Supreme Court New South Wales Medium Neutral Citation: Hardie Holdings Pty Ltd v State of New South Wales (No 2) [2012] NSWSC 1484 Hearing dates: By written submissions Decision date: 06 December 2012 Jurisdiction: Common Law Before: Harrison AsJ Decision: (1) The plaintiffs are to pay the defendant's costs of the motion, filed 6 September 2011, to date Catchwords: COSTS - security for costs - whether costs of motion should follow the event - necessary for defendant to bring motion - defendant successful - entitled to costs Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Category: Costs Parties: Hardie Holdings Pty Limited (First Plaintiff) Cessnock Land Pty Limited (Second Plaintiff) Hardie Greta Pty Limited (Third Plaintiff) Hardie King Pty Ltd (formerly Fame Cove Four Pty Ltd) (Fourth Plaintiff) Fame Cove Three Pty Limited (Fifth Plaintiff) Stanford Land Pty Limited (Sixth Plaintiff) Hardie Sanctuary Pty Limited (Seventh Plaintiff) Biodiversity Land Pty Limited (formerly Eco Trades Pty Limited) (Eighth Plaintiff) Dalbell Pty Limited (Ninth Plaintiff) Nersu Pty Limited (Tenth Plaintiff) Hardie Garnet Pty Limited (Eleventh Plaintiff) Duncan John Hardie (Twelfth Plaintiff) State of New South Wales (Defendant) Representation: M Cashion SC with T Rickard (Plaintiffs) G Craddock SC with S Callan (Defendant) C G Taylor & Son Solicitors (Plaintiffs) Crown Solicitor (Defendant) File Number(s): 2011/67050 Judgment 1HER HONOUR: This judgment deals with costs. The defendant, the State of New South Wales, seeks that the plaintiffs pay the costs of its motion filed 6 September 2011. The defendant's position is that costs should follow the event and therefore costs should be awarded to it. The plaintiffs' position is that there should be no order for costs or alternatively, in so far as the application for security for costs is concerned, the order should be that costs be costs in the cause. 2By notice of motion filed 6 September 2011, the defendant sought firstly, an order that the plaintiffs' statement of claim be struck out, either in whole or in part, pursuant to rule 14.28 of the Uniform Civil Procedure Rules 2005 (UCPR); secondly, an order that the plaintiff give security for costs; and thirdly, an order that the proceedings be stayed until such security was given. 3On 28 August 2012, the notice of motion filed 6 September 2011 was heard by me. 4On 25 September 2012, I handed down judgment and made the following orders. (1) The plaintiffs are to file and serve an amended statement of claim within 28 days. (2) The plaintiffs are to pay the defendant's costs thrown away by the amendments. (3) The eighth plaintiff is to provide security for costs in the form of the title deeds to their property known as "Goonama". (4) The parties are to bring in short minutes of orders to give effect to these reasons in relation to security for costs. (5) Costs of the defendant's notice of motion filed 6 September 2011 are reserved. 5On 28 September 2012, I made orders in accordance with the short minutes of order provided by the parties. Relevantly, I ordered that: (1) On or before 5 October 2012, the eight plaintiff provide security for costs in the form of the title deeds to the property known as "Goonama" comprising an area of 2571.40 hectares located on Weerah Creek Road, Wee Waa ("the Property"), by depositing the title deeds to the Property with the Registrar of the Common Law Division of the Supreme Court of New South Wales. (2) On or before 5 October 2012, Mr Duncan Hardie is to give his personal undertaking in writing not to take any step to encumber the Property whether by way of mortgage or guarantee or agreement to collateralisation with respect to any indebtedness, without further order of the Court. 6I also listed the matter listed before me for directions on 6 December 2012 at 10.00 am 7On 12 October 2012, the plaintiffs filed and served an amended statement of claim. Submissions 8In summary, the defendant's position is that in relation to the strikeout application, the plaintiffs' concession towards the end of the hearing (T31.1-5) led to an agreement to the scheduled re-pleading by reference to a schedule appended to the Court's judgment: Hardie Holdings Pty Ltd v State of New South Wales [2012] NSWSC 1152. The defendant submits that this amounts to a substantial success by the defendant. As a consequence, the defendant should have an order for costs to compensate it for the costs of achieving success and therefore placing the proceedings upon a footing from which they can be effectively managed. It submits that costs should follow the event. 9In relation to the security for costs application, the defendant submits that it had raised the security issue at an early stage by letter dated 30 March 2011. The defendant further requested in September 2011 that the plaintiffs put money on trust, which was refused. The defendant submits that it was put to the expense of using the Court's processes to gather information so as to present evidence of the plaintiffs' financial position to support its application for security. The plaintiffs put on no evidence as to their financial position and it was not until the eve of the hearing that the plaintiffs served the affidavit of Ms Sarah Potter, sworn 13 August 2012. In this affidavit, an offer was made by the plaintiffs of the title deeds to the property "Goonama", if security was ordered by the Court. The plaintiffs did not consent to an order for security for costs. However, such an order was made, the offer of security in the form of title deeds to the property being accepted by the Court. Therefore, the costs of the motion ought to follow the event. 