Supreme Court New South Wales Medium Neutral Citation: Belmore 88 Pty Ltd v Douglas (No 2) [2023] NSWSC 1228 Hearing dates: 13 October 2023 Date of orders: 13 October 2023 Decision date: 13 October 2023 Jurisdiction: Equity - Expedition List Before: Parker J Decision: See [18] Catchwords: COSTS – party/party costs – first defendant previously represented to the Court in separate proceedings that contracts had been exchanged for the sale of property belonging to him and subject to interlocutory orders of the Court – plaintiff sought declaration that contract arising from exchange was void – plaintiff's claim dismissed on ground that no exchange had taken place – costs follow the event – utility of plaintiff's claim - plaintiff's application for costs refused Legislation Cited: Uniform Civil Procedure Rules 2005, r 42.1 Cases Cited: Nil Texts Cited: Nil Category: Costs Parties: Belmore 88 Pty Limited (Plaintiff) Troy Pestano Douglas (First Defendant) Keith Hilton Wood (Second Defendant) Representation: Counsel: P Afshar (Plaintiff) Solicitors: Baybridge Lawyers (Plaintiff) Troy Pestano Douglas (Self-represented) Hilton Keith Wood (Self-represented) File Number(s): 2023/86912 Publication restriction: Nil JUDGMENT Revised from transcript and annotated; issued on 16 October 2023 1. On 23 August this year, I delivered my substantive judgment disposing of these proceedings: Belmore 88 Pty Ltd v Douglas [2023] NSWSC 1011 ("J1"). The plaintiff has now applied for an order that the defendants pay its costs of the proceedings, and that application is the subject of this judgment. 2. The background and procedural history are set out at J1 [3]-[20]. For present purposes, they may be summarised as follows. 3. The proceedings arise out of earlier proceedings brought in this Court. In those proceedings, which are still pending, the plaintiff ("B88") relevantly seeks to enforce a negative pledge by the first defendant, Mr Douglas, over a residential unit owned by him at Double Bay in Sydney's eastern suburbs. That claim was the subject of an application for interlocutory orders preventing Mr Douglas from taking any steps to sell or encumber the property. Consent orders to that effect were made by Kunc J in December last year (see J1 [6]-[9]). 4. The orders made by his Honour did permit the sale of the property, subject to certain conditions as to notice and setting aside the proceeds. Mr Douglas entered into negotiations with the second defendant, Mr Wood, to sell the property and a dispute arose as to whether such a sale satisfied the conditions specified in the order and could proceed. In the course of a hearing before Meek J in January, Mr Douglas informed the Court that he had exchanged contracts with Mr Wood and produced a copy of the counterpart of the allegedly exchanged contract. This ultimately resulted in the institution of these proceedings, in which B88 sought a declaration that the purported contract was void. 5. In bringing these proceedings, B88 did not dispute the assertion that contracts had been exchanged in a way which would ordinarily have resulted in a valid and binding contract coming into existence between Mr Douglas and Mr Wood. The contention advanced for B88 was that any such contract was invalidated by the previous orders of the Court. For the purposes of my judgment, it was therefore common ground that there had been a valid exchange of contracts. Nevertheless, I considered it necessary, if I was to make the declaration which B88 sought, to satisfy myself that this was in fact so. 6. On the evidence presented to me, I was not satisfied that in fact there had been an exchange of contracts with an intention thereby to create legal relations (see J1 [70]-[90]). For that reason, it was not necessary to make a final determination as to whether, had there been a valid exchange, the previous orders would have prevented a contract coming into existence. I did, however, express some scepticism about whether that would have been so (see J1 [96]-[110]). Furthermore, I expressed doubt as to whether it was open to B 88 as a non-party to the alleged contract to obtain a declaration as to its invalidity (see J1 [91]-[95]). Accordingly, I dismissed B88's claim for relief in the proceedings. 7. In support of the application for costs, counsel for B88 submitted that the whole reason for the proceedings being brought was the assertion by Mr Douglas that there had in fact been an exchange of contracts, and Mr Wood's willingness to go along with that assertion. Counsel argued that B88's objective in bringing the proceedings had been to establish that there was no binding contract for the sale of the property and that, although the proceedings had failed, B88 had achieved that objective. 8. Mr Douglas and Mr Wood, for their part, argued that the bringing of the proceedings was unnecessary. They asserted that they had always been prepared to agree not to complete the alleged contract, pending the outcome of the principal proceedings. 9. The starting point for determining this application is the usual rule that costs follow the event (see Uniform Civil Procedure Rules 2005, r 42.1). B88 failed in the proceedings. That is not a complete obstacle to success in the application, but it is only in rare cases that a plaintiff who fails in bringing proceedings may nevertheless recover the costs of doing so. 10. In the present case, Mr Douglas represented to the Court that exchange had taken place when, on my findings, that had not occurred. Those representing B88 had no means of knowing what the facts were. However, B88, by bringing the proceedings, took on the responsibility of demonstrating that the alleged contract should be invalidated because of inconsistency with the December orders and failed to do so. 11. In a sense, it might be said that B88 has achieved the broader objective of invalidating the alleged contract. But on analysis, I do not think that that is so; or, at least, I do not think that the achievement of the objective is of real practical significance. 12. B88's legal representatives did not, after the delivery of my judgment, invite me to make a declaration as to the invalidity of the purported contract on some different basis. Had they done so, they would still have had to confront the difficulty with standing to which I have referred. And there also would have been a difficulty with utility. 13. The fact is that Mr Douglas and Mr Wood were, and are, prima facie entitled to make an agreement among themselves concerning the sale of the property. If, as I have found, there was not a valid exchange, it is open to them to treat the invalid exchange as a valid one; or they could even enter an entirely fresh contract between themselves. A declaration that they failed in their attempt in January to enter into a contract would not prevent them later binding each other in a valid way. 14. Of course, Mr Douglas and Mr Wood cannot disregard other parties' rights. If, as B88 contends in the principal proceedings, there is a valid negative pledge over the property, then Mr Douglas can be restrained from entering into any such contract. Such a restraint already exists, in the form of the orders which have been made. 15. The practical result of the dispute will ultimately depend upon whether B88 is able to establish the existence of a negative pledge. If it is, then no sale will be able to proceed. If it is not, then Mr Douglas will be free to deal with anyone, including Mr Wood, for the purposes of sale. To my mind, what this shows is that the conclusion that I reached in these proceedings about the invalidity of the alleged January exchange is of no practical commercial significance. 16. In making these observations, I should not be taken as expressing any approval of the conduct of Mr Douglas and Mr Wood, as revealed by the evidence. It may be that Mr Douglas, at least, and perhaps Mr Wood, was guilty of acting contrary to the orders made by Kunc J in the principal proceedings in December. But the proper remedy for that, if any, would lie in the Court's power to make appropriate orders against Mr Douglas, and perhaps against Mr Wood, for contempt. That was not the subject of the present proceedings. 17. For these reasons, the plaintiff's application for costs of the proceedings fails. 18. The order of the Court is: 1. That there be no order as to the costs of the proceedings, including the costs of the present costs application. ********** 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: 16 October 2023