Restitution Claims and Interest Payments in Financial Disputes

In a complex financial dispute, the court addressed restitution claims, interest payments on money held by the court, and costs. The court found that the plaintiff was not entitled to double compensation for the same debt if it had been extinguished by prior settlements.

Supreme Court New South Wales

Medium Neutral Citation: [COMPANY] v [NAME] (No 3) [2023] NSWSC 1327 Hearing dates: 18 and 20 October 2023 Date of orders: 6 November 2023 Decision date: 06 November 2023 Jurisdiction: [NAME]: [NAME] Decision: See [198] Catchwords: RESTITUTION – where monies paid in and out of Court by consent – whether [NAME] entitled to interest on monies held by the plaintiff and received upon settlement – where no compulsion operated upon [NAME] and no erroneous judicial order made – where no judicial determination of rights and liabilities due to settlement JUDGMENTS AND ORDERS – double recovery – where plaintiff earlier settled part of claim with another intertwined party – where plaintiff alleges [NAME] defendant continues to owe money under loan – whether plaintiff already recovered monies owing by earlier settlement COSTS – application for costs where proceedings dismissed by consent – whether plaintiff capitulated on claims – where plaintiff earlier settled part of claim with another intertwined party – whether [NAME] achieved success across the claim and cross claims Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119 Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 Baxter v Obacelo Pty Ltd (2000) 48 NSWLR 522; [2000] NSWCA 69 [COMPANY] v [NAME] (No 4) [2023] NSWSC 1162 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 Boncristiano v Lohmann [1998] 4 VR 82 Commonwealth v McCormack (1984) 155 CLR 273; [1984] HCA 57 [NAME] (for the Estate of the late George Dionysatos) v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34; [2015] NSWCA 281 Farrow Finance Co Ltd (in Liq) v ANZ Executors and Trustee Co Ltd [1998] 1 VR 50 FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091 Franklins Self Serve Pty Ltd v Wyber (1999) 48 NSWLR 249; [1999] NSWCA 390 Government Insurance Office of NSW v Aboushadi (1999) Aust Torts Reports 81–531; [1999] NSWCA 396 [NAME] v [COMPANY] (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 Hyder Consulting (Victoria) Pty Ltd v CGU Insurance Limited [2003] VSC 223 McMillan Investment Holdings Pty Limited v Mangos & Ors [2023] NSWSC 1078 McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 1635 McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 37 McNamara v San [2010] NSWSC 809 Nadilo v Eagleton (2021) 250 LGERA 89; [2021] NSWCA 232 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 [COMPANY] v [NAME] of Taxation (2000) 101 FCR 548; [2000] FCA 270 [NAME] Tang Man Sit v Capacious Investments Ltd [1996] AC 514 [NAME] 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424; [2014] NSWCA 107 Re Minister for Immigration and Ethnic Affairs; ex parte [NAME] (1997) 186 CLR 622; [1997] HCA 6 SAS Trustee Corporation v Budd (2005) 3 DDCR 382; [2005] NSWCA 366 Shellharbour City Council v Minister for Local Government [2017] NSWCA 256 Townsend v Stone Toms & Partners (1984) 27 BLR 26 [COMPANY] v [NAME] (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72 Texts Cited: [NAME] and [NAME], Restitution Law in Australia (2nd ed, 2008, LexisNexis Butterworths) [NAME] and [NAME], Restitution Law in Australia (3rd ed, 2016, LexisNexis Butterworths) Category: Principal judgment Parties: [COMPANY] (plaintiff) [NAME] (first defendant) [NAME] ([NAME] defendant) [NAME] ([NAME] defendant) Representation: Counsel: [redacted] [NAME] ([NAME]) [NAME] ([NAME] defendant)

Solicitors: [redacted] [NAME] ([NAME]) File Number(s): 2018/218097 Publication restriction: Nil

JUDGMENT

Introduction 1. These reasons deal with three remaining issues in this long running dispute – being: 1. first, whether, as between the plaintiff and [NAME] defendant, the alleged [NAME] debt between them has been extinguished by reason of the rule against double compensation – with the consequence that the plaintiff's claim is not maintainable against him ('the [NAME] debt claim'); 2. secondly, whether, as between the plaintiff and [NAME], the plaintiff is obliged to pay interest upon the money that was paid out of Court to it but is, as part of the overall resolution of the proceedings, and by agreement between the plaintiff and [NAME] to be paid back into Court and – subject to some presently irrelevant exceptions – returned to [NAME] ('the interest claim'); and, 3. thirdly, costs: the plaintiff, [NAME] and the [NAME] defendant each seek an overall order that deals with the costs of proceedings including the costs of the many cross claims filed ('the costs claims').

Background 1. What follows is a short summary of the proceedings to provide an introduction, and some context to the above issues. The summary reflects my findings. It will be necessary to return to address (and make additional findings about) further matters of fact and background that are relevant to the specific issues raised, and their disposition.

2. I will start with a very broad overview to facilitate a clearer understanding of some of the detail that follows.

The genesis of the disputes: a short summary 1. In general terms these proceedings concern, or arise out of, financial transactions that occurred in and around 2015 and 2016. For the plaintiff parties, there were a number of claims against [NAME] for monies said to be owed under various instruments including a facility agreement, general security deed and mortgage all dated on or around 27 March 2015 and an agreement entered in early 2016. There was also, arising out of these instruments and the involvement of the parties, claims against a solicitor (and the incorporated legal practice of which he was a director) for professional negligence: the same solicitor is alleged to have provided advice to the plaintiff, as well as each of [NAME].

2. The most recent version of the plaintiff's pleading is the fourth further amended statement of claim filed 25 August 2023 ('4FASOC'). It will be necessary to refer to what was alleged in that claim, as well as the [NAME] further amended statement of claim filed 26 April 2019 ('3FASOC').

3. Some further details about how the dispute arose are as follows.

4. The first and [NAME] were relevantly directors of two businesses –[COMPANY] and [COMPANY]. In early 2015, [NAME] was involved in a dispute. A solicitor (and the incorporated legal practice of which he was a director) is alleged to have been retained to act for the first defendant and [NAME] defendant and, later, the [NAME] defendant. The solicitor gave advice in connection with a resolution of the dispute which involved the payment of approximately $850,000 plus GST to the creditor.

5. The money involved in the settlement was to be by facility agreement ('the facility agreement') between the plaintiff (as lender) and [NAME] (as borrowers). The first and [NAME] were guarantors of that agreement. In addition, the first and [NAME] executed a general security agreement, and the [NAME] defendant executed a mortgage over property that she owned at [NAME], NSW as additional security.

6. In mid 2015, [NAME] fell into arrears with a different creditor. The plaintiff agreed to fund the settlement of that dispute which required the first defendant to enter into a loan agreement with the plaintiff. The documentation prepared by the solicitor – described variously in the pleadings by the parties as the '$150K Loan Documents' – was executed by [NAME] on or around 27 January 2016. This loan agreement has been referred to in the pleadings as the '$150K loan', and it is convenient to use that description in these reasons. Put simply, by that loan, the plaintiff agreed to loan the first defendant and/or [NAME] that amount, but, contrary to its terms, it was not repaid, despite requests for that to occur: 4FASOC, pars 50-60. As at 26 March 2019, the amount alleged to be outstanding was $241,077.82 (3FASOC, par 59).

