Supreme Court New South Wales Medium Neutral Citation: Break Fast Investments Pty Ltd v C & O Voukidis Pty Ltd [2011] NSWSC 991 Hearing dates: 1 August 2011 Decision date: 31 August 2011 Jurisdiction: Equity Division Before: Black J Decision: Plaintiff to pay the costs of the proceedings Catchwords: COSTS - successful opposition to application to extend caveat - costs follow the event Legislation Cited: - Uniform Civil Procedure Rules 2005 (NSW) 42.1 - Real Property Act 1900 (NSW) s 74O Cases Cited: - Circuit Finance Pty Ltd v Crown & Gleeson Securities Pty Ltd (2005) 12 BPR 23, 403 - Chand v Azurra Pty Ltd (in liq) [2011] NSWCA 58 - Latoudis v Casey (1990) CLR 534 - Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870 - Tadrous v Tadrous [2009] NSWSC 407 Category: Costs Parties: Break Fast Investments Pty Ltd (Plaintiff) C & O Voukidis Pty Ltd (Defendant) Representation: Solicitors: M.W. Young (Plaintiff) D.L. Cook (Defendant) Solicitors: Proctor Phair (Plaintiff) JBT Lawyers (Defendant) File Number(s): 2010/425491 Judgment 1I delivered judgment in these proceedings on 15 August 2011. In summary, I found that the description of the interest claimed in a caveat ("Caveat") lodged by Break Fast Investments Pty Ltd ("Break Fast") was not such as to establish its claim to the estate, interest or right for the purposes of s 74K of the Real Property Act 1900 (NSW) and that I was therefore required by s 74K(2) of the Real Property Act to dismiss Break Fast's application for an order extending the operation of the caveat. I noted that leave under s 74O of the Real Property Act was not strictly required for Break Fast to lodge a further caveat over the properties, but granted leave to Break Fast to do so to the extent that such leave might be required. I directed the parties to bring in Short Minutes of Order to give effect to those reasons and I indicated that I would hear the parties as to costs. 2It appears that there is no dispute as to the form of the substantive orders that should be made to implement my judgment other than as to costs. Each of Break Fast and the Defendant, C & O Voukidis Pty Ltd ("COV") made written submissions as to the form of order that should be made in respect of costs. On the one hand, COV contends that Break Fast should be ordered to pay its costs of the proceedings. On the other hand, Break Fast contends that COV should pay its costs of a Notice of Motion filed 22 July 2011 seeking to set aside a subpoena issued by Break Fast; that COV should pay Break Fast's costs of the proceedings from 28 July 2011; and that there should otherwise be no order as to costs with the intent that each party pay its own costs. 3First, Break Fast contends that it should have its costs relating to a Notice of Motion filed 22 July 2011 by COV to set aside a subpoena issued at the request of Break Fast. Break Fast contends that it was substantially successful on the hearing of the motion and that COV thereafter conceded that there was an arguable case for a constructive trust. In my view, each party had a measure of success in respect of the motion to set aside the subpoena since, although the subpoena was not set aside, I limited several paragraphs of the subpoena as set out in my judgment. I directed at the conclusion of argument on the motion, without contrary submission by Counsel for either party, that the costs be costs in the cause. In my view, the costs of the motion should follow the outcome of the proceedings. Accordingly, I do not propose to make an order that COV pay Break Fast's costs of the motion. 4Second, Break Fast contends that it should be allowed its costs from 28 July 2011, when it put an offer to COV that the Caveat be preserved on terms that Break Fast would be contractually obliged to consent to refinancing of the facilities in respect of the land in specified circumstances. Break Fast contends that COV has not gained any practical advantage as a result of its success in opposing an extension of the Caveat and is in a worse position than it would have been had it accepted that offer. I do not consider that it can be said that COV's conduct was unreasonable or that it is necessarily in a worse position than it would have been had it accepted Break Fast's offer, since the Court would very likely order that any new caveat which is now lodged be lifted in order to permit an appropriate refinancing to proceed if Break Fast does not itself consent to that course. Accordingly, I do not accept that these matters warrant an order for costs in favour of Break Fast from 28 July 2011 and I do not make such an order. 5Third, Break Fast contends that there should otherwise be no order as to the costs of the proceedings. Break Fast contends that, notwithstanding that it has been unsuccessful in its application to extend the Caveat, it has been granted leave to lodge a further caveat and it has been practically successful since a caveat will remain over the properties securing the interest it claims in Victorian proceedings. 6Break Fast draws attention to three decisions in which an application to extend a caveat has been dismissed but the Court has found that another caveatable interest exists. In Circuit Finance Pty Ltd v Crown & Gleeson Securities Pty Ltd (2005) 12 BPR 23,403 (to which I referred in my earlier judgment) a motion to extend a caveat was dismissed, an order granting leave to lodge a new caveat was made under Real Property Act s 74O, and the Court ordered that there be no order as to the costs of the motion to the intent that each party bear its own costs. The decision in this case provides little assistance to Break Fast's submission, since it appears the registered proprietor did not seek to press its attack on the caveat in that case and could not be said to have been successful on that basis. 7In Raptis v Wija Investments Development Pty Ltd [2007] NSWSC 870, an application to extend a caveat was dismissed but the Court found that there was a serious question to be tried that another interest in land existed and reserved costs until the final determination as to the issue whether such an interest existed. The fact that costs were reserved in Raptis does not support a position that there be no order for costs as sought by Break Fast, although it is readily understandable that costs were reserved in those proceedings in circumstances that proceedings were continuing in the Court. In this case, both parties agree that it would not be appropriate to reserve the costs pending the outcome of substantive proceedings in the Supreme Court of Victoria in which Break Fast seeks to establish the substantive matters underlying its claim to an interest in the land. 8In Tadrous v Tadrous [2009] NSWSC 407, an application to extend the caveat was dismissed, but an order was granted under Real Property Act s 74O, and the Court again ordered that there be no order as to the costs of the application. That case provides greater support for the position advanced by Break Fast, but I do not understand it to establish a principle of general application in cases of this kind. 9Subject to several specific exceptions, the general rule is that costs follow the event: Latoudis v Casey (1990) CLR 534 at 566-567; Chand v Azurra Pty Ltd (in liq) [2011] NSWCA 58. The general principle as to costs is reflected in Uniform Civil Procedure Rules r 42.1 which provides that the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. The effect of UCPR r 42.1 is that, where the Summons seeking an order extending the Caveat has been discussed, Break Fast should be ordered to pay COV's costs of the proceedings unless the Court is otherwise satisfied. 10I am not otherwise satisfied as to that matter. COV's position has been that the Caveat did not properly describe the interest claimed by Break Fast and should not be extended. Break Fast did not accept that position or offer to withdraw the Caveat on terms that it should be permitted to lodge a further caveat properly describing the interest claimed and COV has been successful in resisting an extension of the Caveat. I do not consider that it would be appropriate to order that there otherwise be no order as to costs where Break Fast has been unsuccessful in obtaining the order to extend the Caveat which it sought and COV has been successful in resisting that order. I consider that the appropriate order is that Break Fast should pay COV's costs of the proceedings and I so order. 11I make the following orders, including the order as to costs noted above: 1. Order that the Plaintiff withdraw caveat number AF539654 within 7 days of the making of this Order. 2. Grant leave to the Plaintiff to lodge a further caveat over the land bearing Folio Identifiers A/959723 and 1/332361 claiming an interest over that land as beneficiary under a constructive trust. 3. Order that the Summons otherwise be dismissed. 4. Order that the Plaintiff pay the Defendant's costs of the Proceedings. ********** 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. Decision last updated: 31 August 2011