Supreme Court New South Wales Medium Neutral Citation: Murray Moama Pty Ltd v Vie De L'eau Trading Co Pty Ltd [2021] NSWSC 841 Hearing dates: On the papers Date of orders: 12 July 2021 Decision date: 12 July 2021 Jurisdiction: Equity Before: Darke J Decision: First and second defendants ordered to pay the plaintiff's costs of the proceedings. Catchwords: COSTS – application for removal of caveats – plaintiff a mortgagee in possession exercising powers of sale – defendants' caveats preventing completion of contracts for sale – agreement reached for caveats to be withdrawn on settlement with net proceeds to be held in a trust account – following settlement defendants did not press claims to proceeds in priority to plaintiff – not unreasonable for plaintiff to commence proceedings – clear that plaintiff would have almost certainly succeeded in obtaining removal of caveats had matter been contested – appropriate to make costs order in favour of plaintiff. Legislation Cited: Real Property Act 1900 (NSW), s 74 MA Category: Costs Parties: Murray Moama Pty Ltd (Plaintiff) Vie De L'eau Trading Co Pty Ltd (First Defendant) Vie De L'eau Investments Pty Ltd (Second Defendant) Construct Co Pty Ltd (Third Defendant) Representation: Solicitors: Strategic Law Partners (Plaintiff) Summer Lawyers (First and Second Defendants) Nicholas WJ Rolfe & Associates (Third Defendant) File Number(s): 2020/271014 Publication restriction: Nil Judgment 1. These proceedings were commenced by Summons filed on 18 September 2020. The plaintiff sought orders for the withdrawal of various caveats that had been lodged by each of the three defendants against the titles to parcels of vacant land located in Moama. At that time, the plaintiff was a registered mortgagee in possession of the land in the process of exercising powers of sale. The plaintiff had in fact entered into contracts for sale with a purchaser in respect of each of the parcels of land. There were eleven such contracts, each with a purchase price of $110,000. 2. Prior to the first return date of the Summons, the plaintiff filed a Notice of Motion which claimed the same relief as sought in the Summons. It seems that the plaintiff considered that there was urgency as the purchaser appeared to be ready to settle. The Motion was made returnable on 2 October 2020, but it was adjourned to 9 October 2020. On 8 October 2020 various orders were made by consent, including orders pursuant to s 74MA of the Real Property Act 1900 (NSW) requiring the caveats lodged by the first, second and third defendants to be withdrawn on the settlement of the sales. The Court also noted an undertaking given by the plaintiff to cause the net proceeds of the sales to be held in its solicitor's trust account pending either the agreement of all active parties to the proceedings or order of the Court. In essence, the relief sought by the plaintiff was obtained on the basis that any competing claims to the surplus proceeds would be dealt with after completion of the sales. 3. However, settlement was delayed. A settlement tentatively scheduled for 16 October 2020 was rescheduled for 6 November 2020. Settlement did not occur on that day. On 23 November 2020 the solicitors for the first and second defendants, not having heard from the plaintiff's solicitors for a time, informed the plaintiff's solicitors that if settlement did not occur that week they would seek to have the Summons dismissed and the orders of 8 October 2020 vacated. Further communications between the solicitors followed, in which the solicitors for the first and second defendants continued to press for copies of the contracts for sale and details of settlement adjustments. When the matter was next before the Court on 4 December 2020 it was adjourned to 18 December 2020. On that day it was further adjourned to 12 February 2021. 4. In the meantime, settlements scheduled for 9 December 2020, 16 December 2020 and 22 December 2020 did not proceed. Settlement eventually occurred on 13 January 2021. Two days before settlement, the plaintiff's solicitors provided to the solicitors for the first and second defendants copies of the executed contracts for sale, and details of how the settlement would proceed. 5. On 10 February 2021, the plaintiff's solicitors informed the solicitors for the first and second defendants that they held $383,305.15 in their trust account. It was proposed that a consent order be made to allow that sum to be released to the plaintiff, with the proceedings otherwise discontinued with no order as to costs. The plaintiff's solicitors stated that the plaintiff's mortgage had been registered on 29 April 2014, prior to the creation of the interests claimed by the caveators. That statement does not seem to have ever been contradicted by the first and second defendants. 6. On 11 February 2021 the matter was adjourned to 12 March 2021 to give the parties the opportunity to reach agreement as to the release of the net proceeds of sale, and costs. On 12 March 2021 a similar order was made, adjourning the matter until 16 April 2021. The matter was further adjourned to 21 May 2021. No agreement was reached. 7. On 13 May 2021 the first and second defendants filed a Notice of Motion and affidavit in support seeking an order that the plaintiff pay their costs of the proceedings. The third defendant contemplated taking the same course, but ultimately the plaintiff and third defendant reached an agreement as to costs. 8. It appears that none of the defendants seek to maintain any claim to the surplus funds in priority to the plaintiff. The Court has not been requested to make any order for the release of funds to the plaintiff; presumably the release is to occur by agreement without the need for an order. 