Josey v InvestaFox Pty Limited

[2021] NSWSC 827

Supreme Court

New South Wales

Medium Neutral Citation:

Josey v InvestaFox Pty Limited [2021] NSWSC 827

Hearing dates:

On the papers

Date of orders:

7 July 2021

Decision date:

07 July 2021

Jurisdiction:

Equity

Before:

Darke J

Decision:

Proceedings to be dismissed with no order as to costs.

Catchwords:

COSTS – plaintiff sought specific enforcement of deed in which defendant granted a drainage easement – plaintiff requested signed original documents from defendant to effect exchange of deeds and registration of easement – plaintiff commenced proceedings after defendant’s delay in providing original documents – defendant subsequently sent original documents – parties agreed the proceedings should be dismissed – both parties seek costs – whether defendant was guilty of unreasonable delay in complying with obligations – whether plaintiff was unreasonable in commencing proceedings where existence of binding deed was questionable and plaintiff in any event not ready, willing and able to perform his obligations – held that it is not appropriate for the Court to conduct a hypothetical hearing on those questions – no determination on the merits – no order as to costs.

Legislation Cited:

Uniform Civil Procedure Act 2005 (NSW) r 42.20

Cases Cited:

Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365

Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274

Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84

Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622

Category:

Costs

Parties:

Lawrence Bernard Josey (Plaintiff)
InvestaFox Pty Limited (Defendant)

Representation:

Counsel:
Mr CMJ Palmer (Defendant)

Solicitors:
Edge Legal Group Pty Ltd (Plaintiff)
Landmark Legal (Defendant)

File Number(s):

2021/101938

Publication restriction:

Nil

Judgment

1. These proceedings were commenced by Summons filed on 13 April 2021. The plaintiff sought relief in the nature of specific enforcement of a Deed entered into between the plaintiff and the defendant whereby the defendant agreed to grant the plaintiff a drainage easement. On 14 May 2021, the first return date of the Summons, the matter was adjourned by consent to 4 June 2021. On 2 June 2021, the Court was informed that the parties were agreed that the proceedings should be dismissed, and that the only remaining issue was costs. Directions were made for the filing of submissions and evidence to facilitate that question being dealt with on the papers.

2. The Court has read and considered an affidavit of the plaintiff affirmed on 12 April 2021, an affidavit of the defendant’s solicitor, Mr Kevin O’Brien, sworn on 22 June 2021, and written submissions from the defendant dated 22 June 2021 and from the plaintiff dated 29 June 2021. Each party seeks a costs order in its favour.

3. Before dealing with the respective arguments, it should be noted that as the proceedings are to be dismissed, the starting point is Uniform Civil Procedure Rules (2005) NSW (“UCPR”) r 42.20 which provides that in those circumstances the plaintiff must pay the defendant’s costs unless the Court orders otherwise. The rule has been held to provide for something in the nature of a default position rather than a presumption. The Court retains its discretion as to the appropriate order to make for costs, although it is said that there must be some positive ground or good reason for departing from the ordinary course (see Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 at [78] and [84]; Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365 at [53]-[54]). Where, as here, there has been no determination on the merits, the principles set out by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-5 will be relevant (see also Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [25]-[30]).

4. The plaintiff in its submissions contended that the defendant was guilty of unreasonable delay in complying with its obligations under the Deed. Reference was made to an email sent by the plaintiff’s solicitors to the defendant’s solicitors on 15 February 2021 which demanded that unless certain original documents were provided by 26 February 2021 (including a Transfer Granting Easement and mortgagee’s consent to easement), the plaintiff would be commencing proceedings. The plaintiff submitted that there was no response to the email, or to a follow-up telephone call to the defendant’s solicitors on 26 March 2021, prior to the commencement of the proceedings. The plaintiff submitted that it was compelled to commence the proceedings to secure compliance with the Deed, which compliance was not forthcoming until about 21 April 2021. The plaintiff submitted that there was good reason to depart from the ordinary position in circumstances where the proceedings, which were brought about by the defendant’s unreasonable conduct, became unnecessary when the defendant belatedly complied with the Deed, such that the plaintiff achieved practical success.

5. The defendant contended that the usual position under UCPR r 42.20 should be followed. It submitted that the Deed had not been formally entered into when the proceedings were commenced, and the plaintiff was in any event not ready, willing and able to comply with his own obligation under the Deed to pay the defendant’s reasonable legal costs in respect of the negotiation, preparation and execution of the Deed (see clause 1.15). The defendant further submitted that the plaintiff commenced the proceedings despite his solicitor being informed (on 26 March 2021) that the defendant was in the process of providing the requested original documents. The defendant pointed to the offer it made on 15 June 2021 that if the plaintiff promptly paid the defendant’s costs as required by clause 1.15 and agreed to bear his own costs of the proceedings, the proceedings could be disposed of by orders for dismissal with each party to bear its own costs.

