B32 Investments Pty Ltd v The Owners – Strata Plan 81539 (Costs)

Hearing dates: On the papers

Date of orders: 20 March 2026

Decision date: 20 March 2026

Jurisdiction: Equity

Before: Hammerschlag CJ in Eq

Decision: The Plaintiffs are to pay the Defendant’s costs of the proceedings.

Catchwords: COSTS — Uniform Civil Procedure Rules 2005 (NSW) r 42.1 — where Plaintiffs bring unsuccessful proceedings claiming a declaration that the Defendant unreasonably withheld consent to the substitution of security provided under contractual arrangements between them — whether costs should follow the event or some other order made — HELD — no good reason to depart from the usual rule that costs follow the event

Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Category: Costs

Parties: B32 Investments Pty Ltd (First Plaintiff)
Arinson Holding Pty Ltd (Second Plaintiff)
The Owners – Strata Plan 81539 (Defendant)

Representation: Counsel:
J Foley (Plaintiffs)
M Swanson (Defendant)
Solicitors:
HWL Ebsworth (Plaintiffs)
Sparke Helmore (Defendant)

File Number(s): 2025/00472457

Publication restriction: Nil

JUDGMENT

1. On 6 March 2026 I delivered the principal judgment: see B32 Investments Pty Ltd v The Owners – Strata Plan 81539 [2026] NSWSC 160 (P****rincipal J****udgment).

2. I provisionally ordered that the Plaintiffs are to pay the Defendant’s costs but stayed the order to afford the parties an opportunity to seek some other order, by giving written notice.

3. The Plaintiffs availed themselves of this opportunity and provided written submissions dated 13 March 2026. The Defendant responded on 16 March 2026. It is appropriate to deal with costs on the papers.

4. Definitions used in the Principal Judgment are used here.

5. The Plaintiffs propose two alternative costs orders. Primarily they seek that for the period up to and including 19 February 2026, each party pay their own costs, and that from 20 February 2026, the Plaintiffs pay the Defendant’s costs as agreed or assessed.

6. Their alternative proposed order is that they pay the Defendant’s costs as agreed or assessed, excluding the costs of, and occasioned by, the relisting of the proceedings on 18 February 2026.

7. The Plaintiffs argue that the Defendant should not get its costs to 19 February 2026 because:

8. the Defendant did not, until late December 2025, take steps to obtain qualified advice about, and to properly respond to, the valuation, other documents and information provided by the Plaintiffs as to the value of the substitute security;

9. prior to serving its evidence on 19 February 2026, the Defendant’s sole concerns were in connection with the value of the proposed substitute property;

10. the Defendant did not in fact decline to consent to the substitution, and did not explain the basis upon which it ultimately decided to withhold its consent, until 19 February 2026 when it served its lay evidence; and

11. by not appropriately engaging with the Plaintiffs, the Defendant put the Plaintiffs in the “invidious position” where they needed to commence the proceedings to compel the Defendant properly to engage with the Plaintiffs’ request for substitution.

12. The Plaintiffs accept that the starting point is that costs follow the event and that they need to demonstrate a basis for departing from that position: see Uniform Civil Procedure Rules 2005 (NSW) r 42.1. [1]

13. In my view, not only have the Plaintiffs not shown any basis to depart from the ordinary rule that costs follow the event, but there is every good reason that costs should do so. Each of the following reasons is sufficient on its own to result in the Plaintiffs having to pay the Defendant’s costs of the proceedings. The combination of those reasons puts it beyond doubt.

14. First, the Plaintiffs’ position was unsustainable in law and fact from the start. They always offered inferior security.

15. Second, the offer of inferior security was against the background of their earlier conduct described in the Principal Judgment.

16. Third, it is well established that the Defendant was entitled to rely on relevant considerations even if it did not rely on them at the beginning: Principal Judgment at [42].

17. Finally and perhaps most importantly, even after the Defendant appropriately engaged with the Plaintiffs (to use the Plaintiffs’ terminology), the Plaintiffs nevertheless persisted in their unsustainable argument that the Defendant acted unreasonably in declining the substitution. In other words, history proves that they would have sued anyway and it would have made no difference to the course the Plaintiffs ultimately took had the Defendant acted differently.

18. The Plaintiffs are to pay the Defendant’s costs of the proceedings.

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Endnote

Uniform Civil Procedure Rules 2005 (NSW) r 42.1 provides: “Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.”