Supreme Court New South Wales Medium Neutral Citation: Garawin Pty Ltd v 1A Eden Pty Ltd (No. 2) [2022] NSWSC 1417 Hearing dates: Application in Chambers Date of orders: 28 October 2022 Decision date: 28 October 2022 Jurisdiction: Equity Before: Slattery J Decision: Defendants ordered to pay 50% of the plaintiff's costs of the proceedings up to the date of the Court's first judgment on 25 March 2022. Catchwords: COSTS – costs follow the event – plaintiff successful in action to remove caveats from properties involved in a joint venture development – other consequential relief and case management dealt with in hearing and judgment – whether there was a mixed result – whether the plaintiff should have an order for the whole of its costs against the defendants – whether the defendants should have an order for costs against the plaintiff. Cases Cited: Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333 Bostik Australia Pty Ltd v Liddiard (No. 2) [2009] NSWCA 304 Category: Costs Parties: Plaintiff: Garawin Pty Limited ACN 074380715 First Defendant: 1A Eden Pty Ltd ACN 162152794 Second Defendant: Zaarour Investments Pty Ltd Third Defendant: Joesandra Pty Limited atf The Sleiman Family Trust ACN 130 126 206 Fourth Defendant: Christopher Robert Zaarour Representation: Counsel: Plaintiff: D. Weinberger Second, Third and Fourth Defendants: A. Davis Solicitors: Plaintiff: Ourania Konstantinidis, Dentons Second, Third and Fourth Defendants: Stephen Lewis Hedges, Walker Hedges Forestville File Number(s): 2019/00350729 Publication restriction: No Judgment 1. This is the Court's second judgment in these proceedings. The Court gave its first judgment on 25 March 2022: Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333. This judgment should be read with the Court's first judgment. Events, matters and persons are referred to in both judgments in the same way. 2. Mr D. Weinberger of counsel, instructed by Dentons Lawyers, continues to appear for the plaintiff, Garawin. Mr A. Davis of counsel, instructed by Walker Hedges Forestville continues to appear for the second, third and fourth defendants, the Zaarour interests and the Sleiman interests. 3. This judgment deals with the first of two issues that were left outstanding after the first judgment the question of costs; and the question of what final orders should be made to restore property to the Trust or otherwise to secure the solvency of the trust in accordance with the terms of the trust deed. Costs of the Proceedings up to the First Judgment 1. The parties took starkly different positions on costs. Garawin contended that the defendants should pay its costs of the proceedings up to the date of the first judgment. The second, third and fourth defendants contended that Garawin should pay their costs for the same period, or that each of Garawin and the second, third and fourth defendants should bear their own costs of the proceedings for that period. 2. On 12 May 2022 the Court heard the oral submissions of the parties on the question of the costs of the proceedings up to the date of the first judgment. These oral submissions were preceded by written submissions dated 11 May 2022 from the Zaarour interests and the Sleiman interests. These written submissions concisely set out the second third and fourth defendant's position costs as follows: "3. The general principle often applied is that costs would follow the event. This of course, it is submitted, is subject to the ability of the court to make further or other orders as required to achieve a just result. The present case is, it is submitted, a matter where careful consideration is required to be given to the nature of the relief sought and the overall effect of the determination of the Court. The "event" should not be determined narrowly, but rather having regard to the issues between the parties as a whole and the nature of the disputes resolved by the Court. 4. The proceedings sought a variety of orders, principally directed to releasing any restriction on the ability for the Plaintiff, ("Garawin") to deal with Lots 3, 4, 5 and 6 which are currently registered in the name of the First Defendant (1A Eden). 5. It is not necessary to review in any detail the issues that were considered by the Court and the orders ultimately made. It shall suffice to note that, simplistically and respectfully, the Court has made a series of orders having the effect of requiring assets of 1A Eden to be protected and / or restored. That was the precise intent behind the lodging of the caveats (that have been removed in accordance with the orders of the Court). 