Reed Constructions Australia Pty Ltd v DM Fabrications Pty Ltd [2007] NSWSC 1409

New South Wales Supreme Court

CITATION : Reed Constructions Australia Pty Ltd v DM Fabrications Pty Ltd [2007] NSWSC 1409

HEARING DATE(S) : 19/10/07 Written submissions on costs: 29/10/07, 31/10/07, 05/11/07

JUDGMENT DATE : 6 December 2007

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Barrett J

DECISION : See paragraph [13]

CATCHWORDS : PROCEDURE - costs - no matter of principle

LEGISLATION CITED : Corporations Act 2001 (Cth), ss 447A, 553C

CASES CITED : Petar v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 Reed Constructions Australia Pty Ltd v DM Fabrications Pty Ltd [2007] NSWSC 1190

Reed Constructions Australia Pty Limited - Plaintiff PARTIES : DM Fabrications Pty Limited - First Defendant Nicholas Craig Malanos and Ian James Purchas - Second Defendants

FILE NUMBER(S) : SC 4497/07

COUNSEL : Mr B A Coles QC/Mr B Debuse - Plaintiff Mr M A Ashhurst SC - Defendants

SOLICITORS : Home Wilkinson Lowry - Plaintiff PMF Legal - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

THURSDAY, 6 DECEMBER 2007

4497/07 REED CONSTRUCTIONS AUSTRALIA PTY LIMITED v DM FABRICATIONS PTY LIMITED & 2 ORS

JUDGMENT

1 I am dealing with the question of costs consequent upon my judgment of 23 October 2007: see [2007] NSWSC 1190. I there dealt with two interlocutory processes. One was an interlocutory process by which DM (the first defendant) sought rectification of the deed of company arrangement to which it is subject. The other was an interlocutory process by which Reed (the plaintiff) sought injunctive relief to preserve the status quo pending determination of its claim to have the deed of company arrangement terminated or avoided. Both applications were granted. 2 In relation to the first interlocutory process, Reed says that its costs should be paid by the defendants (DM and the deed administrators), whereas the defendants say that there should be no order as to costs. The contention of Reed is, in essence, that it was Reed that drew to the defendants' attention the error in the deed of company arrangement requiring rectification; that Reed suggested the manner of rectification via s 447A that the court adopted; and that Reed – made (inappropriately, in its view) a cross-defendant by DM – was not an appropriate contradictor and did not seek that role. 3 DM's position is that Reed, while maintaining that rectification was needed, took advantage of the error in the deed. Reed claimed that it was unable to lodge its proof of debt because the deed, in its unrectified form, did not extend to debts arising after 13 April 2006. No other creditor took that point. 4 I accept DM's submissions on this matter. Reed, it seems to me, was an active participant in the rectification aspect, even though it did not oppose rectification. I do not think that its costs should be paid by DM. There should be no order as to costs. 5 In relation to the second interlocutory process which resulted in the grant of an interlocutory injunction at the suit of Reed, it is the contention of Reed that the defendants (DM and the deed administrators) should be ordered to pay Reed's costs. The defendants' position is that the costs of the interlocutory process should be costs in the cause or plaintiff's costs in the cause. 6 The ordinary expectation is that, where an interlocutory injunction is granted, the costs are costs in the cause or plaintiff's costs in the cause. The basis for and history of that expectation were explained at some length by Beazley JA, Giles JA and Hodgson JA in their joint judgment in Petar v Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142. It is pertinent to set out a lengthy extract from the judgment: "16 The general rule as to costs is that costs follow the event unless it appears to the court that some other order ought to be made as to the whole or part of the costs: see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR ). Rule 42.7 deals with interlocutory applications. It provides that unless the court otherwise orders: 'The costs of any application or other step in any proceedings … are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.' 17 The Association contends that in the case of an application for an interlocutory injunction, the Court will exercise its discretion and order that costs be 'costs in the cause'. The Association described this as the 'usual rule' as to costs on such an application.