Hall v H G & R Finance Ltd [2001] NSWSC 782

New South Wales Supreme Court

CITATION : Hall v H G & R Finance Ltd [2001] NSWSC 782 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4027/01 HEARING DATE(S) : 16 August 2001 JUDGMENT DATE : 16 August 2001

Gregory Winfield Hall and Peter James Hedge PARTIES : as managers & receivers of Novarest Pty Limited (P) H G & R Finance Limited (D) JUDGMENT OF : Hamilton J

COUNSEL : J E Thomson (P) J Johnson (D) SOLICITORS : Dibbs Barker Gosling (P) Tress Cocks & Maddox (D) CATCHWORDS : PROCEDURE [553] - Costs - Costs of whole action - Generally - Where action settled - Usual rule - Exception when it is plain one party would have succeeded had matter been fully tried. LEGISLATION CITED : Real Property Act 1900 s 74MA(1) CASES CITED : Re The Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 DECISION : Defendant ordered to pay plaintiff's costs of proceedings.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J Thursday, 16 August 2001 4027/01 GREGORY WINFIELD HALL and PETER JAMES HEDGE as managers and receivers of NOVAREST PTY LIMITED v H G & R FINANCE LIMITED JUDGMENT 1 His Honour: These are proceedings for an order for the withdrawal of a caveat. The proceedings are brought not by the registered proprietor of the property nor by the National Australia Bank Limited ("the Bank"), which held the registered first mortgage over the property, but by receivers appointed by the Bank. That is a matter that is material to the question of costs. 2 This morning when the matter was to come on, the defendant, which had undoubtedly been entitled to lodge a caveat as holder of an encumbrance subsequent in priority to the Bank's registered first mortgage, gave an undertaking to the Court that it would on the settlement of a sale of the property by the registered proprietor deliver a withdrawal of its caveat. The only outstanding issue is as to costs. The general rule as to costs where proceedings are settled or discontinued in that there is a discontinuance by the plaintiff or a capitulation by the defendant, so that a hearing of the proceedings on the merits is not necessary, was enunciated by McHugh J in Re The Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 at 624 - 625. In short his Honour says that in such cases the general rule is that each party should bear its own costs of the abandoned proceedings save where either party acted unreasonably or where the result of the proceedings, had the contest taken place, was reasonably plain. 3 Mr J E Thomson, of counsel for the plaintiff, says that this is a case where a contest of the proceedings would inevitably have led to an order for the withdrawal of the caveat. Mr J Johnson, of counsel for the defendant, says that the proceedings as they stood up to the time of their determination were incorrectly constituted, in that the plaintiffs, as receivers, were not persons with standing to bring the proceedings within s 74MA(1) of the Real Property Act 1900, which provides for the maintenance of such proceedings by any "person who is or claims to be entitled to an estate or interest in the land". 4 Mr Thomson's answer to this is, first, that, were this a defect, it could readily have been remedied and that, indeed, he came to Court this morning with instructions to add as plaintiffs as necessary either or both of the Bank and the registered proprietor of the land. In a sense Mr Thomson's preparedness to do this emphasises there was, at least arguably, a defect in the constitution of the proceedings, although Mr Thomson does not concede this, but argues that the receivers did in fact have an estate or interest in the land. He has tendered the mortgage under which they were appointed and the memorandum of terms and conditions which is incorporated in it. One of those terms and conditions makes it plain that the receivers certainly have a right to the fund created by the sale of the land in priority to other claims, which certainly gives them a charge over the fund and may arguably give them an estate or interest in the land. It is not the registered proprietor who is required to bring the proceedings; it is anyone with anything that amounts to an estate or interest in the land, even if it be a comparatively slight interest. 5 Mr Johnson argues that the proceedings were misconstituted right up to the time of their dismissal upon the giving of the undertaking that I have mentioned. This argument is not without some attraction. However, looking at the matter overall, I take the view that, even if there were a misconstitution (and I do not intend to enter into the somewhat recondite question as to whether or not the receivers actually had an estate or interest in the land) it is fairly clear that, the plaintiffs being the receivers appointed by the Bank, at all points of time the joinder of the Bank as the registered first mortgagee would have been something that could easily have been procured by the plaintiffs had this question been raised. 6 Overall it is my view that it was inevitable that the proceedings for the withdrawal of the caveat would succeed and that upon a realistic consideration of the matter this would have been apparent to the defendant. No doubt it was open to the defendant to attempt to investigate the situation and obtain what information and assurances it could in its own interests. However, overall, applying the test set out above, I have come to the view it was not reasonable in all the circumstances for the defendant to oppose the proceedings, the success of which was in reality inevitable. In the circumstances I propose to order that the defendant pay the plaintiffs' costs of the proceedings and I do so order. …oOo…