Lin and Anor v BHW Capital Pty Limited and Anor (No. 2)

[2014] NSWSC 45

Supreme Court

New South Wales

Medium Neutral Citation:	Lin & Anor v BHW Capital Pty Limited & Anor (No. 2) [2014] NSWSC 45
Hearing dates:	4 February 2014
Decision date:	04 February 2014
Jurisdiction:	Equity Division
Before:	White J
Decision:	Refer to paras [15] and [16] of judgment.
Catchwords:	PRACTICE AND PROCEDURE - costs - general rule costs follow the event - whether costs should be apportioned when plaintiff and defendant each successful on some issues - whether costs should be assessed on indemnity basis - whether costs order affected by untruthful acts by party - each party to bear their own costs PRACTICE AND PROCEDURE - separate hearing - damages - whether assessment of damages requires a separate hearing - whether there is insufficient evidence to determine market price of shares - whether the Court should assess damages on the available evidence - whether the costs of adducing further evidence outweighs the amount of damages sought
Category:	Costs
Parties:	Liang (Jally) Zhen Lin (1st Plaintiff) Ben Zheng Lin (2nd Plaintiff) BHW Capital Pty Ltd (1st Defendant) Shane Irwin (2nd Defendant)
Representation:	Counsel: G Blank (Plaintiffs) H Altan (Defendants) Solicitors: Spectrum Legal Group (Plaintiffs) Willis & Bowring (Defendants)
File Number(s):	2013/165879

Judgment

1. HIS HONOUR: In my reasons of 5 December 2013 I decided that the plaintiffs were entitled to elect whether to pursue a claim for specific performance in relation to the remaining 100 shares that could be transferred, and stood over the proceedings to deal with questions relating to damages and costs.

1. The plaintiffs have elected to seek an order for specific performance in relation to the 100 shares that are capable of being transferred and damages only in relation to the non-transfer of the remaining 50 shares that were the subject of the agreement on which the plaintiffs succeeded.

1. The first question that now arises is whether I should now assess those damages and, if so, in what amount, or, alternatively, whether I should stand the matter over for further hearing on damages.

1. The plaintiffs contend that having regard to the sale of 50 shares to Altis Architects, it can be seen that the value of the shares at the date of breach was $4,000 per share. The defendants contend that the sale to Altis Architects is not reflective of the value of the shares. The defendants contend that that sale took place in circumstances where Altis had agreed to purchase the shares at an agreed price in return for being engaged as the architect for the development. Therefore, the sale is not evidence of the market value or true value of the shares at the date of breach.

1. There is no evidence about the suggested additional quid pro quo for the transfer of the shares. Mr Irwin was cross-examined about the sale to Altis Architects. He said that the price paid by Altis Architects aligned to the view held by the directors as to what the value of the shares were and he said that the sale "aligns with the directors' meeting that valued the shares at a public price which is what was offered".

1. No order was made for a separate hearing on the quantum of damages, if it were found that the plaintiffs were entitled to damages. It is true that the outcome that I found was not one which was addressed by the parties during the course of the hearing, but I think it is an outcome that both parties ought to have had in contemplation as a possible outcome.

1. The question is whether or not the interests of justice now require that there be an adjournment for a further hearing so that further evidence in relation to the value of the shares can be obtained. It would seem that if there were such an adjournment, the evidence would include (but I doubt that it would be limited to) further evidence concerning the sale to Altis Architects. It could also be expected that expert evidence would be adduced which sought to value the company, presumably by seeking to value the development that the company is undertaking and then presumably also seeking to value the shares, probably by discounting them to reflect the minority holding. The cost of such expert evidence is likely to be out of proportion to the amount of damages at stake.

1. Given that no order had been made for the separate trial of the quantification of damages, and given the relatively modest amount of damages at stake, particularly compared with the likely costs of adducing further evidence and then the further costs of an additional hearing, I do not think that the interests of justice require, or indeed permit, the adjournment sought.

1. The available evidence supports an assessment of the value of the shares by regard to the sale to Altis Architects, and I will therefore give judgment for the plaintiffs for the sum of $100,000 as sought.

1. The other disputed question concerned costs. The plaintiffs sought an order that the defendants pay their costs. They submitted that they were the successful parties and costs should follow the event. The defendants submitted that they were in substance the successful parties. The plaintiffs made three claims. The plaintiffs succeeded only on one of them, but failed on the other two. In addition, in relation to the first claim, that is to say, the claim based upon the alleged first agreement, the defendants submitted that costs on the indemnity basis should be awarded in their favour. The costs orders sought by the defendants are that the plaintiffs pay 67 per cent of the defendants' costs on the indemnity basis and the defendants pay 33 per cent of the plaintiffs' costs on the ordinary basis.

1. In my view, this is a case in which a special order for costs is warranted. The claims on which the plaintiffs failed were separable from the claim upon which it succeeded. The plaintiffs sought orders requiring the transfer to them of two parcels, each representing 15 per cent of the issued capital of the company. Those claims were based upon two separate alleged agreements for the transfer of the shares. The plaintiffs failed on the first claim based upon the first agreement. I am satisfied, for the reasons which I gave on 5 December 2013, that that first claim was one which should never have been brought. It was based upon an opportunistic deployment of the two documents dealt with in my reasons, supported by evidence that I found was deliberately untrue. Had it been the only claim, the plaintiffs would have been required to pay the defendants' costs of defending that claim on the indemnity basis.

1. The third claim concerning the removal of Mr Jally Lin as a director was also a separate claim, although I think it played a relatively small part in the likely costs that were incurred.

1. The plaintiffs' failure on those two claims warrants a different order from an order that the defendants pay the plaintiffs' costs. It does not warrant the order sought by the defendants. The real question, I think, is whether I should order that the defendants pay some proportion of the plaintiffs' costs to reflect the fact that the plaintiffs had success on one of the claims, or whether there should be no order as to costs. That decision has to be made having regard to the fact that had each of the claims been run separately, there would have been costs orders in favour of both parties. In other words, in dealing with costs, I should have regard to the fact that the parties should be put in a position reflecting the fact that the plaintiffs would prima facie have had to pay some of the defendants' costs as well as being entitled to their costs of the claim on which they succeeded.

1. Having regard to those matters and having regard to the fact that the costs of the first claim, had it been the only claim, would have been paid by the plaintiffs on the indemnity basis, I think the appropriate order is that there be no order as to costs, to the intent that each party pay its and his own costs of the proceedings.

1. For these reasons, I make orders 1, 2, 3 and 4 in the Short Minutes of Order handed up by counsel for the plaintiffs, which I initial and date today and will place with the papers. In lieu of order 5 sought by the plaintiffs, I order that there be no order as to costs, to the intent that the parties bear their own costs of the proceedings.

1. The exhibits are to be returned in accordance with the Practice Note.

Decision last updated: 20 February 2014