Guildford Montessori Kindergarten Pty Ltd v Wehbe [2025] NSWSC 145

Supreme Court New South Wales

Medium Neutral Citation: Guildford Montessori Kindergarten Pty Ltd v Wehbe [2025] NSWSC 145 Hearing dates: 24-25 February 2025 Date of orders: 5 March 2025 Decision date: 05 March 2025 Jurisdiction: Equity Before: Meek J Decision: Decision to order security for costs made. Decision to order disclosure of certain categories of documents made. Catchwords: CIVIL PROCEDURE — Obligations of parties and legal practitioners — Proportionality of costs — Six interlocutory applications listed for hearing relating to disclosure of documents, security for costs, preservation of documents and distribution orders — Unnecessarily large Court Book extending to over 2,500 pages with a further approximately 220 pages tendered at the hearing — Extraordinary amount of solicitor-client costs incurred by the parties in respect of the interlocutory applications estimated to total in the order of at least $872,000 CIVIL PROCEDURE — Obligation of parties and legal practitioners to facilitate the just, quick and cheap resolution of real issues in the proceedings — The volume of material and extent of costs should cause the parties and the practitioners to deeply reflect upon whether the overriding purpose has been achieved — The experience and capability of legal representatives eminently suits them to be able to deploy discipline and ingenuity in ensuring that only central issues in respect of interlocutory applications are identified, marginal issues and arguments discarded and only the key materials that are required for determination of such applications are included in the Court Book — Unless parties and their legal practitioners can sensibly reduce the volume of materials to be provided to the court and conduct interlocutory applications with appropriately proportionate costs, the Court may, on an appropriately informed basis, have to consider limiting the volume of materials to be relied upon in respect of such applications and consider cost capping orders CIVIL PROCEDURE — Disclosure of documents — Discussion of approach where certain production and disclosure of documents has already occurred by both parties — Where plaintiffs have served their evidence in chief including over 15,000 pages of documents, defendants seek further disclosure prior to serving their evidence in chief, plaintiffs assert Practice Note SC Eq 11 precludes disclosure without exceptional circumstances, plaintiffs failed to seek particulars of defences in respect of allegations of knowledge, authorisation and approval of transactions in respect of monies they claim have been misappropriated CIVIL PROCEDURE — Disclosure of documents — Purposive and flexible approach to the Court's case management powers to regulate production of documents to ensure the overriding purposes of the CPA and UCPR to facilitate the just, quick and cheap resolution of the real issues in the proceedings in light of the volume of material served and the extent of costs incurred in the proceedings to date — During the course of the hearing the claim for disclosure was refined — Held certain disclosure should be provided in respect of revised categories of documents COSTS — Security for costs — Contrast between a current solvency test and requirement for payment if necessary by liquidation of assets at a future time — Generally, in security for costs applications, the question regarding payment of security is not a current solvency test requiring that the corporation have liquid funds available as at the time of the hearing of the application for security COSTS — Security for costs — Plaintiffs are all corporate entities with some being trustees of trusts and some no longer operational — Defendants claim security for costs — Plaintiffs have relatively minimal net business assets — Plaintiffs adduce expert evidence as to the fair market value of the businesses based on capitalisation of future maintainable earnings — Income stream as a source for future payment of costs — Proof of a calculated value of a future income stream per se neither gives rise to any clear inference that the entirety or a substantial part of such a value will be able to be realised promptly following findings on a final judgment nor demonstrates the ability of plaintiff companies to realise a large lump sum from the income stream in a timely way to pay any significant adverse costs order — Doubt regarding capacity to pay costs at future time — Security ordered — Quantum of security discussed and determined COSTS — Basis for assessing costs — Costs under the CPA are subject to rules of court and to the CPA or any other Act awarded on either the "ordinary basis" (as distinct from "party-party basis") or on an "indemnity basis" Legislation Cited: Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Legal Profession Uniform Law Application Act 2014 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Ashington Capital Pty Ltd v Parissen Capital (Project X) Pty Ltd [2012] NSWSC 410 Capital Pty Ltd v Parissen Capital (Project X) Pty Ltd [2012] NSWSC 410 Commonwealth Bank of Australia v Goater [2016] NSWSC 710 Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 East Grace Corporation v Xing (No 1) [2005] FCA 219 Estate of Guamani; Guamani v De Cruzado [2023] NSWSC 502 Gazal v Setiawan [2024] NSWSC 1046 Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 Health Administration Corporation v Toll Global Forwarding Pty Ltd [2024] NSWSC 285 Hitchcock v Pratt Group Holdings Pty Ltd as trustee for the Pratt Family Holdings Trust [2024] NSWSC 1292 Idoport Pty Ltd v National Australia Bank Ltd (2000) 49 NSWLR 51; [2000] NSWSC 338 ILC Group v Sydney Water Corporation [2014] NSWSC 1407 In the matter of Mempoll Pty Limited, Anakin Pty Limited and Gold Kings (Australia) Pty Limited [2012] NSWSC 1057 Lee v Belmore 88 Pty Limited [2025] NSWSC 96 Leighton International v Hodges; Thiess v Reinforced Earth [2012] NSWSC 458 Narradine Pty Ltd v Mascot Steel and Tools Pty Ltd [2012] NSWSC 385 Putney Group Pty Limited v The Royal Rehabilitation Centre Sydney [2009] NSWSC 424 Re Marriage of Garufi (1991) 15 Fam LR 69 Reeves v Reeves [2024] NSWSC 134 Street v Luna Park Sydney Pty Ltd [2006] NSWSC 1317 Taurus Mining Finance Fund Aiv LP v Sandfire Resources Ltd [2021] WASC 52 Yara Australia Pty Ltd v Oswal (2013) 41 VR 245 Texts Cited: Dal Pont, GE, The Law of Costs (5th ed, 2021, LexisNexis) Practice Note SC Eq 11 Category: Procedural rulings Parties: Guildford Montessori Childcare Pty Ltd ACN 120 987 028 (First Plaintiff) Rose-Hill Montessori Kindergarten Pty Ltd ACN 130 543 574 (Second Plaintiff) Eltelegraph Newspaper Pty Limited ACN 142 631 285 (Third Plaintiff) Alanwar Newspaper Pty Limited ACN 073 059 159 (Fourth Plaintiff) Anoujoum Magazine Pty Limited ACN 135 682 521 (Fifth Plaintiff) Access to Care Pty Limited ACN 615 856 365 (Sixth Plaintiff) Future Academy Pty Limited ACN 135 043 113 (Seventh Plaintiff) Wehbe Investments Pty Ltd ACN 065 783 968 (Eighth Plaintiff) Remy Wehbe (First Defendant) Linda Kafrouni (Second Defendant) Kevin Wehbe (Third Defendant) Karl Wehbe (Fourth Defendant) Remy Wehbe Investments Pty Limited ACN 136 262 247 (Fifth Defendant) Advanced Training Services Pty Ltd ACN 604 847 681 (Sixth Defendant) Taghrid Choukair (Eighth Defendant) Prestige Training Group Pty Ltd ACN 602 416 722 (Ninth Defendant) Representation: Counsel: A Ivantsoff (solicitor – special counsel) (Plaintiffs) DK Ratnam with J Courtenay (Defendants)