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[2024] VSC 112
General information, not legal advice.
Supreme Court of Victoria
2024-03-15
COSGRAVE J
Original judgment source is linked above.
1 On 7 March 2024, I handed down my reasons for judgment in granting the plaintiff's application to remove caveats over various properties ('the principal reasons'). I directed the parties to confer and attempt to agree upon orders giving effect to that judgment, including the form of final order and costs. These reasons use the same terminology as used in the principal reasons and should be read together with them.
2 The plaintiff ("LPYI") contends that, as the successful party, it should recover its costs of the application. LPYI submits that it should recover its costs on an indemnity, and not a standard, basis for the following reasons:
(a) initially when challenged in December 2023, JY Property sought to justify the caveats on the basis of an implied, constructive or resulting trust which arose through work which Yun had done. However, at the hearing in January 2024, JY Property abandoned this rationale and relied solely upon its position as a unitholder in the Hybrid Trust;
(b) submissions made to the Court on 19 December 2023 indicated that the caveats were to be used as a bargaining chip, contrary to the purpose for which caveats are to be lodged. This attitude was reinforced by the late withdrawal of the caveat over unit 207, 183 Reynolds Road Doncaster East before the hearing on 19 December 2023;
(c) JY Property persisted with the contested hearing in January 2024 notwithstanding that LPYI, on 19 December 2023, raised the argument that a discretionary unit trust did not grant to a unitholder a caveatable interest in land which formed part of the trust property;
(d) Yun lodged the caveats for a collateral purpose - namely, to reduce his potential liability to Macquarie Bank as a guarantor rather than to protect an interest which the caveator had in the properties.
3 The Court has a broad discretion in relation to costs and can award costs on an indemnity basis in appropriate circumstances.[1] Such discretion must be exercised judicially and not unreasonably or capriciously. The discretion is limited to cases which, for one reason or another, are exceptional and not within the normal range of cases. Such cases usually involve a scenario in which the losing party has engaged in inappropriate conduct. From cases such as Colgate-Palmolive Co v Cussons Pty Ltd,[2] Ugly Tribe Co Pty Ltd v Sikola[3] and D S Clarke Nominees Pty Ltd v Adder Holdings Pty Ltd,[4] it appears that a court might reasonably decide to order costs on an indemnity basis where:
4 In the present case, I consider that JY Property should pay LPYI's costs of and incidental to the proceeding, including any reserved costs, on a standard basis. I do so for the following reasons.
5 First, while initially JY Property alleged a broader basis for the caveats, it was apparent that before the hearing, it informed LPYI that its case was limited to the argument about its rights as a unitholder in the Hybrid Trust.
6 Secondly, the argument which JY Property advanced was not hopeless. The legal issues involved in analysing the trust deed and its implications were complicated. They required careful examination and consideration. It was not a situation in which JY Property initiated or continued its claim in wilful disregard of known facts and law.
7 Thirdly, while I raised concern about the collateral purpose of the caveats in the principal reasons, I made no specific finding on the issue. The evidence was a little troubling but was incomplete. I consider it would not be appropriate to reach an adverse view against JY Property without further evidence from Yun or possibly the solicitor.[5] If he had been cross-examined, he might have been able to explain the situation and eliminate the concern which the affidavit material created.
8 Fourthly, overall, I am not satisfied that JY Property conducted itself in such a manner that the Court should exercise its discretion against it to make an award of indemnity costs. The Court awards indemnity costs in cases which are exceptional. The conduct of JY Property was not sufficient to properly enliven the Court's discretion to award costs at the higher level.
9 For the reasons set out, I make the following orders:
(a) The plaintiff have leave pursuant to Order 45.05 to commence proceedings by originating motion in form 5C and that the requirements of Rules 5.03(1) and 8.02 be dispensed with.
(b) Pursuant to section 90(3) of the Transfer of Land Act 1958 (Vic) caveat number AX539132F lodged in the Office of Titles on behalf of the first defendant be removed by the Registrar of Titles (the second defendant) from Certificates of Title:
(c) Pursuant to section 90(3) of the Transfer of Land Act 1958 (Vic) caveat number AX539146T lodged in the Office of Titles on behalf of the first defendant be removed by the Registrar of Titles (the second defendant) from Certificates of Title:
(d) The first defendant pay the plaintiff's costs of and incidental to the proceeding, including any reserved costs, such costs to be taxed on a standard basis in default of agreement.
(e) Liberty to apply.
[1] See O 63.28 of the Supreme Court (General Civil Procedure) Rules 2015.
[2] (1993) 46 FCR 225, 233-4.
[5] The solicitor, in the letter quoted at [11] of the principal reasons, might have used careless language in saying "Our client reiterates that he requires ..." rather than "... it requires ...".
LPY Investments Pty Ltd
JY Property Pty Ltd & Anor
(1993) 46 FCR 225