Munstermann v Rayward; Rayward v Munstermann (No 3) - [2017] NSWSC 457

Supreme Court

New South Wales

Medium Neutral Citation: Munstermann v Rayward; Rayward v Munstermann (No 3) [2017] NSWSC 457
Hearing dates: On the papers
Decision date: 21 April 2017
Jurisdiction: Equity
Before: Stevenson J
Decision:
Costs to be paid on an indemnity basis

Catchwords: COSTS – whether award should be made for indemnity costs – whether defendant defended proceedings and prosecuted cross-claim in circumstances where he should have appreciated there were no prospects of success
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141
Munstermann v Rayward; Rayward v Munstermann (No 2) [2017] NSWSC 455
Munstermann v Rayward; Rayward v Munstermann [2017] NSWSC 133
Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175
Category: Costs
Parties: Marcus Otto Munstermann (Plaintiff/First Cross-Defendant)
Mark Lindsay Rayward (First Defendant/Cross-Claimant)
Mazmark Industries Pty Limited (Second Defendant/Cross-Claimant)
QIA Group Pty Limited (Third Defendant/Third Cross-Defendant)
Fuseworx Pty Limited (Fourth Defendant/Second Cross-Defendant)
Representation:
Counsel:
A S McGrath SC (Plaintiff, Fourth Defendant and Cross-Defendants)
D K L Raphael (First and Second Defendants and Cross-Claimants)
Solicitors:
Henry Davis York (Plaintiff, Fourth Defendant and Cross-Defendants)
Etienne Lawyers (First and Second Defendants and Cross-Claimants)

File Number(s): SC 2015/339876

Judgment

This is an oppression suit which, for the reasons set out in my judgment of 24 February 2017 (Munstermann v Rayward; Rayward v Munstermann [2017] NSWSC 133), I determined in favour of the plaintiff, Mr Munstermann.
I shall use the same abbreviations in these reasons as in that judgment.
Save for the matter of costs, I made final orders on 31 March 2017 for the reasons I gave that day (Munstermann v Rayward; Rayward v Munstermann (No 2) [2017] NSWSC 455).
These final reasons deal with Mr Munstermann’s application for an order that Mr Rayward pay his costs of the proceedings on an indemnity basis.
The parties agree that I should deal with this question on the papers. I have now received submissions from Mr McGrath SC for Mr Munstermann, and Mr Raphael for Mr Rayward.
I am satisfied that this is an appropriate case in which to order indemnity costs.
Mr Rayward’s defence of Mr Munstermann’s case, and his prosecution of the cross-claim unravelled in the course of Mr McGrath’s cross-examination of him.
Mr McGrath’s cross-examination was conducted with great skill. However, the collapse of Mr Rayward’s case was not only the result of Mr McGrath’s advocacy, but also of Mr Rayward’s alarmingly ready acceptance, in the course of cross-examination, that he had no sound basis upon which to propound the case that he pleaded.
As Mr Raphael said in his submissions on the costs question, Mr Rayward made numerous admissions in the course of cross-examination. Mr Raphael accepted:

“He was wrong in several important areas and this was demonstrated and admissions of lack of correctness followed promptly.”

I see the force in Mr Raphael’s submission that:

“Recognition of an incorrect statement are a rational man’s acknowledgment that he has erred. Such a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 457
Decision Date: 21 April 2017

CaseChat Overview and Summary

The dispute in Munstermann v Rayward; Rayward v Munstermann (No 3) involved two parties, Munstermann and Rayward, who were engaged in litigation with one another. The case was heard in the Supreme Court of South Australia. The primary issue before the court was whether the defendant, Rayward, was entitled to indemnity costs from the plaintiff, Munstermann, following the outcome of the proceedings. Rayward had defended the plaintiff's claim and prosecuted a cross-claim, despite the fact that he should have appreciated there were no prospects of success.

The court was required to determine whether it was appropriate to award indemnity costs in such circumstances. This involved an analysis of the relevant principles of law concerning costs in legal proceedings, including the circumstances in which indemnity costs may be awarded. The court considered the relevant authorities and legal principles, and evaluated the conduct of both parties in the proceedings.

The court found that the defendant had acted unreasonably in defending the proceedings and prosecuting the cross-claim, given that he should have appreciated there were no prospects of success. As a result, the court held that the defendant was liable for indemnity costs. The court also noted that the plaintiff had acted reasonably in pursuing his claim, and that there were no grounds for awarding costs against him. The court made orders accordingly, awarding indemnity costs to the plaintiff and dismissing the defendant's cross-claim.

Orders