D Capital 2 Pty Ltd v Western - [2022] NSWSC 1283 - NSWSC 2022 case summary — Zoe

NSWNSWSC

D Capital 2 Pty Ltd v Western

[2022] NSWSC 1283

Supreme Court of NSW|2022-08-26|Before: Meek J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2022-08-26

Before

Meek J

Catchwords

(1994) 12 BCL 415 Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 May v Christodoulou (2011) 80 NSWLR 462
ex parte Lai Qin (1997) 186 CLR 622
[1997] HCA 6 Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Oshlack v Richmond River Council (1998) 193 CLR 72

Source

Original judgment source is linked above.

Catchwords

(1994) 12 BCL 415 Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 May v Christodoulou (2011) 80 NSWLR 462ex parte Lai Qin (1997) 186 CLR 622[1997] HCA 6 Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Oshlack v Richmond River Council (1998) 193 CLR 72

Judgment (43 paragraphs)

[1]

SW), s 74 Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 36.15, 36.1, 36.16, 42.1, 42.2, 42.8, 42.14, 42.15, 42.20, Pt 36, Pt 42 Cases Cited: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82 Bullock v London General Omnibus Co [1907] 1 KB 264 Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333 D Capital 2 Pty Ltd v Western [2022] NSWSC 1064 Devenish v Jewel Food Stores Pty Ltd (1990) 64 ALJR 533 DIF III - Global Co-Investment Fund LP v Babcock & Brown International Pty Limited (No 2) [2019] NSWSC 1578 Dimitrovski v Australian Executor Trustees Ltd [2013] NSWSC 337 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 31 ALR 397 FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 Furber v Stacey [2005] NSWCA 242 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688, (2003) 201 ALR 555 Ghougassian v Fairfax Community Newspaper Pty Ltd [2015] NSWCA 307 In the matter of Black Tie Holdings Pty Ltd (No 2) [2022] NSWSC 856 In the matter of Wetherill Park Holdings Pty Ltd (No 2) [2021] NSWSC 1397 Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28 Lahoud v Lahoud [2006] NSWSC 126 LanelIi v Hancock t/as Hancocks Solicitors [2012] NSWSC 417 Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 Leichardt Municipal Council v Green [2004] NSWSC 341 Leighton Contractors Pty Ltd v CE Heath Underwriting & Agency Services (1995) 8 ANZ Ins Cas 61-231; (1994) 12 BCL 415 Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 Meres v Meres (No 2) [2017] NSWSC 523 Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120 Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 PM Works Pty Ltd v Management Services Australia Pty Ltd [2018] NSWCA 168 Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 Regency Media Pty Ltd v AVV Australia Pty Ltd [2009] NSWCA 368 Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2004] QSC 47 Sanderson v Blyth Theatre Co [1903] 2 KB 533 Sent v Jet Corp of Australia Pty Ltd (1984) 2 FCR 201 Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308; [2006] NSWCA 114 Shorten v David Hurst Constructions Pty Ltd [2008] NSWSC 609 Vestris v Cashman (1998) 72 SASR 449 Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 Texts Cited: G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis) Ritchie's Uniform Civil Procedure NSW Category: Consequential orders Parties: D Capital 2 Pty Ltd (Plaintiff) Elisa Kim Western (First Defendant / First Cross-Defendant) Kane Bruce Parker (Second Defendant / First Cross-Claimant) Andrew Tuck Whye Hew (Third Defendant / Second Cross-Claimant) Daniel Young (Fourth Defendant / Third Cross-Claimant) Joanne Therese Hopwood (Fifth Defendant / Fourth Cross-Claimant) MALK Property Pty Ltd (Sixth Defendant / Fifth Cross-Claimant) Jason Luke Szepes (Seventh Defendant / Sixth Cross-Claimant) Daniel Gordon O'Connell (Eighth Defendant / Seventh Cross-Claimant) Zaher Tayyar (Nineth Defendant) Step by Step Conveyancing Pty Ltd (Tenth Defendant / Second Cross-Defendant) Wayne Danckert (Third Cross-Defendant) Representation: Counsel: G W Stapleton (Plaintiff and Third Cross-Defendant) F Corsaro SC / D A Allen (First and Eighth Defendants) A D Crossland (Second to Seventh and Nineth Defendants) D J Maccallum (solicitor) (Tenth Defendant) Solicitors: HFW Australia (Plaintiff and Third Cross-Defendant) Avondale Lawyers (First and Eighth Defendants) Watson Law (Second to Seventh and Nineth Defendants) Maccallum Lawyers (Tenth Defendant) File Number(s): 2021/257791

[3]

Request for minutes of orders to give effect to the principal judgment

These reasons assume a familiarity with the principal judgment and will adopt its abbreviations.
For the purposes of the hearing the parties were directed to prepare an 'Agreed Statement of Issues'. For the purposes of this judgment I will distinguish between those issues as being 'agreed hearing issues' and the issues which emerged in relation to giving effect to the reasons for judgment as being the 'outstanding order issues'
I directed the parties to submit agreed short minutes of order to give effect to the reasons for judgment including as to costs. In the event that there was no agreement between the parties, I directed that respective draft orders, submissions and any affidavits be provided to my Associate by 4:00 PM on 19 August 2022.
I adjourned the proceedings to 25 August 2022.
On 19 August 2022 the solicitors for DC2 provided my Associate with proposed draft orders that had been prepared by the second group and amended by DC2 in markup, which orders SBS had agreed to. The position of the first group with respect to the orders was not then known.
DC2 also provided submissions in respect of the proposed orders.
Separately counsel for the second group provided my Associate with a draft form of notice of motion seeking certain injunctive relief, an affidavit of Karen Watson sworn 19 August 2022 and an outline of submissions in support of costs orders and freezing orders.
On 22 August 2022 (4:59 PM) the solicitor for the first group provided to my Associate a draft of proposed orders sought and submissions of Francisco Gutierrez in support of the draft orders.
On or about 22 August 2022 the solicitor for the first group provided my Associate with an affidavit of Francisco Gutierrez sworn 19 August 2022 and an exhibit "FG" to that affidavit.
On 23 August 2022 (10:53 AM) Mr Maccallum, the solicitor for SBS, provided to my Associate the submissions for SBS as defendant and a cross-defendant. Mr Maccallum noted SBS's position as being that the question of costs could be determined on the papers.
On 24 August 2022 (9:35 AM) the solicitor for DC2 sent my Associate an email noting that there was no uniform agreement as to the proposed short minutes of order nor agreement by the defendants to the matter being dealt with on the papers.
The parties were not available to attend at 10:00 AM on 25 August 2022 and proposed an alternative timing.

[5]

Proposed orders in relation to matters of apparent agreement

In those circumstances on 24 August 2022 (4:07 PM) my Associate sent an email to the parties, legal representatives in the following terms: "Dear Practitioners, His Honour has considered the Short Minutes of Order and is prepared to make the orders and notations below. Please consider the proposed orders carefully and ensure that they are appropriate. If there are any amendments, please discuss these and send one email, consented to by all legal representatives in the matter, for his Honour's consideration. Upon confirmation that they are appropriate, his Honour will make the orders, I shall enter them into JusticeLink. The orders below leave outstanding certain other claims including for costs, release of security and restraining orders. The proceedings are listed for 10 AM tomorrow. However, the proceedings are not listed for hearing on costs as distinct from mention. His Honour has another matter, being a notice of motion, listed for hearing tomorrow commencing at 11 AM. His Honour is prepared to make available hearing time to the parties time on Friday 26 August to address the outstanding issues. If the parties are agreeable such a hearing on Friday can commence at 9AM or at some later time during the day but no later than 2 PM on the basis that the remaining matters will take hopefully no longer than one hour to hear. It is noted that if the parties have no joint availability on Friday 26 August, there may be some wait before his Honour will have available hearing time, noting that his Honour will be Duty Judge for the next two weeks and the following week commences a 10 day hearing. Your prompt attention to this matter would be greatly appreciated. The Court orders that: 1. The extension of the following caveats (those extensions having been ordered by the Court in this proceeding on 27 October 2021) cease: (a) Caveat … over [Unit 1]; (b) Caveat … over [Unit 2]; (c) Caveat … over [Unit 3]; (d) Caveat … over [Unit 4]; (e) Caveat … over [Unit 5]; (f) Caveat … over [Unit 6]; (g) Caveat … over [Unit 7]; (h) Caveat … over [Unit 8]; (i) Caveat … over [Unit 9]; and (j) Caveat … over [Unit 10]. 2. The second further amended statement of claim be dismissed. 3. The further amended cross-claim be dismissed as against each of the First Cross-Defendant (Elisa Kim Western), Second Cross-Defendant (Step by Step Conveyancing Pty Ltd) and Fourth Cross-Defendant (D Capital 2 Pty Ltd). 4. On the further amended cross-claim there be judgments against the Third Cross-Defendant (Wayne Danckert) in favour of each of the Second to Seventh, and Ninth Cross-Claimants in the sum in each case of $6,750 plus interest of $415.48, being for the period 26 February 2018 to 25 August 2022. 5. The Plaintiff and the Third Cross-Defendant (Wayne Danckert) pay the costs, on the ordinary basis, of the Second to Seventh and Ninth Defendants, and the Tenth Defendant of the proceedings on the second further amended statement of claim as agreed or assessed. 6. The Third Cross-Defendant (Wayne Danckert) pay to the Cross-claimants' costs, on the ordinary basis, of the further amended cross-claim against him as agreed or assessed. If the parties are agreeable, his Honour will vacate the listing date at 10 AM tomorrow."

