DRE Capital Pty Ltd v Wixels Property Holdings Pty Ltd (No.2)

DRE Capital’s submissions

3. DRE Capital submitted that on 7 August 2025, the defendants’ notice of motion seeking the payment of security for costs was dismissed. Costs should follow the event, there being no good reason to otherwise order. While DRE Capital did obtain leave to serve an affidavit after the hearing, the undertaking by Mr Yang on which the judgment was based (see [30] of the judgment) had first been offered on 23 May 2025, well before the hearing.

The defendants’ submissions

4. The defendants submitted that order 3 of the orders made by Harrison AsJ reserved the costs of the motion. This is an appropriate order for two reasons:

5. in relation to pars 1-2 of the defendants’ motion (which sought dismissal or strike out), DRE Capital conceded at the hearing on 17 June 2025 that it would need to address the issue raised by the defendants that the proceedings were not properly constituted, and has subsequently filed a motion to address this issue; and

6. critical evidence relied upon by DRE Capital as to the financial position of its director was filed, with leave, after the conclusion of the hearing of the motion and well after the initial timetable set by the Court. The extreme lateness of this evidence deprived the defendants of the opportunity to properly consider its position in relation to its application for security, and if necessary, enter an agreed position with the plaintiff.

7. On the day of the hearing of the defendants’ amended motion, on 17 June 2025, DRE Capital conceded that it would need to address an issue raised by the defendants’ in its written submissions that DRE Capital was not entitled to bring the proceedings as trustee for the Fairfax Road Trust. No meaningful argument was heard by the Court by either party in relation to the matter.

8. Following on from the hearing of the defendants’ motion, and consistent with the concession it made through counsel, DRE Capital has brought on a motion dated 8 July 2025, in this proceeding, seeking an order pursuant to s 71 of the Trustee Act 1925 (NSW) that the Secured Loan Agreement dated 20 December 2021 between KD Funds, Wixels, and Rosemarie Brenda Guerin be vested in DRE Capital as trustee for the Fairfax Road Trust.

9. The filing of DRE Capital’s motion seeking an order under s 71 represents a concession that the issue raised by the defendants was properly raised and well-founded.

10. The plaintiff brought proceedings irregularly, putting the defendants to the time and expense of dealing with that irregularity. This is something that ought to have been done prior to the commencement of proceedings. The fact that this was not done ought to weigh heavily against the granting of any costs in favour of the defendants in relation to the “security for costs” aspect of the defendants’ motion.

11. Finally, following the hearing on 17 June 2025, the plaintiff was granted leave by the Court to put on further evidence as to his assets and liabilities. It did so by way of an affidavit filed on 18 June 2025. This affidavit was relied upon by Harrison AsJ at [27] of her Honour’s reasons.

12. The defendants did not have the benefit of this more fulsome affidavit evidence when preparing for, and attending at, the hearing of 17 June 2025. Had the defendants’ been provided prior to the hearing (and in accordance with the original timetable set by the Court) the defendants would have had the opportunity to properly consider whether to negotiate with the plaintiff in relation to security for costs. The failure of the plaintiff to properly prepare this aspect of its case deprived the defendants of that opportunity. It should follow that the plaintiff should not have the benefit of any costs order in its favour at this stage in the proceedings.

13. The reserving of costs is appropriate.

Resolution

12. While Mr Yang proffered an undertaking on 23 May 2025 before the hearing, he did not provide satisfactory evidence that he had the financial means to satisfy the Court that he could pay the defendants’ costs should DRE Capital be ordered to pay costs. At the hearing, the plaintiff was granted leave to amend his statement of claim and ordered to pay the costs thrown away by the amendments. At the conclusion of the hearing, leave was granted to Mr Yang to file an affidavit setting out his financial circumstances. In the end, I decided that as Mr Yang was in the financial position to make good his undertaking. I refused to make an order for security for costs.

Costs

13. Costs are discretionary. Taking these circumstances into account, it is my view that the costs of the notice of motion filed 5 May 2025 should remain as before.

14. The costs have been reserved and can be dealt with at the conclusion of the proceedings.

The Court orders that

1. The costs order made on 7 August 2025 is not varied.

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