NSWNSWSC

John Frederick Hillam v Leduva Pty Limited

[2011] NSWSC 345

Supreme Court of NSW|2011-04-19|Before: Slattery J, Schmidt J, Hall J, Should Schmidt J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2011-04-19

Before

Slattery J, Schmidt J, Hall J, Should Schmidt J

Source

Original judgment source is linked above.

Judgment (9 paragraphs)

[1]

Judgment 1I gave my second judgment in these proceedings on 31 March 2010: Hillam v Leduva Pty Limited [No. 2] [2011] NSWSC 247. Since then the parties have put submissions as to the form of orders that the Court should make consequent upon that judgment and the principal judgment: Hillam v Leduva Pty Limited [2010] NSWSC 1360. This judgment decides issues relating to the final form of orders in addition to the orders made at the time of my second judgment. The Court uses the same terminology for events, things and persons in this judgment as is used in the earlier two judgments. This judgment should be read with the other two. 2Some of the final orders are not contentious. Mr Hillam rightly accepts that all the relief for or incidental to the claimed decree for specific performance must be dismissed in consequence of my second judgment. But there is disagreement about the following aspects of (1) whether the stay that Schmidt J imposed on 31 August 2010 on the issue of the writ of possession should continue and if so for how long; (2) whether Leduva proposes to bring proceedings for contempt ; (3) whether Leduva can claim arrears of occupation fees; (4) whether Leduva is entitled to the costs of the re-listing of the proceedings before Hall J in January 2011; and (5) whether Leduva is entitled to indemnity costs of the proceedings . I will consider these areas of disagreement in order below.

[2]

(1) Should Schmidt J's stay continue and if so, for how long? 3Mr Hillam has been unsuccessful in obtaining relief for the specific performance of the contract for purchase of the Alexandria apartment. Leduva submits that as a result that the stay imposed by Schmidt J on 31 August 2010 should be lifted and the writ for possession should now issue. 4Mr Hillam resists this course. He submits that Schmidt J's stay should not be lifted and in the alternative that the stay should be continued for a period of four weeks to allow Mr Hillam to find alternative accommodation. In the result I find in this section that Mr Hillam fails on his principal contention but succeeds on his alternative contention. For the reasons that follow, Schmidt J's stay should be lifted but Mr Hillam should be allowed four weeks from now to find and move into other accommodation. I will allow the stay to continue until 25 May 2011. 5As I recorded in my principal judgment Mr Hillam did not ask for relief against forfeiture if he were not found to be entitled to specific performance: Hillam v Leduva Pty Limited [2010] NSWSC 1360 at [58]. Both sides accepted that Mr Hillam's claim for relief against forfeiture was made to protect his interest as lessee in possession until completion: Hillam v Leduva Pty Limited [2010] NSWSC 1360 at [52]. I see no reason to depart from the position that Mr Hillam took on this issue at the hearing in November 2010. It is the logical consequence of the way that he put his relief against forfeiture claim as ancillary to his claim for specific performance. The Court was prepared to grant relief against forfeiture when orders were entered. But the discretionary considerations that were central to the grant of such relief were related to Mr Hillam 's readiness, willingness and ability to perform the contract and the consequent availability of specific performance: Hillam v Leduva Pty Limited [2010] NSWSC 1360 at [64]. 6Despite the position Mr Hillam took at the November hearing he advanced arguments in April 2011 that the grant of relief against forfeiture should continue. But these April 2011 arguments are not persuasive in the changed circumstances where Mr Hillam now cannot prove ability to perform the contract. Mr Hillam argues that relief against forfeiture should continue because of the Court's findings that the orders entered on 30 July 2010 were penalties in relation to costs and in relation to the acceleration of the payment of the $140,000. But the Court's findings that these obligations are penalties is separate from and does not affect the entry of judgment for possession, which the Court has not found to be a penalty either in the principal judgment or the second judgment. 7Mr Hillam also argues that the contract for purchase of the Alexandria apartment still subsists, has not been terminated, and is able to be completed within days, weeks or months. That is what Mr Hillam submits he still proposes to do, whilst he remains in possession under special condition 16 of the contract. But in my view, looking at the issue of relief against forfeiture afresh, circumstances have changed since December last year. As the Court is no longer prepared to decree specific performance, and as Mr Hillam is in continuing breach of his obligation to pay $750,000 to Leduva by 30 July 2010 I see no basis further to relieve against forfeiture of possession of the Alexandria apartment consequent upon that breach. In the absence of a decree of specific performance none of the other relevant considerations justify continuation of the stay and the giving of further relief against forfeiture: see Hillam v Leduva [2010] NSWSC 1360 at [64]. 8In the event that he were unsuccessful in seeking an extension of the stay Mr Hillam has asked for a further four weeks to allow him to find alterative suitable accommodation and move out of the Alexandria apartment. There is no evidence as to exactly how long these activities would take. But in my view about four weeks is a reasonable further period. In light of the delay that has already occurred since the default on 30 July 2010 no more time than this should be given. The orders below provide for the stay to expire on Wednesday, 25 May 2011.

