Supreme Court New South Wales Medium Neutral Citation: In the matter of Glenvine Pty Limited (in liquidation) [2020] NSWSC 1017 Hearing dates: On papers, last submissions 17 July 2020 Decision date: 04 August 2020 Jurisdiction: Equity - Corporations List Before: Black J Decision: Costs payable on specified basis. Parties to bring in agreed orders giving effect to judgment within 7 days, or if there is no agreement, draft short minutes of order and submissions. Catchwords: COSTS – Bases of quantification – Whether indemnity costs are appropriate – Whether costs should be payable forthwith – Whether gross sum costs order appropriate Legislation Cited: - Civil Procedure Act 2005 (NSW), s 98 - Uniform Rules of Civil Procedure 2005 (NSW), rr 42.1, 42.5 Cases Cited: Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 - Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 - Commissioner of Australian Federal Police v Omar [2020] NSWSC 155 - Commonwealth of Australia v Gretton [2008] NSWCA 117 - Hamod v State of New South Wales [2011] NSWCA 375 - Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 - Macquarie International Health Clinic Pty Ltd v Sydney Local Health District (No 12) [2019] NSWSC 916 - Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 - Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 - Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727 - Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 - Re Cardinal Group Pty Ltd (in liq) [2018] NSWSC 895 - Re FW Projects Pty Limited (in liq) [2019] NSWSC 1019 - Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866 - Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd; ICB Gait and Posture Clinic Pty Ltd; Foot Steps Orthotics Pty Limited [2019] NSWSC 174 - Re Hillsea Pty Ltd [2019] NSWSC 1309 - Re Punters Show Pty Limited [2017] NSWSC 605 - Re Tiaro Coal Limited (in liq) [2018] NSWSC 1043 - Richmond v Ora Gold Ltd [2020] FCA 70 - Ritson v Gay & Lesbian Community Publishing Ltd [2012] NSWSC 586 - Smith v Shilkin (No 3) [2020] NSWSC 787 - UGL Services Pty Ltd v F1 Solutions Pty Ltd [2012] FCA 245 Category: Costs Parties: Christian Peter Sprowles (Third Plaintiff) Glenvine Pty Limited (in liquidation) (First Defendant) Billie Ashley Pty Ltd (Second Defendant) Kelly Van Beek (Third Defendant) Representation: Counsel: D R Stack (Third Plaintiff) D Barnett (Third Defendant) No appearance by Second Defendant Solicitors: Bridges Lawyers (Third Plaintiff) Pickel Lawyers (Third Defendant) No appearance by Second Defendant File Number(s): 2020/44559 Judgment Background and affidavit evidence 1. By Interlocutory Process filed on 2 June 2020 ("June Interlocutory Process"), the Third Plaintiff, Mr Sprowles, who is the liquidator ("Liquidator") of Glenvine Pty Ltd (in liq) ("Glenvine") sought an order under s 67 of the Supreme Court Act 1970 (NSW) that, nunc pro tunc, he be appointed, without security, as the receiver and manager of all the property, assets and undertakings ("Assets") of the VBC Trust including a property situated in Darlinghurst, NSW ("Darlinghurst Property"). 2. By my judgment delivered on 3 July 2020 (Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866), I held that the Liquidator should also be appointed as receiver of certain property of the VBC Trust including a property situated at Darlinghurst on New South Wales. I there observed (at [35]) that: "I first address the question raised by the Liquidator's application, whether he should be appointed as receiver of the Assets and the Darlinghurst Property with a power of sale. I conclude below that that order should be made, to permit the Liquidator to complete the winding up of Glenvine and exercise its subsisting right of indemnity in respect of the ANZ loan, rather than allowing that loan and Glenvine's liability under it to remain on foot on an interest only basis for the indeterminate future. I reach that conclusion on the basis of several uncontested or uncontestable facts, namely that (1) Glenvine is the registered owner of the Darlinghurst Property; (2) Glenvine is presently liable to ANZ in respect of the principal of the loan on that property and for interest payments on that loan when they resume, even if Ms Van Beek seeks to pay them in practice; (3) there is no existing refinancing proposal for that loan that would discharge Glenvine's liability, still less one that has ANZ's approval; (4) the Liquidator will necessarily incur costs in dealing with the Darlinghurst Property of which Glenvine is now the bare trustee, whether for BAPL as the new trustee of the VBC Trust or for Ms Van Beek, including costs of at least some necessary involvement in the dispute that has arisen as to that trust and as to claims in respect of the Jindabyne property; and (5) although it is not necessary to any conclusion, the Liquidator is better placed to act independently in realising the Assets including the Darlinghurst Property than Ms Van Beek, where the owners corporation and owners of the Jindabyne townhouse have a substantial judgment against Glenvine in that regard. I conclude that order should be made even if Ms Van Beek could established that she is the equitable owner of the Darlinghurst Property, subject to Glenvine's proprietary interest arising from its right of exoneration, at least where no alternative proposal presently exists to pay out the ANZ loan other than by a sale of the Darlinghurst Property." 1. I also summarised the conclusion I had reached, and expressed a preliminary view as to costs, in paragraphs 120-122 of that judgment, as follows: "I have held above that, irrespective of the existence of a dispute as to who owns the Darlinghurst Property in equity, the Liquidator should be appointed as receiver of that property with a power of sale where Glenvine is presently liable on the ANZ loan and that liability must be discharged to progress the winding up. There is no detriment to [the Third Defendant] Ms Van Beek in that order, beyond the detriment that results from the well-established position that a beneficiary's rights are deferred to the right of exoneration of a former trustee in respect of proper trust liabilities. Although it is not necessary to my decision, I have also held above that Ms Van Beek has not established a sufficiently arguable case that she has an equitable interest in the Darlinghurst Property to justify not making that order or deferring that order. I am satisfied that it is both appropriate and necessary now to make an order that the Liquidator be appointed as receiver of the Assets. Given the findings that I have reached above, there is no relevant distinction between this case and many other cases where this Court and the Federal Court of Australia have appointed a liquidator as receiver of trust assets to allow that liquidator to discharge a trustee company's liabilities by exercising its right of exoneration against trust assets. The appointment of the Liquidator as receiver of the Assets and the orders conferring the necessary powers on him will also protect Glenvine's right of exoneration against the Assets from further erosion by Ms Van Beek transferring Glenvine's monies to accounts under her or [The Second Defendant] BAPL's control; will allow the realisation of trust assets as appropriate to pay his costs and disbursements and proper remuneration from the Assets; and will create a fund to meet the claims of persons entitled to those assets, who may include Ms Van Beek. … My preliminary view is that Ms Van Beek and BAPL (without recourse to assets of the VBC Trust) should pay the costs of this application. My preliminary view is also that those costs should be payable forthwith and the Liquidator should have liberty to have them determined promptly by the Court on a lump sum basis, if he seeks to do so. It would arguably be most unfortunate if those costs were to be paid, as a matter of convenience for the Liquidator, from the Assets or the Darlinghurst Property to the potential detriment of any unsecured creditors of Glenvine as trustee of the VBC Trust, rather than from Ms Van Beek's and BAPL's personal assets. However, this is only a preliminary view and I will allow the parties an opportunity for written submissions as to costs." 1. I also made directions for submissions as to any application by the Liquidator for a gross sum costs order, and listed that matter in the Corporations Motions List on 20 July 2020. By his Interlocutory Process filed on 10 July 2020, the Liquidator then sought an order that his legal costs of and incidental to his Interlocutory Process filed on 2 June 2020 be paid by BAPL and Ms Van Beek on a gross sum basis in the amount of $80,161.21, exclusive of GST, and that those costs be payable forthwith and without recourse to the assets of the VBC Trust. In submissions, Mr Stack, who appeared for the Liquidator, clarified that the amount of $80,161.21 claimed by the Liquidator was referable to costs on an ordinary basis claimed between 5 June 2020 and 17 June 2020, and that the Liquidator sought costs on an indemnity basis or, alternatively, on an ordinary basis from 18 June 2020. The Liquidator and the Third Defendant, Ms Van Beek have agreed that the matter could be dealt with on the papers. There has been no appearance for BAPL and it has not made submissions. 