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File Number(s): 2026/00055004

Publication restriction: N/A

JUDGMENT

1. The plaintiff has decided to discontinue these proceedings as against the fifth and sixth defendants in the circumstances described below. The fifth and sixth defendants consent to the discontinuance, but oppose the order sought by the plaintiff pursuant to r 42.19(2) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that there be no order as to the fifth and sixth defendants' costs.

2. The plaintiff commenced these proceedings by summons filed on 9 February 2026 seeking a declaration that it validly rescinded a contract that it had entered into (as purchaser) with the first defendant for the sale and purchase of a property in Norwest, a declaration that the said property was charged with the repayment of the deposit that the plaintiff had paid under that contract, and an order for judicial sale of the property.

3. The fifth and sixth defendants had lodged caveats over the Norwest property prior to the commencement of these proceedings claiming interests that would be affected by any order for judicial sale if made in the terms sought by the plaintiff.

4. The plaintiff issued notices to produce to the fifth and sixth defendants on 9 and 16 April 2026. The fifth and sixth defendants contended that those notices were liable to be set aside. At a directions hearing in the Real Property List on 17 April 2026, the Real Property List Judge permitted the fifth and sixth defendants to make an application to set aside the notices to produce, notwithstanding that they had not filed any notice of motion seeking such relief. His Honour heard that application in a short hearing later that afternoon. The outcome was that the plaintiff did not press one of the notices and his Honour set the other notice aside and ordered the plaintiff to pay the fifth and sixth defendants' costs of the hearing of their informal application to set aside the notices.

5. On 17 April 2026, the Real Property List Judge also made orders for the matter to continue on pleadings, commencing with the filing of a statement of claim by 14 May 2026.

6. The plaintiff did not file its statement of claim until 3 September 2026. That statement of claim omitted the claim for a declaration that the Norwest property was charged with the repayment of the deposit to the plaintiff and omitted the claim for an order for judicial sale. The plaintiff's claims were thus limited to claims for declaratory relief as to the validity of the plaintiff's notice of rescission and the liability of the first defendant to repay the deposit, and a money judgment against the second defendant for the amount of the deposit plus interest. Accordingly, the fifth and sixth defendants were no longer necessary parties to the proceedings.

7. According to the plaintiff's submissions in relation to costs, its claims for a declaration of charge and an order for judicial sale were abandoned by reason of the following events that occurred after filing of the summons on 9 February 2026.

8. On 6 March 2026, the first defendant (the registered proprietor of the Norwest property) exchanged contracts for the sale of the property to a third party. That contract was completed at some time after 14 May 2026, with the whole of the sale proceeds being paid to the registered mortgagees, thereby rendering moot the claims of the plaintiff and the fifth and sixth defendants to an interest in the land. Administrators were appointed to the first defendant on 14 May 2026.

9. The fifth and sixth defendants' submissions as to costs do not dispute the plaintiff's account of those events, which are not attributable to either the plaintiff or the fifth and sixth defendants.

10. Rule 42.19 of the UCPR relevantly provides:

“(1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1.

(2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.”

11. It is common ground between the parties that rule 42.19(2) states a default position and not a presumption, and that the plaintiff as the discontinuing party bears the onus of showing some sound positive ground or good reason for the Court to exercise the costs discretion in s 98 of the Civil Procedure Act 2005 (NSW) in a manner that departs from that default position. [1]

12. The circumstances in which the Court may be persuaded to depart from the default position are many and varied, and include where the occurrence of a supervening event has removed or modified the subject matter of the proceedings. [2] I do not find it necessary to refer to the examples of cases identified in the plaintiff's submissions in which such supervening events have been held to warrant a departure from the default position, as each case turns on its own facts.

13. The plaintiff submits, and the fifth and sixth defendants accept, that the plaintiff acted properly in joining the fifth and sixth defendants to the proceedings when they were commenced.

14. The plaintiff submits that it is discontinuing the proceedings against the fifth and sixth defendants only by reason of the supervening events referred to at [7]-[9] above, that it indicated its intention to do so promptly after the occurrence of those events, and that no question of the reasonableness or otherwise of the conduct of either the plaintiff or the fifth and sixth defendants arises in relation to the exercise of the costs discretion.

15. The fifth and sixth defendants submit that the events referred to at [7]-[9] above are not “supervening events because the Plaintiff is continuing their claim despite those developments, and the true subject matter of the proceedings was not the Norwest property itself, but the equity in the property itself, which the Plaintiff is still pursuing. In short, the form of the P**laintiff's claim has changed but the substance of it has not. The Plaintiff is simply abandoning the proceedings insofar as they concern the Fifth and Sixth Defendants and continuing on.”

