New South Wales Supreme Court CITATION : Glazier Holdings Pty Ltd v Meehan [2004] NSWSC 243 HEARING DATE(S) : 26 March 2004 JUDGMENT DATE : 26 March 2004 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Defendants ordered to pay plaintiff's costs. CATCHWORDS : PROCEDURE [553] - Costs - General rule - Costs follow the event - Costs of whole action - Generally - Plaintiff generally successful - Defendant wins on some issues - Issues intertwined. LEGISLATION CITED : Corporations Act 2001 (Cth) s 459J CASES CITED : Glazier Holdings Pty Ltd v Meehan [2003] NSWSC 185 Glazier Holdings Pty Limited (P) PARTIES : Graham Meehan (D1) Anthony Murphy (D2) Treykell Pty Limited (D3) FILE NUMBER(S) : SC 4069/03 COUNSEL : R Macaulay, Solicitor (P) M L D Einfeld QC & K L Andronos (Ds) SOLICITORS : Pryor Tzannes & Wallis (P) Paul Bard Lawyers (Ds) - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J FRIDAY, 26 MARCH 2004 4069/03 GLAZIER HOLDINGS PTY LIMITED v GRAHAM MEEHAN & ORS JUDGMENT 1 HIS HONOUR: In this matter I delivered judgment on the substantive issues on 19 March 2004: Glazier Holdings Pty Ltd v Meehan [2004] NSWSC 185 ("my judgment"). At the end of that I proposed an order that the defendants' notice of demand should be set aside, an order that the defendants pay the plaintiff's costs of the proceedings and an order that the costs order be stayed until the finalisation of the taking of the account ordered in proceedings 4095/97. The last order was to ensure that the costs of this warfare should not be payable as between the parties until the conclusion of the litigation as a matter of substance, rather than their status depending on whether or not Part 52A r 9 of the Supreme Court Rules 1970 applied in particular circumstances. In fact, I was asked to postpone the making of the orders so there could be argument as to the proper order as to costs. In the result, I made the substantive order setting aside the notice of demand and deferred until today argument as to the costs orders. 2 Today, Mr Einfeld, of Queen's Counsel for the defendants, has argued that despite the plaintiff's success the plaintiff should be ordered to pay the defendants' costs, or at least the defendants ought not be ordered to pay the plaintiff's costs. In the course of his argument Mr Einfeld has reminded me of the three issues in the case as outlined in [3] of my judgment. He has reminded me that on the first two of those arguments the plaintiff lost. But he has taken me to various written submissions relied on by both parties in the course of the substantive argument succeeded in demonstrating that there was, in those written submissions, very little reference to the argument under s 459J of the Corporations Act 2001 (Cth) ("the CA"). Furthermore, what argument there was about s 459J appeared, on the face of those written submissions, to rely, in support of the exercise of discretion, on the conduct of the defendants in delaying the disposal of the proceedings rather than in terms upon the existence of claims, being countervailing claims although not offsetting claims, within the meaning of the CA. This was the basis upon which I finally decided in the plaintiff's favour in my judgment. 3 What Mr Einfeld has said about the written submissions is quite correct. However, I have the advantage, which the parties have not, of full transcript of the course of the proceedings on 11 and 12 December 2003. Whilst what is said about the content of the written submissions is quite correct, it is not correct that the case was not argued at that time on the plaintiff's behalf on the basis on which it subsequently succeeded. Indeed, as soon as the evidence had been completed, in commencing his submissions to me, Mr McGovern, of Senior Counsel for the plaintiff, made plain that, insofar as delay was spoken of, what was really relied on was that the countervailing claims, even they could not be characterised as offsetting claims within the meaning of the CA, would ultimately enure in the plaintiff's favour. This it was said, made it unjust that there should be an enforcement of the costs order in the Court of Appeal, which was an interim stage in the litigation, even if the proceedings in which the order was made were completed proceedings within the meaning of Part 52A r 9. The discussion between Mr McGovern and the Court in which this basis of seeking relief was made plain appears at p 11 of the transcript of 11 December 2003. 4 That being so, in determining the question of costs, the following needs to be borne in mind. The plaintiff did succeed in the proceedings. It succeeded on the third ground and that ground was substantially the ground on which it argued its case on s 459J at the hearing before me. Furthermore, as is apparent from my judgment, whilst it failed in establishing offsetting claims within the meaning of the statute, it did succeed in establishing the existence of those claims in the way, or to the extent, required by the statute. That finding was a necessary foundation for, or basis of, its success under s 459J. In those circumstances it seems to me that the case on the second and third grounds which were argued, one of which failed and one of which succeeded, were intermingled. It is not practicable to disentangle them and, so far as they are concerned, there is nothing to displace the prima facie rule that the successful plaintiff should have its costs of the proceedings. 5 So far as the first ground depending upon Part 52A r 9 is concerned, there was no overlap with the other matters. It is true that the defendants were undoubtedly successful on that ground. There was some evidence that went to that ground, being evidence as to the history of the proceedings. That evidence did, however, also have some relevance to the other grounds. So far as the oral argument is concerned, the argument of that ground did not take up any great or substantial time. 6 In all the circumstances, despite Mr Einfeld's somewhat intriguing argument, the conclusion that I have come to is that my first reaction was the correct one and that the proper order to be made in the circumstances is an order that the defendants pay the plaintiff's costs of the proceedings. I do, however, intend to make as well as order 3 that I initially proposed, so that these costs may not be enforced until the end of the litigation between the parties. 7 As I am making the order at this time, the order will encompass the argument on costs that has taken place today. I now make orders 2 and 3 proposed in [21] of my judgment. ********** Last Modified: 04/30/2004 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.