9. The question of costs as between the plaintiff and first and second defendants is thus the only remaining issue. Each side seeks an order for costs against the other. 10. The first and second defendants submitted that the Summons should not have been filed as the purchaser was not ready, willing and able to proceed to settlement. Based on the affidavit of Mr Andrews, solicitor, it was put that the letter from the plaintiff's solicitors of 4 September 2020, which requested removal of the caveats, had not been received. It was thus submitted that the proceedings first came to the attention of the first and second defendants on 29 September 2020. It was further submitted that the first and second defendants have incurred unnecessary costs in the proceedings as a result of the plaintiff's failure to make full enquiries prior to commencing the proceedings, the fact that the contracts were not ready to complete, and the failure of the plaintiff to provide requested information in a timely manner. The first and second defendants submitted that the Court should dismiss the Summons, with costs to follow the event, and even if the Summons was not dismissed should order the plaintiff to pay the costs. 11. The plaintiff submitted that the proceedings were commenced because there was no response to the plaintiff's solicitors' letter of 4 September 2020, and the purchaser had stated that it was ready to proceed to completion. It was pointed out, correctly, that by 7 October 2020 the first and second defendants had been informed by the plaintiff that it was owed about $1.65 million, and had further been provided with a valuation of the land and details of the purchase prices on the contracts for sale. It was submitted that it was known that the total purchase money was less than what was due to the plaintiff. It was then submitted that whilst the defendants agreed on 8 October 2020 to orders for withdrawal of the caveats, they did not agree to the plaintiff receiving the net proceeds even though it was clear that the plaintiff had priority. The plaintiff submitted that in this regard the first and second defendants acted unreasonably. The plaintiff submitted that ultimately the first and second defendants conceded that they had no claim to the net proceeds of sale, and in all the circumstances costs should follow the event. 12. I do not agree that the Summons should not have been filed as the purchaser was not ready, willing and able to proceed to settlement. It appears that the purchaser said it was ready, and in those circumstances it was not unreasonable to commence the proceedings to have the caveats (which I note are not in evidence) removed. I further note in this context that whilst I accept that the letter from the plaintiff's solicitors of 4 September 2020 was not received, there is nothing to suggest that the plaintiff's solicitors were aware of that. Arguably, further enquiries should have been made prior to commencement, but the fact remains that the defendants, once aware of the proceedings, were apparently not prepared to withdraw the caveats unconditionally. They agreed to do so only on the basis that the net proceeds of sale were placed into an account, which is consistent with the assertion that they may be entitled to some or all of the net proceeds of sale. 13. It is not explained how any such entitlement may have existed in circumstances where it appears that the total purchase money was less than the amount claimed by the plaintiff to be owing to it under its mortgage. Moreover, as already mentioned, the statement made by the plaintiff's solicitors on 10 February 2021 was never contradicted. Ultimately, the first and second defendants accepted that they had no claim to the net proceeds held in the trust account of the plaintiff's solicitors. 14. Whilst there has not been a determination on the merits, it is difficult to see how the first and second defendants could have resisted an order for the withdrawal of their caveats which stood in the way of completion of the mortgagee sales. The agreement for the caveats to be withdrawn on settlement left open the prospect of competing claims to the net proceeds, but such claims by the first and second defendants never materialised. I think that this is a case where it is clear enough that the plaintiff would have almost certainly succeeded in obtaining the removal of the caveats had the matter been contested. There is thus a sound basis to make an award of costs in favour of the plaintiff. 15. I have not overlooked the fact that the proceedings were prolonged to a degree because of the delays in achieving settlement of the contracts for sale. However, it has not been shown that these delays were brought about by the plaintiff, or ought to have been ameliorated by some conduct on the part of the plaintiff. It is true that the plaintiff's solicitors were on occasions slow in responding to requests for information made by the solicitors for the first and second defendants. I have considered whether some allowance should be made in this regard. Ultimately, I do not consider that to be appropriate. This factor seems to me to be counter-balanced by the fact that on 10 February 2021 the plaintiff proffered consent orders that, if made, would have brought the proceedings to an end with no order as to costs. Had those orders been accepted by the defendants, the proceedings would not have continued for so long, and this costs application would not have arisen. 16. In my opinion, having regard to all of the circumstances, it is appropriate to exercise the Court's discretion as to costs by making an order that the first and second defendants pay the plaintiff's costs of the proceedings. ********** 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 July 2021