Ashington Capital Pty Ltd & Anor v Parissen Capital (Project X) Pty Ltd & Anor [2012] NSWSC 410

Supreme Court New South Wales

Medium Neutral Citation: Ashington Capital Pty Ltd & Anor v Parissen Capital (Project X) Pty Ltd & Anor [2012] NSWSC 410 Hearing dates: 03.04.12 Decision date: 01 May 2012 Jurisdiction: Civil Before: Nicholas J Decision: Par 45 Catchwords: COSTS - security for costs - practice matters - proportionality - form of security - matter of impression - no questions of principle Legislation Cited: Corporations Act 2001 (Cth) Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Cases Cited: Allstate Life Insurance Co v ANZ Banking Group Ltd [1995] FCA 1778; (1995) 134 ALR 187 Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd [1987] FCA 102; (1987) 16 FCR 497 Fine Paper Macao Commercial Offshore Ltd v Moore Business Systems Australia Ltd [2009] NSWSC 867; (2009) 75 NSWLR 619 Category: Interlocutory applications Parties: Ashington Capital Pty Ltd – first plaintiff Ashington Management Pty Ltd - second plaintiff Trioline Pty Ltd - third plaintiff Parissen Capital (Project X) Pty Ltd - first defendant Parissen Capital (Stonington) Pty Ltd - second defendant Representation: Counsel: T L Wong - plaintiffs M Henry - first defendant Solicitors: Sparke Helmore - plaintiffs Arnold Bloch Leibler - first defendant File Number(s): 10/415588

Judgment 1By notice of motion filed 11 November 2011 the first defendant seeks an order for security for costs against the plaintiffs pursuant to Uniform Civil Procedure Rules 2005 Pt 42, r 42.21 and s 1335 Corporations Act 2001 (Cth) and/or the inherent jurisdiction of the court. In terms, the order sought is for the provision of security for the first defendant's costs of the proceedings up to, but not including, the trial in the amount of $316,065 by way of either payment into court or bank guarantee in a form acceptable to the registrar. 2There is no issue that security should be provided. The issues are as to the quantum and the form of the security to be provided. The plaintiffs propose that security be provided by the third plaintiff for the first defendant's costs up to, but not including, the hearing in the sum of $150,000 by way of a charge or second registered mortgage over a property at Potts Point owned by Crayon Property Pty Ltd (Crayon), with certain undertakings from Crayon's directors. 3By the amended statement of claim an order is sought that the first defendant pay to the third plaintiff the amount of $774,292.47 in respect of the Project X Development fees from the assets of the Project X Trust, otherwise known as the Project X Hotel Trust (the Trust). The Trust was established to develop and manage a property in Double Bay. Pursuant to a Development Management Deed dated 20 September 2007 the first plaintiff appointed the second plaintiff as development manager of the Trust. The deed was terminated by a Deed of Termination and Release (DOTAR) dated 24 February 2010 made between, inter alios, the first and second plaintiffs and the first defendant. On 22 April 2010 the first defendant replaced the first plaintiff as trustee of the Trust pursuant to a Deed of Appointment and Retirement of Trustee. 4These proceedings were commenced by the first and second plaintiffs by statement of claim filed on 15 December 2010 in which an order was sought that the first defendant pay to the second plaintiff the amount of $1,171,500 in respect of the Project X development fees from the assets of the Trust. 5The defence and cross-claim were filed on 31 January 2011. Under the defence, liability is denied on the ground that, upon the proper construction of cl 4, cl 5 and Sch 2 of the DOTAR, the liability of the first plaintiff to the second plaintiff with respect to fees was extinguished, and the first defendant incurred a liability to the second plaintiff with respect to such fees fixed at an agreed amount of $397,207.53. Alternatively, under the cross-claim, a claim for rectification of the DOTAR was made to amend cl 4.3(a) and delete cl 5.3 to give effect to the common intention of the parties that any liability of the first cross-defendant to the second cross-defendant with respect to fees would be extinguished, and the cross-claimant would incur liabilities to the second cross-defendant with respect to such fees and expenses in amounts as set out in Sch 2. 6In mid-February 2011 a partial settlement was reached pursuant to which the first defendant agreed to pay the amount of $467,773.53. 7The amended statement of claim was filed on 28 October 2011 claiming payment of the amount of $774,292.47, consistent with the partial settlement. 8The pleadings are not yet closed. The first defendant is to file and serve any amended defence and amended cross-claim by 1 May 2012, and the plaintiffs are to file and serve any reply and defence to any amended cross-claim by 15 May 2012. Directions have been given for the serving of evidence. No date for hearing has been fixed. 9The issues for trial were summarised by Mr Keiran Breckenridge, the plaintiffs' solicitor, as follows (aff 20 December 2011, par 31): "(a) whether the services provided by the second plaintiff between October 2009 and 22 April 2010 constituted 'Development Management Services' within the meaning of the Development Management Deed dated 20 September 2007, so that the Project X Development Fees, as defined at paragraph 11 of the plaintiffs' amended statement of claim, fell due and payable in respect of the quarters commencing 1 October 2009, 1 January 2010 and 1 April 2010; and (b) whether the DOTAR provided for a release in respect of amounts owned to the second plaintiff by the first plaintiff on account of Development Management Fees; or (c) if it did not, whether the DOTAR should be rectified so that it does provide for such a release."