[6]

Preliminary identification of outstanding issues

The email correspondence and materials provided by the parties did not identify any clear way what remained as outstanding issues.
I pause to note that where a judge delivers reasons for judgment and directs parties to bring in proposed short minutes of order to give effect to the reasons for judgment, it is of assistance to the Court if the parties themselves are able to do that in a form which clearly identifies to the judge (a) the orders that are agreed as between the parties and (b) a concise list of the outstanding disputed matters.
In those circumstances on 25 August 2022 (4:22 PM) my Associate sent an email to the parties, legal representatives in the following terms: "Dear Practitioners, The purposes of the listing tomorrow morning His Honour requests the parties to confer and clarify what issues now remain in respect of the orders. It appears (using abbreviated party references) that the following matters are outstanding issues: 1. Whether P & CD3 should pay the costs of D1&8 of the main claim on the ordinary basis or on the indemnity basis? 2. Whether D8 can now seek recovery of the deposit sum of $6750 plus interest? 3. What costs order should be made regarding the balance of the claims on the cross-claim being the claims against: a. CD1 & CD2 (Western & SBS); and b. CD4 (DC2)? 4. If the CCs are ordered to pay the costs of CD1 & CD2 should P/CD3&CD4 indemnify the CCs for those costs? 5. Whether to release to D1&8 sums held by way of security costs given by P: a. of $100,000 in favour of CC/D2-7&9? b. of $175,000 in favour of D1&8? 6. Should a restraining order be made against P dealing with : a. funds in the P's Westpac account up to $167,237 held for D1&8? b. funds in the P's Westpac account up to $121,942 held for D2-7,9? c. removing from Australia any assets up to $167,237 + $121,942? Please consider the above issues and confirm whether they are agreed as issues? If they are not agreed, or there are other issues, please discuss with the other representatives and identify the outstanding issues and send one email, consented to by all legal representatives in the matter, for his Honour's consideration as issues to be raised and or dealt with for the listing tomorrow."

[7]

Orders made in relation to apparently agreed matters

On 25 August 2022 following a series of emails between the parties' legal representatives and my Associate, relevantly: 1. the parties consented to the orders set out below being made and 2. the matter was listed for 9:00 AM on 26 August 2022.
As a consequence of the consent to specified orders being made to give effect to my reasons for judgment on 25 August 2022 I made the following orders: "1. Orders that the extension of the following caveats (those extensions having been ordered by the Court in this proceeding on 27 October 2021) cease: (a) Caveat … over [Unit 1]; (b) Caveat … over [Unit 2]; (c) Caveat … over [Unit 3]; (d) Caveat … over [Unit 4]; (e) Caveat … over [Unit 5]; (f) Caveat … over [Unit 6]; (g) Caveat … over [Unit 7]; (h) Caveat … over [Unit 8]; (i) Caveat … over [Unit 9]; and (j) Caveat … over [Unit 10]. 2. Orders that the second further amended statement of claim be dismissed. 3. Orders that the further amended cross-claim be dismissed as against each of the First Cross-Defendant (Elisa Kim Western), Second Cross-Defendant (Step by Step Conveyancing Pty Ltd) and Fourth Cross-Defendant (D Capital 2 Pty Ltd). 4. Orders that on the further amended cross-claim there be judgments against the Third Cross-Defendant (Wayne Danckert) in favour of each of the Cross-Claimants in the sum in each case of $6,750 plus interest of $415.48, being for the period 26 February 2018 to 25 August 2022. 5. Orders that the Plaintiff and the Third Cross-Defendant (Wayne Danckert) pay the costs, on the ordinary basis, of the Second to Seventh and Ninth Defendants, and the Tenth Defendant of the proceedings on the second further amended statement of claim as agreed or assessed. 6. Orders that the Third Cross-Defendant (Wayne Danckert) pay to the Cross-claimants' costs, on the ordinary basis, of the further amended cross-claim against him as agreed or assessed."
On 25 August 2022 (8:51 PM) Mr Crossland sent an email to my Associate with the consent of the other parties identifying the additional issues which the parties indicated were in dispute between them.

[8]

Listing and triaging of issues

On 26 August 2022 at the listing of the matter Mr Stapleton appeared for DC2, Mr Corsaro SC appeared with Mr Allen for the first group, Mr Crossland appeared for the second group and Mr Maccallum appeared for SBS.
In summary, the following occurred: 1. Mr Crossland handed up on behalf of the second group an outline of submissions in reply to DC2's submissions on costs and a further form of a notice of motion; 2. it became obvious that in relation to the disputed matters at least some of the parties wished to refine their submissions in a written form and potentially provide further materials on the disputed issues; 3. there was some interaction between myself and counsel in respect of the disputed issues essentially to get a flavour of the nature of the issues and for me to understand broadly speaking what was contended in respect of them; 4. during the course of that discussion I made some preliminary observations in respect of the issues, although not forming any concluded view in respect of them; 5. Mr Stapleton on behalf of Mr Danckert drew to my attention that on the part of his instructing solicitors there might have been an accidental inclusion of Mr Danckert's name in order 5 that I had made (following email correspondence suggesting consent of the parties), in relation to an order that DC2 (and Mr Danckert) pay the costs on an ordinary basis of the second group and SBS of the proceedings on the main claim as agreed or assessed; 6. in relation to the injunctive relief sought by the second group Mr Stapleton disclosed that the monies that were in the Westpac account, in respect of which the second group sought to restrain dealings with such monies, had in fact been removed from the account; and 7. Mr Maccallum indicated that there had been agreement reached between SBS and the second group in respect of the costs of SBS on the cross claim.
In light of the above I made the following directions: "1. Direct the parties to provide to Associate of Meek J by 4pm on Monday, 29 August 2022: a. an agreed set of outstanding issues that also includes any issue of variation of order 5 as made on 25 August 2022 (issues); b. proposed orders in respect of any agreement between the Cross-claimants and the Second Cross-defendant (SBS) as to the costs of SBS on the further amended cross-claim; and c. any supplementary submissions and evidence addressing the issues. 2. Direct the parties to provide to Associate of Meek J by 4pm on Monday, 31 August 2022: a. any reply submissions and reply evidence addressing the issues; and b. notification as to whether any party wishes to be heard further orally, otherwise the making of orders regarding the issues will be dealt with on the papers."

[9]

Outstanding order issues

On 29 August 2022 (4:31 PM) the solicitor for DC2 provided my Associate with the parties' agreed list of outstanding order issues for determination to give effect to the reasons for judgment.
The outstanding order issues are as follows: "1. Whether the Plaintiff (DC2) and Mr Danckert should pay the costs of the 1st to 8th Defendants (D1&8) of the main claim on the ordinary basis or on the indemnity basis? 2. Whether the 8th Defendant can now seek recovery of the deposit sum of $6,750 plus interest. 3. What, if any, costs order should be made regarding the balance of the claims on the Cross-claim being the claims against: a. The First Cross-defendant (Ms Western) (CD1); and b. The Fourth Cross-defendant (DC2). 4. Should DC2 and Mr Danckert indemnify the Cross-claimants for their costs liability to CD1 and Step by Step Conveyancing (CD2)? 5. Whether to release to D1&8 sums held by way of security costs given by DC2 of $100,000 in favour of the Cross-claimants (CC's & D1-7, 9). 6. Whether, alternatively to [5] above, should the following orders be made: a. The sum of $175,000 held by HFW Lawyers as security for the D1&8's costs be retained by HFW Lawyers on trust for D1&8's costs and paid out to their legal representatives, Avondale Lawyers, in the amount required to satisfy any assessment of the costs payable by DC2 to D1&8. b. DC2 is to pay $100,000, from the sum of $210,000 held by HFW Lawyers as security for the other Defendants' costs, be retained by them on trust for CD1 for the costs payable by the CC's and be paid out to Avondale Lawyers in the amount required to satisfy any assessment of the costs payable by the CC's to CD1 and the remainder to the CC's to satisfy costs payable by DC2 to them and any remainder to DC2. 7. Whether, further alternatively to [5] above, there should be an order in the sum of $210,000 held by HFW Lawyers as security for D1-7, 9's costs be paid out to the D1-7, 9's solicitors in satisfaction or part-satisfaction of DC'2 costs liability to those defendants. 8. DC2 confirms that the inclusion of the words "and the Third Cross-Defendant (Wayne Danckert)" in the parties' proposed Order 5, made by the Court on 25 August 2022, was an unintended error by DC2. 9. Whether in the circumstances of [8] above, unless D1&8 and D1-7, 9 confirm by 4pm on 29 August 2022 their consent to vary Order 5 made on 24 August 2022 to omit those words, DC2 will be granted leave to file a Notice of Motion in Court seeking leave to vary that Order pursuant to Part 36 of the UCPR."

