Larapinta Project Pty Ltd v Acumen Finance Pty Ltd

[2020] NSWSC 1078

Supreme Court

New South Wales

Medium Neutral Citation:

Larapinta Project Pty Ltd v Acumen Finance Pty Ltd [2020] NSWSC 1078

Hearing dates:

On the papers

Date of orders:

17 August 2020

Decision date:

17 August 2020

Jurisdiction:

Equity

Before:

Darke J

Decision:

Costs reserved.

Catchwords:

COSTS – application for removal of caveats lodged by defendant – caveats claim a charge pursuant to finance broking agreements – agreement reached for caveats to be removed in exchange for the provision of alternative security – no longer a need for plaintiffs to pursue relief claimed in the Summons – defendant commences fee recovery proceedings against plaintiffs in County Court of Victoria – decision of the County Court likely to be important on question of costs – question of costs to be deferred until after the conclusion of the County Court proceedings

Legislation Cited:

Real Property Act 1900 (NSW), s 74MA

Cases Cited:

Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd (2011) 15 BPR 29,055

Hanson Construction Materials Pty Ltd v Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240

Category:

Costs

Parties:

Larapinta Projects Pty Ltd (First Plaintiff)
132 West Dapto Group Pty Ltd (Second Plaintiff)
Acumen Finance Pty Ltd (Defendant)

Representation:

Counsel:
S V Palmer (Plaintiffs)
A Smorchevsky (Defendant)

Solicitors:
Bransgroves Lawyers (Plaintiffs)
Jackson & Associates (Defendant)

File Number(s):

2020/162886

Publication restriction:

None

Judgment

1. These proceedings were commenced by Summons filed on 1 June 2020. The plaintiffs sought orders against the defendant pursuant to s 74MA of the Real Property Act 1900 (NSW) for the withdrawal of caveats the defendant had lodged against the titles to certain properties in Yennora and Kembla Grange. The defendant claimed to have an interest as a chargee pursuant to certain finance broking agreements which provided for charges over property owned by the plaintiffs to secure amounts due to the defendant under the agreements.

2. The parties had been in communication with each other in relation to the caveats, through their solicitors, since about 21 May 2020. The Summons had a return date of 26 June 2020. However, in circumstances of perceived urgency, the plaintiffs indicated that they were going to have the matter brought before the Duty Judge.

3. Before that occurred, the defendant served affidavits on 9 June 2020, and later that day an agreement was reached between the parties which involved the removal of the caveats on the basis that the plaintiff pay $65,000 to be held in a solicitor’s trust account as security for the defendant’s claims. That agreement was performed. Accordingly, any need on the part of the plaintiffs to pursue the relief claimed in the Summons fell away.

4. On 7 July 2020 the defendant commenced proceedings against the plaintiffs in the County Court of Victoria to establish its claims. These proceedings are defended by the plaintiffs, who claim to have paid the defendant all amounts that are due to it.

5. The current position is that the proceedings in this Court have been concluded save for the question of costs. The parties have filed affidavits and brief written submissions on that question with a view to it being determined on the papers.

6. The plaintiffs submitted that it would be appropriate for the question of costs to be adjourned with liberty to return to the question following the conclusion of the County Court proceedings, or alternatively that an order be made that the costs of these proceedings follow the event in those proceedings. The plaintiffs submitted that if any determination of costs was to be made by the Court now, it should be that the defendant pay the plaintiffs’ costs.

7. The defendant submitted that the Court should now order that the plaintiffs pay its costs of the proceedings. This is said to be justified on various grounds, including:

1. that the plaintiffs acted unreasonably by failing to “engage meaningfully” with the defendant either prior to or after the commencement of the proceedings;

2. that there was clearly a serious question to be tried as to the interest claimed by the defendant in the caveats; and

3. that in a practical and substantial sense, the plaintiffs capitulated at the last minute by agreeing to the defendant’s proposal for security to be provided.

8. It is relevant to note at the outset that the question whether the defendant had caveatable interests in the properties as claimed in the caveats depends upon whether any amounts over and above the amounts already paid by the plaintiffs may become due to the defendant under the agreements entered into between the parties.

9. Each of the plaintiffs contends that it is not indebted to the defendant and thus the caveats were lodged without proper cause. The dispute appears to be largely concerned with the question whether the defendant is entitled to charge higher brokerage fees, additional to those already paid by the plaintiffs, on the basis that a certain lender was a Tier 3 Entity rather than a Tier 2 Entity for the purposes of the relevant agreements.

10. In my opinion it is appropriate in all the circumstances to defer making any determination as to which party, if any, should have an order for costs in its favour. I accept the plaintiffs’ primary submission in this regard. The nature of the proceedings is one where the caveator would have had the onus of establishing that, in accordance with the principles that apply in respect of the grant of interlocutory injunctions, it would have succeeded in obtaining such injunctions to protect the interests it claims in the caveats (see Hanson Construction Materials Pty Ltd v Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240 at [77] and [82]; Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd (2011) 15 BPR 29,055 at [20]). As it turned out, there was no determination of that question because the parties reached an accommodation that involved the withdrawal of the caveats in return for the creation of an alternative security in the form of a fund held on trust pending the outcome of the dispute. In my opinion, it is appropriate that the question of costs also await that outcome.

11. The decision of the County Court is likely to be important, if not decisive, in reaching a conclusion about whether the defendant was justified in lodging and maintaining the caveats or whether the plaintiffs were justified in contending that the caveats had been lodged without proper cause.

12. I have considered the submissions made by the defendant, and the relevant evidence, in particular those aspects of the evidence referred to in the submissions. However, I am not satisfied that it would be appropriate to now make an order that the plaintiffs pay the defendant’s costs.

13. An examination of the communications between the parties does not lead me to conclude that the plaintiffs were acting unreasonably by failing to engage meaningfully with the defendant. The plaintiffs were asserting that the caveats had been lodged without proper cause, and that the caveats were impeding certain re-financing transactions. It remains to be seen whether the plaintiffs’ primary assertion was correct, and thus reasonably advanced.

14. I do accept, based on the evidence before the Court, that the defendant would very likely have established the existence of serious questions to be tried. It follows that the outcome would probably have turned on the Court’s assessment of the balance of convenience. However, even assuming that the defendant had succeeded in maintaining the caveats, the success would have been akin to success on an application for an interlocutory injunction. It is common in those circumstances to order that the costs of the successful applicant be that party’s costs in the cause. In the present circumstances, the matter in the County Court may be properly regarded as the cause. I therefore do not think that this factor provides a good reason to order costs in the defendant’s favour.

15. Finally, I do not accept that the agreement reached between the parties should be seen as in substance a capitulation by the plaintiffs. The agreement served the plaintiffs’ interests by freeing the properties of the caveats, and the $65,000 agreed to be placed in the trust account was an amount somewhat less than the amount of almost $100,000 claimed by the defendant to be charged over the properties. The agreement appears to be a sensible commercial compromise on both sides.

16. For these reasons, the Court will not at this stage proceed to determine the question of costs. Costs will be reserved. The parties will have liberty to apply in respect of costs after the conclusion of the proceedings in the County Court if the issue remains unresolved.

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Decision last updated: 17 August 2020