7. On or around 28 August 2015 the plaintiff took an assignment from [NAME] of certain debts alleged to be owed by the [NAME] to [NAME] together with certain securities alleged to have been given by them. There were two loans assigned by [NAME] to the plaintiff: [redacted]

8. By May 2016 both [NAME] and [NAME] had been placed into liquidation, and various secured creditors, including the plaintiff, took steps to enforce their security.

9. On 16 July 2018 the plaintiff commenced proceedings against the [NAME] seeking to recover amounts allegedly owed to it by them under the facility agreement, the $150K loan and the two [NAME] debts.

10. The plaintiff (and the directors of the plaintiff – together, 'the [NAME]') also brought proceedings for professional negligence against the solicitors retained to provide advice in connection with the facility agreement and loan and security documentation. This occurred via a cross claim – the [NAME] cross claim, described in more detail at [25]ff, below – and not as part of the principal proceedings. 11. [NAME] disputed their liability to the plaintiff, and cross claimed against the plaintiff (and the directors of the plaintiff) seeking to set aside the facility agreement and loan and security documentation, as well as making an alternative claim for damages against those parties. They also cross claimed (in that same cross claim filed – the first cross claim) against the [NAME] defendant (seeking statutory and equitable contribution). They also advanced, by separate cross claim (the fourth cross claim), a claim for professional negligence against a solicitor (and the incorporated legal practice of which he was a director) arising out of their entry into the facility agreement and loan and security documentation. As earlier noted, the solicitor involved was the same one involved in the claim brought by the plaintiff (and the directors of the plaintiff).

12. The [NAME] defendant disputed his liability to the plaintiff, and cross claimed against the plaintiff (and the directors of the plaintiff) seeking to set aside the facility agreement and loan and security documentation, as well as making an alternative claim for damages against those parties. He also cross claimed (in that same cross claim filed – the [NAME] cross claim) against the first defendant (seeking statutory and equitable contribution). He also advanced, by separate cross claim (the fifth cross claim), a claim for professional negligence against a solicitor (and the incorporated legal practice of which he was a director) arising out of their entry into the facility agreement and loan and security documentation. Again, the solicitor involved was the same one involved in the claim brought by the plaintiff and in the claims brought by [NAME].

The pleadings and parties: further consideration 1. I will next sketch, in a little more detail, the proceedings and the parties.

The statements of claim 1. The proceedings were commenced by statement of claim filed by [COMPANY] ('the plaintiff') on 16 July 2018. There were four named [NAME]: [NAME] ('the first defendant'); [NAME] ('the [NAME] defendant'); [NAME] ('the [NAME] defendant'); and [NAME] ('the fourth defendant').

2. This statement of claim has been amended on a number of occasions, as follows: 1. an amended statement of claim was filed on 29 October 2018; 2. an amended statement of claim was also filed on 8 November 2018; 3. a further amended statement of claim was filed on 13 March 2019; 4. a [NAME] further amended statement of claim was filed on 23 April 2019; 5. a [NAME] further amended statement of claim was filed on 26 April 2019; and, 6. a fourth further amended statement of claim was filed on 25 August 2023.

1. As I have earlier noted, the proceedings by the plaintiff – and the [NAME] – involved claims under the facility agreement and the $150K loan as well as the [NAME] debts. I have, sufficiently for present purposes, described the circumstances surrounding the entry into the facility agreement and the $150K loan: see [9], above. (To signpost: this claim was the subject of the settlement culminating in the orders made on 24 August 2023: by the 4FASOC, pars 50-60 – which were the relevant paragraphs dealing with this claim – were deleted). Some further explanation about the circumstances of the two [NAME] debts is as follows.

2. The plaintiff sued upon the amount alleged to be owing by [NAME] under the [NAME] debt: 4FASOC, par 49. The loan was for $490,000 but, as at 26 March 2019, the amount outstanding was $74,870.11: 4FASOC, par 49. The allegation of the plaintiff was that, contrary to repeated demands made by it to [NAME] for payment of the money owing to it under the [NAME] debt, [NAME] wrongfully failed to pay the outstanding money: 4FASOC, pars 61-63. (To signpost: this claim was not the subject of the settlement culminating in the orders made on 24 August 2023, but formed part of the ultimate settlement that occurred in October 2023).

3. The plaintiff also sued the [NAME] defendant in relation to the [NAME] debt. I will explain this claim in a little more detail, given the existence of that debt remains in issue. (That claim – the [NAME] debt claim – is dealt with at [37]ff, below).

4. On or around 3 July 2009, [NAME] entered into a loan agreement with the [NAME] defendant for the amount of $128,000. The [NAME] defendant was required to execute a mortgage over his property in [NAME] as security for that loan – which he did, albeit that [NAME] did not register that mortgage.

5. At the time that [NAME] assigned its rights and interests in the loan (and the mortgage) to the plaintiff on or around 28 August 2015, the [NAME] defendant owed [NAME] $116,768.91.

6. From around 28 September 2015 to 16 November 2018, the [NAME] defendant made payments to the plaintiff in relation to that loan – but not thereafter: 4FASOC, pars 72, 73. The allegation of the plaintiff is that, despite demands for him to do so, the [NAME] defendant wrongfully failed to pay the outstanding money: 4FASOC, pars 75, 76. The plaintiff sued upon the amount alleged to be owing by the [NAME] defendant under the [NAME] debt: 4FASOC, pars 64, 69, 76ff.

The cross claims 1. There were five cross claims filed (and, often, amended versions of those cross claims). It is convenient to identify and group those claims by the parties who brought them.

2. In addition to commencing proceedings by statement of claim, the plaintiff as well as [NAME] and [NAME] (as [NAME] and [NAME] cross claimants) brought one cross claim: the [NAME] cross claim filed on 9 September 2019. The cross [NAME] to that cross claim were [NAME] (as first and [NAME] cross [NAME]); the [NAME] defendant (as [NAME] cross defendant); [COMPANY] (as fourth cross defendant); [COMPANY] (as fifth cross defendant); and [NAME] (as sixth cross defendant).

3. Pausing momentarily to briefly identify and explain the roles of some of those additional parties – namely, [NAME], [COMPANY] and [COMPANY]. [NAME] is, and was, a solicitor until around 2016-2017. He was a director of [COMPANY] and also became a director of [COMPANY]. Again, put very simply, by the [NAME] cross claim the [NAME] alleged professional negligence against [COMPANY] arising out of a retainer that was entered in or around February 2015 in connection with a loan facility and the preparation of documentation (including securities) for that facility: see the [NAME] cross claim, pars 7-8. As earlier mentioned, the loan facility was between the plaintiff and two companies – [NAME] and [NAME]. The security was provided by not only those entities, but also the [NAME]: see the [NAME] cross claim, pars 7-10.

4. The involvement of [COMPANY] arose in connection with a retainer that was alleged to have been entered in and around May to early June 2017: see the [NAME] cross claim, pars 26ff. Unless necessary to refer separately to each of the incorporated legal practices (and the solicitor), they will simply be described as 'the [NAME]'.

5. I return now to the overview of the pleadings and parties. 6. [NAME] brought two cross claims – as follows:

1. The amended first cross claim filed on 13 November 2019. The cross [NAME] to the amended first cross claim were the plaintiff (as first cross defendant); [NAME] (as [NAME] cross defendant); [NAME] (as [NAME] cross defendant) and the [NAME] defendant (as fourth cross defendant). Put very simply, by the amended first cross claim [NAME] sought a range of orders (including declaratory orders) against the plaintiff to the effect that the facility agreement and the loan and security documentation were void and unenforceable; they sought, in the alternative, damages against the plaintiff and the directors of the plaintiff (against the directors that claim extended to a claim for exemplary damages); they sought statutory, as well as equitable, contribution against the [NAME] defendant. What has been set out is some – not all – of the relief sought.

2. The fourth cross claim filed on 22 July 2022. The cross [NAME] to the fourth cross claim were an incorporated legal practice ([COMPANY] – as first cross defendant), and a solicitor who was a director of the incorporated legal practice ([NAME] – as [NAME] cross defendant), who were retained to provide [NAME] with advice relating to their entry into the facility agreement and loan and security documentation as well as a later agreement, in relation to a loan entered between the plaintiff and first defendant in early 2016 involving $150,000.

1. The [NAME] defendant brought two cross claims – as follows:

1. The amended [NAME] cross claim filed on 4 September 2023.The cross [NAME] to that cross claim were the plaintiff (as first cross defendant); [NAME] (as [NAME] cross defendant); [NAME] (as [NAME] cross defendant); and the first defendant (as fourth cross defendant). Put very simply, by the amended [NAME] cross claim, the [NAME] defendant sought orders that in substance replicated the relief that [NAME] sought against the first, [NAME] and [NAME] cross [NAME] in the amended first cross claim. Further, the [NAME] defendant sought statutory and equitable contribution against the first defendant. Again, as with the amended first cross claim, what has been set out is some – not all – of the claims and relief sought.

2. The fifth cross claim filed on 29 July 2022. The cross [NAME] to the fifth cross claim were [COMPANY] (as first cross defendant) and [NAME] (as [NAME] cross defendant). Although not identical to the fourth cross claim, it replicates the substance of what was alleged by [NAME] against the [NAME].

The settlement in July 2023 1. On or around 14 July 2023 the [NAME] entered into a settlement agreement with the [NAME]. The consequence of that resolution led to the application by the plaintiff to discontinue a number of claims: put simply, the claims under the facility agreement and the $150K loan debt claim. Other claims, however, remained: the plaintiff pursued [NAME] for the [NAME] debt (4FASOC, pars 32-49) and the [NAME] defendant in relation to the [NAME] debt (4FASOC, pars 64-75).

2. It is sufficient to presently note that, in general terms, the settlement involved: 1. the payment of $900,000 to the [NAME] by the [NAME]; 2. the [NAME] agreed to make application for leave to discontinue the facility agreement and the $150K claims against the [NAME] – that is, all claims except for what was defined as the 'Continuing Claims' – as well as any claims against the solicitors (see cll 4 and 5, and the definitions of 'Abandoned Claims', 'Application' and 'Continuing Claims'); 3. the [NAME] agreed to the discontinuance of the [NAME] cross claim (see in particular solicitors cll 4 and 5, and the definition of 'Application'); 4. the application for the discontinuance expressly excluded 'Continuing Claims', which by the definition provided included the [NAME] debt claim; and, 5. mutual releases by the [NAME] and the [NAME] (cll 8 and 9).

1. The intent of the requirement to agree not to pursue any claims against the [NAME] – other than the [NAME] debt claims (claims that did not involve the [NAME]) – was (at least) twofold. First, to shield the [NAME] from any exposure that might arise in them in the event that the [NAME] had a liability to the plaintiff or the [NAME] generally in connection with the claims that were to be discontinued. Secondly, it would permit the [NAME] to argue that neither the first, [NAME] nor [NAME] had suffered any loss in connection with any cross claims that they had against the [NAME].

The orders made on 24 August 2023 1. On 24 August 2023 the Court made a number of orders in the proceedings – parts of the [NAME] further amended statement of claim were dismissed (relevantly excluding the [NAME] debt claim: order 1), and the [NAME] cross claim filed 9 September 2019 was also dismissed (order 4). These orders reflected key aspects of the settlement that had been reached: see [32]ff, above.

The subsequent resolution of the proceedings: the settlement deed 1. The matter was listed for hearing for 10 days commencing 16 October 2023. On 13 October 2023, the parties agreed to a settlement of the proceedings. Essentially, by that settlement, all remaining issues – except for those identified in [1], above – were resolved: to be clear, the resolution extended to all outstanding claims by the [NAME], as well as all cross claims by the [NAME].

The [NAME] debt claim – the plaintiff and the [NAME] defendant

Introduction and overview 1. The plaintiff seeks to recover from the [NAME] defendant an amount alleged to be owing under the [NAME] debt – an amount that, as at 18 October 2023, is agreed to be $157,231.25.

2. The [NAME] defendant disputes that he is liable to the plaintiff for that debt: he raises, by way of response, that the plaintiff is required to account for the sum of $150,000 received from [NAME] as part of a settlement of its claim against [NAME], and further that this payment extinguished his liability under the loan agreement. In the alternate, the [NAME] defendant submitted the settlement of the claim by the [NAME] with the [NAME] so too had the effect of extinguishing his liability ([NAME] defendant's debt submissions at [2]). As explained shortly in what follows, the [NAME] defendant's argument rests upon the rule against double compensation.

3. The plaintiff's position is that it is entitled to judgment in the agreed amount owing and, in relation to the contention that the [NAME] debt had been extinguished, submits (amongst other matters) that the [NAME] defendant's contention is legally misconceived: the claim against [NAME] was, the plaintiff submitted, not for a contractual debt, but for breach of [NAME]'s duties owed to the plaintiff as an "agent, bailee or trustee" in connection with the mortgage over the [NAME] property and that the loss and damage claimed was not the same as sought to be recovered from the [NAME] defendant (plaintiff's debt submissions at [3]).

Background facts 1. The following facts are either agreed or uncontroversial, and I find them to be as follows. They are supplementary to the findings I have earlier made.

2. On or around 3 July 2009, [NAME] entered into a loan agreement with the [NAME] defendant for the amount of $128,000. The [NAME] defendant was required to execute a mortgage over his property in [NAME] as security for that loan – which he did, albeit that [NAME] did not register that mortgage.

3. On or around 28 August 2015, [NAME] assigned its rights and interests in the loan (and the mortgage) to the plaintiff. At the time of that assignment, the [NAME] defendant owed [NAME] $116,768.91.

4. From around 28 September 2015 to 16 November 2018, the [NAME] defendant made payments to the plaintiff in relation to that loan. To be clear, the last payment that the [NAME] defendant made pursuant to the loan agreement was on 16 November 2018 and, since that time, he has made no payments to the plaintiff as required by its terms.

5. In May 2018, prior to the plaintiff commencing legal proceedings, the [NAME] defendant sold the [NAME] property and [NAME] provided to him, at his request, a release of the mortgage.

6. The plaintiff commenced proceedings by statement of claim filed on 16 July 2018. That claim included against the [NAME] defendant – amongst other claims – the [NAME] debt: see 4FASOC, pars 64-76. Further, by the [NAME] cross claim filed 9 September 2019, the [NAME] brought proceedings against [NAME] alleging, inter alia, that [NAME] breached the duties owed to the plaintiff by discharging and releasing the mortgage absent authorisation and direction of the plaintiff: [redacted]

7. On or around November 2020 the plaintiff settled the claim against [NAME], with the [NAME] – that is, not simply the plaintiff – entering into a settlement deed which relevantly required [NAME] to pay the sum of $150,000 inclusive of costs. On 10 February 2021 that amount was paid into the trust account of the solicitors for the plaintiff: [redacted]

8. As at the time the amount was paid into the trust account of the solicitors for the plaintiff, the amount alleged to be owing was $127,081.13; and, as at the date of hearing, the amount alleged to be owing was $157,231.25: affidavit of [NAME] sworn 16 October 2023, par 14, annexure B. These amounts were agreed to be outstanding – subject to the extinguishment argument raised by the [NAME] defendant.

