Wentworth Place Pty Ltd (in liquidation) (administrators appointed) v Gregory Ray Golding (Costs)

[2020] NSWSC 928

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Wentworth Place Pty Ltd (in liquidation) (administrators appointed) v Gregory Ray Golding (Costs) [2020] NSWSC 928

Hearing dates:

Written submissions

Decision date:

21 July 2020

Jurisdiction:

Equity - Commercial List

Before:

Hammerschlag J

Decision:

The defendants are to pay the plaintiffs’ costs of the proceedings on the indemnity basis, which costs are specified and fixed at $73,044.73.

Catchwords:

COSTS – Indemnity costs – Specified gross sum instead of assessed costs – Civil Procedure Act 2005 ss 98(1)(c), 98(4)(c) – Where administrators of company raise a special levy from shareholders to pay necessary costs and expenses – Where defendants refuse to pay but have no defence and administrators commence proceedings to recover the levy and eventually the defendants capitulate – Indemnity costs warranted – Gross sum order appropriate

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

Stephen Richard O’Ryan v Greg Ray Golding [2019] NSWSC 1229

Stephen Richard O’Ryan v Gregory Ray Golding No.2 [2019] NSWSC 1349

Stephen Richard O’Ryan v Gregory Ray Golding No.3 [2019] NSWSC 1372

Golding v O’Ryan [2019] NSWCA 259

Stephen Richard O’Ryan v Gregory Ray Golding (No.4) [2020] NSWSC 424

Category:

Costs

Parties:

Wentworth Place Pty Ltd (in liquidation) (in administration) ACN 000 268 128 – Plaintiff
Gregory Ray Golding - First Defendant
Deborah Anne Golding - Second Defendant

Representation:

Counsel:
J. Hynes – Plaintiff
Self-represented – First and Second Defendants

Solicitors:
Corrs Chambers Westgarth – Plaintiff
Self-Represented – First and Second Defendants

File Number(s):

2020/70464

JUDGMENT

1. HIS HONOUR:   The background to this matter can be garnered from earlier judgments: see Stephen Richard O’Ryan v Greg Ray Golding [2019] NSWSC 1229; Stephen Richard O’Ryan v Gregory Ray Golding No.2 [2019] NSWSC 1349; Stephen Richard O’Ryan v Gregory Ray Golding No.3 [2019] NSWSC 1372; Golding v O’Ryan [2019] NSWCA 259; Stephen Richard O’Ryan v Gregory Ray Golding (No.4) [2020] NSWSC 424.

2. The liquidators/administrators (the administrators) seek, by motion filed on 12 June 2020 against the defendants, a gross sum costs order calculated on the indemnity basis: see Civil Procedure Act 2005 (NSW) ss 98(1)(c), 98(4)(c). The parties have consented to the motion being dealt with on the papers.

3. The liquidators were appointed because of deadlock between the shareholders in Wentworth Place Pty Ltd (in liquidation) (administrators appointed) (the Company), which is a company title vehicle of a property at Point Piper where the Goldings, the O’Ryans, and Ms Freyberg live in disharmony. Their shareholdings are: the Goldings 54.39%; the O’Ryans 28.07%; and Ms Freyberg 17.54%. This is reflective of the fact that the Goldings reside in two of the four apartments on the property.

4. The administrators were appointed because they have capacity to raise special levies from the shareholders in accordance with the Company’s Articles of Association.

5. On 29 November 2019, Mr McInerney, one of the administrators, issued special levy notices to the shareholders. The Goldings’ share was $149,628.24, the O’Ryans’ share was $77,221.27, and Ms Freyberg’s share was $48,252. The O’Ryans and Ms Freyberg paid in early December 2019, but the Goldings refused to pay. They wanted further information. The administrators provided it. Still, the Goldings did not pay.

6. The consequence was that the administrators were forced to start proceedings in this List, which they did on 4 March 2020. The Goldings filed a Commercial List Response on 21 March 2020.

7. On 21 April 2020, I gave judgment approving the administrators’ remuneration. Part of the special levy was to cover this remuneration.

8. The Goldings then, on 27 April 2020, paid $51,412.91, a short payment of $90,215.33.

9. On 12 May 2020, the Goldings, who have acted for themselves, finally capitulated and paid what they owed.

10. In these circumstances, the administrators filed the motion.

11. The Goldings’ position, as set out in a written outline signed by Mr Golding, is that no costs order should be made against them or no order should be made for costs before 21 February 2020, when the breakdown of the levy was provided, or after 12 May 2020, when the claim in the proceedings was resolved. They sought to rely on an unsworn affidavit of Mr Golding. By consent, I have treated this as part of the Goldings’ submissions.

12. In resisting indemnity costs, the Goldings argue that:

1. a special levy must be imposed in accordance with the power specified in the Constitution and in good faith and for a proper purpose;

2. it was unreasonable for the administrators not to have entered into discussions with them before and during the course of the litigation;

3. the basis for the levies was unclear and unsubstantiated;

4. the nature of the defence had been clearly flagged in correspondence from December 2019 and did not require express particularisation in the response;

5. additional costs, since 12 May 2020, are unreasonable and excessive; and

6. there has been no hearing on the merits of the action to assist the Court in making a determination as to costs.

13. These arguments are untenable:

1. the Goldings make no submission that the levy was not imposed under the Constitution, in good faith, or for a proper purpose;

2. it is plain, having regard to the very circumstances here, leaving aside the history of the matter, that the administrators cannot be criticised for not engaging in further discussions when the Goldings had no legitimate ground of resistance but would, I am prepared to infer, have been prepared to resist anyway;

3. on 21 February 2020, a detailed breakdown of the precise remuneration and disbursements intended to be covered was provided, but the Goldings still did not pay;

4. the Commercial List Response does not disclose any reasonable defence. It also made non-admissions, which is impermissible under paragraph 11 of Practice Note SC Eq 3, which regulates proceedings in this List. It was not incumbent on the plaintiff to search through earlier correspondence in a quest to find a defence; and

5. the plaintiffs have provided clear evidence of their costs from an experienced solicitor. The Goldings have not responded with any evidence of their own. Bringing the Court’s experience to bear, the amount claimed is neither excessive nor unreasonable.

14. This is undoubtedly a case where an order for indemnity costs is warranted.

15. It is manifest that the Goldings had no reasonable defence.

16. They have unreasonably and irresponsibly put the Company to needless expense in bringing proceedings to overcome their groundless resistance to the payment of the special levies, which were being raised in significant degree for their own benefit. Their capitulation is an acknowledgment of their untenable position. This is not a case of a commercial compromise.

17. The Goldings resist a specified gross sum order on the footing that costs should go to assessment because this would be a straightforward exercise. This may be so, but in the present case, the simplicity of the exercise is a factor favouring bringing this issue to a swift end without the further delay and expense, which the assessment process will involve. The administrators have ongoing functions and there is no good reason why the Company should wait for assessment.

18. The defendants are to pay the plaintiffs’ costs of the proceedings on the indemnity basis, which costs are specified and fixed at $73,044.73.

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Amendments

21 July 2020 - cl 13.5

21 July 2020 - Solicitors for the plaintiff

Decision last updated: 21 July 2020