Sydney City College of Management Pty Ltd v Castle College Pty Ltd
[2017] NSWSC 861
•4 July 2017
|
New South Wales |
Case Name: | Sydney City College of Management Pty Ltd v Castle College Pty Ltd |
Medium Neutral Citation: | [2017] NSWSC 861 |
Hearing Date(s): | On the papers |
Date of Orders: | 4 July 2017 |
Decision Date: | 4 July 2017 |
Jurisdiction: | Equity |
Before: | Emmett AJA |
Decision: | (1) The proceedings against the First Defendant be otherwise dismissed. |
Catchwords: | COSTS — Party/Party — Exceptions to general rule that costs follow the event — whether conduct was unreasonable — whether it was unreasonable for plaintiff to commence proceedings — no order as to costs |
Legislation Cited: | Nil |
Cases Cited: | Nil |
Texts Cited: | Nil |
Category: | Costs |
Parties: | Sydney City College of Management Pty Ltd (Plaintiff) |
Representation: | Mr P O’Connor (Plaintiff) |
File Number(s): | 2016/305885 |
Publication Restriction: | Nil |
JUDGMENT
These proceedings (the SCCM Proceedings) were brought by Sydney City College of Management Pty Ltd (SCCM) against Castle College Pty Ltd (Castle) and Astley College Australia Pty Limited (Astley). They were concerned with entitlement to possession of premises situated at Level 1, 303 Pitt Street, Sydney (the Premises). The SCCM Proceedings have been resolved, except for a question of costs as between SCCM and Castle. Castle now contends that SCCM should be ordered to pay its costs. SCCM, on the other hand, contends that there should be no order as to the costs of the SCCM Proceedings as between it and Castle.
The Premises are owned by Jiwunda Pty Ltd and Terabu Pty Ltd (the Owners). The Owners granted a lease of the Premises to Castle (the Lease). As at July 2016, Castle had discussed with both Astley and SCCM the possibility of sub-letting the Premises. On 13 July 2016, Castle and SCCM exchanged communications regarding the grant of a sub-lease of the Premises to SCCM by Castle. However, on 15 July 2016 Castle purported to grant a sub-lease of the Premises to Astley (the Sub-lease). Castle executed the documents and Astley paid a month’s rent; paid for fixtures and fittings; and provided a bank guarantee. Astley subsequently entered into occupation of the Premises under the Sub-lease.
On 20 July 2016, Castle wrote to SCCM informing SCCM that Castle would not be proceeding with the assignment of the Lease to SCCM. SCCM alleged that Castle had entered into a binding sub-lease agreement with SCCM on 13 July 2016. SSCM commenced proceedings against Castle in the Equity Division on 4 August 2016 seeking to enforce the agreement of 13 July 2016 (the August Proceedings). The August Proceedings were ultimately settled, and the Owners effectively agreed to the assignment of the Lease to SCCM.
As a result of the events described, a dispute arose as to who was entitled to occupation of the Premises as between Astley and SCCM. On 19 August 2016, Astley commenced proceedings against Castle in the Equity Division (the Astley Proceedings). In the Astley Proceedings, Astley sought an order restraining Castle from interfering with its quiet enjoyment of the Premises, with its access to the Premises or with the services that it enjoyed as sub-tenant of the Premises. Astley filed an amended summons on 21 October 2016 in which the Owners were joined as defendants. In the amended summons Astley sought orders restraining the Owners from de-activating keys giving Astley access to the Premises.
In the meantime, on 13 October 2016, SCCM commenced the SCCM Proceedings and sought a declaration that SCCM was the lawful assignee of the Lease and a declaration that SCCM was entitled to occupy the Premises. SCCM also claimed ancillary relief, including a declaration that Astley was trespassing by occupying the Premises and an order that Astley vacate the Premises. SCCM also sought orders restraining Castle from granting access to the Premises to Astley and restraining Castle from purporting to assign its interest in the Lease to Astley.
Both the Astley Proceedings and the SCCM Proceedings came on for hearing before me on 1 November 2016. In the course of argument on that day, SCCM contended that the Sub-lease was invalid because Castle had failed to comply with a requirement of the Lease that the Owners be satisfied as to certain matters before any sub-lease was granted. Both Astley and Castle contended that, although Castle may have acted in breach of the Lease in granting the Sub-lease, that of itself did not invalidate the Sub-lease. That is to say, while the breach may have entitled the Owners to forfeit the Lease, the Owners had not taken steps to do so. After debate on that question, SCCM withdrew its claims against Astley. Orders were then made by consent in both proceedings.