9. The plaintiff and [NAME] defendant agreed about the characterisation of the respective claims made by the plaintiff against [NAME] and the [NAME] defendant (plaintiff's debt submissions at [3]; [NAME] defendant's debt submissions at [8]). That is, it was accepted: 1. that the claim against the [NAME] defendant by the plaintiff was in debt; and 2. that the claim against [NAME] was for breach of its duties as an agent, bailee and trustee in dealing with the [NAME] property.

Consideration and disposition 1. The [NAME] defendant's written submissions raised two arguments in support of his contention that the [NAME] debt claim has been extinguished: the [NAME] defendant argued that the "rule against double recovery" produces that outcome; or, alternatively, if that is not so, the settlement amount otherwise "needs to be accounted for by the plaintiffs" to ensure that the 'plaintiffs' do not profit from the litigation ([NAME] defendant's debt submissions at [2]).That alternate submission – which was expressed generally to be the requirement to ensure that the 'plaintiffs' do not "secure a windfall", or to avoid the 'plaintiffs' being "unjustly enriched" – was ultimately not pressed. It can therefore be put to one side. What follows deals with the remaining argument advanced: viz., that the rule against double recovery precludes the plaintiff securing a judgment against the [NAME] defendant in relation to the [NAME] debt. (Note: although the [NAME] defendant's submissions were directed to the plaintiff, and the [NAME], the claim against the [NAME] defendant in connection with the [NAME] debt was brought, and only brought, by the plaintiff).

2. The [NAME] defendant's essential argument is that it is "well-established that an applicant may not recover from one or more respondents an amount that is in excess" of their loss and that it "does not matter that the claims against the various respondents arise under different causes of action. Where relief is sought in respect of the same loss, recovery will be limited by the extent of the applicant's loss" ([NAME] defendant's debt submissions at [5]). The [NAME] defendant submitted that this principle – described as the "rule against double recovery" or the "rule against double compensation" – applied here.

The rule against double compensation 1. The relevant rule was stated in Townsend v Stone Toms & Partners (1984) 27 BLR 26, 38 by Oliver LJ as being: The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant. A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due.

1. Purchas LJ explained the rule in these terms (at 49): It follows that if in the first action a plaintiff recovers all that he is entitled to, then there is nothing left to recover in the [NAME] action. The law, now embracing equity, will not permit a plaintiff, by whatever procedural device he employs, to recover more than the damage that he has suffered, whether he claims in contract, tort or both. (The rule against double recovery.)

1. This decision has been repeatedly followed: see, for example, Boncristiano v Lohmann [1998] 4 VR 82, 89 ('[NAME]'); Baxter v Obacelo Pty Ltd (2000) 48 NSWLR 522; [2000] NSWCA 69 at [32]-[34]; Franklins Self Serve Pty Ltd v Wyber (1999) 48 NSWLR 249; [1999] NSWCA 390 at [29] (and the cases there cited); SAS Trustee Corporation v Budd (2005) 3 DDCR 382; [2005] NSWCA 366 at [33] ('Budd'). The rule has been explained as a principle ("the principle of full satisfaction prevents double recovery"), and it reflects the fundamental idea that a party "cannot recover in the aggregate from one or more [NAME] an amount in excess of [their] loss": [NAME] Tang Man Sit v Capacious Investments Ltd [1996] AC 514, 522.

2. The principle is frequently applied in the context of statutory schemes for the payment of damages or compensation, but its application is not so limited. Rather, as explained in Budd at [33], the principle is one of general application: The rule against double compensation may be invoked by one or more [NAME]. If it can be shown that the plaintiff/claimant has already received recompense in any form in respect of the loss for which compensation is claimed against the defendant invoking the rule, then the plaintiff's loss requiring compensation from that defendant is regarded as discharged pro tanto. To award compensation with respect to that loss against that defendant would be to permit double recovery by the plaintiff in respect of a loss no longer calling to be compensated. See also [NAME] (for the Estate of the late George Dionysatos) v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34; [2015] NSWCA 281 at [201]-[202].

1. The engagement of the rule depends upon whether "the claims against the various [NAME] are 'concurrent' in the sense that the relief sought is the same"– that is, there are concurrent or overlapping claims for the same damage: [NAME] at 89; Government Insurance Office of NSW v Aboushadi (1999) Aust Torts Reports 81–531; [1999] NSWCA 396 at [28]-[31]. In that situation, where there is recovery of an amount by a party against one of several wrongdoers, the amount recovered goes in diminution of the damages that are awarded against the other wrongdoer.

The settlement with [NAME]

1. In connection with the requirement for there to be concurrent, or overlapping, claims for the same damage, the parties were at odds about this; as it happens, this was the critical – indeed only – issue for determination. Here, that issue turns upon whether the plaintiff's [NAME] debt claim against the [NAME] defendant is concurrent (in the sense described) with the claim that the plaintiff brought against [NAME] by the [NAME] cross claim. The parties approached the matter on the footing that this issue was to be resolved by an examination of the pleadings, and what was recovered.

2. The [NAME] defendant submitted that, upon proper analysis of the pleadings, it was clear that the plaintiff sought recovery against the [NAME] defendant in respect of the same loss and damage that was the subject of the claims and settlements with [NAME]. The plaintiff, however, contested that characterisation of the pleadings, submitting that there were distinctly different claims advanced (and therefore resolved) and that, critically, there was no recovery in respect of the losses that were the subject of the debt claim against the [NAME] defendant.

3. In order to resolve this issue it is necessary to examine the two pleadings which were the subject of argument – the 3FASOC and the [NAME] cross claim: the former contained the [NAME] debt claim against the [NAME] defendant; the latter contained the claim against [NAME].

4. I will start with the 3FASOC. Relevantly, in connection with the [NAME] debt claim, the claim against the [NAME] defendant involved the following allegations and claim for relief:

1. The relevant loan between [NAME] and the [NAME] defendant was dated 3 July 2009, which was assigned from [NAME] to the plaintiff on 28 August 2015 – an assignment that included the assignment of securities from [NAME] to the plaintiff: [redacted]

2. Between 28 September 2015 to 16 November 2018, the [NAME] defendant made payments to the plaintiff in relation to the [NAME] debt: 3FASOC, par 72.

3. From 17 November 2018 to date, the [NAME] defendant made no payments to the plaintiff in relation to the [NAME] debt: 3FASOC, par 73.

4. From around 10 November 2016 to 5 March 2019, the plaintiff made demands upon the [NAME] defendant for the payment of the amount owing under the [NAME] debt, and the [NAME] defendant failed and refused to pay such monies or any part of them: 3FASOC, par 75(b).

5. The [NAME] defendant was in default under the [NAME] debt by reason of his failure to pay the plaintiff the money that was outstanding from time to time: 3FASOC, par 76.

1. The [NAME] cross claim was brought by the [NAME], and there were six cross [NAME] to that cross claim – one of which was [NAME] (the sixth cross defendant). Relevantly, the claim against [NAME] involved the following allegations and claim for relief:

1. The relevant loan between [NAME] and the [NAME] defendant was dated 3 July 2009, and was assigned from [NAME] to the plaintiff on 28 August 2015: [NAME] cross claim, par 17. The assignment included the assignment of securities from [NAME] to the plaintiff – which included the [NAME] property mortgage ([NAME] cross claim, par 17(a) and the definition of '[NAME]/[NAME]'.

2. In the period 9 to 31 May 2018, [NAME] drafted, prepared and executed a release of mortgage over the [NAME] property following a request by, or on behalf of, the [NAME] defendant and, subsequently, delivered possession, custody and control of the title to the [NAME] defendant, or on his behalf: [NAME] cross claim, pars 33(a) and (b).

3. During the period 9 to 31 May 2018, the [NAME] defendant effected a sale of the [NAME] property: [NAME] cross claim, par 34.

4. On and following the assignment of the debt and the securities from [NAME] to the plaintiff, [NAME] relevantly held the [NAME] property title "as agent, bailee or trustee" for the plaintiff, and was not entitled or committed to deliver up or deal with the [NAME] property title unless "authorised, directed and requested by the plaintiff": [NAME] cross claim, pars 67(a) and (c). As I have earlier noted, the [NAME] defendant accepted that the proper characterisation of the claim brought by the plaintiff against [NAME] was as alleged in par 67(a).

5. By engaging in the relevant conduct (both acts and omissions), "[NAME] breached the duties and obligations which it owed to [the plaintiff] pleaded in paragraph 67": [NAME] cross claim, par 69.

6. By reason of the matters alleged, in the breach of duty by [NAME], the plaintiff alleged to have suffered loss and damage – the particulars of which were identified in the [NAME] cross claim, par 47: [NAME] cross claim, par 70.

7. The plaintiff alleged to have "suffered loss and damage" of three types: 1. the plaintiff's "legal costs in defending" the amended first cross claim (described in the [NAME] cross claim as the "[NAME] Claim"): [NAME] cross claim, par 47(a); 2. the "economic loss which will be suffered by [the plaintiff] if the [NAME] Claim is successful": [NAME] cross claim, par 47(b); and 3. the plaintiff's legal costs, "in whole or part", of the [NAME] further amended statement of claim, and the first, [NAME] and [NAME] cross claims: [NAME] cross claim, par 47(c).

1. In relation to these claims, the plaintiff sought "an order for damages, alternatively equitable compensation, alternatively equitable damages" and damages pursuant to s 236(1) of the Australian Consumer Law: relief claimed, pars 15(a) and (b).

1. In relation to the claim against the [NAME] defendant, as I have earlier noted the [NAME] defendant accepted that the claim brought by the plaintiff against him was a debt claim and the claim against [NAME] was against them for breach of the duty owed to the plaintiff as an "agent, bailee or trustee". In my view, that concession was entirely appropriate. It acknowledges what is otherwise apparent from the pleading itself: namely, that the claims brought by the plaintiff against, on the one hand, [NAME] and, on the other, the [NAME] defendant, were not the same.

2. Further, in my view, as the plaintiff essentially submitted, those distinct causes of action sought recovery in connection with different losses: as against the [NAME] defendant, the plaintiff sought recovery of the money owed under the [NAME] debt; as against [NAME], the plaintiff sought recovery of damages that was either loss and damage connected to the amended first cross claim ([NAME] cross claim, pars 47(a) and (b)) or legal costs (which were not pursued against the [NAME] defendant – and agreed by the parties could be put to one side). The losses so claimed by the plaintiff in the action against [NAME] were of a different and distinct character: see [60(7)] above. They were not concurrent or overlapping claims in respect of the same damage; rather they were separate causes of action claiming different losses. Put simply, there was not, as the plaintiff submitted, a singular liability related to a [NAME] debt or [NAME] amount: Farrow Finance Co Ltd (in Liq) v ANZ Executors and Trustee Co Ltd [1998] 1 VR 50, 79.

3. It follows that the plaintiff's settlement of the claim against [NAME] cannot, in and of itself, amount to a recovery other than in respect of the claimed losses. Further, and in any event, there is, in my view, contrary to what the [NAME] defendant argued, nothing in the deed of settlement between [NAME] and the [NAME] to demonstrate otherwise. Rather, in my view, the deed of settlement supports the characterisation that was argued by the plaintiff, which I accept. That is because the deed merely reflects a settlement of the proceedings, and the claims that the [NAME] (not simply the plaintiff) had against [NAME]: in essence, to discontinue the proceedings against [NAME] (as contained in the [NAME] cross claim) and to release them upon the payment of $150,000. To the extent that the [NAME] defendant submitted that it should be held that there has been a recovery because of the description of the 'claims' in the recitals to the deed, I do not accept that submission. To the extent that 'claims' bears (and has) a definition, the purpose, in my view, of that definition is to provide, by way of amplification, the terms of the release that has been provided. The fact that a broadly worded release is provided (unremarkably, given its purpose) in my view does not amount to a claim by the plaintiff seeking the same loss or damage (less still a recovery) nor, in the present situation, does it engage, in my respectful view, the rule against double compensation.

The settlement with the [NAME]

1. The [NAME] defendant next argued that if the settlement with [NAME] was not captured by the rule against double compensation, then the settlement between the [NAME] and the [NAME] was. There were, as with the above analysis, two strands to this argument: the engagement of the rule was said to be evident from an analysis of the pleadings and by reason of the deed of settlement.

2. This argument turned upon the proper characterisation of the [NAME] cross claim, par 50. The essential argument of the [NAME] defendant was that, by that pleading, the plaintiff sought – and, consequently by the settlement, therefore recovered – damages from [NAME] in connection with the same loss claimed against the [NAME] defendant. The plaintiff disputed both the characterisation and the alleged consequence of the settlement.

3. Given the respective arguments focused upon the [NAME] cross claim, par 50, I will set out that paragraph in full. It provides as follows:

50. By reason of [NAME] t/as [NAME] engaging in such conduct, [the plaintiff] has suffered loss and damage. Particulars (a) The matters and state of affairs pleaded in paragraph 46 commencing with "MIH" after paragraph 46(b) would have existed. (b) The particulars to paragraph 47 are repeated.

1. The [NAME] defendant's argument is that, in effect, paragraph 50(a) reflected a claim brought by the plaintiff against its former legal representatives that, by reason of the negligence of those legal representatives, it lost the benefit of security and, in particular, the benefit of the [NAME] debt.

2. I do not accept that submission. In my view, as the plaintiff essentially argued, the function of par 50(a) was directed to a different end: it was directed to pleading a counterfactual; namely, it set out the steps to demonstrate the causal link between the breach of duty (identified in par 46) and what would have occurred had there been no breach of duty. That is apparent from the structure of the pleading itself and, in particular par 47, which then pleads that by "reason of the matters pleaded" in pars 44-46, the plaintiff "has suffered loss and damage" of the three types in par 47 (as set out in [60(7)], above).

3. For the reasons earlier given in connection with the [NAME] defendant's first argument (see [61]-[62], above), the loss and damage claimed against the [NAME] are confined to the losses particularised in par 47 of the [NAME] cross claim.

4. The [NAME] strand of the [NAME] defendant's argument was that the settlement with the solicitors, as reflected in the agreement dated 14 July 2023 (exhibit C), contained "promises" that were "in part satisfaction of the [NAME] as costs of these proceedings" which were required to be taken into account and, separately, that such "settlement amounts need to be accounted for by the plaintiffs in the debt claim to ensure that [the] [NAME] are not unjustly enriched" ([NAME] defendant's debt submissions at [3]).

