KDG Project Management Pty Ltd v Arden Group Services Pty Ltd

1. [1]

   The matter before the Court today involves a motion that was filed by KDG Group Pty Ltd as trustee for KDG Family Trust (the Applicant) against two proposed Cross-Defendants, Arden CH (NSW) Pty Ltd as trustee for The Arden CH Unit Trust (Arden) and Mr Derek William McCartney. That Notice of Motion, filed on 6 February 2026, sought leave to file and rely upon a document styled “Second Cross-Claim Cross-Summons” and a Technology and Construction List Statement dated 3 December 2025. There was an alternative order sought (the Alternative Order) that the proceedings comprising the Plaintiff’s original claim, which I note was commenced in the District Court for a significantly smaller sum (than the amount claimed in the First Cross-Claim), be separated from proceedings related to the First Cross-Claim and the Second Cross-Claim. Those claims involve many millions of dollars and were the justification for an application being made by the First Cross-Claimant for the matter to be transferred from the District Court to this Court, which order was ultimately made.

2. [2]

   An Amended Notice of Motion was subsequently relied upon which sought leave to file an updated Second Cross-Claim Cross-Summons (dated 25 February 2026) and Technology and Construction List Statement (dated 24 February 2026). The Alternative Order was also included. In each of the original motion and the amended motion the Applicant has sought costs.

3. [3]

   A court book has been prepared which contains a significant number of documents, including affidavits, outlines of submissions and versions of the pleadings, together with a number of company searches.

4. [4]

   This morning, Mr Cook of Counsel appeared on behalf of the Applicant and advised the Court that a consent position, subject to an outstanding issue of costs, had been agreed with his opponent, Mr Neilsen. The parties provided a proposed set of Short Minutes of Order to the Court which refers to a form of Cross-Summons and List Statement different to that incorporated by reference in the Amended Notice of Motion.

5. [5]

   Two significant alterations have been made between the documents sought to be filed in the Amended Notice of Motion and those annexed to the Short Minutes of Order today. First, the proposal to join Mr McCartney as a Second Cross-Defendant has been abandoned. Secondly, paragraphs 29 to 32 of the proposed Technology and Construction List Statement have been deleted, which thereby abandons a claim made against Arden in relation to cl 2.5 of the Profit Sharing Agreement.

6. [6]

   The only issue that remains in contention is proposed orders 4 and 5, in the following terms:

7. [7]

   Mr Neilsen, who appears for the Respondents, opposes those orders. He seeks an order that the Applicant pay not only Mr McCartney’s costs but also the costs of Arden. I would assume that the practical effect of such an order would be a relatively small sum of additional costs, if any, insofar as the same solicitors appear for both Mr McCartney as well as Arden.

8. [8]

   In any event, Mr Neilsen argues that the Applicant, in ultimately taking a course consented to by the Respondents in their written submissions dated 23 February 2026, has capitulated.

9. [9]

   Relevantly, Mr Neilsen has directed my attention to paragraphs 18 and 19 of those submissions. The Respondents’ submissions made two central points:

   1. (1)

      the claim against Mr McCartney was futile because he was not named as a “Profit Sharing Party” in the document styled “Profit Sharing Agreement” as amended by the later document styled “Confirming and Varying Deed”. Leave to file the proposed Second Cross-Claim against Mr McCartney would not be granted in circumstances where the claims are futile; and

   2. (2)

      the claim against Arden for breach of cl 2.5 of the Profit Sharing Agreement as amended by the First Confirming and Varying Deed and the Second Confirming and Varying Deed, was similarly futile where Arden was not named as a Profit Sharing Party. Significantly, Arden did not oppose leave being granted to file the balance of the proposed Second Cross-Claim against it.

10. [10]

    Accordingly, Mr Neilsen says that in substance the Applicant has conceded the Respondents’ position on the motion which it made in its submissions five days earlier. He says it follows that the ‘event’ favours Arden and Mr McCartney, and costs should therefore follow that event: see Uniform Civil Procedure Rules 2005 (NSW) r 42.1.

11. [11]

    Mr Cook submits that in acceding to matters raised in the proposed Cross-Defendant’s submissions, the Applicant has taken an approach that saves the Court from having to decide the entire motion. That is said to be an intervening event.

12. [12]

    I do not accept that argument. The decision of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (Lai Qin) involved a claim by an applicant for prerogative relief against a refusal to grant her a protection visa by the Minister and the Refugee Review Tribunal. Before the matter was determined by the Court, the Minister exercised his discretion to grant the applicant a protection visa.

13. [13]

    On the question of costs, his Honour stated that if there is a supervening event that obviates the need for the Court to determine the matter, the Court ought not conduct something akin to a mini trial to hypothesise as to what may have occurred had the matter been finally determined: at 624. Rather, his Honour said that there would be no order for costs in those circumstances if both parties had acted reasonably, because the Court could not come a conclusion as to what ultimately may have occurred: at 625.

14. [14]

    The difference between cases such as Lai Qin and the present case is that in Lai Qin the Court contemplated an extra-curial supervening event which rendered the prosecution of proceedings futile. That is not the case here. In this case, the Applicant has considered its position on the motion in light of the Respondents’ submissions and has elected not to continue to seek the relief opposed by the Respondents. I make no criticism of the course taken by the Applicant. Indeed, it is axiomatic that a party should not be punished for taking an approach that saves judicial and administrative resources. However, in this case, there is no supervening event which has occurred outside the proceedings.

15. [15]

    In my opinion, there was ample time before today to reach a position that would have obviated the need for the motion to proceed today. I am satisfied that, in consequence of the position adopted by the Respondents to the motion, the costs sought by Mr Neilsen should be awarded.

Orders

1. [16]

   For the above reasons, I make the following orders:

   1. (1)

      The Second Cross-Defendant to the First Cross-Claim be granted leave to file the Second Cross-Claim Cross-Summons and the Technology and Construction List Statement in the form annexed to these orders.

   2. (2)

      The Second Cross-Defendant to the First Cross-Claim to file and serve the Second Cross-Claim Cross-Summons and Technology and Construction List Statement by 4 March 2026.

   3. (3)

      The Cross-Defendant to the Second Cross-Claim to file and serve a Second Cross-Claim Technology and Construction List Response by 1 April 2026.

   4. (4)

      KDG Group Pty Ltd pay Arden CH (NSW) Pty Ltd and Derek William McCartney their costs of and incidental to the motion filed on 6 February 2026.

   5. (5)

      The Notice of Motion filed on 6 February 2026 be otherwise dismissed.

   6. (6)

      The matter be listed for directions on or after 8 April 2026.