In the matter of Latitude 63 Australia Pty Ltd

1. [1]

   By Originating Process filed on 28 October 2025, Latitude 63 Australia Pty Ltd (“Latitude”) applied to set aside a creditor’s statutory demand dated 3 October 2025 (“Demand”) issued by EnerMech Pty Ltd (“EnerMech”). On 9 February 2026, by consent of the parties, the Court noted that the Demand had been withdrawn. At the request of the parties, I made orders allowing them to serve further affidavit evidence and submissions in respect of the question of costs, after first drawing their attention to the real prospect that an application for costs would not be successful where there had been no determination of the proceedings on their merits.

2. [2]

   Latitude seeks its costs of the proceedings, although they have not been determined on the merits. It reads an affidavit dated 23 February 2026 of its solicitor, Ms Dark, which referred to its offer to consent to orders requiring EnerMech to pay its costs in the proceedings on an ordinary basis. That affidavit established no basis on which EnerMech should have consented to that position.

3. [3]

   In submissions, Ms Dark submits that, absent a determination of the proceedings on the merits, EnerMech should be ordered to pay Latitude’s costs on an indemnity basis; or on an ordinary basis up to 3 November 2025 and on an indemnity basis thereafter; or on an ordinary basis. Ms Dark also relies on affidavit evidence that was not read in the substantive proceedings as well as on her affidavit. Ms Dark addresses the applicable principles; rightly recognises that the Court will not try a settled case in order to determine the incidence of costs; and submits that “the expectation that costs should lie where they fall may be displaced where a party acted unreasonably in such a way which should be compensated by costs, and/or one party was almost certain to have succeeded if the matter had been fully tried”.

4. [4]

   I have, not for the first time, reviewed the applicable principles, in declining to make a costs order in somewhat similar circumstances in Re Settlement Holdings Pty Ltd [2026] NSWSC 209 at [3]ff, as follows:

5. [5]

   Ms Dark here submits that there is “no question” as to whether Latitude acted reasonably by seeking to set aside the Demand in order to avoid it being deemed insolvent. I do not accept that proposition, which begs the questions whether there was a genuine dispute as to the debt claimed in the Demand or any other basis to set aside the Demand, which have not been determined. Ms Dark also submits that EnerMech acted unreasonably in several respects, which generally turn on the premise that EnerMech should not have issued the Demand or should have withdrawn it because (which has not been determined) there existed a genuine dispute and offsetting claim as to the Demand. Ms Dark seeks to support that position by submissions which, in substance, seek to require the Court to determine the merits of Latitude’s application to set aside the Demand where there has been no hearing of that matter. I am not persuaded I should take that course, and it is not apparent, without a determination on the merits, whether EnerMech had acted unreasonably in issuing the Demand.

6. [6]

   EnerMech resists the making of a costs order, and reads an affidavit dated 9 March 2026 of its solicitor, Mr Wrigley, which referred to an adjudicator’s determination in 2026 received on 3 February 2026. By submissions dated 9 March 2026, Mr Whealing referred to service of the Demand and to an earlier affidavit dated 6 February 2026 of Mr Matheson which had not been read in the substantive proceedings. He set out the history of the construction of a storage facility and related infrastructure in Darwin, which is not otherwise in evidence; and referred to the final invoice issued by EnerMech after practical completion of the relevant project and to a second retention claim after the expiry of a 12-month defects liability period. Mr Whealing referred to conversations between representatives of the parties, which were also not in evidence, and to a suggested dispute as to the second retention claim. He also referred to the adjudication application made by Latitude which was dismissed on 12 January 2026.

7. [7]

   Mr Whealing noted, uncontroversially, the Court’s power to make orders as to costs. He acknowledged there is no basis on which costs should follow the event where there had been no determination on the merits. He referred to my decisions in cases including Re Ming Tian Real Property Pty Ltd [2021] NSWSC 386 at [6]ff, Re Aussie Strength Pty Ltd [2021] NSWSC 1594 at [4]ff and Re Lidco International Pty Ltd [2025] NSWSC 572 at [2]ff. Mr Whealing submitted that EnerMech had acted reasonably in issuing the Demand and withdrawing it when it did. That proposition depended on matters which have not been determined, where the application to set aside the Demand did not go to a hearing on its merits. Mr Whealing also submitted that there should be no order as to the costs of Latitude’s application to set aside the Demand in the absence of any determination on the merits. That submission did not depend upon the evidentiary matters to which it referred. EnerMech also sought its costs of the costs application, where Latitude had sought an order that EnerMech pay its costs of the proceedings.

8. [8]

   In reply, Latitude reads the affidavit dated 23 March 2026 of its managing director, Mr Martin, who advances various criticisms of EnerMech’s performance project and addresses questions as to practical completion of the project and other matters. That evidence does not seem to me to properly be evidence in reply, and the Court also should not determine those matters on the merits and without a hearing in order to determine a costs application. In submissions in reply, Ms Dark addresses further questions as to when practical completion of the relevant project was achieved and as to the scope of the adjudication determination. It is also not apparent that those submissions are properly made in reply, and they also raise questions that are not properly determined without a hearing on the merits and in an application for costs.

Determination

1. [9]

   Here, as in Telegraph Point, I am not able to assess the likely outcome of the application to set aside the Demand, had it proceeded to a hearing; or the cogency of evidence that was to be relied on in the application to set aside the Demand but was not read when the hearing did not proceed. I am not able to find whether the debt was genuinely disputed, or whether the asserted offsetting claim was genuine. This is again not one of the rare cases where the Court could be satisfied, without a hearing, that one party was almost certain to have succeeded if the matter had been fully tried. It is also not possible to determine whether either party acted unreasonably so as to warrant an order for costs against it. Latitude’s application for costs must fail on that basis.

2. [10]

   That is sufficient basis to make the costs order that EnerMech seeks, that Latitude pay the costs of the application on the basis that costs follow the event of the costs application.

3. [11]

   I make the following orders: