Solicitors:
Grace Lawyers Pty Ltd (Plaintiff)
Mr R Huang (Director representing the Defendant)
File Number(s): 2020/358986
[2]
Judgment
By Originating Process filed on 18 December 2020, The Owners - Strata Plan No 93922 ("Owners Corporation") sought an order that the Defendant, PSR Crown Investment Pty Ltd ("Company") be wound up under the Corporations Act 2001 (Cth). They relied on an unsatisfied creditor's statutory demand ("Demand") for unpaid strata levies, interest and costs served on 6 May 2020. The Company neither applied to set aside nor complied with that Demand, within the extended time that was available for compliance during the COVID-19 period.
On 29 March 2021, I made orders noting an in principle agreement between the parties that the Company was to pay $147,828.29 by 2 April 2021, and that the only issue remaining in dispute between the parties was costs, and I stood the matter over to the Corporations List on 12 April 2021. It appears that the Company made the payment contemplated by the in principle agreement between the parties on 30 March 2021.
By email dated 12 April 2021, the Owners Corporation provided a short form bill of costs in respect of the winding up application, which indicated the amount of professional costs incurred, and disbursements including the filing fee in respect of the Originating Process, service and ASIC fees, and claimed total costs and disbursements of $7,865.74. I made directions to allow the question of costs to be determined on the papers, and dispensed with the requirement that the Company be represented by a solicitor to the extent necessary to permit Mr Huang, a director of the Company, to represent it in submissions as to costs. The Owners Corporation served submissions on 19 April 2021; Mr Huang, on the Company's behalf, did so late, on 27 April 2021; and the Owners Corporation served submissions in reply.
By their submissions dated 19 April 2021, the Owners Corporation sought an order that the Company pay their costs, now increased to the sum of $8,558.74, within 28 days and provided a further short form bill of costs on which they relied in seeking a gross sum costs order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW). In the alternative, it sought an order that the Company pay its costs of the proceedings as agreed or as assessed on a party/party basis.
The Owner's Corporation submits that it should have the costs of the application where the Company has now, belatedly, paid the amount claimed in the Demand. In Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6, McHugh J observed that, where proceedings are determined without a hearing on the merits, the Court can generally not make an order for costs, where that would require the determination of a hypothetical proceeding, in order to determine the question of costs. However, that principle does not apply if the result reflects a capitulation by one party so that the Court can be satisfied one party won and the other party lost. I am satisfied that the payment made to the Owners Corporation amounts to a capitulation by the Company which warrants an order for costs against it in accordance with the principles in Lai Qin.
The Owners Corporation also seeks a lump sum costs order. The applicabIe principles were summarised by Gleeson JA in Re Cardinal Group Pty Ltd (In Liq) and Cardinal Project Services Pty Ltd (In Liq) (Lump Sum Costs) [2018] NSWSC 895 as follows:
"The Court has a wide discretion to award costs under s 98(1) of the Civil Procedure Act 2005 (NSW). Under s 98(4), the Court has power to fix the costs of the successful party as a specified gross sum. That power is broad and may be exercised whenever the circumstances warrant it: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21] (in respect of a predecessor statutory provision); Hamod v NSW [2011] NSWCA 375 at [813]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [4]-[6].
It has been said that it may be appropriate to fix costs in a gross sum in very short and relatively simple matters where the mechanism provides a more convenient alternative to assessment. The rationale is that where the quantum of costs in issue is a very modest sum, it is appropriate that the Court exercise its power to fix costs in a gross sum so as to avoid the potential for unnecessary expense and delay associated with the process of assessment: Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863 at [6]; Re Palladium Consulting Pty Ltd [2013] NSWSC 92 at [14]; Monterio v Parole Authority (NSW) [2016] NSWSC 903 at [33].
As explained by Brereton J in Re Niruzzi Pty Ltd [2012] NSWSC 773 at [5], a case involving proceedings in the Corporations List to set aside a statutory demand:
… it is highly desirable that questions of costs be resolved expeditiously and without recourse to the process of assessment by a costs assessor, incurring, as it does, additional costs and delay.
