HIS HONOUR: In each of these matters, the Dissenting Owner has made an application for an order for security for costs to be made against the relevant Owner's Corporation. In each instance the relevant Owner's Corporation has indicated by a document filed with the Court that it supports the application being made for security for costs by the Dissenting Owner. The entitlement to costs for a Dissenting Owner which would potentially be satisfied by such an order post trial arises from s 188(1)(a) of the Strata Schemes Development Act 2015 which provides that:
Unless the Court otherwise orders, the reasonable costs of proceedings for an application for an order to give effect to a strata renewal plan that are incurred by a Dissenting Owner are payable by the owner's corporation.
There are several matters of discretion that arise under that provision, but that they are matters that only arise for consideration post facto and not in advance. In my earlier decision (The Owners - Strata Plan 6666 v GSA Australia Acquisition No 2 Pty Ltd and Kahu Holdings Pty Ltd; The Owners - Strata Plan 6877 v GSA Australia Acquisition No 2 Pty Ltd and 2-4 Lachlan Avenue Pty Ltd [2018] NSWLEC 115), I described those proceedings, in shorthand terms, as being "the Lachlan Avenue Proceedings", an appellation which I adopt for the purposes of this decision.
The affidavit of Laura Dale, dated 3 August 2018, was read without objection. That affidavit provides information as to the comparative impecuniosity of the relevant strata plan owners and the likelihood that, in the ordinary course of events on the estimate of costs provided, that Owner's Corporation would not be in a position to meet an order pursuant to s 188(1)(a) of the Act without going through the process of levying its owners, other than the dissenting owners, in a fashion which would permit it to do so absent having recourse to any third party for those purposes.
In the Kahu proceedings, adopting again the same appellation as I adopted in my earlier decision concerning these two strata redevelopment schemes, I have sufficient evidence to satisfy me, from the affidavit of Paul Brazier sworn 11 April 2018, that there is a similar lack of financial ability on behalf of the relevant Owner's Corporation to satisfy any order which might be made in those proceedings pursuant to s 188(1)(a) without having to go through the process of levying its members, other than its Dissenting Owner, unless it too was indemnified by some third party.
There is also evidence derived from the affidavit material to which I have referred and from the affidavit of Craig Tidemann of 22 August 2018, which was read on both motions on behalf of the supporting purchaser, GSA Australia Acquisition No 2 Pty Ltd, that there is an intention of a sufficiently fiscally well-endowed entity that stands behind the acquiring purchaser to satisfy any orders that were to be made for costs to either Dissenting Owner pursuant to s 188 of the Act.
The question for my determination, then, is whether, for the purposes of Pt 42 r 21 of the Uniform Civil Procedure Rules 2005, there is any likelihood that the proceedings might be stultified if I was not to make an order, that being the basis upon which Mr Hemmings SC, who I have heard on behalf of the Supporting Purchaser (despite the fact that the proper applicant, in each proceedings and, thus, the proper contradictor on each Notice of Motion, does not oppose the making of the orders sought), that there would not be stultification of the proceedings if I did not make the orders that are sought.
Mr Hemmings proposes orders that would permit a period of time to elapse within which a Deed of Support would be entered into by a third-party entity standing behind the Supporting Purchaser that would be a Deed of Support that would have the effect of guaranteeing to the Applicant Owner's Corporation in each proceedings that that third-party entity would meet any orders that might be made pursuant to s 188(1) of the Act in favour of either Dissenting Owner.
Mr Eastman, who appears for the Dissenting Owner in the Kahu proceedings, has drawn my attention in (41) of his submissions to a decision of the Court of Appeal in LRSM Enterprise Pty Ltd v Zurich Australian Insurance Limited (2014) NSWCA 88. At the end of [37] of the judgment, the Court said:
A finding of stultification becomes available only to the extent that the reasons of relevant persons other than the plaintiff itself for not giving financial support truly reflect an inability, rather than unwillingness, of the plaintiff to marshal the relevant financial resources. It is for this reason that unwillingness of other parties is viewed differently from their inability.
There is no suggestion in these proceedings that, subject to the execution of the Deed of Support, there will be an unwillingness of the body that stands behind the Acquiring Purchaser to meet the costs of either Owner's Corporation.
I am satisfied, under those circumstances, that subject to the entering into of that deed, there is no proper basis upon which I ought, in these circumstances, make the order for security for costs sought.
However, I am not satisfied that it is appropriate to leave the matter stand aside on the basis sought by Mr Hemmings.
There are matters of timing and contingent quantum that require to be addressed. I have this morning set down, in the Lachlan Avenue proceedings, a conciliation conference pursuant to s 34 of the Land and Environment Act 1979, between the parties to be held on 28 September 2018.
It seems to me that the holding of that conciliation conference, at least in the Lachlan Avenue proceedings, provides a relevant milestone. It also seems to me that it would be unnecessarily complex to adopt a different milestone in the Kahu proceedings.
I am therefore satisfied that the appropriate course to follow is to make an order for security of costs in each matter on the basis that that amount being (for the reasons I explained during the course of the hearing) $205,000 in the Kahu proceedings and $300,000 in the Lachlan Avenue proceedings, which are to be paid to the Registrar within 14 days after 28 September 2018, that is, by 4.30 pm on Friday 12 October 2018, unless a Deed of Support is entered into by the GSA Unit Trust, ABN 90 119 124 742 by 9 October 2018.
However, in order to preserve the position of both Lachlan Avenue and Kahu, I propose to order that each of those parties has the liberty to relist their proceedings, if they wish to make some submission to me that that Deed of Support is inadequate for the purposes that are proposed, namely, to underwrite and give an indemnity to each of the relevant Owner's Corporations against any order that might be made pursuant to s 188(1)(a) in favour of either of the dissenting purchasers.
It is therefore appropriate that, in addition to granting the leave to each of those parties to relist for those purposes if they wish to contest the adequacy of that proposed deed, the Applicant in each proceedings and the Supporting Purchaser in each proceedings is ordered to file and serve a copy of that deed by close of business on 9 October 2018.
My anticipation is, self-evidently, that there will be separate deeds in each proceedings.
[2]
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Decision last updated: 31 October 2018