In the matter of GA and RG Horn Pty Ltd

[2021] NSWSC 210

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of GA and RG Horn Pty Ltd [2021] NSWSC 210

Hearing dates:

On the papers

Date of orders:

10 March 2021

Decision date:

10 March 2021

Jurisdiction:

Equity - Corporations List

Before:

Williams J

Decision:

Order that each party pay its own costs of the proceedings.

Catchwords:

COSTS – proceedings dismissed without hearing on the merits – application for defendant to pay the plaintiff’s costs on an ordinary or indemnity basis – application dismissed – no question of principle

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

Corporations Act 2001 (Cth), s 1071F

Uniform Civil Procedure Rules 2005 (NSW), r 42.20

Cases Cited:

Furnish & Finish Pty Ltd v Hollands [2020] NSWSC 1593

Category:

Costs

Parties:

Barbara Constance Horn (Plaintiff)
GA & RG Horn Pty Ltd ACN 000 268 691

Representation:

Counsel:
Mr N Simpson (Plaintiff)
N/A (Defendant)

Solicitors:
Tranter Lawyers (Plaintiff)
N/A (Defendant)

File Number(s):

2021/43569

Publication restriction:

N/A

Judgment

1. By originating process filed on 15 February 2021, the plaintiff sought an order pursuant to s 1071F(2)(a) of the Corporations Act 2001 (Cth) requiring the defendant company to register the transmission of shares in the defendant to the plaintiff. The shares in question were owned by Mr Ross George Horn, who died on 20 March 2020 (the deceased). The plaintiff sought registration of the transmission of those shares to her in her capacity as administrator of the deceased’s estate. The plaintiff is also the sole beneficiary named in the deceased’s will.

2. The plaintiff had requested the defendant to register the transmission in correspondence on 5 January 2021 and 25 January 2021, before commencing the proceedings on 15 February 2021.

3. Solicitors acting for directors of the defendant (Arnold Lawyers) wrote to the plaintiff’s solicitor on 26 February 2021 stating that the directors agreed with the transmission of the shares to the plaintiff in her capacity as administrator and that: “Our clients have or will shortly be giving instructions for transmission of the shares to your client in her capacity as administrator of the estate.”

4. The plaintiff’s solicitors replied by email on the morning 1 March 2021, noting that Arnold Lawyers do not act for the Company and stating that, as the shares had not been transmitted, the plaintiff would proceed with the application that was listed for hearing the following day.

5. The defendant notified the plaintiff that the shares were in the process of being transmitted to her on the afternoon of 1 March 2021. The plaintiff was able to confirm that the transmission of the deceased’s shares had in fact been registered on the morning of 2 March 2021, a short time before the final hearing commenced.

6. It was in those circumstances that the proceedings were dismissed at the commencement of the hearing on 2 March 2021 at the plaintiff’s request, save as to costs. There was no appearance by the defendant. Directions were made at the plaintiff’s request to facilitate the costs of the proceedings being determined on the papers.

7. The plaintiff filed and served written submissions and two short affidavits, including an affidavit of service, in relation to costs. The defendant did not file or serve any submissions or evidence on the question of costs.

8. The plaintiff seeks an order that the defendant pay her costs of the proceedings on an indemnity basis or, alternatively, on the ordinary basis. The plaintiff submitted that this is a case in which the Court should exercise its discretion under s 98 of the Civil Procedure Act 2005 (NSW) to depart from the position in r 42.20 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) because the proceedings were dismissed only as a result of the practical success that the plaintiff achieved by the defendant’s capitulation and registration of the transmission of the shares shortly before the commencement of the hearing. It was submitted that the Court should infer from the capitulation that the defendant’s earlier refusal to register the transmission was unreasonable and without just cause. It was also submitted that the Court should infer from the defendant’s failure to register the shares in response to earlier correspondence that the plaintiff would not have achieved this outcome without commencing the proceedings, and that she had acted reasonably in commencing the proceedings. It was further submitted that the defendant’s failure to respond to the plaintiff’s 25 January 2021 correspondence until after the commencement of the proceedings, and its failure to attend to registration of the transmission until the late afternoon of 1 March or early morning of 2 March 2021, was so unreasonable as to attract an order for indemnity costs.

9. I respectfully adopt the summary of the applicable principles by Ward CJ in Eq in Furnish & Finish Pty Ltd v Hollands [2020] NSWSC 1593 at [28]-[37].

10. The evidence relied on by the plaintiff does not support the inference that the defendant’s refusal to register the transmission, prior to 26 February 2021, was unreasonable.

11. In my opinion, the plaintiff’s letter of 5 January 2021 was ambiguous as to whether she sought to be registered as the holder of the shares on the basis that she was the sole beneficiary under the deceased’s last will, or on the basis that she was the administrator of the deceased’s estate in whom legal title to the shares had vested pursuant to s 44 of the Probate and Administration Act 1898 (NSW).

12. That ambiguity was not resolved until the further letter was sent by the plaintiff’s solicitor on 25 January 2021. The evidence does not establish one way or the other whether the seven day period unilaterally imposed in the letter for the defendant to register the transmission was reasonable in all the circumstances affecting the parties at the time. It would not be unreasonable for the defendant to take some time to take advice after receiving the letter of 25 January 2021. The plaintiff commenced these proceedings on 15 February 2021 without further warning or notice to the defendant, and solicitors acting for the directors of the defendant advised on 26 February 2021 that they no longer opposed the registration of the transmission.

13. There is no doubt that it would have been more convenient to the plaintiff if the defendant had responded more quickly and reached the position prior to 15 February 2021 that it ultimately did reach on 26 February 2021 and implemented on 1 or 2 March 2021. However, it does not follow that the defendant’s conduct was unreasonable or conduct of the kind that attracts an order for indemnity costs.

14. Nor do I consider that the plaintiff acted unreasonably in commencing the proceedings on 15 February 2021, although it would have been preferable in my view for the plaintiff to give further notice to the defendant before taking that step. It would have cost the plaintiff nothing to do so, and further notice may or may not have elicited the response that the defendant would be answering the 25 January 2021 letter imminently and so given the plaintiff reason to pause before incurring the cost of commencing the proceedings.

15. In all the circumstances, I am satisfied that it is appropriate to depart from the position in UCPR r 42.20 by ordering that each party pay its own costs of the proceedings. I decline to order that the defendant pay the plaintiff’s costs of the proceedings.

16. It is common for the same result to be achieved by dismissing proceedings “with no order as to costs”. However, these proceedings have already been dismissed save as to costs and it is necessary to make some order in order to avoid the operation of UCPR r 42.20.

17. For those reasons, I make the following order:

1. Order that each party pay its own costs of these proceedings.

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Decision last updated: 10 March 2021