6. It cannot be said that Garawin has been wholly successful in their endeavours. The removal of the caveats has been conditional upon certain other orders, the effect of which is to protect assets of 1A Eden and either prevent the removal of lots 3, 4, 5 and 6 or alternately to provide some other means of providing assets to the same value. Respectfully, the orders of the Court are perhaps more akin to the intent of the Second to Fourth Defendant's in seeking to protect and ensure that no further assets were distributed, pending the determination of the defect proceedings. Whilst the caveats are to be removed, the effect remains the same. 7. For these reasons, the Second to Fourth Defendants primary submission is that the Plaintiff is to pay the Second to Fourth Defendant's costs." 1. Garawin put submissions orally. Mr Weinberger submitted on behalf of Garawin that costs should follow the event. He submitted that the Court had ordered the removal of the caveats and in due course the Court would be ordering the transfer out of the remaining apartments to the Garawin interests. Mr Weinberger submitted that the fact that the defendants made allegations as to accounting issues, which resulted in the Court ordering of points of claim is irrelevant to the question of what costs order should be made. Finally, Mr Weinberger submitted that the defendants had achieved no success at all and that Garawin was entirely successful, albeit with some variations as to the precise form of relief which was granted. 2. Mr Davis of counsel elaborated the written submission on behalf of the second, third and fourth defendants. Mr Davis accepted that the caveats had been removed and that his clients had been unsuccessful on that issue. But his submission was that the real matters at issue between the parties were far more than a simple question of a caveat and that the true underlying issue was the protection of the assets of the Trust. And Mr Davis submitted that much of the hearing was occupied with the Court addressing that fundamental issue. 3. Mr Davis submitted on behalf of the defendants that little could be made of the offer that Mr Moore had made in the witness box on the last day of the hearing: namely to participate in the transfer back into the Trust of all the properties that had been transferred out of the Trust, pursuant to the agreement reflected in the trust deed, provided the Zaarour interests and the Sleiman interests did the same. Mr Davis submitted that the making of that offer by Mr Moore does not bear either way on the question of what costs order should be made. 4. The Court indicated that it would not make a costs determination until the Court had made orders to be recorded in further agreed short minutes of order, which the Court ordered to be provided by the following Monday, 16 May 2022. But in the result the agreed short minutes of order were not able to be provided and further contests ensued between the parties. Those other contests are now almost complete subject to the parties responding to the direction given with this judgment. 5. The Court has reached the conclusion that it should order the second, third and fourth defendants to pay 50 per cent of the plaintiff's costs of the proceedings up to the date of the first judgment on 25 March 2022. 6. Garawin is correct that it was successful in having the caveats removed from the titles to the properties burdened by those caveats, namely Lots 3, 5 and 6. There is therefore a strong argument that it should have some order as to costs. A not insignificant part of the proceedings was occupied with argument about validity of the caveats, the proper relief to be granted in relation to the possible removal, and the conditions to be imposed if the caveats were removed. In the first judgment the Court found that each of the caveats was incompetent and could not be maintained: first judgment, at [150] and [151]. Although it was theoretically possible for the Court to permit amendment of the caveats, the Court declined to take that course and decided to impose a simple uniform injunctive regime binding on all parties against all the Lots in which the parties had interests in relation to the development: first judgment, at [125]. The Court then proceeded to provide the framework for that injunctive regime: first judgment at [153]. Regrettably the parties were not able to agree upon the details of that regime within that framework and since then Court has made directions to allow that to happen. 7. The defendants are also partly correct. Much of the hearing was occupied with debate about what would happen after the caveats were removed and what orders were appropriate in relation to the parties' various apartments, and the Court considering the disadvantages of formulating various forms of relief. This did occupy a very considerable part of the proceedings and moved the debate well past the competence of the caveats. 8. It can therefore be said in this case that although the usual rule is that costs follow the event, even where the plaintiff is not wholly successful on all issues, here a dominant or sufficiently separable part of the proceedings – relating to a discussion of consequential orders after removal of the caveats – can be identified, sufficient to justify the conclusion that some other orders should be made: Bostik Australia Pty Ltd v Liddiard (No. 2) [2009] NSWCA 304 ("Bostik") at [308]. 