In the matter of Gerringong Storage Pty Ltd

This judgment deals with the costs of proceedings brought by Ms Quine seeking relief in respect of the affairs of Gerringong Storage Pty Ltd (“GSPL”) as the trustee of the Gerringong Storage Unit Trust (“GSUT”). I delivered judgment in those proceedings on 2 April 2025 (Re Gerringong Storage Pty Ltd [2025] NSWSC 302) (“Primary Judgment”). I directed the parties to bring in agreed short minutes of order to give effect to the judgment, including as to costs, or their respective draft orders and submissions if they did not reach agreement. The parties reached agreement as to several orders, and the Defendants propose additional orders that the Plaintiff’s Second Further Amended Statement of Claim (“Statement of Claim”) be otherwise dismissed and that their Statement of Cross-Claim (“Cross-Claim”) be dismissed, which are appropriate to give effect to the conclusions that I reached in the Primary Judgment. The parties did not reach agreement as to the question of costs. That was perhaps not surprising, given the history of the proceedings, but that approach exposed the parties to the risk of incurring significant costs in an assessment which they would have not incurred had they adopted a more constructive approach.

It is, of course, uncontroversial that s 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid, and costs will ordinarily 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, in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). The onus is on the losing party to establish the basis for a departure from the usual costs rule in UCPR r 42.1: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]. Mr Bedrossian, with whom Mr Munro appears for the several Defendants, accepts that the principle that costs should follow the event is the “guiding principle” with respect to costs: Northern Territory v Sangare [2019] 265 CLR 164; [2019] HCA 25 at [24]-[25]. Obviously, that principle requires that the “event” be identified in the relevant circumstances.

Mr Bedrossian also refers to Golding v Vella (No 2) [2001] NSWSC 731, where Barrett J (as his Honour then was) observed at [8] that “… [it is] perhaps unwise to be too technical about measuring success on the various issues pleaded: ‘one does not look at issues as if they were pleaders’ issues, but approaches the matter with a broad brush.’: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22 per Young J.” Mr Bedrossian also recognises that, in James & Ors v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [33], the Court of Appeal observed that, in cases in which a party has received only partial success:

In Commonwealth of Australia v Gretton [2008] NSWCA 117, Hodgson JA (with whom Mason P agreed) in turn observed (at [121]) that:

In Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 (“Monie”) at [64]–[66], Campbell JA (with whom Mason P and Beazley JA largely agreed, including on this issue) observed that:

Mr Bedrossian also refers to the summary of the relevant principles in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [30]-[31], as follows:

In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (“Bostik”) at [38], the Court of Appeal also noted that, in relation to trials, it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party did not succeed took up a significant part of the trial, either by way of evidence or argument. I also addressed the circumstances in which costs could reflect a mixed result of proceedings in Re Metal Storm Ltd (subject to deed of company arrangement) [2014] NSWSC 1170 at [47] as follows:

In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219, the Court of Appeal cited Monie and Bostik and observed at [18] that:

In Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6]–[7], the Court of Appeal in turn noted that:

In Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5], the Court of Appeal noted that:

In Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd (No 3) [2023] NSWCA 316 at [7], the Court of Appeal observed:

In Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21, the Court of Appeal summarised the applicable principles as follows at [11]–[12]:

I have here partly drawn on my summary of the applicable principles in Re Carbon Copies Composites Pty Ltd [2023] NSWSC 1039 at [14]ff, to which Mr Bedrossian refers.

I should now turn to the findings which I reached in that judgment which are relevant to the conclusion that I will reach below as to costs. I first dealt with a Cross-Claim brought by several Defendants who contended that there was a binding agreement for Ms Quine to sell her shares in GSPL and units in GSUT and held (Primary Judgment [22]ff) that Cross-Claim should be dismissed, so that the balance of issues in the proceedings were determined on the basis that Ms Quine was at all relevant times a shareholder in GSPL and a unitholder in GSUT.

Ms Quine then sought, by way of a derivative claim brought on GSPL’s behalf, a declaration that the Sixth Defendant, Gerringong Commercial Hub Pty Ltd (“GCH”) held a property (“Gerringong Property”) and funds from certain loan funds paid by a third party lender on constructive trust for GSPL. I addressed the question whether the custodian for the lender which had taken security over the land should be joined as party to the proceedings (at Primary Judgment [80]ff) but held that there was no utility in taking that course where that claim would fail for other reasons. I then addressed the question whether a knowing receipt claim had been pleaded by Ms Quine and a constructive trust could be established on that basis and held that that claim failed because Ms Quine had not established fraud or dishonesty to give rise to an exception to indefeasibility under s 42 of the Real Property Act 1900 (NSW). I also held (at Primary Judgment [108]ff) that Ms Quine had not brought a claim in knowing assistance or established that an admitted breach of trust on the part of GSPL had a dishonest or fraudulent character, and the claim for a constructive trust on that basis also failed. Ms Quine also brought a further claim relating to funds advanced by the lender, which I found (at Primary Judgment [116]ff) was not established.