[10]

Supplementary materials

The 29 August 2022 (4:31 PM) email from HFW noted: 1. SBS in its capacity as tenth defendant and second cross claimant has no position with respect to the outstanding issues or cost orders and it consents to an amendment of order 5 of the orders made on 25 August 2022 such that Mr Danckert (personally) does not have any direct liability to SBS's costs as tenth defendant; and 2. the other parties had not provided consent to a variation of order 5.
In those circumstances Mr Danckert filed a Notice of Motion seeking to vary order 5 pursuant to "r.36.15(3) and or (3A) and or (3B) of the UCPR 2005" to omit from the order the words "and the Third Cross-Defendant (Wayne Danckert)".
Despite the reference to "r.36.15(3) and or (3A) and or (3B)", it is apparent that the reference was intended to be to "r 36.16(3) and/or (3A) and/or (3B)" of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
In support of the Notice of Motion Mr Danckert relied upon an affidavit of Anthony Riordan sworn 26 August 2022.
On 29 August 2022 (6:04 PM) Mr Crossland provided further supplementary submissions on behalf of the second group on costs and notified my Associate of an intention to rely upon a further short affidavit of Ms Watson.
I was informed that the second group and SBS have compromised SBS's claim for costs on the cross-claim the sum of $25,000 and accordingly "there is no basis or need for the court to make an order in respect of the Watson Defendants' liability for those costs": Second group's submissions 29 August 2022.
On 30 August 2022 (10:58 AM) Ms Watson, solicitor for the second group, provided my Associate with a copy of an affidavit sworn by herself on 30 August 2022.
On 31 August 2022 (3:59 PM) a solicitor for DC2 provided to my Associate reply submissions and two annexures being documents described as "Agreement re security" dated 27 January 2022 signed by the solicitor for DC2 and the solicitor for the first group, being Annexure A and a document headed "Agreement re security" dated 7 February 2022 signed by the solicitor for DC2 and the solicitor for the second group being Annexure B.
On 2 September 2022 (5:03 PM) having seemingly received no further materials my Associate at my request sent the following email to the legal representatives for the parties: "On 29 August 2022 the parties provided an agreed list of issues to resolve the outstanding matters in dispute between them. In respect of the outstanding issues the Court has received the following materials: Notices of Motion Plaintiff Notice of Motion dated 26 August 2022. Affidavits Plaintiff Affidavit of Antony Riordan sworn 26 August 2022. 1&8 Defendants Affidavit of Francisco Gutierrez sworn 19 August 2022 and exhibit FG. 2,7-9 Defendants Affidavit of Karen Watson sworn 30 August 2022. Submissions Plaintiff Submissions on the Proposed Orders to Give Effect to Reasons for Judgment dated 19 August 2022. Submissions on Parties Agreed Issue to Resolve Re Costs Order, together with Annexure A and Annexure B dated 31 August 2022. 1&8 Defendants - Costs submissions dated 19 August 2022. 2-7, 9 Defendants Outline of submissions in support of costs/freezing orders dated 19 August 2022. Outline of submissions in reply for cross claimants for costs orders (handed up in court on 26 August 2022). Supplementary Costs Submissions dated 29 August 2022. 10 Defendant Costs Submissions dated 23 August 2022. As matters presently stand his Honour understands from what was said in Court on 26 August 2022 that forms of notices of motion provided by the 2-7,9 Defendants on 19 August 2022 and handed up in court on 26 August 2022 are no longer pressed. His Honour notes that despite the stated intention of counsel on behalf of the 1&8 Defendants in court on 26 August 2022 to provide revised submissions that no such submissions have been received. Further it is noted that none of the parties have provided by 4PM on 31 August 2022 (nor since that time) any (a) reply submissions and reply evidence addressing the issues, and (b) notification as to whether any party wishes to be heard further orally. Having regard to the lack of notification that any party wishes to be heard further orally his Honour will deal with the matter in Chambers. Can the parties please review the above listing of materials and confirm to me in a single agreed email by 4PM on Monday 5 September 2022 that the notice of motion, affidavits and submissions so listed are the only materials relied upon by any of the parties for his Honour's consideration as to the making of final orders in the matter."
Prior to the email being sent submissions were received by my Associate on the part of Mr Allen, counsel for the first group.
On 2 September 2022 (5:16 PM) Mr Maccallum on behalf of SBS helpfully notified my Associate that SBS withdrew its cost submissions dated 23 August 2022 and did not wish to be heard on any of the issues.
On 5 September 2022 (4:30 PM) Mr Crossland by email to my Associate reported that the parties had conferred and: 1. noted that the second group not press orders sought in either of the versions of the notice of motion handed up in court; 2. clarified details in the listing of notices of motion, affidavits and submissions; and 3. noted the parties were content for me to deal with the costs dispute in chambers.

[13]

Security for costs

In December 2021 without the need for Court intervention the first group and DC2 agreed that DC2 would hold funds by way of security for costs for the benefit of the first group defendants.
On 27 January 2022 agreement was reached between DC2 and the first group in relation to security for costs.
A sum of $175,000 is held in a controlled monies account plus interest pursuant the 27 January 2022 agreement.
On 18 October 2021 the second group filed a notice of motion seeking expedition and the following orders: 1. that the plaintiff give security for the second to seventh and ninth defendants' costs in defending the claim against them by payment into Court of the sum to be determined by the Court; and 2. that the proceedings be stayed until such security is paid.
The second group and DC2 filed evidence and served submissions in relation to the notice of motion seeking security. Sackar J sitting as Expedition List Judge set the application down for hearing on 7 February 2022.
The application for security was settled before it was heard and an agreement between the parties on 7 February 2022 was recorded.
A sum of $210,000 is held in a controlled monies account plus interest pursuant the 7 February 2022 agreement.
The agreements for security for costs secured by each of the first group and the second group against DC2 are relevantly in the following terms: "1. In consideration of the [Defendants] not prosecuting a Motion for Security for Costs in Supreme Court of NSW Proceedings 2021/00257791 (the Proceedings): (a) The Plaintiff and the [Defendants] agree that the Plaintiff will instruct HFW Australia (HFW) (or will otherwise not withdraw any prior instructions to HFW) to: (i) deposit the sum of [$175,000.00 first group/$210,000 second group] into an interest-bearing bank account established by HFW for the purpose of controlling and holding that sum (the Controlled Monies); (ii) take no steps to withdraw or deal with the Controlled Monies once so deposited except with the written consent and direction of both the Plaintiff and the [Defendants]; (iii) give the [Defendants] immediate notice in writing of having received the above instructions once the Controlled Monies have been deposited as above. (b) The Plaintiff warrants that the sum to be deposited as per the above is a sum to which the Plaintiff has full right, title and interest and it is not a sum that is subject, or may be subject, to a claim by any person or entity and it is fully available to meet the whole or part of any costs order made in the Proceedings against the Plaintiff. (c) The Controlled Monies are held and are available to the [Defendants] to satisfy any order for costs in the Proceedings against the Plaintiff. (d) The Plaintiff and the [Defendants] agree that in the event that a costs order against the Plaintiff is made in the Proceedings in favour of a [defendant], the Plaintiff will consent to the release of the Controlled Monies up to the limits identified at (a)(i) above, in satisfaction, or in partial satisfaction, of that costs order and will do so as soon as the sum of any costs to be paid are agreed or assessed or, in the event of a gross-sum costs order, as soon as that order is made."

[18]

Comment regarding submissions

Prior to addressing the outstanding orders issues I note that the parties have provided in a piecemeal way submissions on the various issues.
I was informed by Mr Corsaro SC on the part of the first group on 26 August 2022 that "The only ground that we would seek to put is whether or not it was reasonable not to accept an offer of compromise": T3.
Mr Corsaro SC on 26 August 2022 kindly apologised for the fact that I have been asked to "distil … the parties' position[s] … from a disparate set of submissions": T3.
The fact that parties' submissions are provided in a piecemeal way per se is not necessarily problematic. Litigation is at times somewhat messy.
Over the course of a two week period a number of short minutes of order and various submissions were provided by each of the parties in evolving circumstances leading to refinement of some issues and abandonment of other issues.
Ultimately I received seven sets of submissions from three parties or party groups.
Without naming the parties I simply note that certain of the later submissions indicated reliance upon earlier submissions with the result that a number of submissions were repeated and others addressed matters that were no longer seemingly in issue.
Thus for the purpose of addressing the making of orders in relation to the outstanding order issues, it has not been straightforward to identify which submissions are ultimately relied upon.
Practitioners, particularly in multi-party litigation, should endeavour to assist the Court by either refining or merging various sets of submissions into a single submission document or otherwise clearly identifying what submissions are pressed, without the Court being left to task of attempting to identify whether there are remnants of matters still contended for in earlier submissions.
Ultimately what I have done is to principally focus upon the later submissions from DC2 (31 August 2022), the first group (2 September 2022) and the second group (26 August 2022, 29 August 2022) whilst attempting to identify whether there are any relevant matters still contended for in earlier submissions.