16. I reject that submission. The events referred to at [7]-[9] above established that there was no equity in the Norwest property which might be available to satisfy the plaintiff's claimed charge, rendering its claim for an order for judicial sale untenable. That caused the plaintiff to withdraw those claims for relief which, if granted, would have affected the interests claimed by fifth and sixth defendants by their caveats lodged against the title to the Norwest property. As I have already stated, the plaintiff’s acceptance that it can no longer seek a declaration of charge or an order for judicial sale of the property rendered it unnecessary for the fifth and sixth defendants to continue as parties to these proceedings. There is simply no basis for the fifth and sixth defendants' submission that the plaintiff is continuing to pursue "equity in the property itself".

17. The fifth and sixth defendants also submit that the plaintiff acted unreasonably by:

18. requesting from the fifth and sixth defendants on 23 March 2026 copies of loan documents between the fifth and sixth defendants and the first defendant, documentary evidence of any loan advanced by the fifth and sixth defendants to the first defendant, and details of the balance outstanding in respect of any such loan;

19. pressing the request for the information referred to above on 31 March 2026 after obtaining the loan documents from another source;

20. issuing the notices to produce dated 9 and 16 April 2026;

21. failing to pay the fifth and sixth defendants’ costs that the plaintiff was ordered to pay on 17 April 2026 in respect of the fifth and sixth defendants’ informal application to set aside those notices to produce; and

22. failing to file the statement of claim until 3 September 2026, approximately three and half months after the plaintiff was ordered on 17 April 2026 to do so by 14 May 2026.

23. As to (1) and (2) above, a request is merely a request. The fifth and sixth defendants declined the requests, or simply did not accede to them. There is no evidence that they incurred any material costs in doing so.

24. As to (3) and (4) above, I accept that the plaintiff acted unreasonably in issuing the notices to produce, one of which was withdrawn and the other of which was set aside. However, the fifth and sixth defendants were permitted to make and press an informal application to set aside the notices to produce, meaning that they did not incur the costs of complying with the Court’s processes by filing a notice of motion. That application was determined on the same day it was made, and an order was made for the plaintiff to pay the fifth and sixth defendants’ costs of that hearing. The order now sought by the plaintiff permitting it to discontinue the proceedings with no order as to costs is not intended to interfere with that costs order. The evidence does not establish that the fifth and sixth defendants incurred any material costs in relation to the notices to produce that would not be covered by that costs order. Those costs will become payable upon the conclusion of the proceedings as between the plaintiff and the fifth and sixth defendants by the filing of the notice of discontinuance. The fifth and sixth defendants did not seek an order at the hearing on 17 April 2026 that those costs be paid forthwith. Their complaint that the plaintiff has not yet paid those costs, in circumstances where they are not yet payable by reason of the usual rule in r 42.7(2) of the UCPR, is without substance.

25. As to (5) above, the evidence does not establish that the plaintiff's delay in filing its statement of claim caused the fifth and sixth defendants to incur costs. The fifth and sixth defendants did not appear at any directions hearing after 17 April 2026 until 4 September 2026 when they appeared to inform the Court that they consented to the plaintiff discontinuing the proceedings against them but opposed the plaintiff being granted leave to do so with no order as to costs.

26. For all of those reasons, I consider that the plaintiff acted reasonably in joining the fifth and sixth defendants to these proceedings when they were commenced and did not act unreasonably during the course of the proceedings in a manner that occasioned costs to the fifth and sixth defendants not covered by the costs orders made on 17 April 2026. The plaintiff has acted reasonably in discontinuing the proceedings promptly after the supervening events referred to at [7]-[9] above, which were not brought about by any conduct on the part of the plaintiff and which removed the need for the fifth and sixth defendants to be parties to the proceedings.

27. In all of those circumstances, I consider that the appropriate exercise of the costs discretion is to depart from the default position in rule 42.19(2) of the UCPR by granting leave to the plaintiff to discontinue the proceedings against the fifth and sixth defendants with no order as to costs, save for those costs that are the subject of order 3 made on 17 April 2026.

28. The order of the Court is as follows:

29. Grant leave to the plaintiff to discontinue the proceedings against the fifth and sixth defendants with no order as to costs, save for those costs that are the subject of order 3 made on 17 April 2026 in favour of the fifth and sixth defendants.

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Endnotes

Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 at [78]-[84] (McColl JA, Beazley and Santow JJA agreeing); Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 (Bitannia) at [53]-[54] (Hodgson JA, Tobias JA agreeing) and [72]-[74] (Basten JA); Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424; [2014] NSWCA 107 (Ralph Lauren) at [21] (Preston CJ of LEC, Beazley P and Ward JA agreeing).

Bitannia at [79] (Basten JA); Ralph Lauren at [30] (Preston CJ of LEC, Beazley P and Ward JA agreeing); Chen v Fang [2019] NSWSC 960 at [53] (Darke J) and the authorities there referred to.