As to quantification of a lump sum costs order, the Court is not required to undertake a line-by-line analysis of the costs claimed (as that would be inconsistent with the rationale behind the lump sum costs order process). Rather, the Court should take a broad-brush approach in a way that may involve an impressionistic discount of the costs actually incurred, which is estimated to take into account the contingencies that would be relevant in any formal costs assessment: Harrison v Schipp at [22]; Re Aquaqueen International Pty Ltd [2015] NSWSC 500 at [19]; Russo v Russo (No 4) [2016] NSWSC 1133 at [5]."
I am satisfied that the amount of costs involved is such that it would not be cost effective to require an assessment of those costs, and this is a proper case for a gross sum costs order. The costs claimed by the Owners Corporation have been discounted from those actually incurred by it and those costs are proportionate to what might be expected in a winding up application that would have been contested, until the point at which the Company capitulated. For these reasons, and subject to the matters raised by the Company in Mr Wang's submissions on its behalf, which I address below, I am satisfied that the orders sought by the Owners Corporation should be made. I will also make an order that that amount be paid within 28 days, where both parties accept that payment of any costs due should be made in that period.
By submissions served by Mr Huang on 27 April 2021, the Company sought orders that each party pay their own costs and that the Owners Corporation "remove the ASIC Notice upon the Court Order" and leave to file further proceedings. It alternatively sought an order that the Company pay the Owners Corporation's costs fixed in the amount claimed within 28 days and that the Owners Corporation "remove the ASIC Notice" on receiving that payment.
Mr Huang outlined the background to the dispute, at considerable length, but it is not necessary to address those matters where the proceedings have now been resolved by the Company's payment of the amount claimed in the Demand, after a long delay, which amounts to the Company's capitulation as I have noted above. Mr Huang also submits that a Building Management Committee ("BMC") owes an amount of $77,662.71, although the Company did not seek to set aside the Demand on that basis or seek or obtain leave to rely on it in opposition to the winding up under s 459S of the Corporations Act. It also appears that the BMC is a different entity to the Owner's Corporation, although the Company submits that the strata manager acts as agent for both of them. This claim does not displace the Owners Corporation's entitlement to an order for costs on the basis I have noted above. Mr Huang submits that the Owners Corporation contributed to accumulated legal costs and should pay for their own costs under "equity and good conscience". I am not persuaded by that submission, where it seems to me these proceedings arose from the Company's failure to pay the amount claimed by way of strata levies; it did not apply to set aside the Demand; and it has now capitulated by paying amount claimed by the Owners Corporation. I am therefore not persuaded that I should make an order that each party pay its own costs.
I infer that Mr Huang's submission that the Owners Corporation should be ordered to "remove the ASIC Notice upon the Court Order" is directed to notice of the winding up application that was required to be given by the Owners Corporation to ASIC in a winding up application. I cannot make an order that the Owners Corporation remove that notice, both because it is not within its power to do so, where that notice is now recorded on a record maintained by ASIC, and because that notice accurately records a historical fact, namely that a winding up application was brought against the Company.
It is not necessary but I grant leave to the Company to bring further proceedings in respect of other matters, where it may do so as of right, provided that it has a proper claim which is not barred by any limitations period. I note, however, that rule 7.1 of the Uniform Civil Procedure Rules will ordinarily require that the Company be represented by solicitors in such proceedings, and Mr Huang would ordinarily not be permitted to commence or carry on such proceedings on the Company's behalf unless the Court is persuaded to dispense with the application of that rule.
The costs of this costs application should follow the event. For these reasons, I make the following orders:
The Defendant pay the Plaintiff's costs of the winding up application fixed in the sum of $8,558.74 within 28 days.
The Defendant pay the Plaintiff's costs of this costs application as agreed or as assessed.
[3]
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Decision last updated: 12 May 2021