6. The relief sought in the proceedings is predicated upon the existence of a Deed that is binding upon the parties. However, the evidence before the Court raises questions as to whether the Deed was so binding and, if so, when it became binding. This emerges from the following:

1. On 13 September 2020 the defendant’s solicitors sent to the plaintiff’s solicitors a deed executed by the Defendant, together with an invoice for costs in sum of $800 plus GST, and requested the plaintiff’s solicitors to attend to the exchange of deeds;

2. On 16 September 2020 the plaintiff’s solicitors sent an email in response, seeking provision of the original counterpart deed executed by the defendant “to date and finalise this aspect”;

3. On 15 October 2020 the plaintiff’s solicitors sent an email to the defendant’s solicitors in which it was noted that the original counterpart deed had not been received, and it was stated that, notwithstanding this, a Transfer Granting Easement and a mortgagee’s consent document were forwarded for execution;

4. The plaintiff executed a counterpart of the deed, but the evidence is not clear as to when that occurred;

5. On 1 February 2021 the defendant’s solicitors sent an email to the plaintiff’s solicitors requesting that the unpaid invoice for costs be paid by the end of the week;

6. Later on 1 February 2021 the plaintiff’s solicitors sent an email in response in which it was stated that they were “still awaiting the original deed for purposes of exchange and dating” and that in the circumstances payment of the invoice would be “premature”;

7. On 15 February 2021 the plaintiff’s solicitors sent an email to the defendant’s solicitors which stated that both parties had executed a deed in counterparts, and that they (the solicitors) were “still waiting on the original counterpart Deed”. The email went on to state that unless the original counterpart deed, transfer and mortgagee’s consent document were provided by 26 February 2021, proceedings would be commenced; and

8. Those documents were not provided to the plaintiff’s solicitors until 21 April 2021, about a week after the commencement of the proceedings.

7. It would not be appropriate for the Court to conduct a hypothetical hearing on these questions in order to determine costs. It is sufficient to note that there is at least some doubt about whether the defendant was guilty of any unreasonable delay in complying with the Deed prior to the commencement of the proceedings, if the Deed was in fact binding and that time. Similarly, it is less than clear that the defendant’s subsequent provision of the documents to the plaintiff as requested ought be regarded as belated compliance with the Deed such that the plaintiff should be seen as having achieved practical success in the proceedings. Finally, it is at least arguable that when the proceedings were commenced the plaintiff was in breach of clause 1.15 of the Deed (assuming in the plaintiff’s favour that the Deed was binding). I note that it appears that the plaintiff did not pay the invoice for $800 plus GST until 23 June 2021. In these circumstances I do not think that it would be appropriate to order the defendant to pay the plaintiff’s costs of the proceedings.

8. However, I do not agree that the usual position as embodied in UCPR r 42.20 should be followed. The dismissal of the proceedings comes about as a result of the agreement by the parties to proceed with the transaction embodied in the terms of the Deed. The underlying rationale for the proceedings thus fell away. The dismissal should not be seen as a reflection of a case that ought not to have been brought or a case that ought not be allowed to continue. There was no determination on the merits, so the principles stated in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (supra) and Nichols v NFS Agribusiness Pty Ltd (supra), referred to earlier, are relevant. In that regard, I do not think that the plaintiff acted unreasonably in commencing the proceedings on 13 April 2021. The defendant’s solicitors had on 26 March 2021 apologised for the delay in the progress of the matter, and stated that the original Deed would be posted on 29 March 2021. That seems not to have occurred. In all the circumstances, it was not unreasonable of the plaintiff to seek to move the matter along by commencing the proceedings, even if the invoice for $800 plus GST had not yet been paid.

9. Viewing the matter overall, I have come to the conclusion that the appropriate exercise of the Court’s discretion as to costs is to order that each party pay their own costs of the proceedings.

10. I have not overlooked the defendant’s submission concerning the offer it made on 15 June 2021. It is true that had the plaintiff accepted that offer this costs application would not have had to proceed and at least some of the costs of the proceedings would not have been incurred. However, the defendant pressed for an order that the plaintiff pay all of its costs of the proceedings, and has not succeeded in obtaining such an order. I therefore think that the costs of this application should be treated in the same way as the costs of the proceedings generally.

11. The Court will therefore order that the proceedings be dismissed, with no orders as to costs, to the intent that each party bear their own costs of the proceedings.

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Decision last updated: 07 July 2021