The Owners Strata Plan No 89866 v Zouki (No 2)

[2024] NSWSC 764

Supreme Court

New South Wales

Medium Neutral Citation:	The Owners – Strata Plan No 89866 v Zouki (No 2) [2024] NSWSC 764
Hearing dates:	On the papers; submissions 5, 13 and 17 June 2024
Decision date:	20 June 2024
Jurisdiction:	Equity - Technology and Construction List
Before:	Stevenson J
Decision:	Indemnity costs refused
Catchwords:	COSTS – party/party – indemnity basis – whether costs should be awarded on indemnity basis – whether unreasonable of defendant not to accept offers
Cases Cited:	The Owners – Strata Plan No. 89866 v Zouki [2024] NSWSC 696
Category:	Costs
Parties:	The Owners – Strata Plan No. 89866 (Plaintiff/Applicant) John Joseph Zouki (First Defendant/First Respondent) Hardy Pty Limited (Second Defendant) Kevin Zouki (Third Defendant) Juliane Lahood (Fourth Defendant/Second Respondent)
Representation:	Counsel: D Byrne (Plaintiff/Applicant) G Campbell (First and Second Defendants/First Respondent) Solicitors: DEA Lawyers (Plaintiff/Applicant) Sanford Legal (First and Second Defendants/First Respondent)
File Number(s):	2020/177268

JUDGMENT

1. The background to this matter is set out in my judgment of 29 May 2024, which sets out the reasons why I decided to continue, but vary, the freezing orders made on 22 March 2024 against the second defendant, Hardy Pty Limited. ^[1] The original freezing order was in the sum of $3.2 million. I varied the order to $1.1 million.

   1. The Owners – Strata Plan No. 89866 v Zouki [2024] NSWSC 696.

2. I am now dealing with the costs of the application before me.

3. It is common ground that Hardy Pty Ltd should pay the plaintiff Owners Corporation’s costs.

4. What divides the parties is whether such costs should be on an indemnity basis from 18 April 2024, or alternatively, 23 April 2024.

5. On 18 April 2024, two working days before the original hearing before me, the Owners Corporation offered to settle the motion on the basis that Hardy Pty Ltd paid into Court $1.1 million and that the parties otherwise bear their own costs. The offer was open until the end of the day, that is for just over 3.5 hours.

6. Given the brevity of the period during which the offer was open, I cannot conclude it was unreasonable Hardy Pty Ltd not to accept it.

7. On 23 April 2024, after the motion was by consent adjourned, the Owners Corporation made a further offer to settle the motion on the basis of Hardy Pty Ltd paying $1 million into Court, with the freezing order then being dissolved and the parties paying their own costs.

8. That offer was made in an email between counsel and did not specify a date by which it should be accepted. The offer was not accepted. It was withdrawn on 8 May 2024.

9. The offer would have allowed the freezing order to be dissolved once Hardy Pty Ltd pay the $1 million in Court, whereas the result of the contest is that Hardy Pty Ltd must paid $1.1 million into Court to achieve the same result. To that extent, the Owners Corporation has achieved a better result. Nonetheless, I am not able to conclude that it was unreasonable of Hardy Pty Ltd not to accept the offer, particularly as it was not expressed to be open for any particular period and was withdrawn without notice.

10. Accordingly, I am not persuaded that this is an appropriate case in which to order indemnity costs.

11. I should mention two further matters.

12. The first is that, in his submissions for Hardy Pty Ltd, Mr Campbell suggested that “the freezing order only covers an amount ‘up to $1.1 million’ that is actually in the possession of [Hardy Pty Ltd]”.

13. That is not correct.

14. The effect of the order is to prevent Hardy Pty Ltd from dealing with its assets in any manner which results in the unencumbered value of those assets falling below $1.1 million. It is important that Hardy Pty Ltd understands that.

15. The second is that the solicitors for the Owners Corporation have drawn my attention to the fact that I made two factual errors in my ex tempore reasons of 31 May 2024. First, at [2], I said that the Owners Corporation agreed that, for present purposes, Mr Kevin Zouki, rather than Mr John Zouki was the builder. The Owners Corporation’s position is that the evidence it has thus far adduced does not establish that Mr John Zouki was the builder. Second, also at [2], I said that the proceedings have discontinued against Mr John Zouki. The correct position is that the Owners Corporation’s application for a freezing order against Mr Zouki has been discontinued, and the freezing order against Mr Zouki dissolved by consent.

**********

Endnote