This is the Court's fifth judgment in these proceedings. The Court's principal judgment was given on 13 October 2020: Vella v Nergl Developments Pty Ltd & Ors [2020] NSWSC 1405. The Court's second judgment was given on 9 June 2021: Vella v Nergl Developments Pty Ltd & Ors (No. 2) [2021] NSWSC 648. The Court of Appeal gave judgment on 1 July 2021 considering an appeal from the first and second judgments: Nergl Developments Pty Ltd v Vella [2021] NSWCA 131. I have since given my third judgment on 29 October 2021 and a fourth judgment on 17 December 2021: Vella v Nergl Developments Pty Ltd & Ors (No. 3) [2021] NSWSC 1352; Vella v Nergl Developments Pty Ltd & Ors (No. 4) [2021] NSWSC 1652.
This judgment should be read with the Court's previous judgments. Events, matters, and persons are referred to in the same way in all my judgments in these proceedings.
Mrs Vella requested that these proceedings be relisted, because Nergl and Kindelon had not complied with the Court's existing orders. The Court relisted the proceedings to hear this argument on 12 April 2022. The Court was able to resolve the issues raised on 12 April by a Mrs Vella's Further Amended Notice of Motion ("the motion") and made orders that day. But Nergl and Kindelon requested short reasons for those orders, which are recorded here.
Nergl and Kindelon have not complied with some of the Court's orders after my fourth judgment. The Easement was registered on 18 February 2022. The final form of the Deed of Settlement and Release, as defined in the Heads, was provided on behalf of Mrs Vella to Nergl and Kindelon on 22 February 2022 but it has not yet been executed on behalf of Nergl and Kindelon. And Nergl and Kindelon have not yet complied with the Court's orders on 20 October 2020 for the removal of the caveats over Lot 2 and Lot 3. Mrs Vella seeks orders for the removal of the caveats and orders the execution of the final form of the Deed of Settlement and Release, together with other ancillary orders.
Vella v Nergl Developments Pty Ltd & Ors [2022] NSWSC 476 | Case summary | Zoe
Minter Ellison no longer act for Nergl and Kindelon. The Court granted leave to Mr Nathan Satara to appear on behalf of Nergl for the purposes of today's application. Mr Satara is a family member of the controllers of Nergl and Kindelon and holds a power of attorney from them. The controllers of Nergl and Kindelon are elderly and presently face medical issues and have not yet been able to instruct new lawyers. Mr Satara did not seek an adjournment on this account and was content to argue the matter today.
As to the removal of the caveats, Mr Satara contended that the caveats should not be removed because Mrs Vella was still to comply with clauses 3, 4, 9 and 10 of the Heads (which are conveniently set out in the Court's first judgment at [67]). He contended that the reasons in my third judgment (especially at [41]) made clear that removal of the caveats was not yet appropriate because Mrs Vella still had to comply with the "coordinate positive obligations" imposed upon her by these clauses as a condition of the removal of the caveats.
This argument is not persuasive. The caveats can be removed, and the Court will so order. Clause 3 of the Heads only imposes obligations on Nergl. Mrs Vella has complied with clause 4, as she is clearly ready to discontinue the litigation as soon as Nergl performs the obligations which Mrs Vella requests here that it should perform.
Clause 9 of the Heads only requires that Mrs Vella consent in writing to certain applications that Nergl and Kindelon may yet put before her for execution. No documents have yet been put before her for execution pursuant to clause 9. There is no reason to believe that she will not endorse her consent upon any applications that may be given to her for execution under clause 9. Were she to fail to execute any such documents upon request, the Court could readily authorise their execution. It is not necessary to leave the caveats in place to secure performance of this obligation. But the Court will grant liberty to the parties to apply for a little over six months to seek orders requiring Mrs Vella to give her written consent to applications pursuant to her obligations under clause 9.
Clause 10 of the Heads operates for six months after registration of the Easement. If Mrs Vella sells Lot 2 or Lot 3 within that six-month period, clause 10 requires her to include the "special condition", as defined in the Heads, in any such contract for sale together with a term that any purchaser from her shall procure the same special condition in any future contracts for the sale of Lot 2 or Lot 3 to a later purchaser.
Mrs Vella's clause 10 obligations do not need to be secured by leaving the current caveats on Lot 2 and Lot 3. It is sufficient that the Court grant an injunction restraining Mrs Vella for six months from selling Lot 2 and Lot 3 in a manner inconsistent with the terms required by clause 10. That narrow injunction can be recorded on the titles to Lot 2 and Lot 3 and will fully protect Nergl's interests under the Heads for the limited period of six months.
