Prapas v Karageorge

[2020] NSWSC 54

Supreme Court

New South Wales

Medium Neutral Citation:	Prapas v Karageorge [2020] NSWSC 54
Hearing dates:	On the papers
Date of orders:	10 February 2020
Decision date:	10 February 2020
Jurisdiction:	Equity
Before:	Darke J
Decision:	First defendant ordered to pay the plaintiffs’ costs of the proceedings.
Catchwords:	COSTS – proceedings to enforce obligation to register new lease – proceedings resolved without a determination on the merits – first defendant under a clear obligation to ensure that new lease to plaintiffs was registered – first defendant failed over a number of months to discharge obligation – plaintiffs would almost certainly have succeeded if matter had needed to go to final hearing – conduct of first defendant unreasonable – first defendant ordered to pay plaintiffs’ costs
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98 Real Property Act 1900 (NSW), s 74MA
Cases Cited:	Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622
Category:	Costs
Parties:	Jim Prapas (First Plaintiff) Nick Prapas (Second Plaintiff) Frederiki Prapas (Third Plaintiff) Foti Prapas (Fourth Plaintiff) Stergios Prapas (Fifth Plaintiff) Helen Karageorge (First Defendant) Kingsway Developments Cronulla Pty Ltd (Second Defendant)
Representation:	Counsel: Mr A F Fernon (Plaintiffs) Mr A Bailey (First Defendant)   Solicitors: Gibara Lawplus Lawyers (Plaintiffs) Constantine & Co Solicitors (First Defendant)
File Number(s):	2019/322790
Publication restriction:	None

Judgment

1. These proceedings were commenced by the plaintiffs on 15 October 2019. The plaintiffs are the lessees from the first defendant of certain premises in Cronulla. In September 2018, the plaintiffs exercised an option for a renewed term of 10 years commencing on 1 February 2019. It was a term of the new lease that the first defendant must ensure that the lease was registered (see cl 11.4).

2. Despite the existence of that obligation, the new lease was not registered. This is explained at least in part by the fact that the second defendant had lodged a caveat on the title for the Cronulla property, claiming an interest pursuant to a call option agreement. On 18 April 2019, after the new lease had been lodged by the first defendant for registration, a requisition was issued by the Registrar-General which included a requirement that the caveator’s consent to the lease be obtained. The first defendant sought the second defendant’s consent to the lease but this was not forthcoming. The plaintiffs then urged the first defendant to take steps to have the caveat removed to allow the new lease to be registered, but it seems that no such action was taken. The new lease remained unregistered at the time the proceedings were commenced.

3. By their Statement of Claim, the plaintiffs sought an order that the first defendant do all acts and things necessary to register the new lease, and an order under s 74MA of the Real Property Act 1900 (NSW) for the withdrawal of the second defendant’s caveat to allow such registration. On 6 December 2019, at the first directions hearing, an order was made under s 74MA in respect of the caveat, and a further order was made that the second defendant pay the plaintiffs’ costs of the proceedings. By the time the proceedings were next before the Court on 19 December 2019, the new lease had been registered. However, the plaintiffs and the first defendant remained in dispute on the question of costs, in particular as to whether the Court should further order that the first defendant pay the plaintiffs’ costs of the proceedings.

4. Directions were made to facilitate the determination of that question on the papers. In accordance with those directions the parties provided brief written submissions, and brief written submissions in reply. Those submissions have been considered by the Court and have been placed on the Court file.

5. In essence, the plaintiffs submitted that it was necessary to commence the proceedings because the first defendant failed to discharge her clear (and acknowledged) obligation to ensure registration of the new lease. It was submitted that the first defendant had no defence to the plaintiffs’ claim, and had acted unreasonably in failing to discharge her legal obligation. Accordingly, it was appropriate that the first defendant be ordered to pay the plaintiffs’ costs.

6. In essence, the first defendant submitted that as the period under the call option agreement did not expire until 22 October 2019, the plaintiffs commenced the proceedings prematurely. It was submitted that the first defendant acted reasonably in seeking the second defendant’s consent to registration of the lease, and in contending that cl 11.4 did not have the meaning advanced by the plaintiffs. It was further submitted that the real reason for the need for the proceedings was the conduct of the second defendant in maintaining its caveat on the title, and the plaintiffs already have the benefit of a costs order against the second defendant. The first defendant submitted that it would be appropriate in all the circumstances that there be no order as to costs as between the first defendant and the plaintiffs.

7. Both parties referred in their submissions to the well-known principles, as stated by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-5, that apply in circumstances where proceedings are concluded without the need for a hearing on the merits.

8. In my opinion, it is appropriate to exercise the Court’s discretion as to costs under s 98 of the Civil Procedure Act 2005 (NSW) to order that the first defendant pay the plaintiffs’ costs of the proceedings. I consider that the present case is one of those cases where the Court can feel confident that the plaintiffs would almost certainly have succeeded if the matter had needed to go to a final hearing. The new lease had been executed by the plaintiffs and returned to the first defendant by about 15 February 2019. By cl 11.4 of the new lease, which is plain in its terms, the first defendant was under a clear obligation to ensure that the new lease became registered. The presence of the second defendant’s caveat may have been an obstacle to registration, but it was an obstacle that could have been readily overcome by action on the part of the first defendant. No interest asserted by the second defendant under the call option agreement entered into in May 2018 could prevail over the plaintiffs’ interest arising from the option to renew contained in their earlier registered lease.

9. Moreover, in circumstances where the first defendant failed to discharge her obligation in the eight month period prior to the commencement of the proceedings, I think that the first defendant can be regarded as having acted unreasonably in relation to the registration of the new lease. This conduct of the first defendant is in my view the effective cause of the need to commence the proceedings, much more so than the conduct of the second defendant in merely maintaining its caveat in circumstances where no challenge was made by the first defendant to its operation. The caveat was not challenged until the plaintiffs took the initiative and commenced these proceedings. I should add that I do not accept that the plaintiffs commenced the proceedings prematurely. They had waited for many months for the new lease to be registered before taking that step.

10. Finally, I do not think that the existence of the costs order against the second defendant provides a good reason to decline to order costs against the first defendant. As I have said, the first defendant was the principal cause of the need for the proceedings and hence the expenditure of legal costs by the plaintiffs. Further, it is not known whether the costs order against the second defendant has any practical value to the plaintiffs.

11. For the above reasons, the Court will further order that the first defendant pay the plaintiffs’ costs of the proceedings.

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Decision last updated: 10 February 2020