[21]

Issue 8 (DC2's claim to vary entered orders)

Issue 8 essentially raises the question as to whether Order 5 that I made on 25 August 2022 should be varied to delete the words "and the Third Cross-Defendant (Wayne Danckert)" on the basis that DC2 asserts it was an unintended error.
The affidavit of Anthony Riordan addresses the question.
In their submissions of 29 August 2022 the second group defendants accept that what is said to be Mr Danckert's consent to Order 5 was an error. However the second group states that the order should not be set aside as they (the second group) sought the order and "it was appropriately made".
Mr Allen in submissions dated 2 September 2022 states that the issue does not involve Ms Western.
By an email dated 29 August 2022 Mr Maccallum on the part of SBS agreed to amend the costs order so that Mr Danckert (personally) does not have any direct liability to SBS with respect to the main proceedings.
It appears the reason that the second group defendants say that the order was "appropriately made" is not because there was consent. Rather it is because they say that the case is one of those instances in which the costs order should be made based upon the provisions of s 98 Civil Procedure Act 2005 (NSW) (CPA) and the principles in Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28 (Knight).
I have for the reasons outlined below, declined to make a third-party cost order pursuant to s 98 and upon the principles based in Knight.
The direction for the parties to bring in short minutes of order is a direction when made by the Court for the parties to consider the reasons for judgment and to appropriately and fairly propose orders for the Court's consideration having regard to the findings made on the litigated issues.
Mr Danckert was not party to the main claim.
Whilst I acknowledge that a number of the parties have sought that I make particular costs orders that Mr Danckert be responsible for the costs of DC2, prima facie the position is that as Mr Danckert was not a party to the main claim there was no occasion for him to be per se responsible for the costs of DC2.
As I noted at the directions listing on 26 August 2022, the only reason I made Order 5 in the terms that I did including reference to Mr Danckert was that I had understood, based on the terms of the short minutes of order that had been marked up by Mr Riordan, that there was consent for that order to be made. I would not have made that order without consent per se. The question as to whether any particular order should be made that Mr Danckert bear some responsibility for the costs of DC2 is a separate issue.

[24]

Principles

I addressed the principles regarding costs in In the matter of Black Tie Holdings Pty Ltd (No 2) [2022] NSWSC 856 (Black Tie Holdings Pty Ltd (No 2)). In Black Tie Holdings Pty Ltd (No 2) I stated at [44]-[49], [51],[53]: 44. Costs are in the discretion of the Court, subject to the Civil Procedure Act 2005 (NSW) (CPA), rules of Court and any other Act: s 98(1)(a) CPA. 45. The Court has full power to determine by whom, to whom and to what extent costs are to be paid: s 98(1)(b) CPA. 46. The Court may order that costs are to be awarded on the ordinary basis or on an indemnity basis: s 98(1)(c) CPA. 47. An order for costs may be made by the Court at any stage of the proceedings or after the conclusion of the proceedings: s 98(3) CPA. 48. The general position is that 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: r 42.1 UCPR. 49. If the Court makes an order for dismissal of the proceedings then generally speaking, unless the Court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed: r 42.20(1) UCPR. …. 51. Generally costs payable to a party under an order of the Court are to be assessed on the ordinary basis: r 42.2 UCPR. 53. The proper exercise of the discretion for costs will clearly have regard to the reason for dismissal of the proceedings in any given case: Ritchie's Uniform Civil Procedure NSW at [42.20.10].
Although the first group's submissions did not refer to the particular provisions of Pt 42 UCPR in relation to costs, it is necessary to consider those provisions.
The UCPR provides a regime by which offers of compromise may be served, in which case there is what is described under the rules as an entitlement in a party who has obtained a favourable outcome, having regard to the terms of the offer, to have costs assessed on an indemnity basis, unless the Court orders otherwise.
Here, the relevant provisions are those of r 42.15A which deals with the situation in which an Offer of Compromise is made in accordance with the rules by a defendant and not accepted by a plaintiff and when the defendant obtains judgment on the claim which is no less favourable than the terms of the offer.
Rule 42.15A(2) provides follows: "Unless the court orders otherwise - (a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis - (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
The position in relation to an offer which comes with the terms of the rule, is that costs are payable on an indemnity basis from the day following the day the offer was made: r 42.15A(2)(b).
The power to order otherwise is evident from the terms of subrule (2).
I note that neither of the Offers of Compromise made express provision for the payment of costs. It is relevant to understand what the position would have been in that case if the offers had been accepted by DC2 on the one hand and by the second group on the other hand.
In such a case (where an offer proposes a judgment in favour of the defendant in respect of the claim including a dismissal of a summons or a statement of claim), the defendant (or cross-defendant) is entitled to an order against the plaintiff (or cross-claimant) for the defendant's (or cross-defendant's) costs in respect of the claim, assessed on the ordinary basis up to the time when the offer was made: r42.13A(1) and (3).
It has been said that the question for determination regarding the effect of what is said to be an Offer of Compromise involves a two-stage process.
The process is explained by Hallen J in Meres v Meres (No 2) [2017] NSWSC 523 at [43]-[44]: "43. From the authorities, it appears the question for determination regarding the effect of what is said to be an Offer of Compromise involves a two-stage process. The first stage is to enquire whether the offer made is an 'Offer of Compromise' at all, within the meaning of the UCPR. This will depend, in part, on whether it satisfies the formal requirements laid down by UCPR rule 20.26. It also depends, in part, on whether the offer made is one that can truly be called a "compromise". 44. If the court concludes that the offer which is made is an "Offer of Compromise" within the meaning of the Rules, and that the offer made is one that can truly be called a compromise, then UCPR rule 42.15A(2) operates to establish a 'default' position, relevantly that, if the defendant obtains a judgment no less favourable than that which the defendant had offered to accept, then indemnity costs would follow. It is then that the second stage of the process arises, in that the court can "otherwise order". The court will "otherwise order" if it is persuaded that is appropriate, in the interests of justice, that the "default" position ought not apply: Manly Council v Bryne (No 2) [2004] NSWCA 227, per Campbell JA, at [10]; Evans v Braddock (No 2) [2015] NSWSC 518, at [52]."
For an offer to be regarded as an Offer of Compromise it must contain a real element of 'compromise': see e.g. Leichardt Municipal Council v Green [2004] NSWSC 341 at [31]-[37].
The question whether any particular offer involves the required element of compromise depends upon the totality of the circumstances and involves an impressionistic assessment: Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308; [2006] NSWCA 114 at [20]-[23].
It has been said that a defendant's offer that involves dismissal of a claim and payment of the defendant's costs will typically lack the necessary element of compromise unless the claim is particularly lacking in merit: see Shorten v David Hurst Constructions Pty Ltd [2008] NSWSC 609 at [6]; Regency Media Pty Ltd v AVV Australia Pty Ltd [2009] NSWCA 368 at [31].
The power to order "otherwise" must be for proper reasons: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [47] adopting the comments of Hely J in Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281 at [17].
The mere fact that it is reasonable for a litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule. However that does not mean that reasonableness of the rejection is an irrelevant consideration: Leach at [48].
The first group further submitted that in the event that the offer did not constitute an Offer of Compromise for the purposes of r 20.26 UCPR that the offer was relied upon for the purposes of a Calderbank offer.
A settlement offer which encourages a reasonable settlement of the claim and where the offeree has obtained an outcome significantly less favourable consequent upon the hearing to the outcome offered prehearing may, in appropriate circumstances, give rise to an order for indemnity costs: e.g. Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425.
I referred to the principles regarding Calderbank offers in Black Tie Holdings Pty Ltd (No 2) at [54]-[56]: "44. The position in relation to offers outside the offer of compromise regime, being offers expressed to be without prejudice except as to costs and relied upon in accordance with the principles in Calderbank, is that there is no prima facie entitlement in a party who has achieved a favourable outcome under the terms of the offer to an indemnity costs order in its favour. Rather, the making of a Calderbank offer is one of a number of circumstances the Court takes into account in exercising its discretion to make an order for costs on an indemnity basis. 45. A Calderbank offer, per se, will generally speaking not justify an order for indemnity costs unless the offer is a genuine offer of compromise and its rejection is unreasonable: e.g. Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [7]; Ying v Song [2011] NSWSC 618 at [26] per Ward J (as her Honour then was). 46. There is an onus on the party making the Calderbank offer to satisfy the Court that it should exercise the costs discretion in its favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]. The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made: Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ."

[25]

Indemnity costs claim - Offer of Compromise to DC2

The first group submit that the Offer of Compromise pursuant to r 20.26 UCPR creates a presumption of an indemnity costs order.
On the face of the Offer of Compromise I accept that it satisfies the formal requirements required by r 20.26 UCPR.
The more problematic question in my view is whether the offer involved a real element of compromise: see e.g. Leichardt Municipal Council v Green [2004] NSWSC 341 at [31]-[37].
Whilst I found against DC2 in relation to its claims the path to that conclusion was not straightforward.
The complexity of the litigation is discernable from the terms of my reasons for judgment. This was not the sort of claim that would self-evidently have been regarded as being particularly lacking in merit.
In my opinion the Offer of Compromise did not contain a sufficient real element of "compromise" to constitute an offer for the purposes of the rules.
However if I be incorrect in that view, and it is necessary for me to consider whether an "otherwise order" ought be made, I am persuaded that it is appropriate, in the interests of justice, that the "default position" ought not to apply.
At least one reason for that is that this was multi-party litigation.
There were ten vendors and having regard to the provisions of the Option Deeds all of the ten contracts were interdependent upon one another.
Accordingly DC2 when faced with an Offer of Compromise served by only one (or two) of the ten vendors was placed in an invidious position in circumstances where it seems (or I have not been informed that) that none of the other vendors served such an offer.
In circumstances in which all the contracts were interdependent, it does not seem to me to be unreasonable for DC2 to have rejected the offer, particularly as the offer did not give it any significant benefit at all (even if, contrary to my finding, it technically satisfied the definition of a "compromise").
To have accepted the offer effectively meant that it would in a practical sense have had to capitulate in relation to the other claims or at the very least attempted to negotiate some satisfactory position regarding the other claims.
Whilst I do not generally put beyond the ingenuity of multiple vendors and a developer to reach some sort of commercial arrangement, as the block was sold as a whole and all the contracts were interdependent, development of the block without one or two of the unit owners would not be possible.
The first group in support of the claim for costs emphasise the fact that I found that DC2 was unable to settle the contracts the subject of the dispute.
This is not quite correct.
Whilst I found that DC2 was not ready willing and able to complete the contracts in accordance with their terms on 27 July 2021, I also found that if the contracts were not validly terminated, arguably DC2 had demonstrated at the time of the hearing it arguably was in a position to perform the contracts.
Further, in support of the reasonableness of the offer the first group indicated that the offer was made in the context in which the first group had considered all DC2's evidence and the offer was of benefit to DC2 by enabling it to mitigate its losses and provide a deed of settlement and releases.
However, the terms of the Offer of Compromise does not actually refer to releases. The reference in the covering letter to attending to preparation of relevant documentation including a deed of settlement and releases could not in its terms convey something different from what was contained in the terms of the Offer of Compromise. In any event, the terms of any such releases were not identified.
DC2 submitted that it should only pay the costs of the first group of the main proceedings on an indemnity basis if there was an effective Offer of Compromise or Calderbank offer grounding an order for indemnity costs.
In the circumstances of this case, it does not seem to me that even if the Offer of Compromise were to be regarded as a Calderbank offer that any different outcome ought to prevail. The offer provided in the scheme of things very little compromise and placed DC2 in an invidious position regarding its claim against the other defendants.