5. In relation to these submissions, the following matters should be noted. First, neither the plaintiff, nor the [NAME], advanced any claims in relation to costs as part of the subject matter of this dispute; there was, therefore, no argument directed to this by either side and each side agreed any claims in connection with costs could be ignored. Given this, the first part of the [NAME] defendant's submissions was not pressed. Secondly, as noted earlier, no separate claim in connection with an unjust enrichment was advanced; rather, the argument, as developed during oral submissions, was confined only to the rule against double compensation.

6. Putting these matters to one side, I do not accept the [NAME] defendant's submission. In my view, the deed of settlement between the [NAME] and the [NAME] made clear that the recovery was in connection with the 'Claims', which excluded the 'Continuing Claims'. The settlement was to operate by requiring the [NAME] to make 'the Application': this term was defined, in effect, to mean an application by notice of motion for leave to discontinue the 'Claims', except the 'Continuing Claims'. Put simply, and as the plaintiff and [NAME] essentially submitted, the settlement sum was in connection with the claims forgone and the releases provided (which were also in connection with the 'Claims'). In short, there is nothing in the deed of settlement to suggest that the plaintiff recovered in connection with the same loss that is claimed against the [NAME] defendant.

Orders 1. For those reasons, the plaintiff is entitled to judgment against the [NAME] defendant in connection with the [NAME] debt in the amount claimed – namely $157,231.25. 2. The plaintiff and [NAME] defendant accepted that the successful party should have its costs of this action. I propose to make that order.

The interest claim – the plaintiff and [NAME]

Introduction and overview 1. [NAME] claim interest on money that was paid out of Court to the plaintiff – money which is now to be paid back into Court pursuant to the settlement deed dated 13 October 2023.

2. Put simply, and as explained in some more detail later in these reasons, the short facts giving rise to this claim are these: $1.863 million was, pursuant to an agreement reached on 27 February 2019 between the plaintiff and [NAME] paid into Court and, following an application made by the [NAME] for such orders, by further agreement and consent orders made (reflecting that agreement) on 2 April 2019, the amount of $315,947.93 was paid out to the plaintiff. It is this money that is the subject of agreement to be paid back into Court, and over which [NAME] now seek an order that interest be paid by the plaintiff. 3. [NAME] essentially argue that, by reason of the settlement of the claims – specifically, that the plaintiff has agreed to an order that the $315,947.93 be paid into Court (subject, inter alia, to a proposed application for a freezing order to retain those funds) – has the consequence that not only do they have an entitlement to the money, but also a correlative entitlement to interest on it applying "restitutionary principles".

Background facts 1. I find the background facts to be as follows. They are supplementary to the findings I have earlier made. Where there is a contest about any facts, they are identified and resolved in what follows. To the extent that specific issues of fact – or characterisation – are raised by submissions of the parties, they are also dealt with later when dealing with those submissions.

2. On 3 November 2018, [NAME] entered into a contract to sell the [NAME] property for $2.653 million. The plaintiff had three registered mortgages over that property.

3. On 29 January 2019, the [NAME] defendant entered into a contract to purchase a property at [NAME] for $1.285 million.

4. On 8 February 2019, [NAME] filed a notice of motion, that was returnable before the [NAME] Judge, seeking, inter alia, an order that the plaintiff deliver up the certificate of title to the [NAME] property. On 27 February 2019 the plaintiff and [NAME] entered into an agreement – described as 'terms of settlement' – wherein it was agreed that a bank cheque (payable to the Supreme Court of New South Wales) would be provided to the plaintiff, upon settlement of the sale of the [NAME] property, in the amount of $1.863 million – following which: (a) the plaintiff would pay that money into Court; and (b) the plaintiff would discharge its three mortgages over the [NAME] property. The terms of settlement were signed by counsel for the respective parties.

5. The amount of $1.863 million represented the amount that the plaintiff contended, but [NAME] disputed, was owing (or would become owing) and payable by [NAME] under those mortgages.

6. On 12 March 2019 the sale of the [NAME] property settled, following which the plaintiff delivered to [NAME] discharges of the three mortgages, and [NAME] delivered to the plaintiff three bank cheques made payable to the Court in the amount of $1,863,141.87 (4FASOC, par 88). On that date, as agreed, the plaintiff paid the three bank cheques into Court (4FASOC, par 89).

7. On 2 April 2019, [NAME] served a further notice of motion on the plaintiff, and at that time indicated they would seek to have that notice of motion returnable before the [NAME] Judge later that morning. Relevantly, by prayer 2 of that notice of motion, [NAME] sought an order that the amount of $315,947.93 be paid out to the plaintiff. (The events surrounding the filing of that notice of motion are addressed in some more detail later: see [104]ff, below).

8. On 2 April 2019 following agreement between the parties, orders were made by consent that from the proceeds of the three bank cheques paid into Court on 12 March 2019: 1. the amount of $1,055,007.12 was to be paid out of Court forthwith to the [NAME] defendant so as to be applied as part of the purchase price for the [NAME] property (4FASOC, par 92(a)); 2. the amount of $315,947.93 was to be paid out of Court to the plaintiff forthwith "without prejudice to all parties as rights that are the subject of this proceeding (to discharge the former [NAME] debt and the [$150K loan] …" (4FASOC, par 92(b)); 3. the amount of $492,186.82 was to remain in Court without prejudice to all parties' rights, pending further order of the Court (4FASOC, par 92(c)); and, 4. upon settlement of the contract for sale of the [NAME] property, the [NAME] defendant undertook to give the plaintiff a first ranking registrable mortgage over that property limited to the sum of $537,171.00 (4FASOC, par 92(d)).

1. On 5 April 2019, the [NAME] defendant completed the contract for purchase of the [NAME] property and gave the plaintiff a mortgage in the terms required. Further, the amount of $315,947.93 was paid out of Court to the plaintiff.

2. The amount of $315,947.93 was made up of money alleged to be owing under the $150K loan (approximately $241,077.82, including interest) and money alleged to be owing under the [NAME] debt – being the loan between [NAME] and [NAME] entered on or about 21 November 2007 that was assigned to the plaintiff on or around 28 August 2015 (approximately $74,870.11 – including interest).

3. Although presently dealing with matters of fact, a submission made by [NAME] about a "fact" should be addressed in connection with the $150K loan: it was submitted that not only did [NAME] contest their liability to the plaintiff for the sum of $315,947.93, but that the $150K loan had not been validly assigned ([NAME]' interest submissions at [5] and [6]). [NAME] made a similar submission during the hearing. The plaintiff pointed out that no such issue had ever been raised before (and there was no pleading to that effect in the defence filed by [NAME]) and, when pressed about this, [NAME] conceded that "the parties probably acted on the basis that there was an assignment …". When pressed further, [NAME] did not seek to raise this as an issue relevant to the interest determination; any issue about the assignment can therefore be put to one side.

4. The consent orders made on 2 April 2019 did not require the plaintiff to provide an undertaking as to damages as a condition of the payment of that money out of Court to it (as the "price" for that to occur), nor were they required to provide one on any other occasion.

5. As it happens, the dispute between the parties in connection with those loans resolved and, following on from the resolution and as part of it, orders were made dismissing those claims on 24 August 2023 and 18 October 2023. As I have earlier noted, the claim by the plaintiff under the $150K loan was dismissed by the orders made on 24 August 2023; and the claim by the plaintiff pursuant to the [NAME] loan that was assigned to it was dismissed as part of the settlement with the [NAME], and on 18 October 2023 as part of the settlement reached on 13 October 2023: see [32]ff, above.

