Nassar v Innovative Precasters Group Pty Ltd

[2009] NSWSC 513

CITATION:	Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 513
HEARING DATE(S):	07/04/09, 08/04/09, 15/04/09 Written submissions on costs: 14/05/09, 15/05/09, 29/5/09
JUDGMENT DATE :	10 June 2009
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	See paragraph 15
CATCHWORDS:	PROCEDURE - costs - identification of "event" - offer of compromise - whether non-acceptance unreasonable - particular position of subject companies in a dispute over buy-out and winding up orders
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 232, 233, 466(2)
CATEGORY:	Consequential orders
CASES CITED:	Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342
PARTIES:	Daniel Nassar - First Plaintiff Marfern Pty Limited - Second Plaintiff Innovative Precasters Group Pty Limited - First Defendant IP Group Pty Limited - Second Defendant DGN Investments Pty Limited - Third Defendant Rosario Grasso by his Tutor the Protective Commissioner - Fourth Defendant Paul De Oliveira - Fifth Defendant
FILE NUMBER(S):	SC 1599/98
COUNSEL:	Mr I R Pike - Plaintiffs Mr A J McInerney - Fourth Defendant Mr B DeBuse - Fifth Defendant
SOLICITORS:	Esplins - Plaintiffs Lee and Lyons - Fourth Defendant Marsdens Law Group - Fifth Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY 10 JUNE 2009

1599/08 DANIEL NASSAR & ANOR v INNOVATIVE
PRECASTERS GROUP PTY LIMITED & 4 ORS

JUDGMENT

1 I am dealing with the question of costs consequent upon my judgment of 1 May 2009: Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342.

2 It is necessary to say something at the outset about what should be considered the “event” for the purposes of the general rule that costs follow the event.

3 The plaintiffs submit that the “event” is the order for winding up in respect of each company. At paragraph 4 of their submissions on costs (which form part of the court file), they give reasons for that contention. I do not accept those reasons or that submission. The plaintiffs’ clear and predominant aim was to obtain an order requiring the other shareholders to buy their shares. It was in pursuit of that objective that they brought the matter to trial and embarked on a hearing of three days.

4 The “event” for costs purposes, was the failure of the plaintiffs to obtain an order that the fourth and fifth defendants buy their shares – indeed, their failure to obtain any relief at all on the basis of s 232 and s 233 of the Corporations Act 2001 (Cth) (including winding up order under those provisions).

5 It is beside the point for the plaintiffs to point to various proposals made over a long period involving winding up of one or other of the three companies and some other outcome in relation to others. The dispute was always about the three companies together. The plaintiffs effectively opposed throughout the result that eventually emerged, that is, refusal of a buy out order – indeed, the refusal of all relief referable to s 232 and

s 233 – and winding up of all three companies on the just and equitable ground.

6 The dispute was always, in essence, one between the plaintiffs, the fourth defendant and the fifth defendant. The first, second and third defendants (the three companies) were not active parties and had, in substance, no interests other than those of the active protagonists.

7 It follows from what I have said that the plaintiffs should be ordered to pay the costs of the fourth and fifth defendants and that there should be no order as to the costs of the first, second and third defendants.

8 To give full effect to the orders in favour of the fourth and fifth defendants and to prevent what would otherwise be a distortion, having regard to the fact that the three natural person parties (or their family interests) own the shares in the three companies in equal proportions, it is necessary to displace the operation of s 466(2) of the Corporations Act which would otherwise cause the plaintiffs to have their costs out of the assets of the companies. There will be an order accordingly.

9 The fourth defendant and the fifth defendant contend that their costs after 19 March 2009 should be assessed on the indemnity basis. This is because of an offer made by them on that day to consent to orders under which the provisional liquidator then in office became the liquidator (that is, a winding up order was made), the plaintiff’s costs in relation to the appointment of the provisional liquidator and the winding up order be paid in fixed amounts and of the assets of the companies (with the plaintiffs otherwise bearing their own costs) and the fourth and fifth defendants pay their own costs of the proceedings.

10 Because of the discrete aspects of this proposal concerning costs, there is no difficulty in comparing it with the eventual outcome. The offer was obviously more favourable to the plaintiffs than that outcome.

11 The letter of 19 March 2009 did not limit a time for acceptance. The plaintiffs’ submissions on costs accept that a reasonable period for acceptance would have been seven days.

12 The plaintiffs did not accept the 19 March 2009 offer within seven days or at all. They continued to press for the buy-out relief and were unsuccessful. I am satisfied that that course of action was, from 27 March 2009, unreasonable in the sense relevant to the particular costs question before me. There will be an indemnity costs order accordingly.

13 The plaintiffs maintain a claim for a costs order in respect of their application for the appointment of a provisional liquidator of each company. The plaintiffs maintain that they were compelled to pursue that application (which was granted on 2 February 2009) because, after the incapacity of the fourth defendant, they had informed the fifth defendant that the application would have to be pursued unless an appropriate regime for the control of the corporate group was put in place – to which the fifth defendant did not respond, with the result that the plaintiffs had to proceed.

14 I am of the opinion that there is no good reason to regard the application for the appointment of a provisional liquidator as anything other than an integral part of the overall proceedings. The break down in relationships – particularly between the first plaintiff and the fifth defendant – was complete long before the plaintiffs’ invitation to consent to form some kind of arrangement for the control of the group was issued. It was not realistic for the plaintiffs to think that some agreed regime would be put in place pending their attempts to have the court force the fourth and fifth defendants to buy their shares.

15 The orders of the court as to costs are:

1. Order that the plaintiffs pay the costs of the fourth defendant and the fifth defendant of the proceedings, such costs to be assessed on the indemnity basis from and after 27 March 2009.
2. Order that the plaintiffs not be reimbursed out of the property of any of the first, second and third defendants the costs incurred by them in the proceedings.
3. Order that there be no order as to the costs of the first, second and third defendants.
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