Mrs Vella also claims $21,803.65, being her legal and other costs of preparing and lodging the Conveyancing Act 1919, s 88B instrument as defined in the Heads. She should have an order for payment of this sum. In clause 8, the Heads require the Easement to be documented in a section 88B instrument "prepared and lodged at the cost of Nergl". This obligation is further clarified in clause 8 to provide that Nergl will pay Mrs Vella's "reasonable legal costs and reasonable consultants costs" in relation to the section 88B instrument.
The Court is satisfied that Mrs Vella has established that her direct costs of preparing the s 88B instrument are $21,803.65. But she should not have a full indemnity under clause 8 for those costs if any part of them is also to be recovered under the costs assessments that are presently proceeding consequent upon the Court's orders. The Court will add a proviso to the orders to be made to ensure that Mrs Vella does not obtain double recovery in respect of these fees.
Mrs Vella also seeks that the Registrar in Equity execute the Deed of Settlement and Release in lieu of it being executed on behalf of Nergl and Kindelon. The Court is satisfied that Mrs Vella has made many requests for Nergl and Kindelon to execute the Deed of Settlement and Release and they have failed to do so. Medical issues have prevented the principals of those two companies being available in the near term to execute the Deed of Settlement and Release. The Court has power to order the execution of this instrument under Civil Procedure Act 2005, s 94. In these circumstances, Mr Satara did not oppose the making of an order that the Registrar in Equity execute the Deed of Settlement and Release on behalf of Nergl and Kindelon. The Court will make that order.
Finally, there is the question of the costs of the proceedings on 12 April. Mrs Vella has achieved substantial success on various matters the subject of the present relisting. The Court has ordered that the caveats be removed, as she requested, and over the opposition of Nergl and Kindelon. The issue of removing the caveats occupied a substantial part of the contest on 12 April. It was necessary for the matter to be relisted for orders to be made for the Registrar in Equity to execute the Deed of Settlement and Release. And Mrs Vella has obtained orders under the Heads, clause 8 for compensation for the preparation of the s 88B instrument. The Court will therefore order that Nergl and Kindelon pay all Mrs Vella's costs of the relisting on 12 April. Mrs Vella now seeks orders under Civil Procedure Act, s 98(4)(c) for a specified gross sum instead of assessed costs.
The principles for the making of specified gross sum costs orders instead of assessed costs are well settled. Civil Procedure Act, s 98(4)(c) is expressed in general terms and is not limited to cases of a particular type: Australasian Performing Rights Assoc Ltd v Marlin [1999] FCA 1006 (Burchett J). The power to award a Civil Procedure Act, s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation. The case law frequently emphasises the adaptability of the power and that it is not confined to previously defined classes of cases.
Probable inability to pay a costs order is but one example of a proper basis for the making of a s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered, then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J).
The adaptability of the power means it can be assessed for deployment in new situations. The specified gross sum can be fixed under s 98(4)(c) by the application of what has been described as a "broad brush" approach, having regard to all the information available to the Court: Schipp at [22] and Hadid at [27] and Penson v Titan National Pty Ltd (No.3) [2015] NSWCA 121 at [7] and [25]. The approach taken to the estimation of costs must be "logical, fair and reasonable" and the powers should only be exercised when the Court considers it can do so "fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available": Schipp at [22] per Giles JA.
A definitive statement of the applicable law on the application of s 98(4)(c) in this State appears in Hamod v State of New South Wales [2011] NSWCA 375 at [813] to [820] ("Hamod"). Some of the relevant principles stated in Hamod are: that before exercising the power the Court should be confident that the approach taken to estimating costs is fair, logical and reasonable; that the terms of s 98(4), together with the more general considerations reflected in Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include the degree of any disproportion between the issue litigated and the costs claimed and the complexity of proceedings in relation to their cost; that the power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceeding; that the assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing; that in the exercise of its discretion, the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment; that the costs ordered should be based on an informed assessment of the actual costs, having regard to the information before the Court (for example, by relying on costs estimates or bills); and that the approach taken to estimate the costs to be ordered may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment.