Ms Quine also sought equitable compensation for breach of trust in respect of a transfer of the Gerringong Property from GSPL to GCH and I held (at Primary Judgment [121]) that she could not establish that claim on the basis that she had put it, but that an order for compensation should be made in favour of GSPL to the extent that it had suffered loss by reason of an admitted breach of trust in the transfer of that property, either because the relevant consideration was not paid in full or because the property was transferred at undervalue. I addressed both of those issues, including a substantial contest between the parties and the valuation experts they called as to the value of the land. Ms Quine also brought a claim for knowing assistance against two individual Defendants and two companies associated with them. The two individuals conceded that they were jointly and severally liable with GCH for the amount ordered against it, and the claim against the corporate Defendants was not established (Primary Judgment [153]ff).

Ms Quine brought claims referable to payments made by GSPL in several categories, although the transactions in issue were narrowed in the course of the hearing. I did not find that Ms Quine established her claim in respect of certain transactions in the first category of that claim (Primary Judgment [163]-[164]); the Defendants conceded liability as to several other categories of transactions, including a claim in respect of payment of legal fees, although the amount recoverable by GSPL in respect of that claim was significantly reduced by a repayment of those fees made by one of the Defendants on the first day of the hearing. Ms Quine also brought, but failed in, a claim for misuse of the premises (Primary Judgment [170]ff). Ms Quine also brought an oppression claim and I found that oppression was established in some, but not all, of the bases put (Primary Judgment [175]ff). It was ultimately common ground that GSPL should be wound up on the just and equitable ground and I made a winding up order up on that basis and appointed a receiver to the assets of GSUT, consequential on the winding up order made in respect of GSPL.

Ms Quine submits that, notwithstanding the many unsuccessful claims which she had brought, as set out above, several Defendants should pay her costs of the Statement of Claim. She also submits that the Cross-Claim should be dismissed and the several Cross-Claimants should pay her costs of the Cross-Claim. Mr Crossland, who appears for Ms Quine, draws attention to the “usual rule” that costs should follow the event, to which I have referred above, and submits that departure from the usual rule is only justified where the “overall justice of the case” warrants some other order: McCusker v Rutter [2010] NSWCA 318 at [48]. That approach requires an identification of the relevant “event”, where Ms Quine succeeded only in part, after bringing numerous claims as to which she failed. Mr Crossland also submits that, where the Cross-Claim should be dismissed and the Cross-Claimants were unsuccessful in it, costs of the Cross-Claim should follow the event.

Mr Crossland submits Ms Quine’s claim had “broadly” three components, namely the oppression claim (as to which, as I noted above, she succeeded in part); a claim for orders addressing GSPL’s transfer of the Gerringong Property to GCH; and a claim for orders for compensation under s 1317H of the Corporations Act 2001 (Cth) for breach of directors’ duties. It seems to me that the identification of the issues in that manner does not adequately reflect the number of claims brought by Ms Quine, which I have noted above, and the fact that several claims within those broader categories did not succeed.

Mr Crossland rightly points out Ms Quine’s claim included the oppression claim and the claim for a just and equitable winding up when it was commenced on 5 July 2024 and the Defendants first accepted that the basis for oppression was established in their written opening submissions. That is a matter that plainly tends toward an award of costs in favour of Ms Quine in respect of that aspect of the claim, where she was put to the costs of running that claim, and succeeded in significant parts of it. Mr Crossland then addresses the claim that he characterises as Ms Quine’s “Transfer Claim” in a manner that radically over-simplifies that claim. He rightly recognises that that claim was only brought after it emerged, at a late stage of the preparation of the proceedings for hearing, that the Second and Third Defendants had brought about the transfer of the Gerringong Property by GSPL to GCH, in the circumstances to which I referred in the Primary Judgment at [62]ff. Mr Crossland rightly recognises that Ms Quine succeeded in obtaining substantial relief for the transfer, by way of equitable compensation, although she failed in establishing the larger claim to compensation which she claimed and failed in establishing her claim to a constructive trust over that property or over the loan proceeds, for the reasons that I addressed in the Primary Judgment. I recognise that, as Mr Crossland submits, the large part of the costs relating to the claim for a constructive trust were incurred in two interlocutory applications brought by Ms Quine at the conclusion of the hearing, as to which she accepts she should be ordered to pay costs, although additional costs were also incurred in respect of submissions at the hearing as to that matter.