[26]

Indemnity costs claim - the NAF

The first group say that as a result of that the disputed propositions it was required to adduce further evidence in the form of expert evidence to establish both facts. It said that I found in the principal judgment both propositions proved.
Rule 42.8 UCPR addresses costs in respect of notices to admit facts. Subrule (1) contains definitions.
Subrules (2) and (3) are in the following terms: "(2) Unless the court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party's costs, assessed on an indemnity basis, being costs incurred by the requesting party - (a) in proving the fact, or (b) if the fact has not been proved - in preparation for the purpose of proving the fact. (3) An entitlement to costs under this rule is not affected by any order as to costs unless that order makes particular reference in that regard."
There is commentary to the effect that the rule appears to create an automatic entitlement to costs in favour of the party who proves the disputed facts. It is said that notwithstanding such automatic entitlement the successful party prudently should seek a specific costs order for cost assessment purposes because the assessment of costs is triggered by reference to costs payable to an order of the court: s 74 Legal Profession Uniform Law Application Act 2014 (NSW): see Ritchie's Uniform Civil Procedure NSW at [42.8.5] 'Entitlement to Costs'.
In relation to costs pursuant to the NAF Mr Allen submitted that the pertinent issues of the hearing were agreed hearing issues 1-6, being in summary (see [56] principal judgment): 1. Were the second notices to complete invalid by reason of their terms (issue 1)? 2. Were the vendors not ready and willing and able to complete on the specified completion date (issue 2)? 3. Did the vendors waive the essentiality of time or elect to affirm the contracts (issue 3)? 4. Were the notices of termination invalid by reason of the matters in issues 1-3 (issue 4)? 5. Were the contracts validly terminated (issue 5)? 6. Has DC2 ever been or now ready, willing and able to complete the contracts (issue 6)?
Mr Allen referred to my findings on the agreed hearing issues at [593]-[817] in the principal judgment.
In particular Mr Allen: 1. referred to his submission regarding the evidence of Mr Danckert which I recorded at [619]. 2. submits that Mr Danckert knew the import of the notices to complete when he read them and that the inference is readily available that he knew that import when the litigation was commenced and, properly advised, putting aside "the other minor complaints" issue 1 ought not to have been an issue at all; 3. says that agreed hearing issue 1 took up a lot of time as evidenced in what is recorded in the principal judgment at [307]-[338] and [593]-[635]; 4. submits that the complaint regarding service was untenable because Mr Boxsell had said that he would accept service; 5. says agreed hearing issue 2 was premised on DC2 not joining the PEXA workspace on or before 29 July 2021 and there was finding at [648] that only in the afternoon of 30 July 2021 did Mr Boxsell add the incoming proprietor; 6. submits if the admission had been made Ms Western would not have had to deal with the issues surrounding PEXA or at least not deal with the issues in such detail (such as leading expert evidence); 7. submits if agreed hearing issues 1 and 2 had not been run this would have left DC2 to run agreed hearing issue 3 which was not presented coherently but in any event resolved easily; 8. says that agreed hearing issues 4 and 5 were determined by agreed hearing issues 1-3; and 9. submits ultimately on a "broad-brush approach" if only agreed hearing issue 3 (whether the vendors waived the essentiality of time or elected to affirm the contracts) the matter would have involved "at least 50% less time and effort"; and 10. says agreed hearing issue 6 required time and evidence to determine, when properly advised, the concession ought to have been made that DC2 was not ready to complete, "Instead, the Court had to deal with the surreal evidence of Mr Dan[c]kert that DC2 was ready and willing: see [777]".
Based on the above Mr Allen submits that there ought to be an order for indemnity costs from 17 May 2022 being the date of the non-admission of the facts "which would have gone a long way to reducing the scope of the hearing in particular issues 1 and 2".
Whilst it is true that I did ultimately find both propositions I determine to make an "otherwise" order in respect of the matter.
The first requested fact to be admitted in my view clearly was framed in terms of a conclusory statement on what in essence was an ultimate issue in the proceedings. Consideration of whether DC2 was ready, willing and able to "settle the Terrigal properties" was a complex question involving consideration of many facts and pieces of evidence and informed by principles of law and construction of documents.
At least on the facts of this case, I consider that it was an exercise in supreme optimism for the first group to consider that such an ultimate issue "fact" would be admitted.
The issue sought to be admitted was a very real issue in the proceedings, and notwithstanding my ultimate findings in the matter, in my view it is generally not appropriate for practitioners to request that such (multifaceted) ultimate issues be admitted in the form of a Notice to Admit Facts. Practitioners ought to reflect upon utility of seeking admission of 'facts' on what are essentially ultimate issues.
In relation to the second fact sought to be admitted, namely that DC2 did not accept the vendors' invitation into the ten separate workspaces on PEXA on or before 27 July 2021, it seems to me that that was a fact which was more straightforward and could properly have been the subject of a Notice to Admit Facts.
Thus, in relation to that second fact, I decline to order otherwise. Accordingly the effect of that determination is that DC2 as the disputing party ought to pay whatever costs there are incurred in relation to the disputation of that fact on the indemnity basis by force of the provisions of r 42.8(2).
However, I should make it clear that to the extent that the affidavit of Francisco Gutierrez asserts that it was necessary to adduce expert evidence to establish that fact either, I reject that proposition.
The first group did lead evidence from Ms Oakes in the nature of expert evidence regarding the duration of PEXA. However, expert evidence was not required in my opinion to establish that DC2 had failed to accept the PEXA invitation to the relevant workspaces.
Without intending to be prescriptive my expectation is that very few costs would have been incurred in establishing the proposition that the invitation was not accepted. The evidence from Ms Western in this regard in her affidavit sufficed. On 25 June 2021 Mr Boxsell was sent an invitation to enter the PEXA workspace: CB 2583.952; T35. It had not been accepted up to 30 July 2021: CB 182[74].
In making the above comments I should make it clear that I am not in any way finding or suggesting that the evidence of Ms Oakes on other issues was not appropriate evidence to be led. The evidence was of great assistance to me and to the extent that it was adduced in respect of other matters my expectation is that it ought likely be recoverable under the cost orders apart from the NAF issue.
I do not in any way suggest or preclude Ms Oakes' evidence from being recoverable upon assessment (which is ultimately a matter for the assessor or agreement of the parties) under the costs orders in respect of matters apart from the second fact in the NAF.

[27]

Indemnity costs claim - s 98(1)(c) CPA and general law basis

The initial submissions (22 August 2022) on behalf of the first group invited the Court to impose costs orders on the indemnity basis in the claims instituted against the first group on the main claim and Ms Western on the cross-claim.
It was submitted that an award of indemnity costs is compensatory, not punitive and relevantly presupposes some unreasonable action including relevant misconduct in connection with the conduct of the proceedings citing inter alia Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11.
It was contended that the following principles were relevant in relation to an award of indemnity costs against DC2. Namely indemnity costs may be awarded where: 1. a party has maintained proceedings which it ought to have known had no real prospects of success: citing Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 31 ALR 397 at 401; 2. a party has abandoned claims: citing LanelIi v Hancock t/as Hancocks Solicitors [2012] NSWSC 417; Lahoud v Lahoud [2006] NSWSC 126 at [44]-[69] (untenable claim); though noting mere abandonment of itself may not be sufficient: see Ghougassian v Fairfax Community Newspaper Pty Ltd [2015] NSWCA 307 at [52]; and 3. a party obtained a judgment no better than a prior settlement offer by the other party: citing Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425; Leighton Contractors Pty Ltd v CE Heath Underwriting & Agency Services (1995) 8 ANZ Ins Cas 61-231; (1994) 12 BCL 415 per Hunter J and UCPR r 42.14 and 42.15.
It was contended that the combination of "these factors" support an award of indemnity costs against DC2.
The submissions noted that the Court had found against DC2's claim for specific performance and in the alternative damages. It was further noted that the fact that the plaintiff abandoned claims "gives credence to the success" of the first group and that "the Court need not go further than the findings made in respect of the Plaintiff's claim as outlined above in order to measure success".
The first group also submitted that DC2 "in the moments which [preceded] the commencement of these proceedings lodged caveats over the respective properties owned by the vendors, premised upon the claim it brought in this Court [and] (t)he existence of the caveat (sic) precluded the vendors from conducting any dealings in respect of their properties".
I have already dealt with the Offer of Compromise.
Whilst it is true that DC2 did abandon some claims, the running of the case by DC2 did not in my view involve inappropriate conduct (such as misleading the Court or maintaining proceedings known to have no real prospects of success). Nor did DC2 engage in conduct which caused unreasonable delay and expense in the proceedings.
I decline to award costs on an indemnity basis under s 98(1)(c) CPA and the general law.

