In the matter of BBARC Pty Ltd [2023] NSWSC 697

Supreme Court New South Wales

Medium Neutral Citation: In the matter of BBARC Pty Ltd [2023] NSWSC 697 Hearing dates: 9 June 2023 Date of orders: 27 June 2023 Decision date: 27 June 2023 Jurisdiction: Equity - Corporations List Before: Black J Decision: No order as to costs with UCPR r 42.19 left to operate in accordance with its terms. Catchwords: COSTS — Party/Party — General rule that costs follow the event — Proceedings discontinued —whether there is reason to depart from the default order as to costs in rule 42.19 of the Uniform Civil Procedure Rules 2005 (NSW) Legislation Cited: Corporations Act 2001 (Cth), s 237 Uniform Civil Procedure Rules 2005 (NSW), rr 12.1, 42.19 Cases Cited: - Re Cabramatta King Tea Pty Ltd [2022] NSWSC 462 - Re Harmony Homes Pty Ltd [2023] NSWSC 300 - Re Wonga Pastoral Development Co Pty Ltd [2023] NSWSC 133 Category: Costs Parties: Stuart Grant Crabb (Plaintiff) BBARC Pty Ltd (First Defendant) F H T Nominees Pty Ltd (Second Defendant) Billericay Nominees Pty Ltd (Third Defendant) Representation: Solicitors: Blueprint Law (Plaintiff) W Advisers (First Defendant) Ronayne Owens Lawyers (Second and Third Defendants) File Number(s): 2022/362810

Judgment

Nature of the application and submissions 1. The Plaintiff, Mr Stuart Crabb originally sought leave under s 237 of the Corporations Act 2001 (Cth) ("Act") to bring proceedings on behalf of BBARC Pty Ltd ("Company"). The day before the hearing of the matter, by email dated 8 June 2023, Mr Crabb's solicitors advised my Associate that: "the receivers have still not indicated their position with respect to whether they will proceed with the substantive action, our client has instructed us to discontinue the proceedings. There remains the extant issue as to costs. We have sought the parties' attitude as to discontinuance with no order as to costs. At this stage, no response has been received." 1. At the commencement of the hearing on 9 June 2023, at Mr Crabb's request, I granted him leave to discontinue the proceedings, reserving the question of costs for judgment in Chambers and making directions for written submissions as to costs. Mr Crabb did not make submissions in chief within the time provided by theses directions; I did not extend that time for him to do so where that could not be done by consent; and Mr Crabb did not then make, or seek to rely on, late submissions in respect of costs. The Second and Third Defendants, F H T Nominees Pty Ltd and Billericay Nominees Pty Ltd, made submissions in respect of costs within the time provided by the Court's directions; 2. Mr Crabb then purportedly made submissions in "reply", which were not properly characterised as such and seem largely to amount to submissions in chief as to why the usual order under UCPR r 42.19 is displaced. Mr Crabb also sought to rely on two affidavits in the substantive proceedings and an affidavit of his solicitor dated 8 June 2023, which was also not properly an affidavit in reply, and addressed details of communications between Mr Crabb's solicitors and the receivers. Rather than disregarding those submissions and those affidavits, I have had regard to them where there is no disadvantage to the Defendants in my doing so. 3. Mr Crabb points to the appointment of receivers and managers to the Company's assets on 6 March 2023; submits that the receivers' appointment frustrated his original motivation to commence the proceedings, where the receivers were not prepared to waive their interest in any potential recovery; and submits that the appointment of receivers was the kind of supervening event that justifies the Court's exercise of its discretion not to order any costs against him. Mr Crabb submits that the receiver's appointment, and the effect it had on the Company's interests, resulted from another party's conduct of the Company's affairs while the Company was under that party's control. The Court should not determine that question, without a hearing on the merits, in dealing with a question of costs in Chambers. Mr Crabb also submits that the receivers have "prevaricated" as to whether they would bring proceedings on behalf of the Company, which would have avoided any need for him to bring the derivative claim. For the reasons noted below, it seems to me that these matters do not displace the default position under UCPR r 42.19, where it is very likely that the proceedings would have failed in any event, even apart from the receivers' appointment. 4. On 23 June 2023, the Company, by its receivers and managers, also made submissions, which were also arguably not in reply but were of limited scope. The Company consented to the third order sought by the Second and Third Defendants as to payment out of Court, which I will not make for the reasons noted below, and made no submission as to costs as between Mr Crabb and the Second and Third Defendants, where no party had sought costs against the Company and the Company did not seek costs against any other party.