Hanson Construction Materials v Shamrock

[2009] NSWSC 701

CITATION:	Hanson Construction Materials v Shamrock [2009] NSWSC 701
HEARING DATE(S):	21/7/09
JURISDICTION:	Equity Division
JUDGMENT OF:	McDougall J at 1
EX TEMPORE JUDGMENT DATE:	21 July 2009
DECISION:	See paragraph [19] of the judgment.
CATCHWORDS:	COSTS - indemnity costs - whether plaintiff guilty of "relevant delinquency".
CATEGORY:	Procedural and other rulings
CASES CITED:	Oshlack v Richmond River Company (1998) 193 CLR 72
PARTIES:	Hanson Construction Materials Pty Ltd (Plaintiff) Ramez Shamrock also known as Ramey Shamrock (First Defendant) Suzanne Lee Shamrock also known as Suzy Lee Shamrock (Second Defendant)
FILE NUMBER(S):	SC 3725/09
COUNSEL:	E Oliveri (Solicitor) (Plaintiff) J E Armfield (Defendant)
SOLICITORS:	Oliveri Lawyers (Plaintiff) Hills Solicitors (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

21 July 2009 (ex tempore – revised 21 July 2009)

3725/09 HANSON CONSTRUCTION MATERIALS PTY LIMITED v RAMEZ SHAMROCK

JUDGMENT

1 HIS HONOUR: In these proceedings (commenced ex parte - for leave to serve on short notice - by summons on 17 July 2009) the plaintiff claimed a declaration that it held an equitable charge in a folio in the register, which I take it to be a somewhat inelegant reference to an estate or interest in land, and further or other relief. By way of interlocutory order, the plaintiff sought an extension of the caveat lodged by it to protect its alleged equitable charge. The equitable charge is said to arise from an agreement made between the plaintiff and, among others, the defendants in which the defendants agreed to guarantee certain debts owing to or to become owing to the plaintiff and to charge their interests in freehold or leasehold property in support of that guarantee.

2 When the matter came back before the Court today, it was common ground that the caveat should not be extended and that the summons should be dismissed. In those circumstances, the plaintiff asked for its costs or, alternatively, that each party pay its own costs. The defendants asked that they have their costs on the indemnity basis or, alternatively, the ordinary basis.

3 The basis of the defendants’ application is that on 11 June 2009 their solicitors wrote to the plaintiff's solicitors advising that the defendants had sold the property in question and that the first mortgagee, National Australia Bank, was owed more than the proceeds of sale. In those circumstances, the letter said, "no funds will be available to satisfy the claim made under the Caveat".

4 The letter also noted that the defendants’ solicitors had asked the National Australia Bank to "confirm in writing the situation regarding the debt as we appreciate you would need that confirmation". However, the letter requested that the plaintiff's solicitors "seek preliminary instructions from your client regarding provision of a Withdrawal of Caveat subject to the confirmatory advice from the National Australia Bank”.

5 The plaintiff's solicitors did not trouble themselves to reply to that letter.

6 On 17 June 2009 the National Australia Bank gave the defendants’ solicitors a letter confirming that the amount owed to the bank substantially exceeded the proceeds of sale of the property. It does not appear that a copy of that letter was provided to the plaintiff's solicitors.

7 On 2 July 2009 the defendants’ solicitors wrote again to the plaintiff's solicitors. They enclosed a lapsing notice and renewed their request for a withdrawal of caveat without delay. Again, the plaintiff's solicitors did not trouble themselves to reply to that letter.

8 On 10 July 2009 the defendants’ solicitors wrote again to the plaintiff's solicitors. After referring to the letter of 2 July 2009, they noted "that in the circumstances there are no grounds for your client to sustain the caveat and it should be withdrawn without delay". In an effort to minimise costs, they enclosed a withdrawal of caveat to be signed and returned. Yet again, the plaintiff's solicitors did not trouble themselves to reply.

9 When the matter came before the Court ex parte on 17 July 2009, none of that correspondence was disclosed in the affidavit in support of the application.

10 To complete the picture: yesterday the defendant's solicitors wrote again to the plaintiff's solicitors, enclosing an affidavit (which among other things proved the correspondence to which I have referred). The letter referred to the existence of other prior caveats, and sought confirmation that a withdrawal of caveat would be supplied and that the proceedings would be discontinued. The letter warned that if such advice was not provided, counsel would be briefed for the defendants and the defendants would seek their costs.

11 If the starting point for consideration is that costs should follow the event then the event in question seems to me to be the parties’ acceptance that the summons should be dismissed (which I will order in due course). On that basis, prima facie, the defendants would be entitled to their costs.

12 However, Mr Oliveri, the solicitor for the plaintiff, submits that the plaintiff's claim was a good one and it was only the practicality of the matter -- the unavailability of any funds -- that led the plaintiff to take the course that will result in the dismissal of its summons. Further, Mr Oliveri submits that the letter from the National Australia Bank (17 June 2009) was never provided to him despite the assertion in the defendant’s solicitor's letter of 11 June 2009 that this is something that the plaintiff would need.

13 The last submission does not seem to me to go anywhere. The plaintiff's solicitors never bothered to reply to the correspondence. They did not question the assertion that there was no money available, and would be none on settlement. They did not ask for the letter from the bank to corroborate that. Instead, they remained silent.

14 In those circumstances, it seems to me that there is no reason to disturb the proposition that costs should follow the event. The plaintiff's solicitors were given ample notice before commencing these proceedings that the interest claimed by their client was worthless. Thus, in any practical or commercial sense, there was no point to the commencement of the proceedings. There was no practical or commercial interest to be vindicated by the relief sought. On the contrary, as the plaintiff must have realised, the only consequence of maintaining its caveat might be to frustrate the sale and lead to a mortgagee sale which would override the plaintiff’s interests in any event.

15 It does not seem to me to be an appropriate use of the Court's procedures to commence proceedings for the establishment of a valueless claim. A fortiori, it does not seem to me to be appropriate to seek to invoke those procedures on an urgent basis ex parte, without disclosing all relevant material to the Court.

16 Taking all those matters into account it is, in my view, clear that the plaintiff should pay the defendant's costs.

17 That leaves the question of whether the costs should be paid on the ordinary or the indemnity basis. To justify an order on the indemnity basis it is necessary (to quote Gaudron and Gummow JJ in Oshlack v Richmond River Company (1998) 193 CLR 72 at 89 [44]) that some "relevant delinquency" be established on the part of the person against whom indemnity costs are sought.

18 In my view, there is a relevant delinquency in this case. It is to be found in the commencement of proceedings that had no point whatsoever, in circumstances where the absence of any point was clearly and unambiguously notified over a month before the proceedings were commenced. I regard it as trifling to say that the corroborative letter was never provided, in circumstances where (as I have said more than once) the plaintiff's solicitors not only did not request that letter but, in fact, did not bother to reply to the numerous warnings they were given.

19 I order that the summons be dismissed. I order the plaintiff to pay the defendant's costs. I order that those costs be assessed on the indemnity basis. The exhibit will remain with the file.

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