Vaughan Two Pty Ltd v Vaughan One Pty Ltd (No 2)

1. [1]

   I delivered my primary judgment in these proceedings on 27 November 2025: see Vaughan Two Pty Ltd v Vaughan One Pty Ltd [2025] NSWSC 1393 (PJ). These reasons assume familiarity with and maintain the same abbreviations as in the PJ.

2. [2]

   In the PJ, I ordered that the Amended Summons be dismissed and each of the two cross-summons be dismissed.

3. [3]

   At PJ [109], I expressed the preliminary view that each should be dismissed with costs and gave the parties an opportunity to confer to seek to agree costs and, failing agreement, to provide submissions and for the issue to be dealt with on the papers.

4. [4]

   No agreement was able to be reached and submissions in chief and reply were filed.

5. [5]

   The plaintiff contended that the appropriate costs orders were:

6. [6]

   In the plaintiff’s reply submissions an alternative argument was put that the Court should make the orders at PJ [109].

7. [7]

   The represented defendants contended that the appropriate costs order was for the plaintiff to pay the first, second, third and fifth defendants’ costs of the proceedings on the ordinary basis as assessed or agreed.

8. [8]

   The fourth defendant (Peter), who was self-represented at the hearing – made no submissions on costs.

The Plaintiff’s application for indemnity costs

1. [9]

   The plaintiff’s application for indemnity costs can be dealt with first.

2. [10]

   It is based on an offer made by letter dated 25 September 2025 offering to settle the proceedings on the basis that trustees for partition be appointed to prepare a scheme for partition in accordance with each party’s percentage interest in the properties, and be permitted to sell so many units as are necessary to pay out the NAB mortgage.

3. [11]

   The offer was not said to be made as an offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) but rather in accordance with Calderbank v Calderbank [1975] 3 WLR 586.

4. [12]

   The plaintiff contended that the offer was to resolve the proceedings on terms more favourable to the represented defendants than the result achieved by them in the proceedings.

5. [13]

   I am not satisfied that the non-acceptance of the offer justifies an award of indemnity costs.

6. [14]

   It has not been demonstrated that the offer was more favourable than the result achieved by the represented defendants in the PJ. The represented defendants made clear that the primary case they advanced was that the plaintiff’s claim should be dismissed, i.e., no trustee for sale should be appointed as the parties should be held to their bargain.

7. [15]

   The relief sought in the two cross-summons – partial partition – was an alternative case pressed if the represented defendants were not successful in opposing the plaintiff’s claim for the appointment of trustees. If trustees are to be appointed and the represented defendants’ primary case was they should not be – only a limited number of units should be sold sufficient to discharge the NAB debt and other encumbrances, and thereafter there should be a partition.

8. [16]

   The represented defendants were successful in their primary case – opposing the appointment of trustees. There was thus no need for the Court to determine the alternative claims. The views expressed in the PJ were against the possibility that I was in error in my primary conclusion – see PJ [96].

The competing costs positions

1. [17]

   Having rejected the claim for indemnity costs, the dispute is whether I should make the order foreshadowed at PJ [109] – that costs of the summons should be paid by the plaintiff and costs of the two cross-summons should be paid by the respective represented defendants, or whether the plaintiff should pay the represented defendants’ costs of the proceedings.

2. [18]

   The competing positions essentially reduced to a debate as to the characterisation of the final result in the proceedings.

3. [19]

   The plaintiff contended that the appropriate characterisation of the result is that each party was wholly unsuccessful with respect to the claims that they advanced. Costs should follow the event. It was then contended that the costs orders proposed by the represented defendants would seek to deprive the plaintiff of its costs of responding to cross-claims that consumed the bulk of the hearing and which were ultimately dismissed.

4. [20]

   The represented defendants sought to characterise the result as a complete success on their part – they wholly defeated the plaintiff’s claim for the appointment of trustees. An essential element of this characterisation of the result was that the two cross-summons were only advanced in the alternative to the primary case that no trustees should be appointed. The represented defendants relied upon Griffith v Australian Broadcasting Corp (No 2) [2011] NSWCA 145 at [19] (Hodgson JA) and [38]-[39] (Basten JA) (Griffith).

5. [21]

   Neither the plaintiff nor the represented defendants sought to invoke the principles that have developed in relation to costs in proceedings under s 66G Conveyancing Act 1919 (NSW): see Eva Joy Ambrus v Lee Ellen Buchanan (No 2) [2023] NSWSC 5 at [4]-[6].

6. [22]

   I accept the characterisation of the result advanced by the represented defendants and reject the characterisation advanced by the plaintiff.

7. [23]

   It was the plaintiff that commenced these proceedings seeking the appointment of trustees for sale over all of the remaining units. The response from the represented defendants was to oppose that relief on the basis that it would be inconsistent with the contractual arrangements between the parties.

8. [24]

   Each cross-summons was clearly an alternative case which only arose in the event that the Court rejected the primary defence of the represented defendants that no trustees should be appointed.

9. [25]

   Whilst considerable costs were incurred in relation to the alternative claim and a reasonable proportion of hearing time – my impression is approximately half – was allotted to dealing with it – this was always in the context of it being an alternative claim that only arose if the primary defence failed.

10. [26]

    The position would obviously have been different if the remaining defendants had met the plaintiff’s claim with only the cross-summons. If these had been the battle lines, the result was that both parties lost.

11. [27]

    In Sze Tu v Lowe (No 2) [2015] NSWCA 91, Gleeson JA (with whom Meagher and Barrett JA agreed) stated at [40]-[42]:

12. [28]

    The present case, in my view, is properly viewed consistent with the passages from Griffith.

13. [29]

    The costs incurred in relation to the cross-summons would not have been incurred had the plaintiff not brought the proceedings in the first place. It is appropriate in the circumstances, therefore, for the plaintiff to be ordered to pay the costs of the proceedings.

Orders

1. [30]

   The Court orders that:

   1. (1)

      The plaintiff pay the first, second, third and fifth defendants’ costs of the proceedings on the ordinary basis as agreed or assessed.