10The plaintiffs' submissions in relation to the defendant's strikeout application are that they indicated to the defendant as of 18 October 2011 that they wished to amend their statement of claim and that the defendant had agreed to facilitate that course. From that date, the focus and efforts of the parties had been upon the proposed amendments. As a consequence, any utility in the strikeout application was suspended. From the time the plaintiffs provided the defendant with their proposed Amended Statement of Claim on 1 March 2012, the strikeout application ceased to be of any utility. The plaintiffs submit that, as the initial strikeout application was almost from the outset overtaken by the amended application, there is no occasion for a separate and additional costs order in relation to the strikeout application. 11In relation to the defendant's security for costs application, the plaintiffs submit that the appropriate order is that there be no order as to costs. They concede that the defendant did seek security for costs at an early stage but submit that the defendant at no time has been reasonable as to the quantum of security demanded. The plaintiffs indicated to the defendant in December 2011 that they were prepared to consider providing security for costs if it was in some reasonable amount. The defendant then embarked on a lengthy investigation into the plaintiffs going back many years, the vast majority of information found being unnecessary as the Court was only concerned with the plaintiffs' ability to fund an adverse costs order when it is made. Consequently, only current financial information was relevant. 12The plaintiffs further submit that the defendant demanded security for costs already incurred of some $500,000 and when the plaintiffs sought an explanation, this was resisted by the defendant. Information was only provided after the plaintiffs filed a motion for discovery in August 2012. An offer to provide security in the form of title deeds to the "Goonama" property was then made which was open to the defendant to accept without the need for a hearing of its motion. The Court found that it would be unreasonable to expect the plaintiffs to lodge security in the amount of $850,000 for past and future costs as applied for by the defendant. 13The plaintiffs concede that the defendant has been successful but that it has acted unreasonably and both incurred and put the plaintiffs to considerable and unnecessary expense. Therefore, a just order would be that there be no order as to costs. In the alternative, the plaintiffs submit that the costs of the security for costs application should be costs in the cause. Costs generally 14Section 98 of the Civil Procedure Act 2005 relevantly reads: "98 Courts powers as to courts (1) Subject to rules of court and to this or any other Act: (a) costs are in the direction of the court, and (b) The court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. .., (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount (...)" 15The Uniform Civil Procedure Rules, rules 42.1 and 42.2 read: "42.1 General Rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the 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. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis." Decision 16Costs are discretionary. The plaintiffs have amended their statement of claim. It was only during the hearing that the plaintiffs foreshadowed the amendments they wished to make. 17So far as security for costs are concerned, it was only on about 13 August 2012 (affidavit of Sarah Potter) that the plaintiffs offered property as security for costs but still did not consent to such an order being made. By this time the motion had been listed for hearing the defendant had been put to the expense investigating whether the plaintiffs would be unable to pay its costs if they were ordered to do so. Having said that, a large amount of costs were incurred by the defendant's solicitor in ascertaining the plaintiffs' financial position but it would appear that this financial information will be of use at the hearing. The defendant was successful in obtaining an order for security for costs. 18Hence, it is my view that it was necessary for the defendant to bring the notice of motion and it incurred expense in doing so. 19Overall, as the defendant has been largely successful it should be entitled to its costs of its motion. I order that the plaintiffs are to pay the defendant's costs of the motion to date. The Court orders that: (1) The plaintiffs are to pay the defendant's costs of the motion, filed 6 September 2011, to date. ********** 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: 07 December 2012