The jurisdiction to make a specified gross sum costs order is attracted here. In long-running proceedings such as these, in which the parties have made multiple applications, in which there has been non-compliance with the Court's orders by one party adding to the costs of the proceedings and requiring a relisting, and where there are already two costs assessments underway in respect of existing court orders, it is desirable to reduce further opportunities for contention between these parties. Therefore, to avoid further complications and to bring the proceedings to an end, it is appropriate for the Court to exercise its jurisdiction to make orders under Civil Procedure Act, s 98(4)(c) for a specified gross sum instead of assessed costs.
In his affidavit dated 12 April 2022 Mr Stephen Frawley, the solicitor for Mrs Vella, explains that the total barristers' and solicitors' costs and disbursements of preparing and presenting the motion are a little over $85,000, being professional fees and disbursements incurred to up to the swearing of his affidavit of $50,185.49 together with a further anticipated $34,832. This figure has been broken down in very considerable detail by Mr Frawley, enabling the Court to be confident that it can reach a specified gross sum instead of assessed costs which is fair and appropriate. The Court is satisfied that the figure for costs claimed of approximately $85,000 is generally reasonable. But upon a cost assessment such a sum would not be fully recovered.
Mrs Vella has offered to accept a lump sum assessment of $59,000 representing approximately 70% of these costs incurred. That is a fair and appropriate discount in the circumstances. The Court will make an order for the payment of that sum as a specified gross sum instead of assessed costs. This will mean that when the two existing costs assessments are concluded these parties will not have to engage in another round of costs assessment, thereby further delaying the separation of their commercial interests.
For these reasons the Court makes the following orders and directions:
1. Grant leave to the plaintiff to file in court the Further Amended Notice of Motion dated 12 April 2022;
2. Pursuant to s 74MA(2) of the Real Property Act 1900 (NSW), the first defendant shall withdraw caveat AN743351 registered on the title of Lot 2 in Deposited Plan 1240377 and caveat AN743326 registered on the title of Lot 3 in Deposited Plan 1240377 ("the subject titles") by 4pm on Thursday 14 April 2022;
3. Note that Mrs Vella has an obligation under clause 9 of the Heads of Agreement ("the Heads") as defined in the Court's first judgment (Vella v Nergl Developments Pty Ltd & Ors [2020] NSWSC 1405) ("the Court's first judgment") at [67] to consent to "any or all applications as Nergl shall elect to give effect to the Adjustments", as defined in the Heads, provided such applications are lodged within six months of the date that the owner of Lot 103 lodges for registration in registrable form "the Easement", as defined in the Heads;
4. Note that the easement was lodged in registrable form and registered on 18 February 2022;
5. Grant liberty to apply to the parties until 15 September 2022 for the Court to make orders requiring Mrs Vella to consent to any such applications as are described in order 3 above;
6. Order that the plaintiff, Mrs Vella, the registered proprietor of the subject titles, by her servants and agents be restrained until 19 August 2022 from selling the subject titles pursuant to a contract or arrangement that is inconsistent with or which lacks the terms and conditions required by Clause 10 of the Heads;
7. Order that Nergl Developments Pty Ltd pay Mrs Vella the sum of $21,803.65 being the cost of preparing and lodging the s 88B instrument as defined in the Heads (and being the costs described in pages 208 and 209 of the schedule of Mr Frawley's 18 March 2022 in Exhibit CSF-1), provided that there must be deducted from any recovery of the said sum of $21,803, any amount which is otherwise taken into account as part of Mrs Vella's costs in any costs assessment, so as to prevent double recovery;
8. Order the first defendant Nergl Developments Pty Ltd and fourth defendant, Kindelon Pty Limited pay the plaintiff, Mrs Vella's costs of today;
9. Order under Civil Procedure Act 2005, s 98(4)(c) that the first and fourth defendant jointly and severally pay the plaintiff's costs of and incidental to the motion by way of a specified gross sum costs order in the sum of $59,000;
10. Order pursuant to Civil Procedure Act 2005 (NSW), s 94 that the Registrar in Equity is authorised to execute the Deed of Settlement and Release, as defined in the Heads, in the form provided by the plaintiff to the first and fourth defendants by email from Nicholas Lavanda to Duncan McGregor and David McElhone at 6:21pm on 22 February 2022, in the name of the first and/or fourth defendants;
11. Direct the plaintiff to provide the Deed of Settlement and Release the subject of order 10 to the registrar in Equity for execution within seven days;
12. Grant liberty to apply in relation to the implementation of these orders.
[2]
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Decision last updated: 20 April 2022