Mr Crossland notes that the compensation recovered by Ms Quine under s 1317H of the Act was $3,351.65 and he accepts that this figure is “de minimis”, although he notes that it would have been larger had one of the Defendants not repaid, on the first day of the hearing, payments that had previously been made by GSPL to the Defendants’ solicitors in payment of legal expenses. Mr Crossland rightly points out that that occurred only at the last possible moment. While I accept that Ms Quine would have achieved a more significant recovery in respect of that issue, that neglects the several other claims as to payments made by GSPL, which were the subject of voluminous evidence, as to which Ms Quine also failed. It does not seem to me that an order that allowed Ms Quine the whole of her costs of the proceedings, without regard to the significant time spent and the costs likely incurred on issues on which she failed, would do justice between the parties.

The several Defendants in turn propose an order that the Plaintiff pay their costs of and incidental to Notices of Motion filed by the Plaintiff on 13 and 24 February 2025. It is not necessary to make an order in respect of the motion filed on 13 February 2025, where I have already dismissed that motion with costs on 20 February 2025. I will make that costs order in respect of the second motion, where Ms Quine rightly accepts that she should be ordered to pay the costs of that motion.

The several Defendants otherwise contend there should be no order as to the costs of the proceedings with the intent the parties bear their own costs. For the reasons that I set out below, it does not seem to me that that outcome would properly reflect the extent to which Ms Quine has been successful in the proceedings. Mr Bedrossian submits, in support of the application that there be no costs of the proceedings, that there was a mixed degree of success by both Ms Quine and the several Defendants, and, put another way, there were a number of material issues upon which Ms Quine entirely failed. He submits that, if the Court were to make costs orders on the basis that costs follow the event in respect of individual issues, the practical outcome of that process would be that the parties’ costs orders would likely offset each other, although he recognises the costs of a further dispute in a costs assessment. Mr Bedrossian also submits, in a manner that is broadly consistent with my summary of issues above, that:

Mr Bedrossian is correct in recognising that significant components of Ms Quine’s case were not successful; however, it does not follow that the Defendants should have the costs of those aspects of the case, or that justice would not be done by limiting Ms Quine’s recovery of costs so that it does not extend to the matters on which she failed. Mr Bedrossian also submits that limited time was spent on the Cross-Claim. I do not accept that submission where, rightly, the parties reviewed the relevant correspondence in detail. It also seems to me that Mr Bedrossian’s submission that the costs would here likely offset each other does not have sufficient regard to the extent to which Ms Quine was ultimately successful in obtaining compensation in the proceedings, in respect of the value of the relevant property, or to the extent to which the several Defendants made late concessions as to matters on which she might have otherwise have succeeded, including the breach of trust by QSPL and the Second and Third Defendants’ joint and several liability with QSPL for that breach of trust; and the extent to which damages otherwise recoverable by Ms Quine were reduced, in respect of legal costs, by the late repayment made by one of the Defendants.

Mr Bedrossian submits:

I accept that submission, with the substantial qualification that the outcomes of either Ms Quine’s recovering all her costs or her recovering none of her costs, for which the parties respectively contend, would neither bring about a just result as to costs.

In summary, Ms Quine submits that she should recover all of her costs of the proceedings, notwithstanding the significant extent which she has been unsuccessful in the claims that she advanced. The Defendants in turn submit that Ms Quine should recover none of her costs, notwithstanding the significant extent to which she succeeded in aspects of the claim. It is perhaps unsurprising, again given the history of the proceedings, that both positions are unreasonable and I cannot accept either of them. It may be that different parties would have reached agreement that Ms Quine should recover a percentage of the costs of her claim, to minimise the costs of an assessment, but the parties have not here taken that course.

I have regard to the principles which I have summarised above, including the questions identified in Monie as to whether the issues on which Ms Quine failed were “dominant” and separable issues. The issues on which Ms Quine failed were plainly substantial, although not necessarily “dominant”, and they were severable from the narrower case on which Ms Quine succeeded. Importantly, I also bear in mind that that the formulation in Monie is not to be approached as though it were a statutory test that confines the judicial discretion that the Court is required to exercise in respect of costs, and later cases have referred to the “significance” of the issues on which a plaintiff failed and emphasised the importance of exercising the discretion to reach a just result in all the circumstances.

