Thomas Henry Elford v Marcus James Minty [2021] NSWSC 968

Supreme Court New South Wales

Medium Neutral Citation: Thomas Henry Elford v Marcus James Minty [2021] NSWSC 968 Hearing dates: On the papers Date of orders: 4 August 2021 Decision date: 04 August 2021 Jurisdiction: Equity Before: Robb J Decision: The Court makes no order for the costs of the plaintiffs' notice of motion filed on 17 June 2021, with the intent that all parties will bear their own costs of the motion. Catchwords: COSTS — Party/Party — Costs orders in interlocutory proceedings — Where the Court ultimately made orders by consent — Where the plaintiffs contended that the defendants should pay their costs of the motion on the basis that they should have consented at the outset — Where the defendants submitted each party should pay their own costs on the basis that the application was required to obtain the leave of the Court — Where the Court made no order for costs with the intention that the parties bear their own costs Category: Costs Parties: Thomas Henry Elford (first plaintiff) Telford Locums Pty Ltd (second plaintiff) Marcus James Minty (first defendant) Michael Frederick Minty (second defendant) Jennifer Louise Minty (third defendant) Representation: Counsel: S A Wells (first and second plaintiffs)

Solicitors: Hedges Bhatty (first and second plaintiffs) Hall Partners (first to third defendants) File Number(s): 2014/371874

Judgment 1. The question before the Court concerns the costs order that should be made in respect of a notice of motion filed in these proceedings on 17 June 2021 that was finally dealt with by orders made in the Duty List on 16 July 2021. 2. The determination of the notice of motion was made difficult because this Court's file had been sent to the Registry of the Family Court of Australia, as a result of the proceedings having been transferred to that Court to be determined with related proceedings between certain of the parties to these proceedings. 3. On 17 October 2016, Lindsay J made orders by consent that included an undertaking by the plaintiffs not to take any steps to transfer, encumber or otherwise deal with any assets of the second plaintiff company, other than with the written consent of one of the defendants or in accordance with an order of the Court. 4. The Court was told on the application that the undertaking had been given by consent in order to bring to an end an application by the defendants for the winding up of the second plaintiff. 5. The purpose of the application in the notice of motion was to obtain an order from the Court partially releasing the plaintiffs from the undertaking, and giving the plaintiffs leave to sell a property owned by the second plaintiff. The application was made because the plaintiffs had received an unsolicited offer from a stranger to purchase the property for $830,000. The plaintiffs had obtained a formal valuation of the property of $550,000. The plaintiffs were of the view that the offer was 'too good to refuse'. 6. The plaintiffs sought the defendants' consent to being released from the undertaking to the Court so that the sale could go ahead. The request was made by email on 26 March 2021, but the consent was denied on 7 May 2021. 7. Hence, the plaintiffs filed their notice of motion and had it listed for hearing in the Duty List. 8. The matter was stood over on a number of occasions, and ultimately orders were made on 16 July 2021 by consent of the parties and without admissions. 9. The basis of the defendants' opposition to the undertaking being varied and leave being given to the plaintiffs to sell the property for $830,000 was that they thought that the value of the property may in fact have been greater than that sum. The defendants had not been able to get a formal valuation, but they obtained an appraisal from a real estate agent that gave some support to the defendants' position. There was a question as to whether the subject property was a true comparable to the properties whose sales had caused the real estate agent to give the advice to the defendants that he gave. As this was a Duty List matter, and was determined on an urgent basis, there was insufficient evidence to resolve this question. 10. The defendants' initial position was that the application was not a Duty List matter, and at the least it should be stood into the Applications List, after the parties had been given time to serve appropriate evidence. The defendants submitted that the only way to determine the true market price of the property was to put the property on the market. They submitted that a receiver should be appointed to conduct the sale, as a receiver would be independent of all parties. 11. The Court explained to the parties that, as it was being asked by the plaintiffs to vary an undertaking given by them to the Court by consent in the settlement of an interlocutory application, this was not an application that would be dealt with in the usual way by determining whether there was a serious question to be tried and then assessing the balance of convenience in order to determine whether or not to make the interlocutory order sought. It would be necessary for the Court to consider whether there had been any material change in circumstances since 17 October 2016. The Court would have found that to be a difficult exercise given that it no longer had the file. 12. Ultimately, the defendants agreed to the Court making orders that the plaintiffs be released from their undertaking given to the Court on 17 October 2016, so as to enable the plaintiffs to sell the subject property for $830,000, and to pay the costs and expenses reasonably incurred with respect to the proposed sale. An order was made that the net proceeds of sale be paid to a named firm of solicitors, to be held by them in a designated controlled money account until further order of this Court or the Family Court, or the written agreement of the parties. Those orders were made on the undertaking to the Court by the plaintiffs to instruct their solicitor on the record to act on the sale of the property, and to conduct the conveyance in the ordinary course of business. The Court was asked by the parties to note that the first plaintiff would provide a discharge of his mortgage over the subject property, while reserving his security rights in respect of the proceeds of sale. The defendants reserved the right to contend that a sale at $830,000 was a sale at an undervalue. The defendants also reserved their right to bring an application to wind up the second plaintiff. 13. In my view, the parties effectively settled the claim made by the plaintiffs in their notice of motion, without the Court having been required to deal with the application on its merits. 14. The plaintiffs contend that the Court should make an order against the defendants that they pay the plaintiffs' costs of the notice of motion because those costs would not have needed to be incurred if the defendants had, at the outset, consented to the orders sought by the plaintiffs. Alternatively, the plaintiffs sought an order that their costs of the notice of motion be their costs in the cause. 15. The defendants responded by submitting that, in all of the circumstances, each party should be required to pay their own costs of the notice of motion. They supported that submission by arguing that the application was required to obtain the leave of the Court for the plaintiffs to depart from an undertaking given to the Court in settlement of interlocutory proceedings. They submitted that the present application was an interlocutory one. Further, it is unlikely that it will ever be determined whether, in fact, the subject property was worth more than $830,000, or not. The defendants had not been given the opportunity to see what the market would in fact pay for the property. The defendants had also not been able to contest the matter. 16. The defendants also submitted that they had consented to the orders that were ultimately made on the basis that they regained their freedom to seek an order winding up the second plaintiff. 17. In fact, the defendants ultimately had little choice but to consent to the orders that were made, as the Court pointed out to them that, given the evidence of the value of the subject property, it would not refuse the relief sought by the plaintiffs unless the defendants gave to the Court the usual undertaking as to damages, and the Court was satisfied by evidence that the defendants had sufficient assets to secure the undertaking. 18. I consider that the appropriate order in the circumstances is that each party be ordered to bear their own costs of the notice of motion. That is because it was necessary for the plaintiffs to obtain the leave of the Court to vary the earlier undertaking to the Court, and the application was effectively settled. The defendants were entitled to test the basis for the orders being made. The defendants were deprived of the potential benefit of the subject property being put to the market, although, if the $830,000 price offered to the plaintiffs is as good as they say it is, the defendants will have lost nothing. 19. Although the defendants probably could have acted more quickly, I am not satisfied that they acted unreasonably in all of the circumstances. 20. The Court's order is: 1. The Court makes no order for the costs of the plaintiffs' notice of motion filed on 17 June 2021, with the intent that all parties will bear their own costs of the motion.