The Court delivered its principal judgment in these proceedings on 27 February 2023: Croftstar Pty Ltd as trustee for The Croftstar Investment Trust v Norfeld Pty Ltd [2023] NSWSC 143 ("J").
In essence, Croftstar's claim was for an order for specific performance of a deed dated 28 May 2020 that required Norfeld to sell it certain land at Silverwater, as well as under a contract for sale that was consistent with the deed and entered into in order to effectuate the deed.
The relevant facts are more fully set out in the principal judgment.
The defences raised by Norfeld were spurious, and as I stated at J [38], the case was as clear a case as can be imagined for the Court to make the orders sought by Croftstar. I found at J [40] that Croftstar was entitled to the substantive orders that it sought in the summons.
However, for reasons set out in the principal judgment, I invited Croftstar to submit draft short minutes of order to Norfeld and to my Associate to give effect to the reasons in the primary judgment, and I also provided an opportunity to the parties to exchange and deliver short written submissions on the issue of costs. I found in the primary judgment that Croftstar was at least entitled to an order that Norfeld pay its costs on the ordinary basis, but Croftstar had applied for its costs to be payable on the indemnity basis. It was necessary in the circumstances for the Court to make a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW), as one of the orders sought by Croftstar was that it be permitted to deduct the amount of the costs payable to it by Norfeld from the price payable for the transfer of the land on settlement of the deed and contract for sale.
In accordance with the invitation made by the Court, Croftstar delivered further written submissions on 6 March 2023. Norfeld did not take advantage of the invitation to do so. Rather, Mr Preston, the managing director of Norfeld, sent an email to my Associate dated 28 February 2023 in which he stated that Norfeld had filed a complaint against me to the Independent Commission Against Corruption. Mr Preston made various allegations concerning the conduct of Croftstar, which to me on their face appeared to be entirely baseless. Mr Preston also asserted that I had concealed an indictable offence by others, which he claimed is a crime.
Croftstar Pty Ltd as trustee for The Croftstar Investment Trust v Norfeld... [2023] NSWSC 439 | Case summary | Zoe
Mr Preston also did not avail himself on behalf of Norfeld of the invitation made in the primary judgment for Norfeld to comment on the proposed orders to give effect to my reasons, or in respect of Croftstar's claim that the costs should be ordered in its favour on the indemnity basis, or as to the appropriateness of a gross sum costs order being made in the amount claimed by Croftstar.
Croftstar supported its application by an affidavit of its solicitor made on 6 March 2023. The solicitor provided detailed evidence of the costs incurred by Croftstar. The amount of solicitors' fees was $34,379.47, and the total disbursements were $43,684.75, giving a total amount of legal costs and disbursements of $78,465.22. I am satisfied that the hourly rates charged by Croftstar's legal representatives were reasonable. I am also satisfied that the total amount of costs is reasonable, and in my experience, even conservative. I am satisfied that Croftstar's legal representatives have conducted these proceedings on its behalf in a cost efficient manner.
I accept Croftstar's submissions that a special costs order that costs be assessed on the indemnity basis on the principles set out by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. In my view, this is a clear case for an order that the costs of the successful plaintiff be assessed on the indemnity basis. Not only were all of the defences raised by Norfeld spurious and scandalous, but they were only raised when the time came for Norfeld to perform the obligations that it had willingly accepted.
As noted in J [29], there was unchallenged evidence from the principal of Croftstar that Mr Preston had said to him: "I'm not settling. I can stretch this out for 20 years." Norfeld's defence in this case was an abuse of the Court's process. Norfeld sought to avoid its clear contractual obligations by using its entitlement to defend the proceedings in this Court to deny Croftstar its lawful rights for as long as possible.
The appropriateness of the costs being assessed on the indemnity basis is supported by the terms of a letter dated 16 June 2022 from Croftstar's solicitors to Mr Preston on behalf of Norfeld. By that letter, Croftstar warned Norfeld that if it did not comply with its contractual obligations, it would be necessary for Croftstar to commence these proceedings, and if it did so it would seek an order for costs on the indemnity basis. Among other things, the letter reminded Norfeld that it had enjoyed the use of the deposit of $880,000 paid by Croftstar since 5 April 2017 and that it was refusing to transfer the property in accordance with the deed and the contract for sale some five years later.
I am satisfied that this is a proper case for the Court to make a gross sum costs order in favour of Croftstar in accordance with the principles in Hamod v State of New South Wales (No 13) [2009] NSWSC 756 at [29], and on appeal Hamod v State of New South Wales [2011] NSWCA 375 at [813] to [820]. There is no reason at all for the Court to think that Norfeld would participate in a cooperative way, if the costs order in favour of Croftstar were required to be assessed in the conventional way.
Although the costs and disbursements incurred by Croftstar total $78,465.22, it only seeks an order that the costs payable to it be fixed at $65,000, which is a discount of 17%. As Croftstar is entitled to its costs on the indemnity basis, that is a fair and reasonable discount.
I am satisfied that the orders proposed by Croftstar in the draft short minutes of order that it has submitted are appropriate. The only substantive alteration that I have made is that I have substituted the amount $65,000 for $55,000 in draft order 3, as I assume that the latter sum involves a typographical error.
The orders of the Court are as follows:
The Court Orders:
1. DECLARE that on 27 May 2020 a contract was formed (the "Agreement") between the Plaintiff and the Defendant, by Deed dated that date, pursuant to which, and in the circumstances that have occurred, the Defendant must sell the land comprised within Folio Identifiers Auto-Consol XXXX-XXX and Auto-Consol XXXX-XXX and commonly known as XXX XXX Road, Silverwater, NSW, 2128 (the "Property") to the Plaintiff for the sum of $8,800,000 (plus GST) (the "Price").
2. DECLARE that the Plaintiff has paid $880,000 to the Defendant by way of deposit for the purchase of the Property in accordance with the Agreement (the "Deposit").
3. ORDER that the Defendant pay the Plaintiff's costs of and incidental to the proceedings on a lump sum basis (pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW)) and on the indemnity basis, fixed in the amount of $65,000 (the "Fixed Costs").
4. DECLARE that on completion of the Agreement the Plaintiff is entitled to these credits against the Price:
1. the Deposit;
2. $120,000 in accordance with the Agreement;
3. the Fixed Costs.
1. ORDER that within twenty eight (28) days the Defendant is to vacate the Property, with the intent that vacant possession is given to the Plaintiff on completion.
2. ORDER that the Defendant do all things necessary to enable completion of the Agreement to take place in accordance with clause 30 of the Agreement, as soon as practicable after the Defendant has complied with order 5.
3. ORDER pursuant to section 94 of the Civil Procedure Act 2005 (NSW) that, if the Defendant does not comply with Order 6, the Registrar execute for and on behalf of the Defendant any notice of sale, transfer and any other documentation (including by way of the PEXA settlement system) necessary to discharge any mortgage or other encumbrance registered on the title to the Property and transfer the Property to the Plaintiff and deliver any such documentation to the Plaintiff's solicitors.
4. ORDER that:
1. the Defendant give the Plaintiff vacant possession of the Property as required by order 5;
2. the Plaintiff have leave to issue a writ for possession of the Property forthwith;
3. the writ for possession in (b) is not to be executed until 9am on 2 June 2023 and is otherwise permanently stayed if the Defendant has given the Plaintiff vacant possession of the Property by 9am on 26 May 2023.
[2]
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Decision last updated: 28 April 2023
Parties
Applicant/Plaintiff:
Croftstar Pty Ltd as trustee for The Croftstar Investment Trust