In the matter of Eastmark Holdings Pty Limited (Costs) [2011] NSWSC 1284

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Eastmark Holdings Pty Limited (Costs) [2011] NSWSC 1284 Hearing dates: Written submissions Decision date: 31 October 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: No order as to costs Catchwords: PROCEDURE - costs - application for order setting aside statutory demand - order that demand stand but for reduced amount - competing submissions as to costs - no matter of principle Cases Cited: In the matter of Eastmark Holdings Pty Limited [2011] NSWSC 1084 New Era Installations Pty Ltd v Don Mathieson & Staff Glass Pty Ltd (1999) 31 ACSR 53 Soudan Lane Pty Ltd v Bradshaw [2007] NSWSC 772 Category: Costs Parties: Eastmark Holdings Pty Ltd - Plaintiff The Owners Corporation - Strata Plan No 74602 Representation: Mr J M White - Plaintiff Mr A P Lo Surdo SC - Defendant Blake Dawson - Plaintiff Mills Oakley - Defendant File Number(s): 2011/00023618

Judgment 1In these proceedings, the plaintiff was successful in its challenge to a statutory demand served on it by the defendant, but only to the extent of obtaining an order under s 459H(4) varying the demand by reducing its amount: see In the matter of Eastmark Holdings Pty Limited [2011] NSWSC 1084. 2It remains to deal with the matter of costs, as to which written submissions have been filed. 3The defendant says that, because the plaintiff was unsuccessful in resisting reduction of the amount of the demand by about one-half, the plaintiff should pay one-half of the defendant's costs. Reliance was placed, in that respect, on New Era Installations Pty Ltd v Don Mathieson & Staff Glass Pty Ltd (1999) 31 ACSR 53. 4The plaintiff's contention is that it had no real alternative to pursuing the proceedings in the way it did. Reference is made to the following observation of White J in Soudan Lane Pty Ltd v Bradshaw [2007] NSWSC 772 (at [4]): "These principles are applicable to proceedings to set aside a statutory demand, but special features of such proceedings need to be taken into account in judging the reasonableness of the parties' conduct. A company faced with a statutory demand in relation to a debt, disputed in whole or in part, has no option but to commence an action under s 459G to set aside the demand within 21 days even if the ultimate order sought will be an order under s 459H(4) varying the demand to the amount which is not genuinely in dispute. If a company were merely to pay the amount which was not genuinely in dispute, without securing or compromising the balance to the reasonable satisfaction of the creditor, it would face the prospect of winding up proceedings being brought against it, of its being presumed to be insolvent (s 459C(2)(a)), and of its being unable to oppose the winding-up application on a ground upon which it could have relied for the purposes of an application to have the demand set aside unless leave is given (s 459S)." 5The plaintiff also says that, particularly after service of Ms Choe's affidavit of 23 June 2011, the defendant should have seen the strength of the plaintiff's case and conceded the result which eventually emerged from the court's decision. In the result, the plaintiff says, it should have part of its costs. 6In my assessment, there is merit in the stance taken by each party on the matter of costs. Each side had a significant measure of success. The plaintiff succeeded in showing that there was an arguable case of mis-allocation of payments - something that was by no means uncontroversial. The defendant succeeded in showing that the statutory demand was supportable to the extent of some 50% of the sum demanded. 7The appropriate way of dealing with the fact that each side had a significant measure of success is to let costs lie where they have fallen and not to require either party to bear any part of the other party's costs. 8I make no order as to costs to the intent that each party shall bear its own costs.