlotte Hennessy sworn 8 June 2012;
(iv) Affidavit of Marie Charlotte Hennessy sworn 25 June 2012; and
(v) Affidavit of Randall Clive Russell Walker affirmed 5 April 2012.
By consent, I order
(e) The Plaintiff to pay the Defendants' costs of, and occasioned by, the Amended Statement of Claim.
(f) The substantive matter be stood over to my list, for directions, at 10:00 a.m. on 6 November 2012.
(g) The notice of motion filed by the third Defendant relating to claims for privilege be stood over to my list at 10:00 a.m. on 6 November 2012.
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Decision last updated: 23 October 2012
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