Nadinic v Drinkwater (No 2)

[2017] NSWCA 334

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Nadinic v Drinkwater (No 2) [2017] NSWCA 334
Hearing dates:	On the papers
Decision date:	18 December 2017
Before:	Leeming JA
Decision:	Mr Nadinic to pay Ms Drinkwater’s costs of the application for a stay of execution.
Catchwords:	COSTS – abandonment of application for stay of execution – no reason for costs not to follow the event
Cases Cited:	Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR In re Gilbert’s will (1946) SR NSW 318 Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 Vaughan v Dawson [2008] NSWCA 169
Category:	Costs
Parties:	Andrew Frane Nadinic (Appellant) Cheryl Drinkwater (Respondent)
Representation:	Counsel: A G Martin (Appellant) M Ashhurst SC, L D Corbett (respondent)   Solicitors: Summer Lawyers Pty Ltd (Appellant) Hewitts Commercial Lawyers (Respondent)
File Number(s):	2016/242022
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Division Date of Decision: 07 December 2017 Before: Rein J File Number(s): 2016/242022

Judgment

1. LEEMING JA: These reasons relate to the costs of an application for a stay of an order made on 7 December 2017 authorising the plaintiff in pending proceedings in the Equity Division, Ms Cheryl Drinkwater, to be paid $1 million from a controlled monies account established by agreement of the parties by 14 December 2017. The application was brought with haste, so much so that neither a summons seeking leave to appeal, nor a draft notice of appeal, nor a notice of motion has been filed. The application appears first to have been notified to the respondent on the afternoon of 13 December 2017 (the afternoon of the day before the funds were to be transferred). The matter was listed before me promptly after it was notified, and the parties exchanged submissions and Ms Drinkwater swore an affidavit identifying her need for the funds and how they would be used.

2. During the course of the morning of 14 December 2017, and following receipt of that affidavit, Mr Nadinic abandoned his application for a stay, and indeed abandoned his (unformalised) application for leave to appeal.

3. The only issue that remains is as to the costs which have been incurred. Ms Drinkwater submits that costs should follow the event. Mr Nadinic says that there should be an order as to costs. The parties were content to have this issue determined on the papers. Each has supplied two page submissions in support of the orders for which each contends.

4. Mr Nadinic seeks to apply the principle in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, to the effect that this is a case where both parties have acted reasonably prior to proceedings being settled, that the costs should be made. He emphasises the fact that, following his resignation as director, he had no access to the books and records of Brooks Parade Pty Ltd (the company involved in selling property development) and it was only after 9:40am on 14 December 2017, when Ms Drinkwater’s affidavit was served, that he became aware of facts which meant that the application would no longer be pressed.

5. Ms Drinkwater points out that she was only notified of the stay application at 2:30pm on 13 December 2017, and responded as promptly as possible. The critical matter in Ms Drinkwater’s affidavit was the fact that she was the registered proprietor of Lot 1, and thus – although seemingly this was not disclosed to the primary judge – is better able to meet any liability she may face to Mr Nadinic when these proceedings are heard and determined. She also maintains that Mr Nadinic would almost certainly have lost the application and has effectively capitulated, both considerations taking the matter outside the principles in ex parte Lai Qin.

6. In my view the position is as follows. Following the contested hearing before the primary judge, Ms Drinkwater was prima facie entitled to enjoy the fruits of that success. The consequence is, as Campbell JA explained in Vaughan v Dawson [2008] NSWCA 169 at [16] that the onus was on Mr Nadinic to make out a case that is suitable for the award of a stay. Further, it was for Mr Nadinic to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694.

7. The application for a stay was ancillary to the application for leave to appeal from the judgment of the primary judge. His Honour’s decision was one involving a question of practice and procedure, as to whether a relatively small component (less than a quarter) of a joint fund should be paid out to one litigant pending the determination of the issues between them. The basis on which his Honour did so turned primarily on the fact that the sum of the amounts secured by the mortgage, interest until the likely hearing date, and Mr Nadinic’s professional costs of the litigation would be in the order of $3.5 million, being some $1 million less than is held in the joint fund. In a case such as this, the matters to which Jordan CJ referred in In re Gilbert’s will (1946) SR NSW 318 at 323 have prominence.

8. Further, prominent to the decision on the grant of leave would be whether there had been shown to be a clear injustice to Mr Nadinic, rising above the merely arguable, for, so far as I can see, no question of principle, nor any matter of public importance was raised (I say that with some slight hesitation, because no proposed grounds of appeal have ever been formulated). In Mr Nadinic’s written submissions in support of the stay application, a single paragraph was directed to prejudice. It was as follows:

“Should the sum of $1 million be released to the respondent, the appellant will suffer real prejudice to the extent that the fund is ultimately insufficient to meet the value of his security, and be placed in the position where, despite now having a first-ranking legal charge over the fund, he would have to attempt to recover the shortfall from the respondent as a simple unsecured creditor.”

9. That submission is probably as much as can be said in relation to the prejudice suffered by Mr Nadinic. But there is no prejudice unless the fund is ultimately insufficient to meet any liability order to him. Even if he is entirely successful in the litigation, there is nothing to suggest that it is at all likely there will ever be any insufficiency. Still less is there anything to suggest that there will ever be any material insufficiency, given the size of the joint fund. Further, no submissions were made as to the ability of Ms Drinkwater to meet any residual liability to Mr Nadinic, even if the fund is exhausted.

10. Given the difficulties facing Mr Nadinic’s application for leave, and the difficulty he had in pointing to any prejudice, I would accept Ms Drinkwater’s submission that this is an application which would have failed in any event. The fact that Ms Drinkwater had supplied further evidence opposing the application did not alter its outcome. That is not to suggest that she was not entitled to do so; to the contrary, she was entitled to defend the application in the manner which has occurred.

11. In my view, no reason has been shown to displace the usual order as to costs. Mr Nadinic must pay Ms Drinkwater’s costs of the application for a stay of execution.

12. The intent of that order is to include the entirety of the costs incurred since the application was notified. I do not think it is necessary to require Mr Nadinic to file a summons seeking leave to appeal, so that the order may be made in that proceeding. The order and this judgment are to be regarded, administratively, as forming part of the file in the pending proceedings in the Equity Division.

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Decision last updated: 26 March 2018