In the matter of Hand in Hand Investments Pty Ltd

Category: Costs

Parties: Rouba Mohamad Souhail Osman (Plaintiff)
Hand in Hand Investments Pty Ltd (First Defendant)
Neila Elabed (Second Defendant)

Representation: Solicitors:
Civic Lawyers Australia (Plaintiff)
JK Solicitors (First and Second Defendants)

File Number(s): 2025/371387

JUDGMENT

Background and nature of the application

1. By Originating Process filed on 26 September 2025, the Plaintiff, Rouba Osman sought an order winding up Hand in Hand Investments Pty Ltd (“Company”) on the just and equitable ground. The Plaintiff also sought an order that the liquidator appointed to the Company be appointed as receiver and manager of trust property and claimed damages, on grounds that are not apparent, and an order as to the manner in which the proceeds of sale of trust property should be distributed.

2. On 15 December 2025, Nixon J noted an undertaking to the Court given by the Second Defendant, Neila Elabed, in her own right and as sole director of the Company, which dealt with the treatment of a deposit for the sale of a property situated at Yagoona and authorised a firm of solicitors to hold the relevant funds pending mutual agreement between the Plaintiff and the Second Defendant or Court order; and also irrevocably authorised the solicitors to direct and distribute the sale proceeds for that property to repay borrowings, the solicitors’ reasonable professional fees for attending to the sale, adjustments on settlement and the balance to be distributed by agreement between the Plaintiff and the First Defendant or a Court order. The question who will be entitled to the balance of the sale proceeds has not been determined, whether by agreement of the parties or otherwise. By an Interlocutory Process filed on 2 March 2026, the Second Defendant seeks an order that the proceeds of sale of the property be paid to the Company rather than the Plaintiff, but that application has not yet been heard.

3. Although the ultimate entitlement to the sale proceeds of the property is unknown, the parties sought to have the question of costs determined at this point and Nixon J acceded to that course. The parties subsequently made submissions as to the question of costs.

Applicable principles

4. I now set out the applicable principles in respect of the application for costs, before turning to the parties’ submissions. The Court has power to make an order as to costs under s 98 of the Civil Procedure Act 2005 (NSW) and I bear in mind that a successful party has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 152 ALR 83; [1998] HCA 11 at [22], [134]. I recognise that there has here been no determination of the Plaintiff’s claim on its merits.

5. In Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex p**arte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 (“Lai Qin”), McHugh J in turn observed that:

*“*In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

6. Exceptions to that general principle may arise if a party capitulated or acted unreasonably. In One.Tel Ltd v Cmr of Taxation (2000) 101 FCR 548; (2000) 171 ALR 227; [2000] FCA 270, Burchett J observed that an order for costs may be made where a party effectively surrenders to the other party, and that qualification was noted with approval by the Court of Appeal in Nadilo v Eagleton [2021] NSWCA 232 at [9].

7. Importantly, in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 at 683–684; [2018] NSWCA 84 (“Nichols”), Basten JA observed that:

“… although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon.”

The parties’ submission and determination

8. By submissions dated 16 February 2026, the Plaintiff’s solicitor made submissions as to the circumstances in which the proceedings were commenced and contended that the Plaintiff was compelled to commence the proceedings due to the Second Defendant’s unreasonable conduct and failure to respond to communications. The Plaintiff there set out a detailed chronology of events, dealing with matters as to which the Court has made no determination. The Plaintiff then submitted, contrary to the authority that I have noted above, that:

“While a hearing on the merits was held, no final determination was made and it is appropriate for the Court to now conclude the proceedings with an order that the Second Defendant pay the Plaintiff’s costs.”

9. The Plaintiff submitted that the proceedings had been rendered unnecessary by events beyond the Plaintiff’s control, namely the sale of the underlying property caused by the Second Defendant after the proceedings were commenced, and contended that the Plaintiff had achieved practical success in the proceedings by causing the property’s sale and putting an end to the ongoing dispute relating to the Company. I do not accept either proposition. As to the first proposition, no order requiring the sale of the property was sought in the proceedings and it is not apparent how that sale amounts to success in the proceedings. As to the second proposition, it is not apparent that the ongoing dispute between the parties has in fact been resolved, still less who will succeed at its resolution. As I noted above, the parties have not reached agreement as to how the proceeds of sale of the property are to be distributed and that issue has not been determined by the Court. The Plaintiff also submits that the Second Defendant has acted unreasonably, but that submission assumes a matter which has not been determined and will never be determined, namely that the Plaintiff would have succeeded in the proceedings had they gone to a determination on the merits. The Plaintiff also advances several propositions as to the occupancy of the property, which again depend on matters which have not been determined in the proceedings.

10. By submissions in response dated 23 February 2026, the Defendants respond, also largely by reference to matters that have not been determined in the proceedings, that the proceedings were commenced prematurely and were unnecessary and that the Court should make an order that each party pay their own costs of the proceedings. The Defendants in turn refer to the history of the purchase of the property, allege a breach of trust by the Plaintiff and advance allegations as to the funding of the purchase of the property and the manner in which it was sold, also by reference to matters not determined in the proceedings.

11. By submissions in reply dated 2 March 2026, the Plaintiff took issue, without evidentiary references, with the Defendants’ claim as to the manner in which the property was used; and repeated the claim that the Defendants had failed to respond to the Plaintiff’s communications and that the Second Defendant only caused the property to be sold after the proceedings had commenced.

12. I am satisfied that the Court could not here reach a determination as to the disputed issues noted above, including whether the Plaintiff was forced to commence the proceedings or whether they were unreasonably commenced, and as to who may establish any entitlement as to the sale proceeds of the property, in the absence of a determination of those matters on the merits. Here, as in Nichols, those matters cannot be resolved without reviewing the underlying evidence and disputed questions of fact, and cannot properly be determined in a costs application. For these reasons, there will be no order as to the costs of the proceedings, with the qualification that the costs of the Interlocutory Process filed by the Second Defendant on 2 March 2026 should be determined after that Interlocutory Process is determined.

13. For completeness, the Plaintiff also seeks a gross sum costs order in the proceedings. It is not necessary to determine whether such an order should be made, where no order will be made as to the costs of the proceedings. It is also not apparent that any evidentiary basis was established for the Plaintiff’s quantification of the costs incurred in the conduct of the proceedings.

14. I make the following orders:

15. Subject to order 2, there be no order as to the costs of the proceedings.

16. The costs of the Interlocutory Process filed by the Second Defendant on 2 March 2026 to be determined after that Interlocutory Process is determined.

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Amendments

17 March 2026

Coversheet - corrected date of decision.