2. The Liquidator's application was supported by an affidavit dated 10 July 2020 of his solicitor, Mr Dibden, which referred to the steps involved in the hearing of the Interlocutory Process. Mr Dibden fairly noted that, although orders for substituted service of the proceedings on Ms Van Beek and BAPL were made on 2 June 2020, BAPL appeared in the proceedings from 4 June 2020 and Ms Van Beek first had an involvement in the proceedings on 12 June 2020, and first filed and served an affidavit and an outline of submissions opposing the relief sought by the Liquidator on 18 June 2020. 3. Mr Dibden also referred to a tax invoice dated 6 July 2020 issued by his firm, which recorded the professional legal costs and disbursements (including counsel's fees) incurred on behalf of the Liquidator in respect of the June Interlocutory Process, which totalled $120,366.91 inclusive of GST, for work performed between 15 May 2020 and 3 July 2020. Mr Dibden noted that the vast majority of the work undertaken in the matter was undertaken by Mr Dibden and Mr Karle (who is a lawyer with several years' experience with the firm) although they utilised staff with lower charge-out rates for discrete tasks where possible. Another solicitor and a paralegal each with lower hourly charge-out rates than Mr Karle had assisted in tasks that needed to be undertaken immediately before a resumed hearing of the matter on 26 June 2020, when Mr Karle was on leave. Mr Karle's hourly rate had also increased in the course of the matter by reason of his promotion to Senior Associate on 1 July 2020. 4. Mr Dibden expressed the view, which was relevant although plainly not conclusive of the fact, that the hourly rates charged by his firm were fair and reasonable, that there had been an appropriate level of delegation and that the professional costs incurred by the Liquidator reflected a fair and reasonable amount for the necessary work, and he also pointed to the complexity of the legal issues raised and the vigorous opposition of Ms Van Beek and BAPL to the orders sought. I am persuaded that there was a significant degree of complexity in the application given the range of issues raised by Ms Van Beek in opposition to the orders sought, and there is no doubt as to the vigorous character of that opposition, as recorded in my earlier judgment. Mr Dibden also expresses the view that Mr Stack's rates were fair and reasonable and that the fees charged by him reflected a fair and reasonable amount for the work necessary to be performed in connection with the Interlocutory Process. Mr Dibden also addressed other matters which he considered supported the making of a gross sum costs order in the amount claimed. Mr Dibden also referred to costs incurred in respect of this Interlocutory Process, comprising solicitors' professional costs of $9,636.50 exclusive of GST and counsel's fees of $2,187.50 and a court filing fee in respect of the Interlocutory Process in the amount of $424.00. Additional fees which Mr Dibden foreshadowed in respect of an oral hearing of the application were not necessary, where the matter was determined on the papers. 5. Ms Van Beek in turn relies on her affidavit dated 17 July 2020. She refers to the level of her annual income, which has increased in one respect and decreased in other respects during the COVID-19 pandemic, and says that she has paid for legal costs by borrowing funds from two sources, and has also withdrawn money from her superannuation fund under COVID-19 arrangements. She says that she does not have any other source of funds to meet a costs order against her other than the sale of her home. Her evidence is that she has significant equity in her home, above the amount of a mortgage to a bank lender, although that conclusion is based on no more than an enquiry with a local real estate agent as to an estimated value for her home. She indicates her belief that, if she was immediately required to pay the Liquidator's costs of the application to appoint a receiver, she would have to put her house on the market unless she could successfully apply for an increase in her mortgage. She says that she "suspect[s]" that any such application would be difficult given her current limited income. She indicates that she is prepared to give an undertaking to the Court and the Liquidator, pending final resolution of her Cross-Claim, not to borrow further funds against her house other than to pay her own legal costs. I will return to the scope of that undertaking below. Whether Ms Van Beek and BAPL should pay the Liquidator's costs and for what period 1. Mr Stack referred to the scope of the Court's power to costs under s 98 of the Civil Procedure Act 2005 (NSW) and Part 42 of the Uniform Civil Procedure Rules. Section 98 of the Civil Procedure Act 2005 (NSW) confers a discretionary power to determine costs on the Court ("UCPR"). Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) in turn provides that: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 1. A successful party has a "reasonable expectation" of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22], [134]. In Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with whom Mason P agreed) observed that: "… underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs." 1. In Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [7]–[9], McColl JA in turn observed that: "Section 98 of the Civil Procedure Act 2005 (NSW) confers a wide discretion on the court with respect to costs. The "general rule" is that court costs follow the event unless the court makes "some other order" pursuant to the discretion conferred by Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.1. As Beazley JA explained in Baker v Towle [[2008] NSWCA 73; (2008) 39 Fam LR 323 at [11] (Mathews AJA agreeing)], in most litigation, UCPR r 42.1 "operates in a straightforward way, 'the event' being readily identifiable as a judgment for the plaintiff or the defendant on the claim. In that sense, 'the event' to which the rule refers is the result of the proceedings, so that the party who succeeds on the claim before the court is awarded costs, unless the court, pursuant to the discretion conferred by r 42.1, makes 'some other order'". Underlying both the general rule that costs follow the event, and qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs." [footnotes omitted] 1. I have drawn on my summary of the applicable principles in Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd; ICB Gait and Posture Clinic Pty Ltd; Foot Steps Orthotics Pty Limited [2019] NSWSC 174 at [5]ff for the summary that appears above. Mr Stack also referred to the observations of the High Court of Australia as to the scope of a corresponding power in Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [24]-[25], as follows: "It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise", the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature". Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power. A guiding principle by reference to which the discretion is to be exercised — indeed, "one of the most, if not the most, important" principle — is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs." [citations omitted]. 1. Mr Stack fairly accepts that it was necessary for the Liquidator to apply to the Court for the orders appointing him as receiver of trust assets, even if that application had not been opposed by Ms Van Beek and BAPL. Nonetheless, an unopposed application would likely have proceeded on the first occasion on which the matter was listed for directions before Rees J or with a single listing in a Corporations Motions List, rather than requiring a hearing split over several days. Mr Stack points out that Ms Van Beek was unsuccessful in her opposition to the orders sought, in respect of the range of submissions put, and that BAPL had adopted those submissions. Mr Stack submits, and I accept, that that at least warrants an order that Ms Van Beek and BAPL pay the costs of the application on an ordinary basis, so far as costs should follow the event. 2. As I noted above, the Liquidator has quantified the costs he claimed against Ms Van Beek from 5 June 2020. Mr Barnett, who appears for Ms Van Beek, responds that she was not party to the winding up proceedings in respect of Glenvine; the Interlocutory Process brought by the Liquidator of Glenvine seeking his appointment as receiver of the assets of the VBC Trust and the Darlinghurst Property was filed in Court on 2 June 2020, and orders were made by Rees J on that date, for the filing of evidence by 12 June 2020 and submissions by 18 June 2020, with the matter listed for hearing on 19 June 2020. Mr Barnett points out that Ms Van Beek did not appear on 4 June 2020, and did not have the opportunity to indicate whether the timetable was suitable for her, but little turns on that matter where the proceedings were later adjourned on 19 June 2020 and she was provided a further opportunity to lead evidence in them. Mr Barnett submits, however, and I accept, that Ms Van Beek had not taken a position of opposition to the orders sought on 4 June 2020 and orders should not be made for costs against her from that date. I accept Mr Barnett's submission that costs should not be ordered against Ms Van Beek before 18 June 2020 when she first served an affidavit in opposition to the orders sought. 