In the matter of Medical Training and Development Pty Ltd

By Originating Process filed on 7 December 2020, the Plaintiff, Dr Iqbal, sought a range of relief in respect of the affairs of Medical Training and Development Pty Ltd (“MTD”) which was opposed by the First, Third, Fifth, Sixth and Seventh Defendants (“Active Defendants”). I summarised the outcome of the proceedings in paragraph 33 of my judgment delivered on 6 August 2021 as follows:

Following the delivery of that judgment, Dr Iqbal filed an interlocutory application which sought the orders to which I referred in that paragraph, and an order that he pay or otherwise satisfy the amount of $100,000 in satisfaction of his obligations as to initial capital in consideration of his acquisition of the shares in MTD. When that Interlocutory Process was returnable in the Corporations Motions List on 23 August 2021, Mr Johnson, who appears for Dr Iqbal, advised that it would no longer be pursued and I accordingly made orders that the proceedings be dismissed. Mr White, who appears for the Active Defendants, then indicated that they would seek an order as to the costs of the substantive proceedings, and I ordered that the parties submit their draft orders and short submissions as to any difference between them, on the agreed basis that the costs of the proceedings would be determined in Chambers.

I will first address the relevant legal principles, which are not controversial. Mr Johnson, who appears for the Plaintiff, accepts that costs would normally follow the event, unless some reason is shown to the contrary and refers to my summary of the applicable principles in Sabouni v Revelop Building and Developments Pty Ltd [2021] NSWSC 123 at [2]-[5] as follows:

Mr White in turn refers to the Court of Appeal’s decision in Valmont Interiors Pty Ltd v Giorgio Armani (Australia) Pty Ltd (No 3) [2021] NSWCA 160 at [20]-[25], where the Court of Appeal observed that:

The Active Defendants sought orders that the Originating Process be dismissed, which were not necessary where the proceedings had already been dismissed on 23 August 2021, and that Dr Iqbal pay their costs on the indemnity basis or alternatively on the ordinary basis, as agreed or as assessed. Mr White submitted that the Active Defendants had opposed the orders sought by Dr Iqbal on the ground that he had failed to pay his contribution of the initial capital to MTD under the agreement on which he relied, the General Partnership Agreement (“GPA”) and he pointed to the absence of any evidence led by Dr Iqbal of any contribution of initial capital and to the Active Defendants’ evidence that such contribution had not been made. Mr White also points to the nature of the affidavit evidence led by Dr Iqbal in support of his interlocutory application, which was not read. They submit that, where Dr Iqbal has now not sought to proceed with the Interlocutory Process or to make the contribution necessary to be issued the relevant shares, and the proceedings have been dismissed, he has been wholly unsuccessful in the proceedings. Mr White also refers to a letter from the Active Defendants’ solicitors to Dr Iqbal’s solicitors which had previously pointed to their contention that Dr Iqbal had not paid the money that was required to be paid under the GSA or GPA, and had referred to a claim for indemnity costs if proceedings were commenced. Mr White submits that that letter amounts to a Calderbank offer, although it is not apparent that it had any element of compromise about it. Alternatively, Mr White submits that the Active Defendants are entitled to their costs on the usual basis that costs follow the event.

Mr Johnson in turn refers to other matters which had been in issue in the proceedings, including my finding that a document on which the Active Defendants relied had been fabricated, and submits that that is sufficient reason to depart from the ordinary rule. In my view, the reliance on a fabricated document as a significant aspect of the Active Defendants’ case is sufficient reason not to order indemnity costs in their favour and also sufficient reason to depart from the ordinary rule as to costs. For these reasons, I maintain the preliminary view that I expressed in the substantive judgment, albeit on a somewhat different basis from that which I had there indicated.

I make the following orders, substantially in the form proposed by Mr Johnson, in addition to those which I made on 23 August 2021: