First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd (No 2)

[2022] NSWSC 264

Supreme Court

New South Wales

Medium Neutral Citation:	First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd (No 2) [2022] NSWSC 264
Hearing dates:	On the papers
Date of orders:	14 March 2022
Decision date:	14 March 2022
Jurisdiction:	Equity
Before:	Darke J
Decision:	Orders that there be no order as to costs, to the intent that each party bear its own costs of the proceedings.
Catchwords:	COSTS – application by plaintiff for costs against first defendant and cross-claimants – where first defendant filed submitting appearance – where there was no clearly successful party as between plaintiff and cross-claimants – no point of principle
Cases Cited:	First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd [2021] NSWSC 1143
Category:	Costs
Parties:	First Mortgage Capital Pty Ltd (Plaintiff/First Cross-Defendant) Westpac Banking Corporation Ltd (First Defendant/Second Cross-Defendant) Zufaidah Binte Juri (Second Defendant/First Cross-Claimant) Sheik Taleb Bin Sheik Husain (Third Defendant/Second Cross-Claimant) Jude Thaddeus Albert (Fourth Defendant) Commonwealth Bank of Australia Ltd (Third Cross-Defendant)
Representation:	Solicitors: Summer Lawyers (Plaintiff/First Cross-Defendant) HWL Ebsworth Lawyers (First Defendant/Second Cross-Defendant) Diamonds Solicitors (Second and Third Defendants/Cross-Claimants) Dentons (Third Cross-Defendant)
File Number(s):	2020/304426
Publication restriction:	None

Judgment

1. Judgment in this matter was delivered on 9 September 2021 (see First Mortgage Capital Pty Ltd v Westpac Banking Corporation Ltd [2021] NSWSC 1143). In brief, it was held that reliance by the plaintiff (“First Mortgage”) upon a certain power in its mortgages amounted to unconscionable conduct, but that it was otherwise open to it to exercise its powers to redeem various higher ranking mortgages. As stated in the principal judgment (at [83]) there was thus no clearly successful party in the central controversy as between First Mortgage and the cross-claimant mortgagors.

2. I also expressed the view at [83] of the principal judgment that, prima facie, it would be appropriate to make no order for costs of the proceedings, to the intent that each party bears its own costs. However, there is no general agreement amongst the parties to that effect. First Mortgage has indicated that it seeks orders for costs against the cross-claimants, and also the first defendant (“Westpac”).

3. Directions were made by the Court for the filing of written submissions with a view to the question of costs being dealt with on the papers.

4. Having read and considered the written submissions provided, I have concluded that the appropriate exercise of the Court’s discretion as to costs is to make no order as to costs, to the intent that each party bears its own costs of the proceedings.

5. As against the cross-claimants, First Mortgage seeks an order that they pay a proportion of its costs (on an indemnity basis or, alternatively, on the ordinary basis) essentially because it is said that it achieved comparatively greater success on the respective claims than did the cross-claimants. First Mortgage also seeks such an order on the basis that the cross-claimants abandoned various parts of their claim during the course of the hearing without prior notice. First Mortgage also complains that the conduct of the cross-claimants prior to the commencement of the proceedings (including by challenging the validity of certain powers of attorney) stymied a potential resolution of the matter and effectively required First Mortgage to commence the proceedings.

6. The cross-claimants, in response, maintained that having regard to the mixed result in the proceedings, it was appropriate for each party to pay its own costs.

7. As against Westpac (which filed a submitting appearance on 18 November 2020, within a month of the commencement of the proceedings), First Mortgage essentially says that prior to the commencement of the proceedings, Westpac acted unreasonably in not agreeing to First Mortgage redeeming two of Westpac’s mortgages. It was pointed out that First Mortgage was ultimately held to be entitled to redeem those mortgages.

8. Westpac, in response, submitted that it was in a difficult situation in relation to the redemption requests since it was on notice of the dispute between First Mortgage and the cross-claimants. Westpac further submitted that, as found by the Court, the proposed exercise of powers by First Mortgage involved conduct that was unconscionable. Westpac further submitted that the institution of proceedings was required in the absence of a resolution of the dispute between First Mortgage and the cross-claimants.

9. I generally accept the submissions made by the cross-claimants and Westpac. I do not think that the matters raised by First Mortgage in its submissions warrant the making of any costs order against either the cross-claimants or Westpac, let alone an order on an indemnity basis.

10. The proceedings were centrally concerned with the dispute between First Mortgage and the cross-claimants. The existence of that dispute was the reason why proceedings had to be commenced, not the attitude displayed by Westpac to the requests made of it to redeem its mortgages. Further, I do not think that the conduct of Westpac in this regard was unreasonable, given that it was facing competing and inconsistent demands from First Mortgage and the cross-claimants. Finally, it is noteworthy that Westpac effectively played no part in the proceedings from 18 November 2020.

11. Further, it has not been shown that any conduct of the cross-claimants stymied a potential resolution of the dispute between them and First Mortgage. There was no clearly successful party in that dispute. Whilst it is true that the cross-claimants abandoned various aspects of their claims, the fact remains that they succeeded on one important aspect by making out a case that First Mortgage had, and was proposing, to exercise its powers in an unconscientious manner. In all the circumstances, I am unable to accept that First Mortgage should be regarded as having achieved comparatively greater success.

12. For the above reasons, there will be no order as to costs, to the intent that each party bear its own costs of the proceedings.

**********