3. As Ms Van Beek submits, costs prior to that date should properly be ordered against BAPL, which had opposed the relief sought by the liquidator at least from 4 June 2020, with costs on and from that date being ordered against both BAPL and Ms Van Beek. Whether costs should be quantified on a gross sum basis 1. Mr Stack addresses the quantification of costs on a "gross sum" basis by reference to s 98(4) of the Civil Procedure Act 2005 (NSW). He refers to the observations of Beazley JA (with whom Giles and Whealy JJA agreed) in Hamod v State of New South Wales [2011] NSWCA 375 at [816]-[817] as follows: "The terms of s 98(4), together with the more general considerations reflected in the Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include: the relative responsibility of the parties for the costs incurred (for example, Harrison v Schipp); the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability: Ritchie's Uniform Civil Procedure NSW at [s 98.45]. The exercise of the power conferred by s 98(4) is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment. This may arise either from the likely length and complexity of the assessment process: Beach Petroleum NL v Johnson (No 2) at 120; Charlick Trading Pty Ltd v Australian National Railways Commission; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006; or from the likelihood that the additional costs of formal assessment would disadvantage the successful party because of the likely inability of the unsuccessful party to discharge the costs liability in any event: Harrison v Schipp; Sony Entertainment (Aust) Ltd v Smith (2005) 215 ALR 788 at [90], [194]–[195]; Hadid v Lenfest Communications Inc [2000] FCA 628." 1. Those principles were applied by Kunc J in Macquarie International Health Clinic Pty Ltd v Sydney Local Health District (No 12) [2019] NSWSC 916 at [158]. Mr Stack also refers to my observation in Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 at [19] that the power to award gross sum costs orders: "… is commonly exercised where costs have been incurred in a lengthy or complex case, but it is not limited to such a case:… the power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court typically applies a discount in assessing costs on a gross sum basis … A gross sum costs order may also be made to avoid the expense, delay and aggregation involved in litigation arising out of an assessment … Where a gross costs order is to be made, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a cost assessment, in determining a gross sum payable, and will apply "a broad brush" approach …" [citations omitted] 1. Mr Stack recognises that a discount is sometimes applied in making a gross sum costs order, but refers to the observations of Brereton J in Hancock v Rinehart (Lump Sum Costs) [2015] NSWSC 1640 at [57] that the case for such a discount is seriously undermined if the Court can be confident that there is little risk that the amount includes costs that might be disallowed on assessment. 2. It seems to me that this is a proper case for a gross sum costs order. First, as Mr Stack points out, the costs of an assessment process would ultimately be borne by unsecured creditors of Glenvine or persons who would otherwise be entitled to recovery against trust assets. Second, as Mr Stack points out, the relatively narrow scope of the application before the Court, notwithstanding the complexity of the legal arguments put, means that the Court is well-placed to assess whether the costs claimed by the Liquidator are reasonable. Mr Barnett does not appear to contest that a gross sum costs order may properly be made or to challenge the quantum of costs disclosed in Mr Dibden's affidavit evidence, but submits that the period for which costs are recoverable should be 18 June 2020 to 3 July 2020, rather than 5 June 2020 to 3 July 2020, and an appropriate discount should be applied for party/party solicitor's costs rather than indemnity costs. I accept that those adjustments should be made. 3. Mr Stack also points to authority that counsel's fees will generally be allowed in full in a gross sum costs assessment, unless there is reason to think those fees are not within an appropriate range: Beverage Freight Services Pty Ltd above at [36]. There is no basis to doubt that counsel's fees are in an appropriate range in this case and disbursements would be recoverable in full, again limited to the period from 18 June 2020 in respect of Ms Van Beek and from 4 June 2020 against BAPL. 4. I invite the parties to seek to agree the quantum of costs on that basis, but I will allow an opportunity for further submissions limited to that question if they are not able to do so. Whether costs should be ordered on an indemnity basis from 18 June 2020 1. As I noted above, the Liquidator seeks an order that his costs be paid on an indemnity basis from 18 June 2020. Rule 42.5 of the UCPR deals with an order for costs on an indemnity basis. The jurisdiction to order costs is compensatory and not punitive and 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 above at 89. 