Australia, May 9 -- New South Wales Land and Environment Court issued text of the following judgement on April 9:

1. Each of Dexterity Holdings Pty Ltd ("Dexterity Holdings"), Cubed Realty Pty Ltd ("Cubed Realty") and Equity Strata Pty Ltd ("Equity Strata") initially sought orders for their own winding up on the ground of insolvency and also on the just and equitable ground, in an application brought by the managers appointed to those companies by the Department of Fair Trading (NSW) ("DFT") pursuant to the Property and Stock Agents Act 2002 (NSW) ("PSA"). Equity Strata, on the instructions of those managers, have now sought leave to discontinue the application in respect of Equity Strata. There is no reason that that leave should not be granted.

2. A director and shareholder of Equity Strata, Mr McIntyre, had sought to oppose its winding up, and would likely have been heard as an interested person in that application under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW) ("Corporations Rules"), although an order has not yet been made granting him leave to be heard under that rule.

3. Mr McIntyre seeks an order for his costs of the proceedings and, in the alternative, seeks directions to allow him to bring an application for a third party costs order, although the identity of the third party against which the costs order was sought was not entirely clear. There are, it seems to me, two fundamental difficulties with that application. The first is that Mr Macintyre did not seek to be joined as a party to the proceedings but sought leave to be heard as an interested person to be heard under r 2.13 of the Corporations Rules, putting aside the fact that that leave has not yet been granted and now will not be granted. The consequences of that approach are well established. I should add to my oral judgment that I reviewed those principles in Re Jabiru Satellite Ltd (in liq) [2022] NSWSC 639, and there declined to make an order for costs in favour of an interested person who had successfully opposed an application to appoint a special purpose liquidator. I adopt, without repeating, my review of the case law in that judgment.

4. In summary, a party who is heard under r 2.13 of the Corporations Rules ordinarily has no expectation that he or she will recover the costs of his or her appearance and equally has little risk that costs will be awarded against him or her. Those matters are correlatives, because the lesser exposure to an adverse order for costs carries with it a lesser likelihood of recovery of costs. It was, of course, open to Mr McIntyre to seek to be joined as a party, but he likely rightly did not do so, thereby minimising his costs exposure in respect of the proceedings.

5. While there are circumstances in which an order for costs may be made in respect of an interested person under that rule, it does not seem to me they are satisfied here. The winding up application in respect of Equity Strata has not been determined on its merits. I appreciate that Mr Weinberger, who appears for Mr McIntyre, seeks to contend that the managers of Equity Strata had no power to commence the proceedings in the name of the companies. I should not determine that issue on its merits in this application, where the application will be discontinued, adopting the approach recognised in the decision of McHugh J in Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 180 CLR 622. I put aside the fact that I in any event find below, in dealing with the same issue in respect of Dexterity Holdings, that the managers do have the necessary power..

6. I also bear in mind that, because this is an application for costs of an interested party heard under r 2.13 of the Corporations Rules, the normal rules as to costs do not apply, and the fact that Mr McIntyre might (again putting aside the finding that I reach below as to that question) have succeeded in a determination on the merits, had it occurred, does not advance his position as to costs. His success on that question would not, without more, have entitled him to an order for costs under r 2.13 of the Corporations Rules. For these reasons, I would not make an order for costs in Mr McIntyre's favour, where there has been no determination on the merits that would support that order, and he is not a party to the proceedings, but a person who would likely have been heard as an interested party under r 2.13 of the Corporations Rules had the proceedings in respect of Equity Strata not been discontinued.

7. I would also make orders to permit a third party costs application, because the premise of such an application can only be that Mr McIntyre is a party to the proceedings who is entitled to seek such an order, and that is not the case.

8. I therefore grant leave to Equity Strata, by its managers, to discontinue the proceedings brought by it with no order as to costs.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/19641134ac1cf696bcd4d92e)

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