Johnson Property Group Pty Ltd v Dabson

[2017] NSWSC 481

Supreme Court

New South Wales

Medium Neutral Citation:	Johnson Property Group Pty Ltd v Dabson [2017] NSWSC 481
Hearing dates:	21 April 2017
Decision date:	21 April 2017
Jurisdiction:	Equity
Before:	Stevenson J
Decision:	First defendant to pay the costs of the plaintiffs
Catchwords:	COSTS – proceedings spent – proceedings in effect resolved by consent – interlocutory orders made on return date of summons – whether plaintiffs should have their costs – whether plaintiffs acted reasonably – whether plaintiffs almost certain to have succeeded
Legislation Cited:	Environmental Planning and Assessment Act 1979 (NSW)
Cases Cited:	One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548; FCA 270 Re Minster for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Category:	Costs
Parties:	Johnson Property Group Pty Ltd (First Plaintiff/Applicant) Avondale Greens Developments Pty Ltd (Second Plaintiff/Applicant) Michael David Dabson (First Defendant/Respondent) John Raymond Dabson (Second Defendant/Respondent) Inkeri Dabson (Third Defendant/Respondent)
Representation:	Counsel: J Lazarus (Plaintiffs/Applicants) G Farland (Defendants/Respondents)   Solicitors: Sparke Helmore Lawyers (Plaintiffs/Applicants) O'Neill McDonald Lawyers (Defendants/Respondents)
File Number(s):	SC 2016/375552

EX TEMPORE Judgment (REVISED)

1. These proceedings are now spent in that the plaintiffs seek no further relief. There has been no determination as to the merits of the plaintiffs’ claim. Nonetheless the plaintiffs seek their costs of the proceeding as against the first defendant.

2. The plaintiffs do not seek costs against the second and third defendants, as those defendants were not served at the time that the relevant event occurred.

3. In my opinion the plaintiffs should have their costs.

4. Where there is no hearing of a case on its merits, the Court will not usually make any order for costs as there is often difficulty in "discerning a clear reason why one party, rather than the other, should bear the costs", to adopt the words of Burchett J in One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548; FCA 270 at [6].

5. The Court will not hear a case which has become moot merely to determine the question of costs. However, if it emerges, clearly, that one of the parties has acted so unreasonably as to warrant a costs order against that party, or unless (even if those parties have acted reasonably), one was almost certain to have succeeded, a costs order may be made (Re Minster for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622).

6. This is such a case.

7. The defendants owned land at Cooranbong. The plaintiffs are involved in the development of adjoining or nearby land. There is a dispute between the parties about an aspect of that development.

8. On 22 March 2016, a mediation between the parties concerning that dispute took place before Mr Lloyd QC. It was a term of that mediation that all discussions, including negotiations, were privileged and confidential.

9. On 16 November 2016, the defendants lodged with the New South Wales Department of Planning, a submission concerning an aspect of the development. It is now common ground that the submission contained confidential information; namely, the terms of other negotiations which took place at the mediation.

10. On 29 November 2016, the solicitors for the plaintiffs sent a letter to the defendants’ then solicitor, Mr Wilkinson, who had accompanied the defendants at the March 2016 mediation. There is a dispute between the parties as to whether the plaintiffs were entitled to assume that Mr Wilkinson was acting generally for the defendants, and as to whether the plaintiffs’ solicitors were justified in writing to him.

11. I do not need to resolve that dispute as it is common ground that the defendants came to know the contents of the letter on the following day.

12. The letter stated:

“Our respective clients have, over an extended period, been attempting to negotiate an agreement that would allow your clients to subdivide Lot 2 in a way that maximises its lot yield in the short term. Those negotiations have taken place on a confidential basis. As you know, the subdivision of Lot 2 to its full potential in the short term is heavily dependent on land our clients’ control to facilitate access, bushfire asset protection zones, stormwater drainage and services. The most recent attempt to find agreement occurred at a mediation before the Hon. David Lloyd QC. It was a condition of that mediation that the negotiations were kept confidential (as we reiterated in our letter of 30 June 2016).

Your clients have lodged a submissions in response to public notification of an application to modify the Concept Plan which regulates the development of the land controlled by our clients.

…

You will see from a review of the submission lodged by your clients that, notwithstanding the obligation of confidentiality, your clients have included the details of the negotiations that have taken place. That disclosure is not only a breach of the obligation to keep the negotiations confidential but regarded by our clients as an act of bad faith.

…

Given your clients’ breach of confidence we are instructed to provide your clients with 7 days to withdraw the submission they have made to the Department. If the submission is not withdrawn within that time our clients reserve their right to take further action about the submissions.

This letter requires your clients’ urgent attention.”

13. It must have been, at least it should have been, obvious to the defendants what confidential information the plaintiffs were alleging had been disclosed in the defendants’ submission; namely, details of negotiations that had taken place at the mediation.

14. The defendants thought the matter was sufficiently important to immediately seek advice the following day from HWL Ebsworth Lawyers.

15. By 6 December 2016, if not earlier, it was clear that HWL Ebsworth could not act for the defendants because they had previously acted for the plaintiffs.

16. On that day, 6 December 2016, a representative of the plaintiffs sent an SMS to the first defendant imploring him to "come up with a commercial deal" to resolve the dispute between the parties.

17. The first defendant did not respond to that invitation.

18. Nor did the defendants take any further steps to obtain legal advice about the letter of 29 November 2016, sent by solicitors for the plaintiffs.

19. There was no reason for the defendants to think that the plaintiffs no longer pressed the demand made in that letter.

20. Not having heard from the defendants, the plaintiffs wrote to the Department on 9 December 2016 in the following terms:

“It has come to our client’s attention that a submission (by way of objection) to the above modification has been made by Michael, Raymond & Inkeri Dabson. This submission, together with an accompanying appendix, has been published on the Department of Planning’s website.

…

Our client is of the view that this submission discloses matters which are the subject of an obligation of confidentiality. Our client is currently considering its legal position about the disclosure of these matters. In these circumstances, we are instructed to request that the submission be removed from the Department’s website by no later than 5pm, Tuesday 13 December 2016 and until these legal issues are resolved.

If the submission is not removed by that time there is the prospect that the Minister may need to become a party to litigation our client is presently considering commencing.” [Emphasis in original]

21. On 13 December 2016, the Department replied:

“On behalf of your client, Johnson Property Group, you request that the submission, by way of objection to the proposed modification, made by Michael, Raymond and Inkeri Dabson be removed from the Department’s website.

The Department agrees to temporarily remove the submission from the website in light of your client’s concerns. We ask that you identify those matters that you say are subject to an obligation of confidentiality, by close of business on Friday 16 December 2016, after which time we propose to place the submission back on the Department’s website. The Department will consider redacting those matters that you demonstrate as being subject to an obligation of confidentiality before that deadline.

The Department will also write separately to the Dabsons about this matter.” [Emphasis in original]

22. On the same day, the Department sent a similar letter to the defendants, adding:

“You are also invited to amend your submission to remove any information that is subject to an obligation of confidentiality by close of business on Friday 16 December 2016.” [Emphasis in original]

23. The Department's attitude, although perfectly reasonable from its point of view, placed the plaintiffs in a difficult position. The Department agreed to (and did) remove the submission from its website "temporarily", and said that it would consider redacting the submission by deleting any confidential information. It invited submissions about what should be removed by close of business on 16 December 2016.

24. However, the plaintiffs were entitled to assume that the Department would seek submissions from the defendants about any such redaction. It was also entitled to assume that in view of the defendants' failure to respond to its solicitor’s letter of 29 November 2016 (written, by then, almost two weeks earlier), the defendants might object to the redaction, or at least raise some argument about it. It was by no means certain that those matters could be settled by negotiation in a timely manner (or indeed at all) before the deadline the Department had imposed.

25. The defendants did not respond to the Department's letter, seek to engage lawyers alternate to HWL Ebsworth, or seek to respond to the plaintiffs’ solicitor's letter of 29 November 2016; or to communicate in any way with the plaintiffs.