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. 2. Mr Stack also referred to my summary of the principles applicable to an order for indemnity costs in Re Hillsea Pty Ltd [2019] NSWSC 1309 at [13] as follows: "Costs are awarded on an ordinary basis unless there are exceptional circumstances …. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs … 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 …" [citations omitted] Mr Stack pointed out that that passage was cited with approval by Hallen J in Smith v Shilkin (No 3) [2020] NSWSC 787 at [69]. 1. Mr Stack refers to my observations in paragraph 35 of the 3 July 2020 judgment, which I have quoted above, and submits that it should have been obvious to Ms Van Beek and BAPL that the orders sought by the Liquidator had to be made, where Glenvine was in default under the loan facility to ANZ, that facility was in default, Glenvine was in liquidation and it otherwise had no ability to satisfy its obligations under the facility. Mr Stack submits that, having regard to those matters and arguments which were put by Ms Van Beek, which I held were not sufficiently arguable to defer granting the relief sought by the Liquidator, and were adopted by BAPL, it was unreasonable for Ms Van Beek and BAPL to oppose the relief sought by the Liquidator, and they should be ordered to pay the liquidator's costs on an indemnity basis on and from 18 June 2020. 2. Mr Barnett responds that Ms Van Beek's conduct in resisting the appointment of a receiver was not unreasonable, and submits the fact that the Court reached the conclusion that a receiver should be appointed notwithstanding matters on which Ms Van Beek relied does not mean that it was unreasonable to put them. On balance, I accept that submission and an order for indemnity costs should not be made. Whether costs should be paid forthwith 1. The Liquidator also seeks payment forthwith. In Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; (2009) 257 ALR 503, Besanko J observed that the usual approach that costs are not resolved until the end of a proceeding serves the general interests of justice because it avoids multiple taxations and an apparent unfairness where a party who is initially successful is ultimately unsuccessful or vice versa; and prevents interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties; and also recognised (at [21]) that: "the court may order that costs be paid forthwith, and the cases suggest that [this] power may be exercised in circumstances in which there is an element of unreasonableness in the conduct of the unsuccessful party, and it is likely that there will be a long delay between the interlocutory proceeding and the conclusion of the principal proceeding." 1. Such an order has been made in this Court, for example, where the result of a motion represents complete success for a party on a discrete and substantial part of the proceedings and, absent that order, costs would not be payable for a significant period: Ritson v Gay & Lesbian Community Publishing Ltd [2012] NSWSC 586 at [4]–[5]. In UGL Services Pty Ltd v F1 Solutions Pty Ltd [2012] FCA 245, Jagot J departed from the usual rule and made an order for costs forthwith where her Honour was satisfied that a summary judgment application was misconceived. I applied those principles in Re Punters Show Pty Limited [2017] NSWSC 605, Re Tiaro Coal Limited (in liq) [2018] NSWSC 1043 and Re FW Projects Pty Limited (in liq) [2019] NSWSC 1019 at [23] on which I have drawn for the summary of the applicable principles that appears above. 2. Mr Stack also refers to the observations of Gleeson JA in Re Cardinal Group Pty Ltd (in liq) [2018] NSWSC 895 at [11]-[12] that: "The usual rule in Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.7(2) is that an order for costs in respect of interlocutory proceedings is not payable until the conclusion of the proceedings, unless the Court orders otherwise. The Court's discretion to order the immediate payment of interlocutory costs is wide and unfettered. Here, the costs order relates to the determination of a discrete question. That is a relevant circumstance in which it may be appropriate to order that costs be payable forthwith … There may be an argument that UCPR, r 42.7(2) does not apply where the Court makes a lump sum costs order in respect of an interlocutory application because such an order takes the matter outside UCPR, r 42.7(2). For the avoidance of doubt, however, it is appropriate to order that the costs be payable forthwith." 