The Trust Company Ltd as custodian for the Ardent Leisure Trust v AMF Bowling Worldwide Inc

[2018] NSWSC 1098

Supreme Court

New South Wales

Medium Neutral Citation:	The Trust Company Ltd as custodian for the Ardent Leisure Trust v AMF Bowling Worldwide Inc [2018] NSWSC 1098
Hearing dates:	Written submissions
Decision date:	16 July 2018
Jurisdiction:	Equity - Commercial List
Before:	Hammerschlag J
Decision:	Application for indemnity costs and gross lump sum costs order refused.
Catchwords:	COSTS – where proceedings are set down to be heard quickly because of the nature of the underlying commercial dispute – where a change in commercial circumstances intervenes rendering the primary relief otiose and the case is to proceed as one for different relief but concerns the same dispute – where the trial date is vacated and the plaintiff is ordered to pay the defendant’s costs thrown away by the vacation – the defendant seeks the costs of the entire proceedings to date on an indemnity basis and a gross lump sum order; HELD no further costs order beyond that already made is appropriate
Category:	Procedural and other rulings
Parties:	The Trust Company Ltd (as custodian for the Ardent Leisure Trust) ACN 004 027 749 – First Plaintiff Bowling Centres Australia Pty Ltd ACN 003 710 110 – Second Plaintiff AMF Bowling Worldwide Inc – Defendant
Representation:	Counsel: N.M. Bender – First Plaintiff / Respondent G.M. Drew – Defendant / Applicant   Solicitors: Arnold Bloch Leibler – First / Second Plaintiffs Spruson & Ferguson Lawyers – Defendant
File Number(s):	2018/66030

Judgment

1. HIS HONOUR:    The plaintiffs owned a ten pin bowling and entertainment business including bowling alleys which operated using the AMF brand. AMF is a registered trade mark owned by the defendant. The trade mark had been used by the plaintiffs under a licence agreement entered into in 2005 between AMF and the second plaintiff, and which had been assigned to the first plaintiff.

2. On 20 December 2017, the plaintiffs entered into a written sale agreement with The Entertainment and Education Group (TEEG) to sell the business. It was intended that the AMF licence would be assigned back to the second plaintiff and that the shares in the second plaintiff would be sold to TEEG. Completion of the sale agreement was subject to a condition precedent that AMF consented to the proposed assignment. AMF refused to give consent unless it was paid an upfront fee of US$2,000,000 and an annual fee of US$300,000 as consideration for doing so.

3. On 28 February 2018, the plaintiff started these proceedings. The primary relief claimed was declarations that they were entitled to assign the licence and that AMF’s refusal was impermissible as being in bad faith and contrary to an implied term of the licence. A claim for damages was included in the alternative.

4. The sale agreement had provisions that if AMF did not consent by 30 April 2018, TEEG had the right to terminate it.

5. The plaintiff sought for its primary relief to be heard and determined before the deadline of 30 April 2018. Plainly, the matter had commercial urgency, albeit self-imposed by the terms of the sale agreement.

6. Over the opposition of the defendant, I fixed the matter to commence on 28 May 2018. This was the earliest time which would have allowed the case to be properly prepared and justly tried.

7. The plaintiffs tried and failed to obtain an extension of the completion date from TEEG. The transaction was then re-negotiated on the basis that the AMF branded bowling centres to be sold to TEEG were rebranded so that AMF’s trade mark would no longer be used and no consent from it was necessary for the sale to be completed.

8. In these circumstances, the plaintiffs’ principal relief became otiose and it properly moved the Court to vacate the hearing date, which I did on 14 May 2018. I ordered the plaintiff to pay the defendant’s costs thrown away by vacation of the hearing and that those costs be assessable and payable forthwith. The defendant indicated an intention to move the Court that the plaintiffs pay all of the costs of the proceedings to date on an indemnity basis. I ordered the parties to provide written submissions, which they did. The defendant seeks such costs and a gross lump sum assessment of them.

9. The parties have agreed that I should rule on the defendant’s applications on the papers.

10. This is not a case where the plaintiff should pay the costs of the proceedings to date, let alone one where indemnity costs are justified.

11. The issues which the plaintiffs intend to agitate are still live, the relief sought is now damages. The plaintiffs amended their Summons and Commercial List statement on 2 July 2018 to claim damages as their primary relief. Whether they are entitled to damages will turn, amongst others, on the validity of the original complaint. Those matters are yet to be tried.

12. The plaintiffs in no way acted irresponsibly whether in bringing the proceedings, obtaining the earliest practicable hearing date or in moving the Court for a vacation in the commercial circumstances which then occurred. This list operates to facilitate the expeditious hearing of commercial disputes. It is to be expected that commercial circumstances in significant transactions may change, sometimes quickly.

13. I do not propose to vary the costs order which I earlier made.

14. I do not propose to order a gross lump sum assessment. Justice does not, in the circumstances of this case, require that I do so where both parties are substantial commercial entities and all which such an assessment would be concerned with is costs thrown away by the vacation of the hearing. In any event, the defendant has not established what, if anything was thrown away.

15. The defendant’s applications are dismissed.

************

Decision last updated: 16 July 2018