Ryde Ex Services Memorial and Community Club Ltd v Kaloriziko Ryde Pty Ltd (No 2)
[2018] NSWSC 317
•12 March 2018
Supreme Court
New South Wales
Medium Neutral Citation: Ryde Ex Services Memorial and Community Club Ltd v Kaloriziko Ryde Pty Ltd (No 2) [2018] NSWSC 317 Hearing dates: 12 March 2018 Date of orders: 12 March 2018 Decision date: 12 March 2018 Jurisdiction: Equity Before: Parker J Decision: Plaintiff ordered to pay costs of first and second defendant of the proceedings, so far as they are solely referable to the second defendant’s role as guarantor for the first defendant.
Plaintiff ordered to pay costs of third defendant of the proceedings.Catchwords: CIVIL PROCEDURE – costs – discontinuance of proceedings – multiple defendants – review by the Court pursuant to UCPR r 42.19(2) – where only claim against the second defendant is in his capacity as guarantor for the first defendant – whether the Court should depart from the ordinary rule – plaintiff required to pay costs of second defendant, so far as they solely relate to second defendant’s role as guarantor Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.19(2) Cases Cited: Ryde Ex Services Memorial and Community Club Ltd v Kaloriziko Ryde Pty Ltd [2017] NSWSC 1576 Category: Costs Parties: Ryde Ex Services Memorial and Community Club Ltd (Plaintiff)
Kaloriziko Ryde Pty Ltd (First Defendant)
Greg Gav (Second Defendant)
Marwan Chanine (Third Defendant)Representation: Counsel:
Solicitors:
AMB Cornish (Plaintiff)
GP Gee (First and Second Defendant)
C Nehme (Third Defendant)
Hicksons Lawyers (Plaintiff)
Blackstone Waterhouse Lawyers (First and Second Defendant)
Fortis Law Group (Third Defendant)
File Number(s): 2017/230385 Publication restriction: Nil
Judgment – ex tempore
Revised & issued 14 March 2018
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On 21 November 2017, I delivered my decision in these proceedings (published as [2017] NSWSC 1576). I granted leave to the plaintiff (“the Club”) to discontinue the proceedings against each of the first defendant (“Kaloriziko”), the second defendant (“Mr Gav”), and the third defendant (“Mr Chanine”). I expressed preliminary views as to costs, but made no orders, and granted leave to the parties to apply in due course if orders could not be agreed. The parties have not been able to reach full agreement, and accordingly I must deal with the dispute which remains concerning costs.
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The Club’s claim was for specific performance of a contract for the sale of land it, as vendor, had made with Kaloriziko as purchaser. The Club claimed payment of the contractual amount, or alternatively, damages against the second and third defendants who had guaranteed Kaloriziko’s liabilities. Following the hearing, the Club announced it wished to discontinue the proceedings. I decided to permit that because I considered that the Club was entitled to specific performance and its change of position was reasonable in the face of ongoing resistance from Kaloriziko to the making of an order for specific performance.
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The consequences of my decision, so far as it concerns costs, are mainly agreed. I expressed the view that the Club should pay the costs of the third defendant who was separately represented. This is agreed as between the Club and Mr Chanine. I also expressed the view that there should be no order as to costs as between the Club, and Kaloriziko and Mr Gav (who are commonly represented) because the plaintiff had succeeded on the specific performance issue, even though it had discontinued. This is agreed as between the Club and Kaloriziko, so that the dispute concerns the costs of Mr Gav only.
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The Uniform Civil Procedure Rules 2005 (NSW), r 42.19(2) provides that unless the Court otherwise orders, the discontinuing party must pay the costs of any claim which is discontinued. Counsel for Kaloriziko and Mr Gav argues that this applies to Mr Gav. His argument is that the only claim against Mr Gav was a claim as guarantor and the Court should only order otherwise under r 42.19(2) for sound and principled reasons.
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Counsel for the Club submitted that there were such reasons. He pointed out the common representation of Kaloriziko and Mr Gav, and observed that their submissions had expressed common opposition to the relief sought. Counsel also submitted that Mr Gav had a personal interest as guarantor to resist specific performance. Counsel relied on observations I made in my decision at [22]-[27] about the risks to which Mr Gav would be exposed as a director of Kaloriziko, should Kaloriziko not perform the contract.
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Although Mr Gav’s interests could have been affected indirectly by an order for specific performance, the point of my remarks was that the effect of Kaloriziko not being required to perform was potentially adverse to Mr Gav, rather than favourable. In any event, such indirect or commercial interests seemed to me to be irrelevant. Mr Gav was not a necessary or appropriate party to the claim for specific performance against Kaloriziko. The fact that the submissions were expressed as being made on behalf of both Kaloriziko and Mr Gav jointly is of no consequence. In my opinion, counsel for Kaloriziko and Mr Gav is, strictly speaking, correct in saying that the only claim against Mr Gav was under the guarantee. In the circumstances r 42.19(2) requires an order in Mr Gav’s favour on that claim.
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That, however, does not mean that Mr Gav should be entitled to an order in his favour for the whole of the costs of the proceedings. The claim for specific performance was clearly the dominant issue. To my observation, had no claim been made against Mr Gav under the guarantee, there would have been little, if any, effect on the length of the hearing. In the circumstances the proper order is that the plaintiff should pay the costs of the proceedings solely referable to the claim against Mr Gav as guarantor.
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This means that the costs order in favour of Mr Gav may have little or no value, but I cannot be sure on the material before me that it has no value, and Mr Gav has been required to bring this application to vindicate his rights under the Rules, whatever they may be worth. Accordingly, the costs order in favour of Mr Gav must include the costs of this application.
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The orders of the Court are:
(1) Order that the plaintiff pay the first and second defendant’s costs of the proceedings to the extent solely referable to the plaintiff’s claim against the second defendant as guarantor, including, for this purpose, the costs of the application for costs.
(2) Otherwise make no order as to costs between the plaintiff and the first and second defendants.
(3) Order that the plaintiff pay the third defendant’s costs of the proceedings.
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Decision last updated: 14 March 2018
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