New South Wales Supreme Court CITATION : The Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (No 2) [2007] NSWSC 797 HEARING DATE(S) : 19/07/07 JURISDICTION : Equity Division JUDGMENT OF : Young CJ in Eq EX TEMPORE JUDGMENT DATE : 19 July 2007 DECISION : Plaintiff to pay second defendant's costs. CATCHWORDS : PROCEDURE [598]- Costs- Departing from general rule- Plaintiff obtained relief under the Ex parte James principle having failed on its principal arguments- Whether seeking indulgence- Liquidators of second defendant seeking to protect a fund- Appropriate in circumstances for plaintiff to pay second defendant's costs. LEGISLATION CITED : Civil Procedure Act 2005, s 98 CASES CITED : Ex parte James (1874) 9 Ch App 609 Fordham v Fordyce [2007] NSWCA 129 The Presbyterian Church (NSW) Property Trust (P) PARTIES : Scots Church Development Limited (In Receivership) (D1) York Street Mezzanine Pty Limited (In liq) (D2) Westpoint Corporation Pty Limited (In liq) (D3) FILE NUMBER(S) : SC 2618/06 COUNSEL : S A Kerr (P) J E Thomson (D2) SOLICITORS : Henry Davis York (P) Minter Ellison (D2) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Thursday 19 July 2007 2618/06 – THE PRESBYTERIAN CHURCH (NSW) PROPERTY TRUST v SCOTS CHURCH DEVELOPMENT LTD (NO 2) JUDGMENT 1 HIS HONOUR: I gave reasons for judgment in this matter on 29 June 2007 ([2007] NSWSC 676). Essentially, the case confirmed the priority of the claims of the plaintiff and of the unsecured creditors of a company, York Street Mezzanine Pty Ltd, with respect to what I called in my earlier judgment "the Church Lot", part of the land at the corner of Margaret and York Streets, Sydney. 2 The case involved considerable argument because, although there had been a contract for the Church Lot to be transferred back to the plaintiff after there had been a development of the Assembly Hall site by companies in the Westpoint Group, there had never been a caveat lodged by the plaintiff to protect its interest and, because there was some rearrangement, the York Street Mezzanine company became a second registered mortgagee. 3 The proceedings were heard together with 6486 of 2005 which was an application by the liquidators of York Street Mezzanine Pty Ltd for directions. The reaction of the court in the Corporations List to that application was to direct that the matter be dealt with in contested proceedings. The contested proceedings were considered and I gave directions to the liquidators earlier this morning that they should act in accordance with my judgment in these proceedings. I also made the appropriate order for costs. 4 The plaintiff made a number of points. The two points that took a considerable amount of time were: (a) whether its interest was an equity which was valid against York Street Mezzanine, the registered second mortgagee ( the plaintiff failed in this argument) and; (b) that under the principle of Ex parte James (1874) 9 Ch App 609 the liquidators should be directed to release the Church Lot from its mortgage. The plaintiff succeeded in the second part of the case. 5 Section 98 of the Civil Procedure Act 2005 provides that costs are in the discretion of the court, however, as was the case with corresponding provisions in the older legislation, the practice has been that judicial powers are to be exercised according to the views of a collegiate court and the views of a collegiate court for many years have been that a person who succeeds in litigation should get costs and a person who fails should pay them. 6 Both parties have provided written submissions as to costs. The plaintiff says that the general exercise of discretion means that as it succeeded it should get costs. The second defendant, on the other hand, says that the plaintiff only succeeded on the Ex parte James principle, and that is virtually to seek the indulgence of the court. Despite what the Court of Appeal said in Fordham v Fordyce [2007] NSWCA 129, that there was no overarching principle known as "The Indulgence Principle", there are a series of decisions in this Division which made it clear that where one is seeking a boon one usually has to pay the costs and even if the boon is granted, that those principles should be applied. 7 As I said in para 205 of my earlier judgment, I did consider whether a condition for granting relief under the Ex parte James principle was that the plaintiff pay the liquidators' costs, but I noted that for all practical purposes this was easily dealt with when considering the proper order for costs rather than making it a condition. 8 The plaintiff says that this is not really an indulgence type case. The Ex parte James argument was the main thrust of what it was putting to the court. It succeeded, it should get its costs. The second defendant says that this is an over-simplification. The plaintiff failed on one of its principal arguments. The second defendant only became involved because of the direction that was given in 6486 of 2005 and it did not increase the costs in the way it conducted the case. 9 Mr Kerr for the plaintiff said, "Oh yes, it did", it resisted vigorously at every step along the way. In response, Mr Thomson for the liquidators said that that is the duty of persons such as his clients who are protecting a fund and, indeed, the best way parties can often assist the court is by vigorously asserting a particular point of view. 10 The basal reason why this case came to court at all was because the plaintiff omitted to protect its interest in the Church Lot by lodging a caveat. It failed to demonstrate as a matter of law that it had priority over the second defendant. The liquidators of the second defendant are protecting a fund. The plaintiff has been given the benefit of the Ex parte James principle and, in my view, even though it successfully invoked that principle, and even though it is only in a clear case that Ex parte James should be applied, it is appropriate, virtually as a condition of the relief, that it pay the liquidators' costs. 11 Accordingly, in the short minutes that I signed off on this morning I made that order. ******************* 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.