Gordon v Glowberth Pty Ltd (No 2)

This judgment deals with the two remaining issues to be decided arising from the determinations I made in Gordon v Glowberth Pty Ltd [2024] NSWSC 104 (Principal Judgment), in circumstances where the parties are unable to agree on proposed short minutes of order to give effect to the Principal Judgment. Those two issues are the new form of freezing orders to be made against Glowberth Pty Ltd and the question of costs.

This judgment assumes familiarity with the Principal Judgment. Shorthand and defined terms used in the Principal Judgment are used in this judgment.

I begin with a brief summary of my conclusions in the Principal Judgment before turning to consider the submissions of Mr Gordon, Glowberth and the Official Trustee in Bankruptcy as well as the applicable legal principles and my conclusions on the application of those principles to the issues that remain in dispute.

At the hearing before me on 7 December 2023, Glowberth applied to discharge the ex parte freezing orders that were made by me as duty judge on 20 September 2023 in favour of Mr Gordon, and which were subsequently varied and extended by consent and without admission by me on 22 September 2023 (Original Freezing Orders) (Principal Judgment at [1]).

Due to Mr Gordon’s failure to disclose facts material to the making of the Original Freezing Orders — namely, his bankrupt status from on or around 2 July 2015, which was and is of central relevance to the substantive proceedings between the parties — I determined that the Original Freezing Orders should be discharged (Principal Judgment [33]–[34]).

On Mr Gordon’s oral application during the hearing for new freezing orders in the same terms as the Original Freezing Orders (Principal Judgment [31], [35]), Glowberth raised numerous issues going to the question of whether such orders should be made afresh (Principal Judgment [37]–[85]). I found against Glowberth on all of those issues, save for the amendment sought to remove from the new freezing orders the $2,000 per week restriction for the payment of legal costs, and in its place the insertion of an allowance for the payment of reasonable legal costs (Principal Judgment [86]–[87]).

My ultimate conclusion in the Principal Judgment was as follows:

In written submissions dated 5 March 2024 (Gordon submissions) (to which proposed freezing orders were annexed), Mr Gordon referred to the Principal Judgment at [87], where I noted the need to remove the $2,000 per week limit for legal expenses (which appeared in the Original Freezing Orders). The form of freezing orders proposed by Mr Gordon adopts that amendment, substituting “paying $2,000 a week on your reasonable legal expenses” with “paying your reasonable legal expenses”, but otherwise substantially retains the format and phrasing of the Original Freezing Orders, save for any necessary adjustments to dates, and to reflect the now inter partes nature of the application and the fact that all supporting material has already been filed.

In written submissions dated 5 March 2024 (Glowberth submissions), Glowberth indicated that the amendment concerning the payment of legal fees is the only change required, but no draft form of freezing orders in those terms was annexed to the Glowberth submissions.

The Official Trustee did not seek to be heard in relation to the form of the new freezing orders.

In the Gordon submissions it was contended that:

In the Glowberth submissions it was contended that:

In written submissions dated 5 March 2024, the Official Trustee contended that:

The Original Freezing Orders were in the standard form, adhering to the form of order annexed to Practice Note SC Gen 14 (Practice Note).

I note that the new freezing orders sought by Mr Gordon and annexed in draft form to the Gordon submissions are in keeping with the form annexed to the Practice Note, with necessary adjustments. I am, moreover, satisfied that those draft orders (with necessary changes to dates, stating that they arise from an inter partes hearing and the change to the legal costs provision) reflect the reasons given and findings made by me in the Principal Judgment.

In those circumstances, I am prepared to make freezing orders substantially in the form proposed by Mr Gordon and agreed to, in substance, by Glowberth.

Section 98(1) of the Civil Procedure Act 2005 (NSW) states:

Rule 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides the relevant starting point when considering whether the court should exercise its discretion to order indemnity costs. That rule states that costs are to be assessed on the ordinary basis unless the court orders or the rules provide otherwise.

A summary of the relevant principles relating to the discretion to award costs on an indemnity basis can be found in Cappello v HomeBuilding Pty Ltd [2023] NSWCA 109, a recent decision of the Court of Appeal of this court, in which Mitchelmore JA (with whom Simpson and Meagher JJA agreed) at [46]–[48] stated:

For costs awarded on an ordinary basis, the relevant discretion is set out in r 42.1 of the UCPR. This general rule confers a wide discretion, and is in the following terms:

Recently, in Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21, the Court of Appeal of this court (constituted by Gleeson, Leeming and Adamson JJA) gave an explanation of the normal rule, stating at [11]–[12]:

In Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd (No 3) [2023] NSWCA 316, Basten AJA, and Payne and Stern JJA, observed similarly at [7]:

In the present case, I consider that there are two ‘events’ in respect of which costs orders need to be made. Those events are: (i) the discharge of the Original Freezing Orders; and (ii) the imposition of new freezing orders in the terms contended for by Mr Gordon. I note that while the characterisation of these issues as ‘events’ is perhaps not entirely accurate (this being an interlocutory application and the resolution of the substantive dispute having not yet occurred), it is useful for the purposes of structuring my reasoning.

In terms of the first event, Glowberth succeeded in its application to dissolve the Original Freezing Orders. In terms of the second event, Mr Gordon succeeded in his instanter application for fresh freezing orders. To use the language adopted in the authorities (see Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], per Beazley, Ipp and Basten JJA; Croc’s Franchising at [7] and [9]), this is in the nature of a “mixed outcome”. But the overall practical result of the events was that new freezing orders in substantially the same terms as the Original Freezing Orders were ordered.

Despite the fact of Mr Gordon’s non-disclosure, I do not consider that this is a case involving conduct of Mr Gordon in the proceedings that exhibited some special or unusual feature or was unreasonable or delinquent conduct in the sense described in Capello so as to give rise to an order for indemnity costs. This is particularly so in light of the fact that new freezing orders are to be made.

To reflect the mixed outcome and the overall practical result of the applications (being the imposition of new freezing orders), I am of the view that fairness to the parties of the type described in Chandrasekaran demands that the appropriate order should be costs in the cause for both applications.

In relation to the costs of the Official Trustee, I propose to make no order as to costs, with the intention that the Official Trustee bear its own costs in respect of the applications dealt with in the Principal Judgment.

For the reasons set out above, I make the following orders: