New South Wales Supreme Court CITATION : Alpha Centauri Enterprises Pty Ltd v Mortgage House of Australia Pty Ltd [2009] NSWSC 636 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 3 July 2009 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 3 July 2009 DECISION : Plaintiffs are to pay the defendants' costs of the proceedings other than the cross-claims on a party and party basis until 6 February 2007 and on an indemnity basis thereafter. The defendants' assessed costs of $106,735.25 relating to the vacation of the hearing in April 2007 are payable immediately. The defendants are to pay the plaintiffs' costs of the cross claims. CATCHWORDS : PROCEDURE – Costs – determination after final hearing – claims and cross claims dismissed – offer of compromise – plaintiffs do not resist order for indemnity costs of the proceedings brought by them but seek their costs of the cross-claims – held plaintiffs to pay defendants' costs, other than the cross claims, on party / party basis up until offer of compromise, and on an indemnity basis thereafter – defendants to pay plaintiffs' costs of the cross claim Alpha Centauri Enterprises Pty Ltd ACB 052 158 255 [First Plaintiff] Robert Alan Duncan [Second Plaintiff] PARTIES : Mortgage House of Australia Pty Ltd ACN 081 508 054 [First Defendant] Direct Mortgage Solutions Pty Ltd ACN 089 173 482 [Second Defendant] Mortgage House Broker Services Pty Ltd (formerly Array Home Loans Pty Ltd) ACN 096 357 596 [Third Defendnat] Mortgage House Realty Pty Ltd ACN 088 962 725 [Fourth Defendant] FILE NUMBER(S) : SC 50041/2005 COUNSEL : P.D. Kennedy - Solicitor [Plaintiffs] A.R. Zahra [Defendants] SOLICITORS : Mooney & Kennedy [Plaintiffs] Gokani & Associates Legal [Defendants] - 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HAMMERSCHLAG J 3 JULY 2009 50041/2005 ALPHA CENTAURI ENTERPRISES PTY LTD & ANO V MORTGAGE HOUSE OF AUSTRALIA PTY LTD & ORS EX TEMPORE JUDGMENT 1 HIS HONOUR: There are two issues that remain in these proceedings, both relating to costs. 2 The first concerns the costs of the proceedings generally. On 12 June 2009 I gave judgment dismissing both the plaintiffs' claim and the defendants' cross-claims. I made provisional orders as to costs and reserved to the parties liberty to make submissions on their displacement. Each party has made submissions. 3 The second concerns an order which I made in April 2007 when an earlier hearing date of these proceedings was vacated at the instance of the plaintiffs. The plaintiffs were ordered to pay the costs thrown away by the adjournment, but I declined to order that they be payable immediately and noted that the usual rule is that costs orders are payable only on conclusion of the proceedings, although that is not necessarily the usual rule in this list. The defendants say that the proceedings are now concluded and they want their costs. The plaintiffs take issue with this. 4 On 6 February 2007 the defendants made an offer of compromise of both the plaintiffs' claim and the defendants' cross-claims (as they then stood) by paying to the plaintiffs the sum of $200,000. The offer was not accepted. 5 The defendants seek the costs of the proceedings including the cross-claims on a party/party basis until 6 February 2007 and on an indemnity basis from 7 February 2007, with the caveat that they are not entitled to recover any costs relating to the issue of quantification of the cross-claim (this on the basis that they established at least one breach of the Business Partner Agreements, but failed to establish any damage). 6 The plaintiffs do not resist an order for indemnity costs of the proceedings brought by them, but seek an order that the defendants pay the costs of the cross-claim. They put that well after the offer of compromise, the cross-claims were substantially amended and that in the ultimate result they failed. 7 The offer of compromise does not distinguish between the claims and the cross-claims. On the one hand, it represents an offer significantly in excess of what the plaintiffs ultimately achieved, but, on the other, the defendants failed on their cross-claims. In addition, the cross-claims ultimately prosecuted were substantially different to those at the time of the offer. 8 In my view, the offer of compromise is sufficient to displace the party /party rule on the plaintiffs' claims (as the plaintiffs conceded), but is not in the circumstances sufficient to displace the usual order with respect to the cross-claims, that the successful party is entitled to its costs. 9 With regard to the second issue, the plaintiffs put that "the conclusion of the proceedings" means after all rights of appeal have been exhausted and that the order which I made in April 2007, in respect of which have now been assessed at $106,735.25, should now await the outcome of any appellate proceedings which the plaintiffs may bring. 10 I reject that submission. 11 I declined to allow the April order to be enforced until conclusion of the proceedings at first instance. That order is now enforceable. 12 Mr Kennedy, solicitor for the plaintiffs, moved for an order that the costs assessed in respect of that adjournment be stayed, because of his clients' impecuniosity, pending the determination of any appeal. But that costs order was made because the plaintiffs were not then ready to proceed. An appeal will not change that fact and such orders follow almost certainly when there is, as there was here, an adjournment at the plaintiffs' instance because of a lack of readiness to proceed. 13 In my view, no basis has been made out for a stay and accordingly I decline to grant one. 14 The orders of the Court will be as follows. a The plaintiffs are to pay the defendants' costs of the proceedings, other than the cross-claims, on a party and party basis until 6 February 2007 and on an indemnity basis thereafter. b The defendants' assessed costs of $106,735.25 are payable immediately. c The defendants are to pay the plaintiffs' costs of the cross-claims. ********** 13/07/2009 - insert word "to" before costs. - Paragraph(s) 1 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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