(5) Indemnity Costs 20This leaves the question of indemnity costs. Leduva claims that it should have its costs of the whole proceedings paid on the indemnity basis: (1) because it is said Mr Hillam was well aware that he was never ready , willing nor able to complete the contract for purchase of the Alexandria apartment; (2) because it is said Mr Leibeskind's loan was a fiction unsupported by any direct evidence; and (3) because it is said Mr Hillam always knew that Bonython Metals was claiming the return of the $175,000 that Mr Hillam was using to attempt to show that he was ready willing and able to complete the contract. 21The Court will not order indemnity costs based on Leduva's argument that Mr Hillam was well aware that he was never ready, willing nor able to complete the contract for purchase of the Alexandria apartment. Even findings of unconscionable conduct, breaches of fiduciary duty and fraud or other deplorable conduct in litigation, will usually lead to an order for costs on the ordinary basis and will not automatically result in an indemnity costs order against that party: Harrison v Schipp; Cameron v Schipp [2001] NSWCA 13 at [136]. The focus of a claim for indemnity costs is the conduct of the losing party as litigant: Baillieu Knight Frank (NSW) v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 392. It is not clear on the evidence presently available that Mr Hillam always knew that none of the bases on which he claimed he was ready willing and able to complete the contract could succeed . Mr Hillam put up several alternatives, which were at least arguable although in the result they failed. In my view Mr Hillam's failure to prove that he was ready, willing and able to complete does not establish a basis for a special order for costs against him. 22But the issue of indemnity costs based on Mr Hillam being aware that Ample and Bonython were likely to recover the $175,000 before the contract was completed is more complicated. The evidence on that subject does at least found a prima facie inference that Mr Hillam knew that Ample regarded Mr Hillam's use of Bonython's funds for Mr Hillam's private purposes as unauthorised and that Mr Hillam was aware that there was a risk of Mr Hillam's and CFM's use of those funds being restrained by a Court . But these circumstances overlap closely with questions of (1) whether CFM and Mr Hillam committed a contempt of Court by misleading the Court when giving the undertaking, exhibit P, and (2) whether CFM and Mr Hillam breached the undertaking before the Court released CFM from it. The Court could not award indemnity costs against Mr Hillam on these grounds without making findings about Mr Hillam's conduct that overlap closely with the possible allegations of contempt that Leduva may make. In these circumstances the better course appears to be to defer consideration of any application for indemnity costs based on these matters until the opportunity to raise and resolve any issues of contempt of Court has been given . 23But there is no reason why Leduva should not even at this stage have a costs order on the ordinary basis made in its favour: UCPR , s 42.2. It has been successful in the proceedings. The usual rule applies that costs follow the event: UCPR , r 42.2. The costs that Leduva may recover under this order will include Leduva's costs of the motion dated 21 February 2011 to reopen the proceedings. Leduva was successful on this motion. I give leave to Leduva to revisit the question of an indemnity costs order after any issues of contempt of Court have been considered . A finding of contempt may provide the basis for an indemnity costs order: Degm am Pty Ltd (in liq) v Wright (No.2) [1983] 2 NSWLR 354, at 358 and EMI Rec ords Ltd v Ian Cameron Wallace Limited [ 1983 ] Ch 59.