26. Finally, late in the evening of 14 December 2016, the plaintiffs’ solicitor sent an email to the defendants, as follows.

“As you know we act for Johnson Property Group Pty Ltd and Avondale Greens Developments Pty Limited. Please find attached, by way of service:

1. Summons;

2. Notice of Motion;

3. Affidavit of Alan Joseph McKelvey sworn 14 December 2016;

4. Confidential Affidavit of Alan Joseph McKelvey sworn 14 December 2016;

Our clients intend to approach the Supreme Court at 10:00am tomorrow morning to seek the orders set out in the Notice of Motion.”

27. The attached summons sought the following relief:

“1.   A Declaration that the Defendants have breached:

(a)   clause 5 of a mediation agreement to which they and the Plaintiffs were a party (Mediation Agreement); and/or

(b)   their equitable obligation of confidence,

by making a submission to the NSW Department of Planning and Environment (Department) in about November 2016 (the Submission) which discloses matters which had been discussed at a confidential mediation between the parties conducted by Mr David Lloyd QC on 22 March 2016 (Mediation).

2.   An Order that the Defendants forthwith take all steps necessary to have the Submission withdrawn, including without limitation writing to the Department withdrawing the Submission and requesting that the Submission be removed from the Department’s website.

3.   An Order that the Defendants, by themselves, their servants and agents, be restrained from disclosing to anyone any matters discussed at the Mediation without the Plaintiff’s prior written consent, unless they are required by law to make the disclosure.” [Emphasis in original]

28. The summons made quite clear the basis on which the plaintiffs proposed to move the Court, and made quite clear the basis on which the plaintiffs sought to have the defendants withdraw the submission; namely, that the submission contained confidential information.

29. On 15 December 2016, the plaintiffs, by counsel, approached McDougall J as Duty Judge.

30. His Honour granted the plaintiffs leave to serve the summons and supporting affidavits with short notice, and appointed the following day, 16 December 2016 (the last day of Court Term) as the return date of the summons.

31. On that occasion, the first defendant appeared by counsel, and consented to orders in the following terms.

“1.   The First Defendant forthwith take all steps necessary to direct and/or advise the NSW Department of Planning and Environment (Department) that the Defendants’ submission made in about November 2016 relating to the Plaintiffs’ application under former section 75W of the Environmental Planning and Assessment Act 1979 not be restored to the Department’s website until further order.

2.   The proceedings be returnable before the Registrar in Equity on 31 January 2017 at 10 am.

3.   Liberty to apply on 2 days’ notice.” [Emphasis in original]

32. That order obliged the first defendant to take all steps needed to ensure that the submission "not be restored" to the Department's website until further order. That was because by then, as I have said, the Department had "temporarily" removed the submission from the website.

33. Those orders, in substance, vindicated the position of the plaintiffs.

34. The defendants made no further attempt to agitate the matter in Court.

35. Rather, on 27 January 2017, the defendants lodged a revised submission with the Department, which did not contain any of the confidential information. In effect, the defendants thereby acknowledged the correctness of the basis upon which the plaintiffs had moved the Court.

36. There was then no cause for the plaintiffs to seek any further relief. All that remained was the determination of costs of the proceedings.

37. In substance, the plaintiffs have achieved success. Its position has been vindicated. It has achieved what it set out to achieve, and what the defendants have, in effect, acknowledged that it was entitled to achieve. The defendants have not pointed to any factor which suggests they had a sound basis to defend the proceedings.

38. The plaintiffs did not, in my opinion, behave precipitately. It gave the defendants fair warning that it would take whatever further action was needed if the defendants did not respond to its solicitor's letter of 29 November 2016 within seven days. In fact the plaintiffs waited some 17 days before taking action; including well over a week after the date upon which the defendants knew that HWL Ebsworth could not act for them.

39. I find this a clear basis to make a costs order.

40. I make the following orders:

1. Order that the first defendant pay the plaintiffs’ costs of the proceedings, including the costs of its notice of motion of 28 February 2017.

2. Order that the summons be otherwise be dismissed.

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Decision last updated: 27 April 2017