6. The overall settlement agreement that was reached between the parties on 13 October 2023 has been recorded in a deed of release. A term of that deed provides that the plaintiff agrees to an order that it pay the sum of $315,947.93 "into Court subject to the resolution of costs and the proposed freezing application" referred to in cl 4.4: cl 4.3. The deed also makes provision, as between the parties, that the issue as to whether interest on this amount is payable – and if so, in what amount – was to be the subject of determination by the Court: cll 4.3 and 4.6(c).

7. I turn now to deal with the respective arguments.

An overview of the submissions 1. [NAME] submit that their entitlement to claim interest was "on the restitutionary basis" ([NAME]' interest submissions at [8]). The essential argument of [NAME] is that it "is a well-recognised principle that sums paid pursuant to a court order that is set aside on appeal must be repaid with interest" and, in that respect, [NAME] relied upon the decision in [COMPANY] v [NAME] (No 2) (2011) 80 NSWLR 445, 449-450; [2011] NSWCA 72 in support ([NAME]' interest submissions at [9]).

2. The plaintiff contests [NAME]' entitlement to claim interest: it argues (amongst other matters) that the legal underpinning necessary to enliven the Court's power to award interest does not exist, and that that is particularly so given that the proceedings have been dismissed – consequent upon a settlement between them – without any judicial determination (plaintiff's interest submissions at [8]).

Judgments or orders set aside: consideration 1. It may be accepted, as [NAME] submitted, that sums paid pursuant to a court order which is set aside on appeal must be repaid with interest. The leading authority is Commonwealth v McCormack (1984) 155 CLR 273; [1984] HCA 57 where the principle was stated as (at 276): "An appellant who has satisfied a judgment for the payment of money is entitled, on the reversal of the judgment, to repayment of the money paid by him with interest". See also [NAME] v [COMPANY] (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 at [12] ('[NAME]'). The underlying principle engaged in that situation is unjust enrichment: [NAME] at [14]. Nevertheless, in my view, it is inapt to describe that which has occurred in the present case as involving a court setting "aside an order on appeal", or anything relevantly akin to that situation, and [NAME] did not explain why it was. In my view [NAME]' reliance upon the line of authority referred to is misplaced. The circumstances here are quite removed from that situation: no judgment was entered.

2. Further it cannot be said that there was an order – erroneously made – requiring the payment of the sum of $315,947.93 that was subsequently overturned (National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386, 597). Again, the circumstances here are quite removed from that situation. That is because: (a) the money paid into Court by the plaintiff on 12 March 2019 occurred as a consequence of an agreement between the parties dated 27 February 2019, and was not the subject of a determination of any issue in dispute; (b) the amount of $315,947.93 paid out of Court on 5 April 2019 to the plaintiff was the subject of an agreement between the parties and a subsequent consent order (reflecting an agreement) between the parties and so too was not the subject of a determination of any issue in dispute – in fact, that agreement and consent order followed from, and arose out of, an application for the money to be paid out to the plaintiff that was made by [NAME]; (c) the amount of $315,947.93 that is to be paid back into Court, following the settlement reached on 13 October 2023, is (again) the product of an agreed position not the subject of a determination of any issue in dispute – that is, the parties have agreed for this to occur and for an order to be made giving effect to it; and (d) no order is being set aside or disturbed.

"The substance is restitution"

1. The submission of [NAME], as developed during the hearing, was that "the substance of what is happening is restitution of effectively the monies that [[NAME]] paid pursuant to those orders". [NAME] emphasised, in this respect, the importance on focusing "on the substance, not the form of this". The essence of the argument for [NAME] is that in respect of the $315,947.93 (and that which resulted in it being paid out to the plaintiff), all claims in connection with that amount have been dismissed; it follows, on the argument advanced, that there is an entitlement to the money and interest upon it.

2. The authorities relied upon by [NAME] identify the requirement for the payment from one to the other to be "compelled", and also recognise the correlative right for the position to be restored if the judgment or order is overturned: those matters evidence why there has been enrichment at a party's expense that is unjust. Thus, there is, in the way in which the issue was argued by [NAME], two related issues to consider: the element of compulsion and the manner in which the money is returned. I will deal with them in order.

Compulsion 1. Beyond the fact that the money had been paid into Court, the submissions of the [NAME] skipped over any analysis of how the money came to be paid into Court and, subsequently out of Court to the plaintiff and how, given those matters, restitutionary principles were engaged nor, further still, why there was compulsion.

2. As set out in Chapter 7 of [NAME] and [NAME], Restitution Law in Australia (3rd ed, 2016, LexisNexis Butterworths) – of which, the [NAME] edition was relied upon by [NAME] – the feature of the payments in the situation argued by [NAME] is that "the payment was compelled" (at p 279, [701]).

3. In my view it is not correct to characterise that which occurred by the payment of money out of Court to the plaintiff – or anything in connection with the money being paid into Court – as being a payment that was compelled. That is not this case. I consider it to be clear (and find) that – as a matter of substance – it was consensual: that is, [NAME] agreed to pay the money to the plaintiff – and, to be clear, they did so voluntarily. I have explained, and made findings about, what occurred above. There is, I add, no suggestion of any untoward conduct by the plaintiff nor anything that was suggested to be "unjust" in connection with the agreement(s) entered or orders made (or to be made): no submissions were made about any such matters.

4. Given the argument of [NAME], and the submission to the effect that it was important to focus upon the substance, the following matters warrant emphasis.

5. It was [NAME] who approached the [NAME] Judge on 8 February 2019 seeking an order that the plaintiff deliver up the certificate of title to the [NAME] property, as well as discharge the mortgages that it held over that property. On 27 February 2019 the plaintiff and [NAME] resolved the dispute in connection with those matters – essentially upon the terms as I have earlier set out. [NAME]' notice of motion, filed 8 February 2019, was also to be dismissed.

6. It was again [NAME] who approached the [NAME] Judge on 2 April 2019. The notice of motion itself was not in evidence, but the terms of it are recorded in the judgment of [NAME] in McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 37 at [65]. Relevantly, by prayer 2 of the notice of motion, [NAME] sought the following: The sum of $315,947.93 in Court be paid to [the plaintiff] forthwith without prejudice to all parties' rights that are the subject of this proceeding (to discharge the [NAME] and the $150,000 loan facility gross of interest up to 26 March 2019). 1. [NAME] also sought, by that notice of motion, that money paid into Court be paid out in order to complete the purchase of the [NAME] property (order 1) and that other amounts – namely, $342,186.82 and $150,000 – remain in Court, essentially "without prejudice to all parties' rights that are the subject of this proceeding ..." (orders 3 and 4).

2. At the return of the motion on 2 April 2019, the parties provided [NAME] – sitting as the [NAME] Judge – with a document titled: "Terms of Order made by the Court by consent". Specifically, order 2 proposed (and agreed) by the parties became order 2 as made by [NAME]. It reflected the terms of the order sought by [NAME] (being prayer 2) in the notice of motion filed by them on 2 April 2019: see [104], above.

3. Having recounted those matters, and looking at the substance of what occurred, I am unable to accept that there was any relevant compulsion to do what [NAME] did. In my view the only finding that is open – which I have made in [101], above – is that the key events were consensual (and, thus, voluntary), initiated by [NAME] and agreed upon by the parties. During the course of submissions, [NAME] conceded that the payment was made "voluntarily" – albeit that the payment was "without prejudice" etc. To the extent [NAME] fix their upon the consent order, the full context, and the agreement that underlay the making of that order has been set out. Those matters explain the order, and make plain that it was based upon an agreed position.