In the Astley Proceedings, orders were made to give substantive relief in accordance with the prayers in Astley’s summons. Orders were made for the payment of Astley’s costs and the summons was otherwise dismissed.
In the SCCM Proceedings, orders were made on 1 November 2016 declaring that SCCM is the lawful assignee of the Lease and that SCCM’s interest as so declared is subject to the Sub-lease. Most of the other prayers for relief made by SCCM were dismissed, save for its claims against Castle including a claim for damages. SCCM was directed to file and serve a statement of claim in respect of its remaining claims against Castle and Castle was directed to file a defence and any cross-claim. After argument as to whether SCCM should be ordered to pay Castle’s costs of the SCCM proceedings to date, I concluded that the question of costs as between Castle and SCCM should be deferred pending the determination of SCCM’s claim for damages against Castle, which at that stage had not been formulated. SCCM was ordered to pay Astley’s costs of the proceedings and the question of costs as between SCCM and Castle was reserved.
I directed that the SCCM Proceedings be listed for directions before the Registrar on 15 December 2016, after the pleadings had been finalised in accordance with the directions that I gave. In the events that have happened, no statement of claim was filed by SCCM. Further, it appears that, as a result of an oversight, the SCCM Proceedings were not listed on 15 December 2016. Accordingly, in due course, the SCCM Proceedings were relisted before Darke J on 30 March 2017 in order to finalise them. On that occasion, Darke J directed, by consent, that the question of costs as between SCCM and Castle be determined on the papers and that written submissions be filed by each of SCCM and Castle. Written submissions have now been filed.
It now appears that SCCM has no intention of pursuing its claim for damages as against Castle. Castle contends, therefore, that SCCM is in the position of an unsuccessful plaintiff. Following abandonment of that claim, it has been totally unsuccessful as against Castle. All of SCCM’s claims against Castle have, in effect, failed, other than prayer 1 for a declaration that SCCM was the lawful assignee of the Lease, a matter that was not substantially in issue.
SCCM, on the other hand, contends that the conduct of Castle led SCCM to commence the SCCM Proceedings. Thus, in mid-2016, Castle knowingly entered into and continued negotiations with both SCCM and Astley for the assignment of the Lease. Neither SCCM nor Astley was aware of the extent of the negotiations that Castle engaged in with the other and each was led to believe that there was no impediment to concluding their respective negotiations with Castle on the basis that it would obtain possession of the Premises.
SCCM asserts that Castle deliberately failed to inform it and Astley of the true extent of the negotiations with the other. Specifically, Castle executed the Sub-lease on 15 July 2016, at a time when the request for assignment of the Lease from Castle to SCCM was being considered by the Owners. Five days after the Sub-lease was executed by Castle, both the Owners and SCCM were informed that Castle was no longer proceeding with the assignment to SCCM. That resulted in SCCM commencing the August Proceedings against Castle seeking to enforce the agreement of 13 July 2016 to assign the Lease.
SCCM contends that, between 3 August 2016 and 15 August 2016, Castle continued to withhold relevant information from both Astley and SCCM regarding the true arrangements that Castle had entered into. It asserts that Castle’s actions were designed to promote the impression in both Astley and SCCM that each had a secure agreement that would entitle it to occupation of the Premises. On 16 August 2016, orders were made that the August Proceedings be dismissed. The Court noted the agreement between the parties that the Owners would effectively agree to the assignment of the Lease to SCCM. SCCM contends the assignment was worthless because SCCM was not given occupation of the Premises because, in the meantime, the Sub-lease had been granted to Astley.
In all the circumstances, I do not consider that the commencement of the SCCM Proceedings by SCCM was unreasonable. The circumstances that gave rise to the SCCM Proceedings were brought about by the conduct of Castle in playing Astley off against SCCM. I consider that the appropriate course is to make no order as to the costs of the SCCM Proceedings as between Castle and SCCM. SCCM did not file a statement of claim and it is apparent that it does not intend to pursue any claim for damages against Castle. Thus, it appears unlikely that any costs have been incurred after 1 November 2016, other than in relation to the question of costs itself. The SCCM proceedings should be otherwise dismissed as between SCCM and Castle. There should be no order as to the costs of the argument concerning costs.
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