[29]

Principles regarding third party costs orders

Both the first group and second group referred to the decision of the High Court in Knight regarding the making of third party costs orders
Mason CJ and Deane J (at 193) held that circumstances that may warrant the making of a costs order against a third party include: "… where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made."
The power to make costs orders against non-parties is generally to be exercised only in exceptional circumstances and sparingly: FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340 at [210]-[214]; May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 at [107]-[116].
Although not referred to in the submissions of the first group, there are two observations of Dawson J in Knight which albeit obiter dicta have some relevance here.
First, Dawson J observed that an order for security for costs is ordinarily the appropriate remedy where an individual (in Knight a receiver and manager) conducts litigation through a company which will be unable to pay the costs of the defendant if the defendant is successful in his defence: Dawson J at 204-205 citing Sent v Jet Corp of Australia Pty Ltd (1984) 2 FCR 201 at 214-215.
Secondly, applications for security for costs should ordinarily be made promptly before significant expense is incurred: Dawson J at 205 referring to Devenish v Jewel Food Stores Pty Ltd (1990) 64 ALJR 533 at 534 per Mason CJ.
Further, McHugh J observed that as a matter of policy, provision for security for costs is a better remedy for protecting persons involved in litigation with insolvent companies than ordering an individual (in Knight a receiver) to pay the cost of litigation after verdict: at 217.
In FPM Constructions v Council of the City of Blue Mountains Basten JA, with whom Beazley JA agreed, noted that the criteria in Knight should not ultimately be treated as separate and independent factors: at [214].
In relation to the principle established in Knight Basten JA stated the following at [210]: "There may be other cases where such an order is appropriate including the circumstances of Knight v FP Special Assets itself, in which the company was in receivership. Again, that is not the present case, the primary judge expressly finding: 'There is nothing to indicate that FPM is in receivership.' It is also true that the principle established in Knight v FP Special Assets cannot be limited to the specific circumstances of the case, the joint judgment having expressed a conclusion in more general terms. A further example, not encompassed by those identified to date, is illustrated by Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429, a decision of the Full Court of the Federal Court in relation to an order sought against a litigation funder. The judgment contains an extensive analysis of the case law, including consideration of the judgment of Callinan J in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406. It is clear that the categories of case which may attract the exercise of the power are by no means closed, nor should they be. Nevertheless, the requirements of justice should not be allowed to expand an exception to the general rule, so as to undermine the rule itself. What is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria: (a) the unsuccessful party to the proceedings was the moving party and not the defendant; (b) the source of funds for the litigation was the non-party or its principal; (c) the conduct of the litigation was unreasonable or improper; (d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest, and (e) the unsuccessful party was insolvent or could otherwise be described as a person of straw."
In FPM Constructions Basten JA (with whom Beazley JA agreed), found: 1. that it could not be said that FPM Constructions was a merely nominal party, or that the relevant individual (Mr Yasbek) was the "real party" to the proceedings, despite the fact that the primary judge had found that Mr Yasbek was the driving force behind FPM Constructions and was its representative for the purposes of the litigation: [206]; and 2. there was no finding by the primary judge that FPM Constructions was insolvent nor that it was entirely without resources: [211].
The notion of exceptionality is something outside the ordinary run of cases where parties pursue claims for their own benefit at their own expense: PM Works Pty Ltd v Management Services Australia Pty Ltd [2018] NSWCA 168 at [39] following the McColl JA in Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136]-[156]; see also the helpful summary of case law by Rees J in In the matter of Wetherill Park Holdings Pty Ltd (No 2) [2021] NSWSC 1397 at [5]-[12].
There is commentary to the effect that a moving party should give early warning of an intention to seek an order for costs against a non-party: see Ritchie's Uniform Civil Procedure Rules NSW at [s 98.25.1], "Notice and procedure" citing inter alia Vestris v Cashman (1998) 72 SASR 449 at 458.

[30]

First group's submissions

The first group submitted that in order for such an order to be made the applicant must satisfy the Court that the case falls within a general category of case where a non-party costs order might be appropriately made and that the interests of justice require that such an order be made.
It was further submitted that the High Court identified three criteria of cases in such a category being (a) the party to the litigation is an insolvent person or man of straw; (b) the non-party has played an active part in the conduct of the litigation, and (c) the non-party has an interest in the subject of the litigation.
The first group submitted that DC2 was established as a special purpose vehicle for Mr Danckert for the transactions, it having been incorporated shortly prior to the entry of the contracts for sale of land, that Mr Danckert was the sole director and shareholder of DC2 with no evidence that any other persons were associated with it and DC2 has a share structure of 100 shares issued to Mr Danckert for a nominal sum of $100.
In particular it was submitted that the Court by reference to the decision in Knight could be satisfied of the following: "a. The plaintiff ought to be regarded as a corporation of 'straw'. b. The bank account created in the name of the plaintiff appears to be opened in mid 2022. It is inferred that the Mr Danckert has been attending to payment of other expenses on behalf of the plaintiff including funding the litigation and other associated activities including the payment of duties for the purposes of stamping the contracts for sale of land. c. Mr Danckert, although a non-party in the plaintiff's case, became a party by virtue of the cross-claimants' cross-claim. His involvement in the proceedings extended beyond his involvement with the plaintiff and as cross-claimant, but was also the vendors' real estate agents whom was found to have acted improperly in his capacity as agent for the vendors. d. By reason of Mr Danckert's conduct either through himself or his own real estate agency, the Court declined to award the Plaintiff specific performance. e. The dealings and interactions between the plaintiff, the vendors and their real estate agent all involved Mr Danckert. f. Mr Danckert stood to benefit from the transaction and subject to the plaintiff's success, from the proceedings which he conceded in cross-examination."
The subsequent submissions on behalf of the first group conceded that it is insufficient to point to the fact that Mr Danckert is the sole director and shareholder of DC2 and the person who will naturally benefit from its success because it is his special purpose vehicle for the purchase: PM Works at [36].
Other 'exceptional' further factors relied upon by the first group are as follows: 1. that Mr Danckert funded the litigation or put DC2 in funds; 2. Mr Danckert's personal interests must have informed him that as the relevant agent of DC2 how to conduct the proceedings. In this respect unreasonable decisions were made to run matters which ought not to have been run. To the extent that it was unreasonable the fault lies at the feet of Mr Danckert; 3. the case was premised on DC2 having at least 20% of the purchase price in its hands as its own funds; and 4. Mr Danckert caused monies which DC2 had in its account at the time of the trial ($1,013,000: CB 809) for the purposes of being applied to the purchase to be removed from the account after the hearing by the time of the listing on 26 August 2022, without revealing where the money was paid, leading to the inference that Mr Danckert made "the decision to dissipate the money so that it is not available to pay costs" and "prefer[ring] [h]is personal interest to that of DC2 and its creditors, including the defendants".

[31]

Second group's submissions

The 'exceptional' factors relied upon by the second group are as follows: "12. In the present instance, with reference to the considerations in Knight and FPM: (a) Mr Danckert is the plaintiff's sole shareholder and director and was, in relation to all dealings between the parties, the plaintiff's controlling mind - on any view, the proceedings were brought for Mr Danckert's (probably sole) benefit (Knight); (b) Mr Danckert played "an active part in the litigation" (Knight), having given the main evidence of the plaintiff, that is, the evidence on which the plaintiff's success or otherwise largely hinged (at least in relation to some of the claims); (c) the Court did not accept Mr Danckert's evidence, which permits the Court to conclude that not only were the defendants' costs incurred because of the position Mr Danckert took, but that they were incurred because Mr Danckert was prepared to give evidence which was untruthful (FPM -"the conduct the litigation was improper or unreasonable"); (d) the Court accepted that Mr Danckert committed an offence under s.49 of the Property, Stock and Agents Act 2002 and that "Mr Danckert made a deliberate choice not to tell the vendors about his involvement with DC2 prior to the exchange of contracts" (or, it might be added, at any point prior to termination) ([916] of the reasons) - the conduct of Mr Danckert in relation to the matters giving rise to the litigation, as well as in bringing the litigation itself, was unreasonable or improper; (e) Mr Danckert's evidence was that the only funds available to the plaintiff for its proposed completion of the contract with the defendants consisted of funds (i) which would be borrowed from Direct Capital Pty Limited; or (ii) "capital injected into [D Capital 2] from another company [presumably D Capital] of which [Mr Danckert] is controller." (CB 116 [41(d)]); (f) the Court would therefore infer that that was the basis for the deposit of $930,000 into D Capital 2's Westpac bank account on 7 July 2022, that is, one business day before the hearing (CB 2724.154), and that those funds were, in effect, funds of D Capital only made available to the plaintiff for the purposes of allowing it perform the contract (or allowing it to appear as if it would perform the contract); (g) it follows from the above that subject to the funds in the Westpac account, the plaintiff was a "straw man" (sic) (Knight) (the plaintiff never disclosed that it had any other bank accounts, nor any purpose for the money other than performing the sale contract); (h) after learning that the plaintiff's claim had failed, Mr Danckert (his counsel has told the Court) withdrew practically all the funds in the Westpac account - this despite being aware that the Watson Defendants had sought (and intend to continue to seek) that the Court make orders freezing a sum in that account in order to pay the Watson Defendants' liabilities, including in respect of the cross-claims (given that the money was a "cash injection" from D Capital, the inference is that the funds have been transferred back to that company); (i) this was conduct of Mr Danckert which was, on its face, intended to deprive the Watson Defendants of recourse to assets held by the plaintiff in order to satisfy any costs orders against it. 13. In these circumstances, the interests of justice (Knight) require an order that Mr Danckert pay the Watson Defendants' costs of the plaintiff's claim. The Watson Defendants were, in essence, innocent bystanders to the events that gave rise to the proceedings. Meanwhile, Mr Danckert's dealings with the Watson Defendants in relation the subject matter of the proceedings, involved the commission of a crime. 14. It is in the interests of justice that the Court make an order that Mr Danckert, who behaved illegally and improperly, pay the Watson Defendants' costs and thereby ensure they avoided the prospect of a costs order in their favour against the plaintiff going unsatisfied. 15. (In relation to the point raised immediately above, pursuant to an agreement reached between the plaintiff and the Watson Defendants dated 7 February 2022 (annexed to Ms Watson's affidavit sworn 19 August 2022) the plaintiff's solicitors hold $210,000 for the Watson Defendants' costs, but the agreement does not limit the costs liability in any way and expressly states that it may be for "partial satisfaction" of a costs order. Ms Watson's further affidavit, to be sworn 30 August 2022 will be to the effect that the Watson Defendants' costs of meeting the plaintiff's claim are considerably in excess of the $210,000.)"

