In the matter of Lorebray Pty Ltd [2021] NSWSC 1135

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Lorebray Pty Ltd [2021] NSWSC 1135 Hearing dates: 31 August 2021, 3 September 2021 Date of orders: 3 September 2021 Decision date: 03 September 2021 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Applicant ordered to pay costs of abandoned interlocutory process. Catchwords: COSTS – interlocutory application heard for a day – adjourned at request of applicant to explore two bases for resolution – neither achieved – applicant now wishes to take up offer made months ago for resolution – application now futile – ordered to pay costs – applicant argued should only pay one set of costs given two opponents taking same position – opponents acting for different interests – applicant to pay both respondents' costs. Category: Procedural rulings Parties: McMardi Pty Ltd (Plaintiff / First respondent) Redhill McN Pty Ltd (First Defendant / Applicant) Lorebray Pty Ltd (Second Defendant / Second respondent) Representation: Counsel: Mr R Scruby SC (Plaintiff) Mr M K Condon SC (First Defendant) J S Emmett SC / R K Jameson (on 31 August 2021) and Mr S E Martin, solicitor (on 3 September 2021) (Second Defendant)

Solicitors: Henry William Lawyers (Plaintiff) Allsop Glover Lawyers (First Defendant) Garland Hawthorn Brahe (Second Defendant) File Number(s): 2021/131663

ex tempore Judgment 1. HER HONOUR: The second defendant, Lorebray Pty Ltd, is a family company established by John and Margaret (Peg) McNamee. Lorebray is trustee of the McNamee Property Trust. 2. Sadly, the McNamee family appears to be at war. A peace appears to have been brokered in December 2019 by entry into a Shareholders Agreement and Deed of Settlement and Release. Under the Shareholders Agreement, the board of Lorebray was to comprise a representative of the first defendant, Redhill McN Pty Ltd (being a company in which John McNamee and three children had an interest), the plaintiff, McMardi Pty Ltd (being a company in which Peg McNamee and three children had an interest), and an independent director to break any deadlocks between these 'camps'. Brenden Miller, solicitor, became the independent director. 3. One of the McNamee children – and a shareholder of McMardi – is Christine Liddy. In December 2019, Lorebray commenced proceedings against Ms Liddy seeking to recover $1.65 million said to have been lent to Ms Liddy (the Liddy proceedings). In July 2020, Ms Liddy filed a defence and cross-claim, contending that the monies were a gift or discretionary distribution from the McNamee Property Trust. In September 2020, Ms Liddy filed a motion seeking security for costs in the amount of $160,900 in the Liddy proceedings. Perhaps prompted by this, Lorebray made application for judicial advice in respect of the Liddy proceedings. The Liddy proceedings were adjourned to allow Lorebray and Ms Liddy to conduct settlement negotiations. 4. By March 2021, it appears that hostilities resumed. Redhill and another company commenced proceedings to wind up Lorebray. The application for judicial advice was heard by Lindsay J, and orders made. Redhill's representative on the board of Lorebray, Stephen McNamee, was appraised of the judicial advice. He resigned as a director of Lorebray. 5. In May 2021, McMardi commenced these proceedings, seeking declaratory relief that, notwithstanding the absence of a representative of Redhill on the board of Lorebray, the board could nonetheless continue to pass valid resolutions. This application, and the application to appoint a liquidator to Lorebray, are both listed for final hearing before Black J on 28 September 2021 for five days. 6. Meanwhile, in June 2021, Lorebray's solicitors asked whether the shareholders of Redhill would be willing to take over carriage of the Liddy proceedings on terms that they indemnify Lorebray for any costs orders made in those proceedings. This offer was not embraced. In July 2021, Lorebray's solicitors advised that, having not heard any further from Redhill's solicitor in respect of the beneficiaries taking over the conduct of the Liddy proceedings, Lorebray's solicitor proposed to see whether he could resolve the proceedings with Ms Liddy's solicitor. Unproductive correspondence ensued. Very sadly, John McNamee passed away in the midst of this. Ultimately, Redhill filed an interlocutory process seeking to restrain Lorebray from resolving the Liddy proceedings. 7. On 31 August 2021, I commenced to hear Redhill's application to restrain Lorebray from taking steps to settle the Liddy proceedings. The Court Book comprised some 3,300 pages of affidavits and documentary exhibits and six sets of written submissions. The application was hard fought. Each of Redhill, Lorebray and McMardi briefed senior counsel. The hearing took all day. Part of the hearing concerned the confidential judicial advice and took place in closed court, from which McMardi's senior counsel was excluded. 8. Obviously, the detail of the closed hearing remains confidential. Suffice to say that, as a consequence of what transpired during the closed hearing, Redhill's senior counsel sought an adjournment to enable his client to resolve the matter by endeavouring to reach agreement with Lorebray on one of two bases. When the hearing resumed in open court, McMardi's senior counsel acceded to the request for an adjournment. I directed Redhill and Lorebray to notify my associate by 2pm today if they had managed to achieve agreement on either basis, failing which, I would make orders to in respect of Redhill's application at 2.30pm. 9. At the resumed hearing today, Redhill's senior counsel advised that neither of the two bases had been realised. Instead, Redhill now wished to avail itself of Lorebray's offer – first made in June 2021 – that Redhill's shareholders take over the carriage of the Liddy proceedings. An adjournment was sought to permit this avenue to be explored. Redhill's senior counsel fairly conceded that the Amended Interlocutory Process served no utility and could also be dismissed. On that matter, at least, all legal representatives were in wholehearted agreement. 10. As to the costs of Redhill's application, Redhill submitted that the cost of the Amended Interlocutory Process should be the parties' costs in the cause. I do not agree. The parties have been through a whole day of hearing for no good purpose. Redhill has abandoned its application. It should pay the costs incurred by the other parties in having to meet it. 11. In the alternative, Redhill submitted that, as Lorebray and McMardi's senior counsel both took the same position on Redhill's application, Redhill should only be obliged to pay one set of costs. Whilst it is true that Lorebray and McMardi both opposed Redhill's application for an injunction, their interests were not the same as is illustrated by the fact that Lorebray, but not McMardi, was entitled to participate in the closed court session. Lorebray and McMardi's legal representatives were representing distinct interests and each should have their costs. 12. For these reasons I make the following orders: 1. Dismiss the Amended Interlocutory Process dated 30 July 2021. 2. Order the first defendant to pay the plaintiff and second defendant's costs of the Amended Interlocutory Process.