Woodgate v M J Leonard Pty Ltd [2006] NSWSC 783

New South Wales Supreme Court

CITATION : Woodgate v M J Leonard Pty Ltd [2006] NSWSC 783

HEARING DATE(S) : 19/06/06 Written submissions: 21/06/06, 23/06/06

JUDGMENT DATE : 8 August 2006

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Barrett J

DECISION : Second defendant to pay plaintiffs' costs of claims brought against second defendant. No order as to costs between plaintiffs and first defendant

CATCHWORDS : PROCEDURE - costs - where no determination on the merits - whether there should be departure from principle that costs lie where they fall

LEGISLATION CITED : Corporations Act 2001 (Cth), Part 5.3A, ss.

CASES CITED : Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

Giles Geoffrey Woodgate - First Plaintiff Herd Bars & Bodies Pty Limited - Second Plaintiff PARTIES : M.G.B. Chadd Pty Limited - Third Plaintiff M J Leonard Pty Limited t/as Leonard Legal - First Defendant Mark Douglas Fawcett - Second Defendant

FILE NUMBER(S) : SC 2269/06

COUNSEL : Mr J.T. Johnson - Plaintiffs Mr C.R.C. Newlinds SC/Mr A.F. Fernon - Defendants

SOLICITORS : Sally Nash & Co - Plaintiffs Leonard Legal - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

BARRETT J

TUESDAY, 8 AUGUST 2006

2269/06 GILES GEOFFREY WOODGATE & 2 ORS v M J LEONARD PTY LIMITED t/as LEONARD LEGAL & ANOR JUDGMENT 1 The only question for determination in these proceedings is that of costs. 2 The proceedings were commenced on 7 April 2006. The first plaintiff ("the plaintiff") had been appointed administrator of two companies (Herd Bars & Bodies Pty Limited and MGB Chadd Pty Limited, which are the second and third plaintiffs) under Part 5.3A of the Corporations Act on 28 March 2006. In that capacity, he demanded of each of the first defendant (a solicitor corporation which had acted for each company) and the second defendant (a director of the company) delivery up of books and records of each company. Demands were made on 28 March 2006, 31 March 2006, 3 April 2006 and 5 April 2006. The proceedings were commenced on 7 April 2006. The first return date was 10 April 2006. On that day, orders for delivery of documents were made by consent. The orders required each defendant to deliver up certain documents by 5 pm on 13 April 2006. There was also an order that the second defendant furnish by the same deadline an affidavit concerning property of the company. The proceedings were stood over to 24 April 2006. 3 On 24 April 2006, the first defendant sought an order that the proceedings against it be dismissed. The court noted that such an order would be made in chambers if the plaintiff did not indicate by 5 pm on 27 April 2006 that he opposed that course. The matter was stood over to 1 May 2006. It does not appear that any order was made in chambers as foreshadowed. 4 On 1 May 2006, the proceedings were further adjourned to 15 May 2006. On the latter date, certain affidavits were filed in court and there was a further adjournment to 29 May 2006. Finally, there was an adjournment to 19 June 2006, on which day it was indicated that the only issue remaining to be agitated was that of costs and directions for the filing of submissions on costs were made. 5 Some documents were provided by the first defendant on 6 April 2006, that is, the day before the proceedings were commenced. The first defendant produced further documents on 13 and 24 April 2006. There was subsequent correspondence about the sufficiency of compliance but no further production of documents and no action directed towards enforcement of the consent orders. 6 Compliance by the second defendant is accepted by him as having been incomplete. He does not oppose the making of a costs order against him but says that there is no basis for ordering assessment on the indemnity basis. The second defendant is now a bankrupt but it is accepted on both sides that the Bankruptcy Act 1966 presents no obstacle to the making of a costs order against him. 7 Subject to the second defendant's indication that he does not oppose a costs order against him, this matter falls to be dealt with according to principles stated by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at pp.624-625: "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd , the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.