New South Wales Supreme Court CITATION : Baikie v Huxley [2001] NSWSC 962 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50126/01 HEARING DATE(S) : 19.10.01 JUDGMENT DATE : 30 October 2001 PARTIES : Winifred Anne Worfolk Baikie -v- Gregory John Huxley & Anor JUDGMENT OF : Hunter J Applicant/First Defendant: M Foley (solicitor) COUNSEL : Respondent/Plaintiff: M Vincent Second Defendant: B Gillard (solicitor) Applicant/First Defendant: Foleys Solicitors SOLICITORS : Respondent/Plaintiff: Greg Judd & Associates Second Defendant: Conway MacCallum CATCHWORDS : Practice & procedure - application to stay pursuant to Pt 14B r 8 - prior proceedings dismissed under Pt 14B r 7 as inactive file with no order as to costs - application to transfer matter to common law list - discretionary factors - defendants' costs of prior proceedings to follow event in current proceedings - stay refused - costs of application costs in the cause. DECISION : In proceedings no 11743/00 defendants' costs of proceedings to follow the event of proceedings no 50126/01. Otherwise application dismissed. Costs of application be costs in the cause. IN THE SUPREME COURT OF NEW SOUTH WALES COMMERCIAL LIST EQUITY DIVISION HUNTER J TUESDAY 30 OCTOBER 2001 50126/01 WINIFRED ANNE WORFOLK BAIKIE –V- GREGORY JOHN HUXLEY & ANOR REASONS FOR JUDGMENT 1 This is an application by the first defendant on amended notice of motion seeking the following relief: "1. A Declaration that pursuant to the provisions of Part 14B Rule 8 of the Supreme Court Rules the Plaintiff is liable to pay the Defendants' costs of and incidental to the previous proceedings between the same parties No. 11743 of 2000, which was dismissed by the Court on 13th July 2000 for want of prosecution. 2. These proceedings be stayed until the Defendants' costs in these proceedings to date and the previous proceedings No. 11743 of 2000 have been agreed to or assessed and paid. 3. These proceedings be transferred out of the Commercial List and placed in the Common Law Division's General List." 2 It is not in dispute that the plaintiff brought proceedings against the defendants by statement of claim in proceedings number 11743 of 2000 in the Common Law Division of this Court (the common law proceedings), seeking the same relief as that claimed in these proceedings. 3 The common law proceedings were dismissed pursuant to the provisions of Pt 14B r 7 of the Supreme Court Rules on 13 July 2001, which is in the following terms: " 7 (1) If a defence to a possession claim has not been filed in proceedings entered in the List within 5 months of the possession claim being instituted, the Court may of its own motion dismiss: (a) the proceedings; or (b) if there is more than one claim made in the proceedings – the claim for possession, unless a party satisfies the Court that such an order should not be made. (2) The Court may not make an order under subrule (1) without giving the parties a reasonable opportunity to be heard. (3) Subrule (1) does not apply to proceedings, or to a claim, that have or has been disposed of by judgment, final order, discontinuance or dismissal." 4 The effect of such an order is laid down in Pt 14B r8 as follows: " 8 (1) An order for dismissal under rule 7 shall not prevent a party from: (a) bringing fresh proceedings; or (b) claiming in fresh proceedings relief that has been claimed in the dismissed proceedings. (2) Where: (a) proceedings are dismissed under rule 7; (b) a party is, by reason of the dismissal, liable to pay the costs of another party occasioned by the proceedings; and (c) before payment of the costs, the party so liable brings against that other party further proceedings on the same or substantially the same cause of action as that on which the dismissed proceedings were brought, the Court may stay the f u rther proceedings until those costs are paid." 5 The formal order of 13 July 2001 was not before me. However, it is common ground that, in the order dismissing the proceedings, no order as to costs was made. 6 The affidavit in support of the application was that of Michael David Foley sworn 28 September 2001 which was limited to the following brief description of the history of the common law proceedings. 7 Prior to the dismissal of the common law proceedings no steps had been taken in the proceedings by the plaintiff or the defendants other than the filing of an appearance by the defendants on 7 August 2000 and a letter of request for particulars of the summons made by the defendants by facsimile of 14 August 2001. On 16 August 2001 the solicitor for the defendants received a facsimile and telephone call from the plaintiff's solicitor which raised the fact that she had received a further request for particulars from the second defendant's solicitor. Presumably, there had been a change of solicitors by the second defendant about that time. 8 On 25 May 2001 the Registrar of the Court gave written notice to the defendants' solicitor in the following terms (presumably a like notice was given to the plaintiff): "These proceedings have been entered in the Possession List pursuant to Practice Note 106. Court records indicate that in the above proceedings, no defence to the claim has been filed within 5 months of the claim being instituted. Pursuant to Pt 14B rule 7 of the Supreme Court Rules the Court will dismiss the claim or the proceedings unless, within 14 days of the date of this notice, the plaintiff notifies the Court of its desire to show cause why an order for dismissal should not be made. The Court will, if the plaintiff gives notice of its desire to show cause, list the proceedings for further consideration by the Possession List Judge, or, otherwise – dismiss the claim or proceedings. Your written application must be lodged with the Court before the expiration of 14 days from the date of this notice." 