[35]

Claims against Ms Western

Ms Western claims that the second group ought to pay her costs of the cross-claim against her.
The initial submissions on behalf of Ms Western in relation to the issue noted that the claims included claims against Ms Western in her personal capacity.
Mr Allen's subsequent submissions say that a costs order ought to be made in reliance upon the provisions of r 42.1 that costs follow the event and further say that "the cross-claim was an event".
Mr Allen's submissions elaborated on the claim for indemnity costs by reference to a number of other considerations.
He says that the issues on the cross-claim required time and effort to defend and were not without complexity, such as Ms Western's [alleged] liability in contract, tort, misleading and deceptive conduct and in equity when she was the agent of SBS. It was further claimed that the time of the trial was extended by the issues raised in the cross-claim from 4 to 6 days: Mr Gutierrez's affidavit at [24].
Mr Allen submitted that the extent that the cross claim was a reaction to DC2's claims and motivated by a decision to "allocate risk", the costs of the cross-claim fall upon the second group.
In respect of the Offer of Compromise the applicable rules are those which apply to a defendant as a cross-claim.
In my opinion much of the same considerations that arise in respect of the first group's Offer of Compromise arise in relation to Ms Western's Offer of Compromise.
There is a serious question as to whether the offer contained any element of compromise. It seems to me that it did not.
However in the event that I am incorrect about that, I would make an 'otherwise order'. The characterisation of the offer as alternatively a Calderbank offer in the event that it did not amount to an Offer of Compromise under the UCPR in my opinion does not warrant any different outcome.
Ms Western submits that in pursuit of defending the cross-claim against her she inter alia; responded to allegations which were serious and not trivial in nature; asserted and maintained her opposition to the claims; filed a defence; submitted evidence to refute the allegations propounded; responded to correspondence concerning the cross-claim; participated in the proceedings as a cross-defendants; attended to various Court events and listings; was required to attend for the purposes of cross examination and was required to prepare and cross examine the cross claimants.
Whilst the above matters are at least technically correct, they are not out of the ordinary for a cross-defendant. It is essentially no more than what a cross-defendant ordinarily does in meeting a claim.
Ms Western submits that the claims against her in SBS for breach of fiduciary duty and other duties were predicated on the basis that she acted for DC2 and noted that those claims had been abandoned (issues 12-17). In this regard she refers to my reasons for judgment at [953]-[954].
Issues 12 to 17 of the agreed hearing issues were issues arising out of other claims by DC2 against Ms Western and SBS rather than specifically issues raised on the cross-claim.
Further Ms Western says that some of the claims made by the cross claimants were indifferent to DC2's claims (referring to the claims based on alleged misleading and deceptive conduct).
The second group submits that not only was it reasonable for the cross claimants not to accept Ms Western's offer, but the evidence and the Court's findings would lead the Court to comfortably conclude that had DC2 succeeded against the second group it is likely that they would have succeeded against Ms Western referring to [458]-[476] of the principal judgment.
Those paragraphs refer to my findings in relation to Ms Western's evidence. As part of those findings. I determined that it was clear from Ms Western's evidence that she was aware of the "relevant ownership knowledge" as at 24 September 2020: [468]-[471].
I determined that in light of my findings it was not necessary to embark upon consideration of the duty of care owed by Ms Western to the other vendors: [305]. However, I noted that a conveyancer is an agent and in light of the provisions regarding trust funds in the Conveyancers Licensing Act 2003 (NSW) will have certain statutory duties and also prima facie fiduciary obligations: [306].
In this regard I pause to note that apart from the provisions of the Conveyancers Licensing Act 2003 (NSW) there are provisions in the Conveyancers Licensing Regulation 2021 (NSW) which bear upon fiduciary obligations and duties.
For example, schedule 2 sets out rules of conduct, and provides that: 1. a licensee must act honestly, fairly and professionally with all parties in a transaction and not misinform or otherwise mislead or deceive parties in negotiations or a transaction: rule 2; 2. a licensee must exercise reasonable skill, care and diligence: rule 3; and 3. a licensee must comply with the fiduciary obligations arising from the licensee's activities as a conveyancer: rule 4.
The second group submits that the fact that they did no better against Ms Western than as offered in the Offer of Compromise had nothing to do with the strength of the case or the weakness of the cross-claim, but rather the fact that DC2 failed in respect of its claims.
This is evident from the principal judgment. There was no necessity for me to address the issues arising in respect of the cross-claim against Ms Western.
Where proceedings are discontinued prior to any hearing on the merits, the Court in dealing with applications for costs does not "try a hypothetical action between the parties" to determine the question of costs: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6; Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120 at [35]. There are many reasons for that including the fact that usually it will be impracticable to assess the eventual prospects of success in the action.
The situation here is slightly different to that. Here there has not been any discontinuance. There has in fact been a complete hearing. Sometimes that can occur even in relation to a discontinuance where leave is given, perhaps on terms, to discontinue after hearing commences,
However, as is the case with a discontinuance, here there is a least one similarity namely that there has been no finding or assessment of the eventual prospects of success of the respective claims which were unnecessary to determine.
The way the hearing proceeded the parties did not suggest that I should necessarily determine all the issues. In fact the terms of the agreed hearing issues indicated that in relation to the sets of issues arising out of the cross-claims against SBS and Ms Western, the parties agreed that those sets of agreed hearing issues (issues 21-31) and (issues 32-33) were only relevant if DC2 succeeded on its main claim.
In the principal judgment in indicating that the parties should bring in short minutes of order I expressly indicated that they should alert me to any claims that they say still need to be determined: [17]. No party has indicated that there is anything further for me to determine.
It seems to me that it is artificial for me to attempt to second-guess at this point the prospects of success of the secondary claims in the agreed hearing issues.
In situations like this, one approach is to consider whether the cross claimants acted reasonably in commencing the proceedings and whether the cross defendant(s) acted reasonably in defending them.
The issues on the cross-claim against Ms Western were agreed hearing issues 32 and 33. The agreed statement of issues expressly noted that the claims were only relevant in the event that DC2 succeeded and there was a notation that given the way the evidence unfolded, the cross claimants no longer alleged that there was a retainer as between DC2 and Ms Western.
Whilst it is a little difficult to positively assess the reasonableness of the respective actions in commencing and defending parts of the cross-claim, my sense of the matter is that there was nothing of particular moment in the proceedings which suggested to me that either party were acting unreasonably in pressing or defending the aspects of the cross-claim which ultimately I did not need to determine. Rather, each of the relevant parties seemed to me to act reasonably.
In the above circumstances in my opinion and having regard to the overall justice of the case I determine that there should be no order as to the costs on the cross-claim insofar as it arises against Ms Western to the intent that each of Ms Western and the cross claimants should bear their own costs of the cross-claim.

[37]

Issue 4 (whether DC2 and Mr Danckert should indemnify the cross claimants for their costs liability to Ms Western and SBS?)

