Trevan v Trevan & Ors (No 2) [2010] NSWSC 441

New South Wales Supreme Court

CITATION : Trevan v Trevan & Ors (No 2) [2010] NSWSC 441

HEARING DATE(S) : 30 April 2010

JUDGMENT DATE : 30 April 2010

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Palmer J

EX TEMPORE JUDGMENT DATE : 30 April 2010

DECISION : Order that the Plaintiff pay the First Defendant's costs of the proceedings on the party/party basis up to and including 27.05.09, and thereafter on the indemnity basis.

CATCHWORDS : CORPORATIONS – COSTS – Whether costs of proceedings to set aside proof of debt of creditor/shareholder should be costs of liquidation or paid by unsuccessful party.

CATEGORY : Consequential orders

Robert Warren Trevan (Plaintiff) Jack Harrison Trevan (First Defendant) PARTIES : Ian James Purchase (Second Defendant) R.H. Trevan Pty Ltd (In liq) (Third Defendant) Trevan Car Sales (In liq) (Fourth Defendant) Trevan Auto Service Pty Ltd (In liq) (Fifth Defendant)

FILE NUMBER(S) : SC 2007/256054

COUNSEL : L. Tyndall (Plaintiff) D.J.A. Mackay (First Defendant)

Maxwell & Co (Plaintiff) SOLICITORS : McCartney Young (First Defendant) Shaw Reynolds Bowen & Gerathy (Second Defendant – Submitting appearance filed in Court on 23 March 2010)

2007/256054 Trevan v Trevan & Ors (No 2)

JUDGMENT – Ex tempore on costs

30 April, 2010

1 I gave reasons for judgment in this matter on 27 April 2010 and reserved the question of costs so that the parties could make submissions, if they so wished. I will continue to use the references to the parties which I have adopted in the judgment, that is, I will refer to Jack and Robert, the two principal contestants. 2 Jack seeks an order for his costs of the proceedings on an indemnity basis as from the expiry of an offer for settlement put by his solicitors to Robert's solicitors in a letter dated 21 May 2009. 3 Robert resists any order for costs and says that the costs of determining the correctness of the liquidator's decision to admit Robert's proof of debt should be the liquidator's costs in the liquidation. In other words, both parties should have their costs paid by the liquidator as an expense of the liquidation. 4 I do not think that this submission ought to be accepted. It is true that the liquidator made a determination and that that determination I have held to be incorrect. However, the determination was in respect of a claim put forward by Robert and I have found that that claim was not justified, in that there was no enforceable agreement between Robert and his company, on the one hand, and Trevan Car Sales, on the other, for any share buy back agreement. 5 I do not think it is right that Jack, as a shareholder of Trevan Car Sales, who is entitled to a surplus on a winding-up, ought to bear the expenses of the conduct of his own case, let alone the conduct of Robert's case. It seems to me that it is fairer and more just to regard this, essentially, as a contest between the two parties, Jack and Robert, and that the costs burden of Robert's unsuccessful case should fall solely upon Robert. The question, then, is: should those costs be ordered on the indemnity basis? 6 There is, as I have said, a letter, offering a compromise, sent by Jack's solicitors to Robert's solicitors on 21 May 2009. That letter offers virtually a capitulation in respect of Jack's opposition to Robert's proof of debt. Jack offers to discontinue the proceedings on the basis that each party pay its own costs, and he will then advise the liquidator that he withdraws his objection to the admission of Robert's proof of debt. The only condition that Jack imposes is that Robert withdraw his claim for interest on the debt said to arise under the buy back agreement. The offer was expressed to expire on 27 May. I do not think the time limit for consideration of that offer was unreasonable. 7 Robert has fared very much worse in the result of this litigation than the proposal that was put by him to Jack's solicitors. It was not reasonable on Robert's part to refuse the offer in the letter of 21 May. Accordingly, I think that Robert should pay Jack's costs of the proceedings on the party/party basis up to and including 27 May 2009, and thereafter on the indemnity basis. 8 I make orders in accordance with Short Minutes of Order initialled by me, dated today and placed with the papers.