9 Nothing was done by either the plaintiff or the defendants in response to the notice, and, as a consequence, the proceedings were dismissed pursuant to Pt 14B r 7. Neither party has assisted me with any authority in aid of the order for a stay of the proceedings. I am unaware of any direct authority in relation to the construction of Pt 14B r 7 and 8. 10 The closest analogy appears to be in those cases dealing with Pt 21 r 8 of the Supreme Court Rules. 11 In this application there are several unsatisfactory aspects. 12 The affidavit relied upon by the respondent is that of Gregory Russell Judd sworn 12 October 2001, he being the solicitor for the plaintiff/respondent. The affidavit sets out in narrative form the underlying facts on which these proceedings are brought. They arise out of a contract for the sale of land at Wahroonga for the price of $1,750,000, the contract being between the plaintiff as vendor and the defendants as purchaser. 13 Clauses 34 and 35 of the contract for sale were in the following terms: "34. (a) The contract for the sale of property 22 Esk Street, Wahroonga in the state of New South Wales is conditional upon an interdependent with the contract of even date between the Ko Huna Beach Holdings Pty Limited as vendor and Private Equity Strategies Pty Limited ACN as Trustee for the Nawarra Trust (a company of which the vendor is both a director and shareholder) to transfer 7 bures known as bures 4, 8, 14, 15, 16, 51, and 52 in the Ko Huna Beach Resort at a consideration disclosed in such contract as $985,000.000. The interdependence of the two contracts shall continue notwithstanding that the sale of the Wahroonga property shall settle prior to the completion of the transfer of the Queensland properties. (b) The purchase price of $1,750,000.00 shall be paid in the following manner: (i) as to $765,000.000 in cash upon completion of the sale (ii) the purchaser shall transfer to Private Equity Strategies Pty Limited the 7 bures situated in the Ko Huna Beach Resort the subject of the contract for sale of even date between the purchaser as vendor and Private Equity Strategies Pty Limited as purchaser. 35. In the event that the transfer of the Queensland properties are unable to be effected on the due date for settlement of the Esk Street, Wahroonga property the parties agree that settlement of the Esk Street property will proceed upon payment of the cash sum of $765,000.00 together with the purchaser and vendor or her nominee entering into mortgages in registrable form to secure the remainder of the purchaser (sic) price of $985,000.00, the security of which shall be the Ko Huna Beach Holdings Pty Limited's interest in the whole of the Ko Huna Beach Resort together with properties belonging to or being acquired by the Purchasers at 83 Braeside Street, Wahroonga and 22 Esk Street, Wahroonga. The purchaser shall pay interest to the vendor at the rate of 10% per annum payable monthly in advance to the vendor or as she may direct in writing to the purchaser. Additionally all stamp duty and the vendor's legal costs in respect of the mortgage shall be paid by the purchaser. Such mortgages shall be discharged upon settlement of the transfer of the 7 bures to Private Equity Strategies Pty Limited. Such monies shall be paid on settlement of the Esk Street property or earlier." 14 Private Equity Strategies Pty Ltd is said to be an investment company controlled by the plaintiff and her husband. The contract for the purchase of 7 bures was entered into on 26 February 1999, as contemplated by the contract for sale and, on the same date, the defendants guaranteed payment of the balance of that purchase price, namely $985,000. It is alleged that the defendants failed to pay the balance of the purchase price to the plaintiff and that the vendor, under the bures contract for sale, was wound up on 21 June 2000 without the subject bures being transferred. 15 The defendants are alleged not to have honoured their obligations under the deed of guarantee to the plaintiff as set out in pars 15 to 19 of the contentions as follows: " C SUMMARY OF PLAINTIFF'S CONTENTIONS 15. The Plaintiff is entitled as an unpaid Vendor to the balance of the purchase price under the Contract from the First and Second Defendants as the Purchasers named in the Contract. 16. The Plaintiff as mortgagee is entitled to be repaid the Debt by Ko Huna as mortgagor. 17. The First and Second Defendants as guarantors under the Guarantee guaranteed all of the obligations of Ko Huna as mortgagor under the Mortgage and their own respective obligations in respect to the Debt. 18. The First and Second Defendants are both in default in their obligations to the Plaintiff as contained in, where applicable:- (a) the Contract; (b) the Guarantee. 19. As at 2 July 2001 the amount owing under the Mortgage is $985,000.00 plus interest thereon." 