Franpina Developments Pty Ltd v John Anthony Arena Pty Ltd - [2022] NSWSC 57

Supreme Court

New South Wales

Medium Neutral Citation: Franpina Developments Pty Ltd v John Anthony Arena Pty Ltd [2022] NSWSC 57
Hearing dates: On the papers
Date of orders: 4 February 2022
Decision date: 04 February 2022
Jurisdiction: Equity
Before: Darke J
Decision:
Order made for first and second defendants to pay the costs of the plaintiff and the third defendant/cross-claimant on the ordinary basis

Catchwords:
COSTS – proceedings concerning validity and enforceability of a Deed – where proceedings concluded by consent orders – no hearing on the merits – consent order provided for Deed to be set aside – whether first and second defendants capitulated or surrendered to claims of plaintiff and cross-claimant – whether costs should be awarded on an ordinary or indemnity basis

Legislation Cited:
Contracts Review Act 1980 (NSW)

Cases Cited:
Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302
FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091
Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84
One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Shellharbour City Council v Minister for Local Government [2017] NSWCA 256

Category: Costs
Parties: Franpina Developments Pty Ltd (Plaintiff)
John Anthony Arena Pty Ltd (First Defendant/First Cross-Defendant)
John Anthony Arena (Second Defendant/Second Cross-Defendant)
Giuseppa Arena (Third Defendant/Cross-Claimant)
George Anthony Arena (Fourth Defendant)
Margherita Stella Romana Murdocca (Fifth Defendant)
Josephine De Giorgio (Sixth Defendant)
Maria Di Sano (Seventh Defendant)
Rose Marie Caristo (Eighth Defendant)
Representation: Solicitors:
Hamilton Locke (Plaintiff)
DC Balog & Associates (First and Second Defendants/First and Second Cross-Defendants)
Bridges Lawyers (Third Defendant/Cross-Claimant)

File Number(s): 2020/00364465
Publication restriction: None

Judgment

This judgment deals with the costs of the proceedings which were, in all other respects, brought to an end by orders made by the Court on 10 December 2021 (as varied on 13 December 2021).
The proceedings concerned the validity and enforceability of a Put and Call Option Deed (“the Deed”) dated 26 June 2019, that was entered into by Mrs Giuseppa Arena as vendor and John Anthony Arena Pty Ltd (“JAA”) as purchaser. The Deed relates to a property owned by Mrs Arena on Lane Cove Road, North Ryde (“the house property”). Mrs Arena is the elderly mother of six children, including Dr John Arena who, together with his wife, controls JAA. Mrs Arena is a director and the sole shareholder of Franpina Developments Pty Ltd (“Franpina”). Franpina is the owner of various properties adjacent or in close proximity to the house property the subject of the Deed.
By a Statement of Claim filed on 23 December 2020, Franpina claimed relief in respect of the Deed, including a declaration that it is void and unenforceable, and an order that it be set aside. Eight defendants were named, being JAA, Mrs Arena and her six children.
Franpina is not a party to the Deed. However, it attacked its…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWSC 57
Decision Date: 04 February 2022

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Franpina Developments Pty Ltd, a property developer, brought proceedings against John Anthony Arena Pty Ltd, along with two other defendants, concerning the validity and enforceability of a Deed. The dispute arose from an agreement that involved the sale of a property, and the plaintiff sought to set aside the Deed on the basis that it was obtained through misrepresentation or undue influence. The case was resolved through consent orders, with the Deed being set aside, and no hearing on the merits took place.

The court was required to determine the appropriate basis for awarding costs. The plaintiff and the cross-claimant argued that the second defendant had capitulated or surrendered to their claims, which would justify an indemnity costs order. The second defendant contended that the proceedings were not conducted on an indemnity basis and that the costs should be awarded on an ordinary basis. The court examined the nature of the proceedings, the conduct of the parties, and whether the second defendant had conceded the issues.

The court found that the proceedings were not conducted on an indemnity basis and there was no evidence of capitulation or surrender by the second defendant. Given the nature of the resolution through consent orders and the absence of a hearing on the merits, the court held that costs should be awarded on the ordinary basis. The court emphasised that indemnity costs are only appropriate in cases where a party has acted oppressively, vexatiously, or abusing the process of the court, which was not demonstrated in this instance.

The court ordered that the costs of the proceedings be paid on the ordinary basis. The precise amount of costs was to be determined by the parties or, if they could not agree, by the court. The order reflected the court's view that the proceedings did not meet the criteria for indemnity costs, and the resolution through consent orders did not support an argument that the second defendant had acted in a manner warranting such costs.

Orders