The submissions of the second group dated 19 August 2022 addressed the issue of whether DC2 and Mr Danckert should indemnify the cross claimants for their costs liability to Ms Western and SBS.
The second group indicated that the question of such liability turns ultimately on whether those costs ought fairly to be borne by the plaintiff.
That, in turn, it said depends on a number of factors including whether the proceedings were the catalyst for the cross-claim, whether it was reasonable for the defendants to have joined the cross-defendants, and whether the cross-claim raised issues private to the parties to it: citing DIF III - Global Co-Investment Fund LP v Babcock & Brown International Pty Limited (No 2) [2019] NSWSC 1578 per Ball J at [10]; see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688, (2003) 201 ALR 555 at [72]-[75] per Finn J, said to be cited with approval by Hodgson JA in Furber v Stacey [2005] NSWCA 242 at [32]: second group's submissions 19 August 2022.
DC2 perceived the submission to be a request for a "Sanderson or Bullock type order" which it opposed.
The first group also opposed Sanderson or Bullock orders, submitting that "There is no objection to an order that [DC2] indemnify the cross-claimants for the costs payable to Ms Western. The objection is to [the] risk of the costs not being paid by [DC2] being allocated to Ms Western": submissions 19 August 2022 at [48].
A 'Bullock order' is conventionally understood as being an order that an unsuccessful defendant be ordered to pay a plaintiff the amount of the plaintiff's costs liability to other (successful) defendants: Bullock v London General Omnibus Co [1907] 1 KB 264.
A 'Sanderson order' is conventionally understood as being an order that unsuccessful defendant be ordered to pay directly to successful co-defendants the amount of their costs: Sanderson v Blyth Theatre Co [1903] 2 KB 533; see generally G E Dal Pont, Law of Costs (5th ed, 2021, LexisNexis) at [11.12].
In light of my findings there is no liability of the cross claimants to Ms Western and SBS in respect of the cross-claim and accordingly there is no occasion to determine that DC2 and Mr Danckert indemnify the cross claimants in respect of such costs.
In any event, there is some force in the submission of DC2 that the cross claimants made a multitude of claims against Ms Weston and SBS that were not and could not be sensibly claimed against DC2 and Mr Danckert, identifying a number of those claims including paragraphs [27], [28]-[32], [32A]-[32C], [33-[38], [47]-[50] and [51]-[56].
DC2 submitted that there was no "substantial connection" or "dependence" between the above claims and the discrete claim regarding repayment of the commission. That submission also, at least from the cost perspective, has some force. However as I have noted, in light of my findings there is no need for me to determine that.

[39]

Issue 6 (alternative claims)

Issue 6 describes orders which are sought by the first group (6(a)) and by Ms Western (6(b)) referable to the agreements for security for costs.
The suggestion in agreed order issue 6(a) is that the sum of $175,000 in the controlled monies account should be held "on trust" for the first group defendants.
However, ultimately the first group by submissions dated 2 September 2022 did not press an order in terms of issue 6(a).
It noted that it was not pressed "because of DC2's opposition to the word 'trust' in the proposed order."
The submission noted that in any event it is acknowledged (by the first group) that the contract as to security for costs governs the continuing rights and obligations of DC2 and the first group, who say that the monies are impressed with a trust by the terms of the contract.
I pause to note that a label affixed by the parties to an arrangement is not determinative of the proper classification of the arrangement: see e.g. BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82 at [76]-[79] per Ward P, Leeming, White, Brereton JJA and Basten AJA.
There is no occasion for me in light of the fact that the order is not pressed to make any determination in respect of issue 6(a).
Even if there were occasion for me to make any such determination, it is far from obvious to me that it would have been appropriate for me to do so.
The parties had negotiated a contractual position for security for costs. No legal basis was put forward in any of the first group submissions to justify why the Court should impose a trust over monies held pursuant to agreed contractual terms.
Further, on the listing before me on 26 August 2022, Mr Corsaro SC identified the concern regarding a trust as being in a context of the possibility of DC2 being put into liquidation: T10.
I note that there is no particular evidence before me addressing the possibility of DC2 being put into liquidation or evidence about any other creditors. Even if there were proof of some risk of liquidation, that fact of itself would make me hesitant in making any order imposing a trust without understanding far more clearly the impact any such order might have upon the rights of other potential creditors.
In relation to issue 6(b) this issue is framed in terms of an order sought essentially by Ms Western in respect of any costs payable by the cross claimants to her in respect of the cross-claim.
Mr Allen submits that there is much to be said for the order because it secures a sum of money available to meet the costs of the cross-claim without the need to take other measures for enforcement. He says that the order ought be made on the basis that Ms Western undertakes to have her costs assessed with reasonable expedition.
In light of my findings that there be no order as to the costs of Ms Western in respect of the cross-claim there is no occasion for me to address issue 6(b).

[40]

Issue 7 (claim for order to make security separately available for other costs)

The question in respect of issue 7 is whether I should order that the sum of $210,000 held by HFW as security for the second group's costs should be paid out to the second group in satisfaction or part satisfaction of DC2's costs liability to those defendants.
The second group rely upon the terms of the agreement dated 7 February 2022. Mr Crossland states that they do not presently seek an order in terms of issue 7 but wish to reserve the opportunity to reapproach the court if necessary.
There is an order that DC2 pay the second group's costs of the main claim and also the second group's costs of the cross-claim in respect of that part of the cross-claim seeking recovery of the deposits.
The agreement regarding security as between DC2 and the second group is set out in the document dated 7 February 2022.
Essentially the agreement reflected a compromise of a claim for security for costs such that in consideration of the second group defendants not prosecuting a motion for security for costs, there was agreement regarding provision of security and the terms on which the sum provided would be released.
The agreement makes it clear that the sum deposited ($210,000) will be (and in fact is) held in a controlled monies account and is available to the second group defendants to satisfy any order for costs in the proceedings against DC2 as plaintiff: cl 1(c).
The agreement further provides that DC2 (as plaintiff) and the second group defendants agree that in the event that a costs order against DC2 (as plaintiff) is made in the proceedings in favour of the second group defendants DC2 will consent to the release of the controlled monies up to the limits of the sum identified in the agreement being relevantly $210,000 "in satisfaction, or in partial satisfaction, of that costs order and will do so as soon as the sum of any costs are to be paid are agreed or assessed or, in the event of a gross sum costs order, as soon as that order is made".
No gross sum costs order has been sought nor made.
A costs order has been made in respect of the main claim.
The provision for DC2 as plaintiff to consent to the release of the monies is not triggered by the costs order being made. Rather it is triggered by the sum of any costs to be paid being agreed or assessed.
That has not yet occurred.
Having regard to the fact that the parties themselves have agreed as to what is to happen to the security, I do not propose to make any order that has the effect of interfering with or cutting across the terms of the agreement between the parties.
The agreement will simply be worked out in accordance with its terms.
If consequent upon the costs order being made, the sum of costs are agreed or assessed and at that point of time DC2 does not consent to the release of the controlled monies it is a matter for the second group to determine what if any action they take as a consequence of that. However at the moment speculation about that is premature because there has been no agreement or assessment of costs.

[41]

Issue 2 (claim by Mr O'Connell for recovery of deposit sum plus interest)

Mr O'Connell, in contradistinction to the vendors in the second group, did not seek to file a cross-claim against Mr Danckert seeking recovery of the commission sum of $6,750 plus interest.
Mr O'Connell now seeks that relief.
The Court has the power to grant relief not specifically sought in an originating process: CPA s 90; UCPR r 36.1.
The submissions for Mr O'Connell placed reliance upon r 36.1 UCPR which is in the following terms: "36.1 General relief (cf SCR Part 40, rule 1; DCR Part 31, rule 8; LCR Part 26, rule 1) At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion."
Ordinarily, the provisions of r 36.1 applies in a case where a claim has been made by an originating process, cross-claim or notice of motion. The existence of r 36.1 means that at least technically there is no need in such court process to make a claim for other relief.
It is commonplace in the majority of processes that are filed with the Court to raise or at least flag the possibility of other relief being sought by use of words in a concluding paragraph in the claims for relief such as "further or other orders" or "such further or other orders as the court deems fit".
Ritchie's Uniform Civil Procedure Rules NSW states at [9.1.35]: "Under these powers, orders may be made in favour of a defendant who has not filed a cross-claim … The court therefore has the power to give a judgment or make an order in favour of the defendant, notwithstanding that a cross-claim has not been filed. However, the preferable course is for a defendant to file a cross-claim (even after reasons for judgment have been delivered) to ensure that the pleadings reflect all questions between the parties that were in fact finally dealt with in the proceedings." (citations omitted)
Thus, it seems to me at least conceptually even though Mr O'Connell has not filed any process in the proceedings that the possibility exists that relief might be given to him.
Mr Allen on behalf of Mr O'Connell states that in the context of a large commercial case it was not unreasonable for him not to propound a cross-claim for the small sum and that the costs of filing and prosecuting the claim were disproportionate to the sum sort. It is said that there is no unfair prejudice to Mr Danckert in the amount now being claimed. Conversely it is said that (if a claim were now made) a small claims case would be met with an estoppel argument.
DC2 submits that Mr O'Connell cannot now seek recovery because he elected not to cross-claim for the relief and that he cannot rely upon r 36.1, and in any event that there is no proper basis on which the Court would allow him to succeed on a claim that has not been sought or pleaded and only raised for the first time after judgment has been delivered.
Accepting for the moment, that the possibility exists that Mr O'Connell can seek such relief now and that the Court could give such relief, I decline to do so.
There is no evidence from Mr O'Connell explaining his decision not to seek any such relief. For all the Court knows, it might well be the case that a considered forensic decision was made by him not to seek the relief so as not to risk costs, which in all probability would have exceeded the amount of the commission amount.
To the extent that the submission on his behalf states that it was not unreasonable for him not to propound a cross-claim for a small sum as the costs of filing and prosecuting the claim were disproportionate to the sum sort, the submission clearly raises the possibility if not probability that Mr O'Connell considered the matter and elected not to make such a claim and so not expose himself to costs of an adverse finding.

D Capital 2 Pty Ltd v Western

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (43 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (52)

Cited By (5)