9. But the defendants' alternative argument that each party should bear their own costs up to the date of the first judgment is not persuasive. The foundational relief which Garawin sought was removal of the caveats. The defendants now say the real argument in the proceedings was about protecting the assets of the Trust, recapitalising the Trust, and not removal of the caveats. But the second, third and fourth defendants did not answer the plaintiff's case by conceding up front that the caveats were not competent and should be removed by consent so as to avoid a contested hearing involving that subject. Instead, the defendants included a faint defence of the caveats in their case. Consequently, the Court heard argument about that question and considered and determined it. If the hearing really had been about recapitalising the Trust in some form, the second, third and fourth defendants could have stated that at the outset and taken advantage of the opportunity to wholly recast the issues and to preserve their position on costs. 10. Thus, Garawin should have an order for costs. Ordering that each party bear its own costs would not do justice to the success which Garawin has had at the hearing on the primary issue of the caveats. Ordering that the defendants wholly pay Garawin's costs of the hearing would not do justice to the period of the hearing and the resources devoted to the issue of consequential relief and protecting the assets of the Trust. Doing the best that the Court can in the circumstances with these competing considerations, the Court will order that the defendants pay 50 per cent of the plaintiff's costs of the proceedings up to the date of the first judgment. 11. That leaves the question of what costs orders should be made up to the date of this judgment. Between the date of the first judgment and the date this judgment, the Court has been pre-occupied at various directions hearings in considering material filed in chambers and working out an appropriate set of consequential orders that would benefit both parties and the Trust. The contest after the first judgment did not involve any issues concerning the caveats. A costs outcome which may commend itself for this period is for the Court to order that each party bear its own costs of the proceedings after that date. But a final cost order can await the Court's determination of the remaining issues. The Formal Final Orders 1. Since the matter was last before the Court, pursuant to leave granted by the Court, the parties have filed their evidence about the current and prospective financial position of the Trust. The evidence comprehensively deals with the parties' estimates of the present and future liabilities of the Trust. The evidentiary material provided is sufficient for the Court to mould appropriate final relief. In that regard the Court will note the reading of Mr Moore's affidavit of 19 August 2022, Mr Zaarour's affidavit of 21 July 2022 and Mr Slieman's affidavit of 20 July 2022 together with their respective exhibits. 2. The Court can make orders for final relief based on this material. But the Court does not wish to risk a denial of procedural fairness to the parties. The material provided could justify several different forms of final relief. It is not entirely clear to the Court what orders each side proposes to have made by way of final relief at this time. The Court will therefore give the parties the option (if they wish) to put on concise submissions of no more than five pages about the form of final relief within 14 days, that is by Friday, 11 November 2022. There is no obligation upon a party to file these submissions: these directions merely provide a choice for the parties. 3. In any submissions the parties may wish to address (whether either as principal final relief, or in the alternative), the plaintiff seeks a lifting of the stay imposed in Order (8) on the operation of Order (2) of the orders made with the Court's judgment on 25 March 2022, and whether an order something like order (2) is one of the possible orders that should now be made. The Court raises this issue because the parties' evidence recently filed does not directly address this possibility. Conclusions and Orders 1. For these reasons the Court makes the following orders and directions: 1. Order the defendant to pay 50% of the plaintiff's costs of these proceedings up to the date of the first judgment; 2. Reserve for further consideration the question of costs after the date of the first judgment; and 3. the parties have leave to file any additional submissions in relation to final relief by Friday, 11 November 2022. 4. Leave is granted to approach my Associate if the parties mutually agree that an oral hearing on the moulding of final relief is still required. ********** 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: 28 October 2022