Peters v Lithgow Forge Pty Ltd

EX TEMPORE Judgment 1HIS HONOUR: I gave my principal judgment in these proceedings on 10 October 2011: Peters v Lithgow Forge Pty Ltd [2011] NSWSC 1185. In this judgment I will refer to parties, places and events by the same names as they are referred to in the principal judgment. 2The parties are in issue about a number of matters to do with the form of the orders that are to be made resulting from the principal judgment. Those issues seem to fall into three main baskets. The first basket relates to the plaintiff's costs. The second basket relates to the third defendant, Ms Allen's costs. The third basket relates to questions of whether relief in the nature of a freezing order should be incorporated into the orders made. I will deal with each of these in turn.

The Plaintiff's Costs 3In relation to the plaintiff's costs there are two subissues. The plaintiff has been substantially successful and says that based on an early offer of settlement he should have his costs on an indemnity basis. He also says that his costs should not be reduced on account of the late amendment to the proceedings, upon which the plaintiff was successful. I will deal with each of these sub-issues in turn. 4As my principal judgment set out, the plaintiff brought proceedings on a creditor's petition in the Federal Magistrates Court, in mid2009. Those proceedings were ultimately withdrawn before these proceedings were commenced, as my principal judgment also describes. But in those bankruptcy proceedings the plaintiff says that it made a Calderbank offer to settle its claim, which it is said would now base the making of an indemnity costs order. 5The May 2009 offer the plaintiff made in the Bankruptcy proceedings was that the respondent pay the plaintiff $170,000 as follows: $85,000 by 1 June 2009, $42,500 by 1 September 2009, and $42,500 by 1 December 2009. In this offer the applicant indicated: that he made no claim as to interest; that he would discontinue the Federal Magistrates Court proceedings; and, that the offer was open for acceptance until 5pm on Monday 20 May 2009. This offer was not accepted. 6In my view the defendant's submissions in relation to indemnity costs are persuasive. The defendant says that the substance of the issues in those proceedings were different from the issues in these proceedings. These are proceedings to set aside a mortgage and a transfer and for a declaration of a resulting trust. Those proceedings were mainly for recovery of a debt through bankruptcy processes. 7Also it was not until late July 2010 that the full nature of the plaintiff's claim against the various defendants in these proceedings was evidenced, from its pleading amendments. Some of the present defendants to these proceedings were not even parties to the proceedings in the Federal Magistrates Court. It seems to me that the later communication of the full nature of the plaintiff's claim after the expiry of the May 2009 offer and the more complex relief claimed against more defendants in these later proceedings makes it quite unreasonable to use the 2009 offer as a basis for ordering indemnity costs against the defendants or any of them. 8The second issue in relation to the plaintiff's costs is whether they should be reduced in any way, by reason of his success on the amendments to the Statement of Claim made shortly before the August 2010 hearing. The Court foreshadowed in the principal judgment that by reason of the late amendment of the resulting cross-claim that there may be an argument available that the plaintiff's costs should be reduced. 9The plaintiff says a number of things on this issue: (1) that the late amendment to claim a resulting trust was only responsive to the defendants serving evidence in late June 2010 which raised for the first time that the property, the subject of the proceedings, was owned by the Wieland Family Heirs Trust; (2) that the amendments were served about 28 July 2010, even though the amendment was sought and granted on the first day of the hearing; (3) that the plaintiff succeeded, in any event on the equitable charge argument and succeeded in setting aside the mortgage, which were not part of the late amendments; and, (4) that the defendants pressed on to hearing with the issues even after the resulting trust argument was raised. 10The defendants rely upon what was said in my judgment. They concede that the plaintiff succeeded on the equitable charge issue but say that little time was spent on that issue. They point out that the plaintiff failed on the share transfer issue which was a bulky issue relating to the third defendant, and that although the plaintiff succeeded on the mortgage issue, the resulting trust issue was only added on the first day of the hearing. 11The plaintiff says that he should have his full costs; the second defendant says that he should pay one quarter of the plaintiff's costs. 12In relation to the plaintiff's costs, the arguments on both sides have merit. Yet the short facts are that the evidence of the defendants did raise in late June, clearly for the first time, the potential ownership of the Lithgow property by the Wieland Family Heirs Trust. The response to that by the plaintiff was quite timely. The plaintiff issued subpoenas to the Perth Mint, Westpac and L J Hooker in Lithgow, which resulted in the production of material that was then used in evidence. But even with the service at this time on the defendants of this extra evidence, the resulting trust amendments could have been foreshadowed even sooner it seems to me. The thrust of what was being pursued by attempting to show that the resulting trust arose was, as my judgment shows, not just supported by material from the Perth Mint and Westpac. But the general nature of the second defendant's conduct was some basis for putting the resulting trust contention. Exactly how much earlier the amendment could have been foreshadowed is difficult to say. But in my view it could have been forecast earlier than it was, which would have given the defendants a greater opportunity to consider their reaction. 13The plaintiffs on the other hand respond and say, an opportunity to settle the proceedings was not lost by reason of that, because it can be seen from the offer of compromise served by the defendants that the parties were a long way apart in negotiations. That offer of compromise was served on 19 August 2010, at the conclusion of the hearing of the proceedings. It invited a verdict for the defendants and for the plaintiff to pay fifty per cent of the costs. Certainly that is a factor to be taken into account. But in my view, some opportunity of settlement was lost by the timing of this amendment. 14Ordinarily, the principle is that a party who succeeds on one point but fails on others will receive a costs order in their favour only from the date of the amendment made: Beoco Limited v Alfa Laval Co Limited [1995] QB 137; Murrihy v Radio 2UE Sydney Pty Limited [2000] NSWSC 318 . But such principles are not clearly applicable here because the plaintiff did succeed on other matters. The plaintiff succeeded in relation to the mortgage issue and the charge issue. So in my view it is appropriate to discount the plaintiff's costs taking all these factors into account. 15I also note that the resulting trust argument, was a very important one for the plaintiff. Even if the plaintiff had succeeded, as it has, on the argument as to the charge, if the resulting trust argument had not also been successfully pursued, there would still have been a debate about priorities between Mr Wieland and Lithgow Forge. In my view the appropriate course in all these circumstances is to order the defendants, excluding the third defendant, pay twothirds of the plaintiff's costs of these proceedings.