Supreme Court New South Wales Medium Neutral Citation: Hebbel Constructions Pty Limited v Bitar Pty Limited and Anor [2018] NSWSC 859 Hearing dates: 10 May 2018 Decision date: 08 June 2018 Jurisdiction: Equity Before: Black J Decision: Bitar Pty Ltd to pay the Court-appointed receiver's costs of and incidental to the motion on an indemnity basis. Bitar Pty Ltd to pay Hebbel Construction Pty Ltd's costs of and incidental to the motion on the ordinary basis. Catchwords: COSTS – indemnity costs – where unsuccessful application for discharge of Court-appointed receiver – whether applicant will be required to pay receiver's costs on indemnity basis. Cases Cited: - MLW Investments Pty Ltd v Tacsum Pty Ltd [2006] NSWSC 1256 Category: Costs Parties: Hebbel Constructions Pty Limited (Plaintiff) Bitar Pty Limited (First Defendant) Hebbel Constructions Pty Ltd & Bitar Pty Ltd (Second Defendant) Representation: Counsel: P Wiggins (Solicitor – Plaintiff) P E King (First Defendant) S Golledge (Court Receiver) Solicitors: Paramonte Legal (Plaintiff) Priest Legal (First Defendant) Yates Beaggi (Court Receiver) File Number(s): 2014/296117 (012) Judgment 1. By my judgment delivered on 25 May 2018 ([2018] NSWSC 758) ("Judgment"), I dismissed an application made by Bitar Pty Ltd ("Bitar") for the discharge of a receiver appointed by the Court to the assets of a partnership of Hebbel Constructions Pty Ltd ("Hebbel") and Bitar and the shares in Bitar Hebbel Constructions Pty Ltd, and also declined to order an interim distribution which Bitar sought to have made by the receiver to it. I reserved liberty to apply on 2 business days' notice in respect of any issue arising from any significant delay in the completion of the sale of a particular residential unit to its occupant, or, if she did not promptly complete a purchase of that unit, to a third party. I expressed the preliminary view that Bitar should pay the receiver's costs of and incidental to the application, on an indemnity basis, and should pay Hebbel's costs of and incidental to the application on an ordinary basis, consistent with the orders as to costs made in MLW Investments Pty Ltd v Tacsum Pty Ltd [2006] NSWSC 1256, but indicated that I would allow the parties an opportunity to be heard. 2. On 25 May 2018, I directed that the parties submit agreed Short Minutes of Order to give effect to the Judgment, including as to costs, within 7 days, or if there was no agreement between them, their respective draft orders and submissions including as to costs. The receiver submitted Short Minutes of Order, which it had agreed with Hebbel, and Bitar submitted draft orders that differed in some respects, including as to costs, as to which the parties each made submissions. 3. Bitar referred to the history of the proceedings and accepted that it should pay the receiver's costs of the application on the ordinary basis and submitted that there should otherwise be no order as to costs. Bitar submits that it was reasonable for it to bring the application: "in circumstances where Rein J had in the exercise of his discretion already put the Receiver on a short leash by requiring him in orders made in December 2017 to present accounts on a[n] eight weekly basis for his failure to act with reasonable expedition to that date." 1. Hebbel takes issue with Bitar's characterisation of orders previously made by Rein J as amounting to putting the receiver on a "short leash" or reflecting any finding that the receiver had previously failed to act with reasonable expedition, and submits that Rein J did not make such a finding and that the orders were made by consent. The receiver also took issue with Bitar's submission as to the orders made by Rein J, and contended that submission misstated the circumstances in which that order was made. I do not accept that his Honour had made such a finding and I also do not accept that orders previously made by consent, before the application was brought, support Bitar's submission that it was reasonable to bring the relevant application. 2. Bitar also submits that it was reasonable to bring the application by reason of its other criticisms of the receiver's conduct, which I had addressed in the Judgment, and because both Hebbel and Bitar, at least to some extent, questioned the time taken by the receivership and the costs incurred in it, although Hebbel opposed the application for removal of the receiver. Bitar submitted that it was appropriate for it to raise the relevant issues with the Court, where, it submitted, it had been previously excluded from the governance of the partnership and by reason of the receiver's stated intentions regarding draft partnership tax returns, a matter which I addressed in the Judgment, and the circumstances of the case. 3. Hebbel otherwise supports the preliminary views set out in the Judgment, contests Bitar's submission that it was reasonable for it to bring the application and refers to the findings in the Judgment as to Bitar's several complaints as to the receiver's conduct. The receiver did not take a position as to whether Bitar should be required to pay the receiver's costs of the application on an indemnity or other basis, since he maintained an entitlement to recoup his reasonable costs in full from the partnership assets in any event. He noted that, absent an indemnity costs order in his favour, Hebbel would be required to meet 50% of the difference between the receiver's costs on an indemnity basis and those costs calculated on the ordinary basis, so far as that difference would be met by his claim for indemnity against the partnership assets. 4. I am satisfied that costs orders should be made as I had foreshadowed in the Judgment. An order for indemnity costs against Bitar is justified in the particular circumstances, irrespective of any question whether the application was reasonably brought, where Bitar was unsuccessful in an application for the Receiver's removal; Hebbel was successful in opposing that application, for the reasons noted in my Judgment; and, absent an indemnity costs order, Hebbel would nonetheless be required to fund half of the difference between the actual costs incurred by the receiver in the application and the costs recoverable by the receiver on an ordinary basis, so far as the receiver relied on his indemnity from the partnership's assets in respect of that difference. I am satisfied that an order for costs should be made in favour of Hebbel, and against Bitar, on the ordinary basis, where Hebbel had a proper legal and commercial interest in opposing the orders sought by Bitar in the application, and was successful in that opposition. 5. I note that all the parties agreed to the form of Orders 1 and 4 set out below. It is not necessary to make a further order vacating a directions hearing on 8 June 2018, proposed by Bitar, since that order had previously been made on 25 May 2018. I make the following orders: 1. Notice of Motion filed by Bitar Pty Ltd on 24 April 2018 is dismissed. 2. Bitar Pty Ltd is to pay Daniel Frisken's costs of and incidental to the motion on an indemnity basis. 3. Bitar Pty Ltd is to pay Hebbel Construction Pty Ltd's costs of and incidental to the motion on the ordinary basis. 4. The parties have liberty to apply on 2 business days' notice in respect of any further complaint arising in respect of any substantial delay by the receiver in completing the sale of unit 11, whether to Ms Anna Taouk or to any third party. ********** 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: 21 June 2018