16 On the evidence before me the plaintiff appears to have a very strong claim under her guarantee. In relation to the Pt 14B r7 order Mr Judd deposed to the following in his affidavit sworn 12 October 2001: "14. The Court search does not disclose any costs order made in the Previous Proceedings when they were dismissed. 15. I have practiced as a solicitor principally in the area of equity and commercial litigation for many years. In my opinion the costs of the first defendant incurred in taking instructions in the Previous Proceedings would not have been thrown away and would have been substantially relevant in taking instructions in the present proceedings. 16. I have reviewed the letter requesting particulars, annexed to Mr Foley's affidavit. In my opinion the preparation of such a letter by a competent solicitor would take no longer than one hour to prepare, including whatever instructions were needed from the client in respect to the particulars requested. 17. The first defendant has not provided any evidence as to what his costs were in the Previous Proceedings. Based upon the affidavit of Mr Foley the costs would appear to relate to the following attendances: (a) the taking of instructions and reading the Statement of Claim (I estimate this would take approximately 2 hours); (b) preparing and filing of a notice of appearance (I estimate this would take approximately 20 minutes); and (c) the issuing of a request for particulars (I estimate this would take approximately 1 hour). 18. In my estimate a reasonable estimate of the total costs involved in the attendances referred to in paragraph 17 would not exceed $1,000.00. 19. I have instructions from the plaintiff that if this Court is of the view that a costs order should be made in favour of the first defendant in respect to the Previous Proceedings, then rather than have the current proceedings stayed, the plaintiff would be willing to pay into Court within 14 days the sum of $1,000.00 on account of the first defendant's costs in the Previous Proceedings pending any assessment or agreement of those costs." 17 That proposal to pay $1,000 into Court has been rejected by the applicant. 18 The plaintiff/respondent has made no attempt to provide any evidence to the Court as to the reasons why the common law proceedings were not prosecuted nor has evidence been adduced as to the circumstances giving rise to the bringing of these proceedings, other than a muted suggestion from the bar table that delay in the common law proceedings was not the direct responsibility of the plaintiff. 19 The applicant has stated from the bar table that Mr Judd's cost assessment is inadequate. I found that particularly surprising in light of the information given to me from the bar table by counsel for the applicant that the applicant's solicitor has no cost records kept in relation to the common law proceedings: he has rendered no bill of costs to the applicants, nor to the respondent: he has tendered no evidence of the costs of the applicants incurred in the common law proceedings: in order to assess costs the solicitor would have to refer to his common law file: the only evidence of activity on behalf of the defendants in the common law proceedings by their solicitor was the filing of a Notice of Appearance, the making of a request for particulars, perusing a facsimile from the plaintiff's then solicitor, a short telephone attendance, in addition to perusing the Registrar's notice. 20 Counsel for the applicant stated that no response was made by the defendants to the Registrar's notice in the common law proceedings in the hope, or expectation, that the common law proceedings would be dismissed and that would be the end of the plaintiff's claim. 21 In these proceedings, in light of the conduct of the defendants in the common law proceedings, the position as to costs as revealed during the course of this application, I am neither disposed to make an order for costs against the plaintiff in the common law proceedings, nor to grant any stay of these proceedings pending payment of any costs of the defendants in the common law proceedings. 22 In my view the just result will be achieved by ordering that the defendants' costs in the common law proceedings follow the event in these proceedings: in effect that they be defendants' costs in the cause. They are costs which, on the evidence before me, must be miniscule, unassessed, unbilled, unrendered and of a proportion which makes the rejection of the respondent's offer surprising. 23 The application to transfer the matter out of the Commercial list into the Common Law Division is based upon the dilatory history evidenced in the plaintiff's efforts to enforce her cause of action against the defendants. On the evidence before me, the plaintiff appears to have a very strong cause of action against the defendants. I am not disposed to deprive her of the benefit of the case management available in the Commercial list. Having regard to the history of the matter, however, I think the Court should keep a careful watch on its progress to ensure that the benefits of listing it in this list is not wasted. 24 In the circumstances the application is dismissed and the costs will be costs in the cause. *********** Last Modified: 11/27/2001 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.