In the matter of Fearndale Holdings Pty Ltd (admin apptd)

[2019] NSWSC 1895

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Fearndale Holdings Pty Ltd (admin apptd) [2019] NSWSC 1895
Hearing dates:	On the papers (last written submissions 6 December 2019)
Decision date:	27 December 2019
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Order that Applicant on Interlocutory Process pay costs, as agreed or as assessed.
Catchwords:	COSTS – where interlocutory process did not proceed to hearing – where outcome could be predicted with confidence.
Cases Cited:	- Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Category:	Costs
Parties:	Interlocutory Process filed 7 May 2019   Equivest Holdings Pty Ltd (Applicant) Timothy James Cook (as administrator of Fearndale Holdings Pty Ltd (admin apptd)) (Respondent)
Representation:	Solicitors: V L Macri Lawyers (Applicant) William James Lawyers (Respondent)
File Number(s):	2018/91831 (009)

Judgment

1. This is an application for costs in respect of an Interlocutory Process which did not proceed. On 7 May 2019, Equivest Holdings Pty Ltd (“Equivest”) filed an Interlocutory Process naming multiple respondents, including Fearndale Holdings Pty Ltd (admin apptd) (recs and mgrs apptd) (“Company”) and its administrator Mr Cook, by which it sought orders replacing Mr Cook as the Company’s external administrator or alternatively that a meeting of creditors and contributories of the Company be convened to consider a resolution for the removal of Mr Cook and his replacement by other administrators. Equivest served two affidavits in support of the application and the Company and Mr Cook then served several affidavits in response, including an affidavit of their solicitor, Mr McCarthy dated 2 November 2019, on which they rely in respect of costs. The Interlocutory Process was ultimately dismissed by consent, on 2 December 2019, with the question of costs to be addressed on the papers.

2. The Company and Mr Cook now seek their costs of the application. They refer to the grounds of the application, of which one of several grounds was an alleged failure to sell certain land owned by the Company. The administrator has been seeking to sell that land for a long period, with his attempts to do so having been delayed by a range of Court applications, until they were ultimately successful in achieving a sale. The Company and Mr Cook also refer, in submissions, to the fact that the application was filed on the basis that it was urgent, with short service being sought, but was then not progressed with any speed over a long period. The Company and Mr Cook also outline the sequence of delays in the application and I need not repeat them in this judgment.

3. Equivest responds, by reference to the supporting affidavit dated 5 May 2019 of Mr Pethybridge, that the application was substantially based upon an alleged non-compliance with orders made by the Court on 2 May 2018 to list the Company’s property for sale by auction. I pause to note that, as evidence led in the proceedings has indicated, Mr Cook has had regard to advice as to the preferable sale process for the land, and the administrator could not in any event have reasonably proceeded with a sale by auction until the ongoing disputes in respect of the land were resolved.

4. Equivest submits that the Interlocutory Process was not ultimately determined because events overtook it, since unconditional contracts for the sale of the property were exchanged and have now completed. Equivest also addresses, in submissions, issues as to a Notice to Produce that it had issued, which is not necessary to determine for present purposes. Equivest also addresses issues as to the extent to which, and the time at which, it was notified of the exchange of contracts for the sale of the property. Those issues are not relevant to the costs of this application and it is also not necessary to determine them. Equivest fairly recognises that, once it became apparent there was an exchange of contracts for the sale of the property, then the basis of its application was undermined to a significant extent although it contends that it could fairly maintain that application until settlement of the sale of the land.

5. Equivest submits that its Interlocutory Process was not determined on its merits and that the Court will not try a hypothetical case to determine who would have won for the purposes of determining a costs argument. Equivest refers, in that regard, to the principle recognised in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 625 that the Court will not ordinarily make an order as to the costs of proceedings that have not been determined on the merits, at least if it appears that both parties acted reasonably in commencing and defending the proceedings. Equivest also rightly acknowledges an exception to that principle that:

“… in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried … But such cases are likely to be rare.”

6. Equivest submitted that, given its stake in the outcome of the sale of the land, it did not act unreasonably in bringing the application. I will assume, without deciding, that matter. Equivest also submits, but I do not accept, that it cannot be predicted with confidence that Equivest would not have succeeded and the administrator would have succeeded in the application. I do not accept that submission, because it was always apparent that Mr Cook was seeking to bring about an advantageous sale of the property, which was delayed by multiple third party applications; it was inevitable that those applications would ultimately be determined, and very likely that the property would then be sold; and there was little or no prospect that the Court would have replaced the present administrator, who was seeking to sell the property in difficult circumstances, with other administrators who would have no better prospect of selling the property in those difficult circumstances.

7. For these reasons, I order that Equivest pay the administrator’s and the Company’s costs of the Interlocutory Process filed 7 May 2019, as agreed or as assessed.

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Decision last updated: 30 December 2019