All that was in issue in these proceedings has now been resolved, other than the question of whether a costs order should be made in favour of the plaintiff company, on the usual basis under the Uniform Civil Procedure Rules 2005 (NSW), namely, costs as agreed or assessed, or whether, as is the plaintiff's case, the order should be on an indemnity basis.
There is no issue between the parties as to the Court's power to make an indemnity costs order under s 98 of the Civil Procedure Act 2005; the principles which apply, namely those discussed by Black J in In the matter of Australasian Barrister Chambers Pty Ltd (in liquidation) [2017] NSWSC 695; or that despite Button J having adjourned the hearing on 15 March 2017 on the basis that the matter was part heard, that in the circumstances which had developed, I should deal with this aspect of the case, sitting as duty judge.
Black J observed at [3]:
"… whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at 89; Westpac Banking Corporation v Ollis [2007] NSWSC 1008 at [6]. DRA in turn points out that costs are awarded on the ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. DRA also emphasises that the jurisdiction to order costs is compensatory and not punitive: Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6] where the Court observed that an order for indemnity costs may be made where conduct in proceedings is plainly unreasonable or involves an element of delinquency."
What was in issue here was whether, as the plaintiff contended, there had been relevant delinquency in the proceedings by the corporate defendant, whose sole director and guiding mind is Mr Tan and the shareholders of which are he and his wife Ms Lim, so as to warrant a costs order on an indemnity basis being made.
The tortured history of what brought the parties to court and finally led to this point, include steps taken by the plaintiff Mr Tan, which I am satisfied establish the requisite delinquency.
The proceedings were commenced by the plaintiff following the adjudication of a building dispute under the Building and Construction Industry Security of Payment Act 1999 (NSW), in relation to a project known as Stage 5 Civil Works Park View Project Spring Farm, of which the defendant was the developer. This resulted in the issue of an adjudication certificate on 3 March 2017 in favour of the plaintiff, for some $2,168,678.30. The certificate was not challenged, but the adjudicated amount was still not paid, despite demands made for payment. It later emerged that on the day after the issue of the certificate, the sale of the defendant company's only known large asset was settled.
Steps were taken by the plaintiff on 3 March 2017 to register the certificate in this Court. Judgment was entered in these proceedings on 7 March 2017, but what was owing still not paid, even after notices of motion for garnishee orders and a writ for levy of property were filed. While the defendant's solicitors, HWL Ebsworth continued to act for the defendant in other matters, instructions to act on this application were withdrawn. HWL Ebsworth was also instructed to advise the plaintiff to speak to Mr Tan directly. Repeated efforts to do so failed, but contact was made by the purchaser of the property, who advised the plaintiff HWL Ebsworth had also acted for it on the sale, which was claimed to have been an arm's length transaction.
Information was then obtained which disclosed that HWL Ebsworth still held almost $1.7 million of the proceeds of the sale of the property in trust. Payment of the amount owed to the plaintiff was further pursued without success.
Eventually in March 2017 an application for the issue of a writ of sequestrian was filed in these proceedings. The defendant did not appear at the hearing of that application, but on 10 March Campbell J was persuaded to issue the writ: see TJ and RF Fordham Pty Ltd v Starhill Property Group Pty Ltd [2017] NSWSC 240. At [7] his Honour concluded that the defendant and the purchaser of the property "are or may be associates" and at [11] that there was a real risk that Mr Tran was attempting to avoid the consequences of the Court's judgment.
On 14 March Ms Lim and it appears another of her and her husband's companies, ECS Mutiara SDN BHD, sought urgent interlocutory relief from the Equity Division Duty Judge in relation to the proceeds of the sale, in which they claimed an equitable interest, which had priority over the plaintiff's interest. They also sought injunctive relief against the plaintiff. Pembroke J ordered payment of the disputed sum into Court.
This matter came before Button J on 15 March, when again the defendant did not appear, despite what Campbell J had concluded and ordered. By that time the moneys held by HWL Ebsworth had been paid into Court, pursuant to orders made by Pembroke J.
On 16 March orders for security for costs in the Equity proceedings were sought against Ms Lim and ECS. That application was listed for hearing on 29 March, but on 24 March consent orders were made in relation to security of $30,000, which has never been paid.
The hearing as to costs was adjourned by Button J, so that the defendant could have an opportunity to lead evidence and to defend the application for indemnity costs.
On 10 April Mr Tan placed the defendant into voluntary administration. On 28 April orders were made in the Equity proceedings, which resulted in some $73,804 being paid into the plaintiff's solicitor's trust account, pending determination of the costs in these proceedings.
At the hearing before me in June, there was finally an appearance for the defendant, but it led no evidence. The case advanced for the defendants was simply that what was relied on established no relevant delinquency on its part.
I am satisfied that this submission may not be accepted.
Not only did the defendant not challenge the original adjudicated certificate, the judgment entered in these proceedings, or the orders made by Campbell J, it did not pay what the plaintiff was owed. Even on the hearing of the costs application it was not submitted that there was no proper basis for the adverse conclusions which his Honour had reached.
On the evidence Mr Tan and the defendant have sought to dispose of the asset which could have funded payment of its uncontested debt to the plaintiff, despite not challenging the certificate and all that has unfolded in these proceedings. Even after the unopposed and unchallenged sequestration orders were made, steps intended to ensure that the judgment could not be satisfied were pursued, by means of the kind which had persuaded Campbell J to make the sequestration orders.
Those further steps include the initiation of proceedings by another of Mr Tan's companies against the plaintiff, to claim an interest in the remaining proceeds of the sale, which have not finally been pursued after it failed to provide the security it had been ordered to provide; the defendant having earlier made other payments to Ms Lim and another of Mr Tan's companies; and Mr Tan placing the defendant into administration.
The obvious inference which must be drawn from the defendant's failure to call evidence from Mr Tan, is that his evidence would not have assisted it to resist the indemnity costs order the plaintiff sought. The plaintiff has obviously been put to considerable and unnecessary cost by the course Mr Tan caused the defendant deliberately to pursue.
I am well satisfied that in the result, a proper basis for an indemnity costs order in favour of the plaintiff has been established.
[2]
Orders
Accordingly I order that the defendant pay the plaintiff's costs of the proceedings on an indemnity basis.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 13 June 2017