1. It seems to me that here, as in Re Cardinal Group Pty Ltd (in liq) above, the costs were incurred in determining a discrete issue. There is likely to be some delay in the determination of the balance of the issues in the proceedings, where several of the issues addressed in my earlier judgment were not determined on a final basis, reserving the opportunity to Ms Van Beek to reagitate them at a final hearing. On the other hand, Mr Stack accepts that those costs will be paid, in the first instance, from trust funds realised from the sale of the Darlinghurst Property, rather than by Ms Van Beek personally. 2. Mr Barnett responds that an order that costs be paid forthwith should not be made in respect of Ms Van Beek, and points to the ordinary rule that the costs of an interlocutory application are payable at the conclusion of the proceedings. Mr Barnett also addresses the question when the Liquidator first advanced an argument that he should be appointed as receiver to the Darlinghurst Property irrespective of any claim by Ms Van Beek to ownership of that property. It does not seem to me that that matter advances the question of whether an order for costs should be made forthwith. Third, Mr Barnett submits that the fact that Ms Van Beek was not successful, and that her claims were found not to be seriously arguable, did not have the consequence that her conduct in seeking to resist the appointment of a receiver was unreasonable or unnecessary. I accept that the matters raised had a degree of complexity and, as Mr Barnett points out, the result of proceedings generally appear clearer after they have been determined. 3. Fourth, and importantly, Mr Barnett points out that the Liquidator can use the net sale proceeds of the Darlinghurst Property to pay the costs of this application, and submits that there will be no detriment to unsecured creditors from that course, where no distribution would be made until resolution of Ms Van Beek's claims at a final hearing, when further orders for costs may be made in her favour (reducing the net costs that she would be required to pay) or against her. Mr Barnett also submits that, if an order for costs is made forthwith, the likelihood is that Ms Van Beek will need to sell her home in order to meet these costs and, if she was successful a final hearing, she would have a fund available from which to pay the Liquidator's costs without having to sell her home. 4. Ms Van Beek also offers an undertaking not to encumber her home any further other than in respect of her own legal costs, although that is a significant limitation if it has the result that any equity in Ms Van Beek's home will be applied to the payment of her legal costs, and will potentially not then be available to the Liquidator in respect of the costs order in his favour in this application. On balance, I would not make a costs forthwith order, if Ms Van Beek is prepared to undertake not to encumber her home further, but limiting the qualification in respect of her own legal costs so that any encumbrance in that respect is subordinated to the Liquidator's existing claim for costs, so that the Liquidator is not exposed to the risk that the amount of equity in that home is insufficient to meet the order as to costs in his favour after payment of Ms Van Beek's legal costs. If Van Beek's own legal representatives are not satisfied that there is sufficient equity in the home to accept that limitation, then that is strong reason that the undertaking is not sufficient to displace the basis for a forthwith costs order, and I will make that order. Whether costs should be paid without recourse to the VBC Trust 1. The Liquidator seeks an order that his costs be paid without recourse to the assets of the VBC Trust. This is appropriate where Ms Van Beek did not established a seriously arguable case that she is the equitable owner of those assets. Costs of this application 1. The Liquidator also sought an order that Ms Van Beek and BAPL pay his costs of this Interlocutory Process in a gross sum to be determined by the Court. Each party has had a measure of success in this application and there should be no order as to its costs as between the parties, although they will of course be recoverable by the Liquidator as proper costs in the receivership. Orders 1. I direct the parties to bring in agreed orders to give effect to this judgment within 7 days or, if there is no agreement between them, their respective draft short minutes of order and submissions, not exceeding 5 pages, as to the differences between them. ********** 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: 12 August 2020