Here, it seems to me that a possible resolution of the question of costs would have been to order that Ms Quine have the costs of the Cross-Claim and those aspects of her primary claim on which she succeeded, but not of the significant claims on which she failed. On that basis, Ms Quine would recover her costs of and incidental to (1) the Cross-Claim; (2) GSPL’s claim for compensation against GCH; and (3) the Plaintiff’s oppression claim and her claim for winding up on the just and equitable ground, but not her costs referable to (4) the claim brought on GSPL’s behalf that GCH held the Gerringong Property or loan funds on constructive trust for GSPL; (5) the claims referable to payments made by GSPL other than in respect of legal fees; and (6) the claim for misuse of the Gerringong Property. I will not adopt this approach, where the additional costs of an assessment on that basis would plainly not be in the interests of either party.

It seems to me that the Court can here do justice by adopting a broad brush approach to the likely result of an assessment, given its own knowledge of the matters in issue and the extent of the evidence and submissions addressed to them. On that basis, I was inclined to order that (1) Ms Quine pay the costs of the two motions on which she failed; (2) the Second to Fifth Defendants pay two-thirds of Ms Quine’s costs of and incidental to the matters raised by the Statement of Claim; and (3) the Second to Fifth Defendants pay all of Ms Quine’s costs of the Cross-Claim, in each case as agreed or as assessed. I recognise that that approach reflects a global assessment, rather than the more granular approach that would likely be adopted (at substantial cost) in an assessment on an issue by issue basis and is necessarily, in the language of the case law, a matter of impression and evaluation as to which minds might differ.

After I formed that view, I allowed the parties an opportunity to make further submissions, by an email sent by my Associated as follows:

In further submissions, Mr Crossland reiterates Ms Quine’s primary position that the Defendants should pay all of her costs of the Statement of Claim on the ordinary basis. He acknowledges the Court’s power to apportion costs based on mixed success but submits that the aspects of Ms Quine’s claim on which she failed did not take up a significant part of the trial, either as to evidence or argument. He submits that, if an apportionment should be made, that should occur on the basis that those components of the claim on which she was unsuccessful were not relevantly significant. I do not accept that submission for the reasons set out above. Mr Crossland also submits that Ms Quine obtained monetary relief greater than that for which the Defendants contended, but that does not seem to me to be of relevance to the apportionment of costs between the issues on which she succeeded and the issues on which she failed. Mr Crossland also repeats an earlier submission that Ms Quine’s claim to costs should not be “discounted” by reason of her failure to obtain a declaration of constructive trust. No question of “discounting” her claim to costs arises, where the question here is the extent to which Ms Quine has established that claim. Ms Quine then submitted that, if an apportionment was to be made, the Court should require the several Defendants to pay 85% of and incidental to the matters in Ms Quine’s Statement of Claim. This percentage does not seem to me to reflect the outcome of the proceedings, having regard to the matters which I have addressed above. Ms Quine also addressed, briefly, the position as to an earlier application before Nixon J. That matter was outside the scope of the leave granted for further submissions and I do not have regard to the submissions as to that matter.

Mr Bedrossian and Mr Munro in turn repeated that the Defendants’ primary position is that there should be no order as to costs, other than as to the two discrete Notices of Motion upon which Ms Quine failed. The Defendants then submit that the structure of the orders which I had contemplated was “slightly incomplete and thus does not result in a fair or appropriate outcome” and that, if Ms Quine had succeeded on two-thirds of the issues raised by the Statement of Claim, then she had failed on one-third of the issues raised by it, and an order should be made in the several Defendants’ favour as to the matters on which she failed. I have not neglected that possibility, which I addressed above. I accept that, as Mr Bedrossian and Mr Munro point out, there are several cases in which that approach has been adopted. The Defendants submitted that that outcome would have the result that the Second to Sixth Defendants would pay one-third rather than two-thirds of the costs of the Cross-Claim, which is the obvious result of that approach.

As I have indicated above, I am not persuaded that that approach will do justice between the parties. It seems to me that the Defendants’ approach should not be adopted, first, because Ms Quine ultimately succeeded in the proceedings, although not all aspects of her claim, and her partial success is sufficiently addressed by allowing her costs only of the parts of the case on which she succeeded; and, second, because the significant changes in the Defendants’ position immediately before and in the course of the hearing, particularly by concessions made at the commencement of the hearing and in submissions during the hearing, undermines the basis of the approach for which they contend.

With the benefit of the parties’ further submissions, it seems to me that the proper course is to take the approach that I have set out in paragraph 31 above. As I noted above, it will still be open to the parties now to avoid the costs of an assessment that would still need to distinguish between the costs of interlocutory processes as to which costs orders have been made in favour of the Defendants and the costs of the Cross-Claim, and the costs of the remainder of the proceedings as to which orders in favour of Ms Quine, by reaching an agreed resolution as to costs on a global basis.

I therefore make the following orders: