Winau Aust Pty Ltd v LCC Property Development Pty Ltd (No 2)

[2023] NSWSC 1501

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Winau Aust Pty Ltd v LCC Property Development Pty Ltd (No 2) [2023] NSWSC 1501

Hearing dates:

4 December 2023

Date of orders:

4 December 2023

Decision date:

04 December 2023

Jurisdiction:

Equity

Before:

McGrath J

Decision:

See [17]

Catchwords:

PRACTICE AND PROCEDURE — judgments and orders — application for claim brought by third plaintiff to be dismissed and cross-claim brought by first cross-claimant to be discontinued and the proceedings be otherwise dismissed which would have the effect of resolving hard fought, complex and long-running proceedings — Uniform Civil Procedure Rules 2005 (NSW), r 12.1 — no order as to costs

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

183 Eastwood Pty Ltd v Dragon Property Development & Investment Pty Ltd [2023] NSWCA 146

Chen v Fang [2019] NSWSC 960

Furnish & Finish Pty Ltd v Hollands [2020] NSWSC 1593

Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84

Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2023] NSWSC 1355

Category:

Principal judgment

Parties:

Winau Aust Pty Ltd (ACN 614 471 984) (First Plaintiff)
Shunjiyuan Investments Pty Ltd (Second Plaintiff)
183 Eastwood Pty Ltd ATF the Eastwood Unit Trust (Receivers and Managers appointed) (Third Plaintiff/First Cross-defendant)
LCC Property Development Pty Ltd (Receivers and Managers appointed) (ACN 614 285 531) (First Defendant/Third Cross-defendant) (No appearance)
Ippin Textiles Pty Ltd (Third Defendant/First Cross-claimant)
Jia He Family Investments Pty Ltd (Fourth Defendant/Second Cross-claimant)
M Wang Family Pty Ltd (Fifth Defendant/Third Cross-claimant)
LV EDSB Pty Ltd (Sixth Cross-defendant) (No appearance)
Minghao Investment Pty Ltd (Seventh Cross-defendant) (No appearance)
Vicky and Winnie Pty Ltd (Eighth Cross-defendant) (No appearance)
John Tak Chin Lau (Ninth Cross-defendant) (No appearance)
Steven Zhuogon Ju (Eleventh Cross-defendant)
CK Consulting Pty Ltd (Eighth Defendant/Twelfth Cross-defendant)
L’Orient Legal Pty Ltd (Twelfth Defendant)

Representation:

Counsel:
J Foley (Third, Fourth, Fifth, Eighth and Twelfth Defendants)

Solicitors:
Piper Alderman (Third Plaintiff/First Cross-defendant)
Skylar Legal (Third, Fourth and Fifth Defendants)
Clyde & Co (Eighth Defendant/Twelfth Cross-Defendant)
Moray & Agnew (Twelfth Defendant)

File Number(s):

2018/00170894

Publication restriction:

Nil

JUDGMENT

1. On 9 November 2023, I gave judgment in these proceedings that the proceedings by the first, second and fourth plaintiffs (respectively Winau Aust Pty Ltd, Shunjiyuan Investments Pty Ltd and Junde Hong) against the first defendant, LCC Property Development Pty Ltd (Receivers and Managers appointed) be dismissed for want of due despatch pursuant to r 12.7(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR): Winau Aust Pty Ltd v LCC Property Development Pty Ltd [2023] NSWSC 1355.

2. By notice of motion filed 27 November 2023, the third, fourth and fifth defendants (respectively Ippin Textiles Pty Ltd, Jia He Family Investments Pty Ltd and M Wang Family Pty Ltd) seek the following orders:

1. The claims brought by the third plaintiff be dismissed, with no order as to costs.

2. Pursuant to r 12.1 of the UCPR, the cross-claimants be granted leave to discontinue the cross-claim filed 4 May 2021, with no order as to costs.

3. The proceedings be otherwise dismissed.

3. Mr J Foley appeared as counsel for the third, fourth and fifth defendants instructed by Skylar Legal, as counsel for the eighth defendant (CK Consulting Pty Ltd) instructed by Clyde & Co, and as counsel for the twelfth defendant (L’Orient Legal Pty Ltd) instructed by Moray & Agnew.

4. Ms L O’Keeffe from Piper Alderman appeared for the third plaintiff/first cross-defendant, 183 Eastwood Pty Ltd (in liquidation). The third plaintiff/first cross-defendant is the only active plaintiff with any claims left to be prosecuted in the proceedings. Ms O’Keeffe stated that the third plaintiff/first cross-defendant by its liquidator consented to the orders sought in the motion.

5. I am informed by Mr Foley that by making the orders sought in the summons it will bring an end to the entirety of all of the claims which are now remaining in these hard fought, complex and long-running proceedings, other than the outstanding application concerning costs which are sought by the first defendant against the first, second and fourth plaintiffs.

6. The cross-claim was brought by the third, fourth and fifth defendants (thereby becoming the first, second and third cross-claimants respectively) against 12 cross-defendants.

7. The relevant power I have been asked to exercise in relation to the cross-claim is one which permits the cross-claimants to discontinue the cross-claim on terms that there be no order as to costs. That power is contained in r 12.1(1) of the UCPR which states:

(1)   The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant—

…

(b)   with the leave of the court.

8. Rule 12.1(5) states that proceedings on a cross-claim are taken to be different proceedings to the proceedings on the originating process.

9. The usual consequence of proceedings being discontinued are set out in r 42.19 of the UCPR, which relevantly states:

(1)   This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1.

(2)   Unless the court orders otherwise… the plaintiff must pay such of the defendant’s costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.

10. The effect of r 42.19(2) of the UCPR is to create a default position concerning costs but not a presumption, with the discontinuing party required to show some “positive ground or good reason for departing from the ordinary course of awarding costs pursuant to that rule”: Chen v Fang [2019] NSWSC 960, Darke J at [53]-[54] and the authorities quoted therein.

11. The active parties to the claims remaining in the proceedings (being the third plaintiff/first cross-defendant, the third defendant/first cross-defendant, the fourth defendant/second cross-defendant, the fifth defendant/third cross-defendant, the eighth defendant/twelfth cross-defendant and the twelfth defendant) have now reached a settlement agreement which is conditional on the court making orders in accordance with the motion. That agreement takes the form of a deed of settlement which I am informed has now been executed by all of the parties to it.

12. On 27 November 2023, the motion was served by email from Skylar Legal as solicitors for first, second and third cross-claimants on each of the following parties:

1. the first, second and third plaintiffs – respectively Winau Aust Pty Ltd, Shunjiyuan Investments Pty Ltd and 183 Eastwood Pty Ltd (in liquidation) (which is also the first cross-defendant);

2. the third, sixth, seventh, eighth, ninth, eleventh, and twelfth cross-defendants – respectively LCC Property Development Pty Ltd (which is also the first defendant), LV EDSB Pty Ltd, Minghao Investment Pty Ltd, Vicky and Winnie Pty Ltd, John Tak Chin Lau, Steven Zuohong Ju, CK Consulting Pty Ltd (which is also the eighth defendant); and

3. the twelfth defendant – L’Orient Legal Pty Ltd.

13. The settlement has been reached in circumstances where the remaining active plaintiff has effectively abandoned prosecution of its claims by agreeing to the dismissal of them. This only leaves the cross-claim to be dealt with.

14. In light of the commercial settlement reached between the active parties and the proposed orders contained in the motion, the cross-claim in this case will never be heard on its merits and it is not appropriate to embark on a hearing of the merits in order to determine the question of costs on the proposed discontinuance: Furnish & Finish Pty Ltd v Hollands [2020] NSWSC 1593, Ward CJ in Eq (as her Honour, the President, was then) at [34] and the authorities contained therein. In those circumstances, where there is also no question as to the reasonableness of the conduct of any of the parties in both commencing and defending the proceedings, the proper exercise of the costs discretion will usually mean that the court would make no order as to the costs of the proceedings: Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84, Payne JA at [30].

15. It is also clear on the material before me that the third plaintiff/first cross-defendant has no assets of any value. In this regard, I was directed to the judgment of the New South Wales Court of Appeal in 183 Eastwood Pty Ltd v Dragon Property Development & Investment Pty Ltd [2023] NSWCA 146 where at [23] Simpson AJA recorded affidavit evidence that as at 17 May 2023 the third plaintiff/first cross-defendant had $111.20 in a bank account and otherwise had no other assets. Any pursuit of the cross-claim against the third plaintiff/first cross-defendant in those circumstances would obviously be fruitless.

16. As a result, I consider it is appropriate to make the orders sought in the motion.

17. Accordingly, I make the following orders:

1. The claims brought by the third plaintiff be dismissed, with no order as to costs.

2. Pursuant to r 12.1 of the UCPR, the cross-claimants be granted leave to discontinue the cross-claim filed 4 May 2021, with no order as to costs.

3. Except in relation to the outstanding application concerning costs by the first defendant against the first, second and fourth plaintiffs, the proceedings be otherwise dismissed.

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Amendments

04 December 2023 - Amendment to cover sheet

13 December 2023 - Amendment to cover sheet

Clerical amendment to [3] of decision