Supreme Court New South Wales Medium Neutral Citation: Lay v Pech (No 3) [2019] NSWSC 91 Hearing dates: Decided on the papers Date of orders: 14 February 2019 Decision date: 14 February 2019 Jurisdiction: Equity Before: Robb J Decision: 1. Order that the parties forthwith do all things and sign all documents necessary to cause the property situated at XX XXXXX St, Cabramatta, NSW 2166 to be sold by public auction at the earliest possible date and to disburse the proceeds of the said sale in the following manner and priority: (a) Payment of agent's commission and advertising expenses and legal expenses of the sale; (b) Discharge of the mortgage held in the name of the Defendant; and (c) The balance then remaining to the Second Plaintiff. 2. Order that the Defendant shall sign and execute all documents necessary to achieve the discharge of mortgage and transfer pursuant to the sale and all other documents, at the necessary times, at the request of the Plaintiffs, in order to enable Order 1, including if required by the Plaintiffs before a contract is entered into for the sale of the property. 3. Direct that the Plaintiffs' solicitors have the authority to conduct the sale of the property on behalf of the Defendant. 4. Direct that the Second Plaintiff is at liberty to determine the reserve price for the auction at his sole discretion save that it must be above the amount owed on the mortgage. 5. Order that the Defendant pay the sum of $19,220 to the Second Plaintiff forthwith. 6. Order that the Defendant pay the Plaintiffs' costs of these proceedings on the ordinary basis. 7. Note that the property is to be sold, as the Second Plaintiff is presently unable to obtain finance to enable him to refinance the existing mortgage over the property. 8. Grant the parties leave to relist the proceedings on 2 days' notice by arrangement with the Associate to Robb J to apply for any orders that are necessary or convenient for the implementation of these orders. Catchwords: COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: In the matter of Liquor National Pty Ltd, Wind National Pty Ltd, Sundara Pty Ltd, Killara 10 Pty Ltd, James Estate Wines Pty Ltd, Print National Pty Ltd, Print National Australia Pty Ltd [2004] NSWSC 1896 Lay v Pech [2018] NSWSC 460 Lay v Pech (No 2) [2018] NSWSC 1449 Reitano v Reitano [2012] NSWSC 1127 Category: Costs Parties: Lyna Lay (First Plaintiff) Muy Kong Tai (Second Plaintiff) Poly Pech (Defendant) Representation: Counsel: J Lo Schiavo (Plaintiffs) I King (Defendant) Solicitors: Alliance Compensation Lawyers (Plaintiffs) Woolf Associates (Defendant) File Number(s): 2015/369362 Judgment 1. The dispute in this matter concerned whether the defendant holds a residential property on trust for the plaintiffs. 2. In my primary judgment delivered on 19 April 2018, I found in favour of the plaintiffs and held that, in principle, the defendant held the property on trust: Lay v Pech [2018] NSWSC 460. I did not make any specific finding as to which of the plaintiffs was the proper beneficiary. That was because the plaintiffs sued the defendant collectively, without making clear which of them was the real beneficial owner. I invited the parties to bring in short minutes of order to give effect to my reasons for judgment. 3. After the Court received draft short minutes of order from the plaintiffs and suggestions by the defendant concerning variations to the orders, on 25 September 2018 I published a further judgment that explained my response to the dispute between the parties concerning the orders that should be made: Lay v Pech (No 2) [2018] NSWSC 1449. 4. As the defendant had asked for an opportunity to make further submissions as to why I should not order him to pay the plaintiffs' costs of the proceedings, as I foreshadowed in the principal judgment, I fixed a timetable for the provision by the parties of further submissions on that issue. 5. Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) provides: 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. 1. As Black J remarked in In the matter of Liquor National Pty Ltd, Wind National Pty Ltd, Sundara Pty Ltd, Killara 10 Pty Ltd, James Estate Wines Pty Ltd, Print National Pty Ltd, Print National Australia Pty Ltd [2004] NSWSC 1896 at [10], it is well established that: "…costs are to be awarded to compensate the successful party for the expense of being put to the necessity of litigation, and a wholly successful party should ordinarily receive its costs unless good reason is shown to the contrary". 1. The defendant has resisted the making of an order that he pay the plaintiffs' costs by seeking to draw an analogy between the facts of this case and those in Reitano v Reitano [2012] NSWSC 1127. In that case at [39], largely on the ground that the case before him was a family dispute between a son and a mother, and in order to avoid prolonging the dispute and causing hardship to the defendant, Pembroke J ordered each party to pay their own costs of the proceedings. As I understand the judgment, his Honour was also influenced by the difficulty that the plaintiff may have had in enforcing a costs order against the defendant, who lived in Spain. A special feature of the case was that, although the plaintiff succeeded in establishing a beneficial entitlement to a property in Australia, the circumstances that led to the plaintiff's success had the consequence that the plaintiff held his interest in a property in Spain on trust for the defendant. His Honour made a consequential order that the plaintiff transfer his interest in the Spanish property to the defendant. Consequently, although the plaintiff was wholly successful in the proceedings before the Court, the defendant in fact succeeded in obtaining a collateral measure of success in getting clear title to the Spanish property. 2. It is a truism that the costs of proceedings are within the discretion of the Court exercised judicially, and that each case will depend upon its own facts. I consider that the decision in Reitano v Reitano depends upon its own facts, and has little relevance to the present dispute. 3. In my view, the defendant's position in these proceedings was entirely unmeritorious to the extent that it was hardly arguable. 4. Not only is there not a good reason to depart from the general rule concerning the burden of costs, but this is a classic case where it is entirely fair that the defendant should be ordered to pay the plaintiffs' costs of his unsuccessful defence of their claim. 5. Accordingly, I maintain my earlier decision that I will make an order that the defendant pay the plaintiffs' costs of the proceedings. 6. In my second judgment, I set out the orders sought by the plaintiffs and explained a number of variations that I would make to those orders. In accordance with those reasons and my decision as to the appropriate costs order, I now make the following orders: 1. Order that the parties forthwith do all things and sign all documents necessary to cause the property situated at XX XXXXX St, Cabramatta, NSW 2166 to be sold by public auction at the earliest possible date and to disburse the proceeds of the said sale in the following manner and priority: 1. Payment of agent's commission and advertising expenses and legal expenses of the sale; 2. Discharge of the mortgage held in the name of the Defendant; and 3. The balance then remaining to the Second Plaintiff. 1. Order that the Defendant shall sign and execute all documents necessary to achieve the discharge of mortgage and transfer pursuant to the sale and all other documents, at the necessary times, at the request of the Plaintiffs, in order to enable Order 1, including if required by the Plaintiffs before a contract is entered into for the sale of the property. 2. Direct that the Plaintiffs' solicitors have the authority to conduct the sale of the property on behalf of the Defendant. 3. Direct that the Second Plaintiff is at liberty to determine the reserve price for the auction at his sole discretion save that it must be above the amount owed on the mortgage. 4. Order that the Defendant pay the sum of $19,220 to the Second Plaintiff forthwith. 5. Order that the Defendant pay the Plaintiffs' costs of these proceedings on the ordinary basis. 6. Note that the property is to be sold, as the Second Plaintiff is presently unable to obtain finance to enable him to refinance the existing mortgage over the property. 7. Grant the parties leave to relist the proceedings on 2 days' notice by arrangement with the Associate to Robb J to apply for any orders that are necessary or convenient for the implementation of these orders. ********** 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: 15 February 2019