4. Nor do I accept that there is any basis to find that the order made (being, order 2 made on 2 April 2019) is wrong: the basis for it being made was an agreement between the parties prompted by the notice of motion brought by [NAME] specifically seeking that order. 5. [NAME]' submissions did not address these matters of detail – what the plaintiff submitted was the premise of the argument – nor how or why, given the above matters (and the concession made by the [NAME]), the element of compulsion was demonstrated. 6. [NAME] also sought to argue that the payment made "was an interim payment" ([NAME] interest submissions at [14]). Presumably this submission was made to secure a finding of compulsion. I do not accept that submission. As I have explained, the application was brought by [NAME] (not the plaintiff) for the payment of the money out of court to the plaintiff. That is not an application for an interim payment in any sense (as to which, see s 82 of the Civil Procedure Act 2005 (NSW)), and [NAME]' notice of motion filed on 2 April 2019 was not framed as an application of that kind.

7. In my view, the absence of compulsion – the fact I have found the payment was consensual (and voluntary) and initiated by [NAME] – denies a right to restitution (and the correlative right to interest) based upon the principles relied upon by [NAME]. That is sufficient, in my view, and given the way the matter was argued, to dispose of the application by [NAME].

The return of the money 1. As to this matter, [NAME] submitted that it did not matter how the money came to be returned to them: in this specific respect [NAME] relied upon that part of the decision in [NAME] at [14] where it was said that "restitution is available regardless of the means whereby the judgment is discharged".

2. For the reasons that I have earlier given, that is not this situation: no judgment is being "discharged" (see [95]-[96], above). Furthermore, it is important to emphasise the full context of the passage in [NAME] (and what it was directed to) upon which [NAME] rely. The entire subject of the discussion by [NAME] was dealing with the basis of restitution with interest of money paid under a judgment (that is, by compulsion) later set aside: that is apparent from a consideration of the discussion in [NAME] at [12]-[14]. That discussion of principle led into the summary that [NAME] relied upon. The confined part of the passage in [NAME] at [14] relied upon by [NAME] was not a freestanding statement of principle, in my view. 3. [NAME] also relied upon Chapter 7 of [NAME] and [NAME], Restitution Law in Australia (2nd ed, 2008, LexisNexis Butterworths) at p 268 [707] in aid of the above submission (that is, relying upon [NAME] at [14] – as set out in [112], above) that "it does not matter why the order for payment no longer applies, restitution should be given if the monies paid pursuant to a Court order are to be repaid" ([NAME]' interest submissions at [12]). In my respectful view, the paragraph from Restitution Law in Australia relied upon does not assist [NAME]: it establishes that the precise manner in which "the order pursuant to which the benefit was conferred was … set aside" did not matter. (The text then sets out a number of examples). Putting to one side the question of compulsion (upon which this principle clearly rests), the order made for the payment out was not erroneous, nor has it been set aside. 4. [NAME] argued that, as a matter of substance, there was a right to restitution and interest upon the orders made (a submission that appears to be directed to the ultimate position sought by [NAME]) and the mere fact that the money is to be "returned" to [NAME] triggered the entitlement to interest in line with the principle identified. I am, respectfully, unable to accept the breadth of that submission given the above discussion. In that respect it is also necessary to note the following.

5. First, the overall agreement reached between (relevantly) the plaintiff and [NAME] on 13 October 2023 involved, inter alia, a term that the plaintiff will consent to an order that the amount of $315,947.93 be paid into Court (no order has been made and the Court was simply asked to note that agreement: par 20). Again, to the extent that [NAME] seek to anchor the case on the return of the money in the consent order (yet to be made) then I do not accept that any order (assuming it will be made) reflects the reality and the true position: the order is the product of agreement between all parties to resolve the dispute.

6. Secondly, in connection with the orders made on 24 August 2023 that resulted in the dismissal of a number of causes of action that were contained in the 3FASOC: the orders relevantly extended to the claim on the $150K loan. Further, in connection with the settlement reached in October 2023, that resulted in the dismissal of the outstanding claims by all parties (subject to some presently irrelevant exceptions) – but each side expressly agreed to the entry of that settlement agreement to be "[w]ithout admission" (recitals N and O). In each situation, there has been no determination of the rights and liabilities of any party in consequence of these agreements leading to the orders, nor is there any agreement about such matters. 7. [NAME] submitted that it was incorrect to submit, as the plaintiff did, that all relevant steps were consensual because, in their submission, the orders made on 24 August 2023 were not by consent. It is apparent that the only issue that arose on 24 August 2023 was whether the "settled claims" should be discontinued or dismissed: the plaintiff, initially, sought the former, but ultimately did not oppose the latter when sought by [NAME]. It is correct, as [NAME] submitted, that the plaintiff brought an application for these orders, but they were for an order that the proceedings be discontinued. Further, each active party agreed that orders should be made that, in substance, allowed this to occur subject only to a notation that essentially precluded the plaintiff on bringing fresh proceedings or claiming the same relief in fresh proceedings. That approach reflected what was agreed between the plaintiff and the [NAME] (see the definition of 'Application' in the settlement deed dated 14 July 2023, and [72], above for a discussion about the terms of that deed). As it happens, the plaintiff agreed to an order that the proceedings be dismissed, rather than simply discontinued, with a notation in the terms that I have outlined. Thus, I do not accept that there is any material inaccuracy in what was submitted by the plaintiff; rather, it is essentially aligns with what occurred.

8. Thirdly, [NAME] advanced a claim for interest which was accepted by the parties to be reflected in the relief claimed, par 12, of the amended first cross claim filed 29 August 2023. (The earlier version of this cross claim, also described as the amended first cross claim, but filed on 13 November 2019, made the same claim). In particular, [NAME]' interest claim specifically sought interest upon the amount that was paid as referred to in par 92 of the 3FASOC – an amount that included the amount paid out to the plaintiff on 5 April 2019. That cross claim was dismissed by orders made on 13 October 2023 albeit that that prayer for relief was preserved. The basis for that claim, at least as expressed in the pleading, was somewhat opaque: it referred to sums paid to the plaintiff "under protest". The precise juridical basis for that "claim" was not explained during submissions: as the plaintiff submitted, [NAME] did not seek to establish, in the particular circumstances that arose, any legal basis for that claim. In any event, there is no basis to make any finding of the kind referred to in par 12 of the amended first cross claim. In fact, it is contrary to the express finding that I have made – namely, that the payment was consensual (and voluntary) and initiated by [NAME].

9. Thus, and in addition to the conclusion that I have reached in connection with the question of compulsion (see [111], above), I do not accept, for the above reasons, that the agreed "return" of the money triggers any entitlement to interest in the manner argued by [NAME].

10. Given the conclusion that I have reached, it is unnecessary to determine the rate of interest.

Orders 1. The parties did not identify any particular form of orders that would follow from acceptance, or rejection, of the interest claim. In those circumstances I propose simply to order that [NAME]' claim for interest be dismissed.

The costs claims: an overview of the respective positions 1. By way of broad overview (and for introductory purposes), the positions of the parties may be summarised as follows:

1. The plaintiff seeks (and the [NAME] seek) an order that there be no order as to costs of the proceedings with the intent that each party should bear their own costs. 2. [NAME] seek the following orders: 1. an order that the plaintiff – as well as [NAME] – pay their costs of the proceedings; and, 2. an order that the plaintiff – as well as [NAME] – pay their costs of the first, [NAME] and fourth cross claims.

1. The [NAME] defendant seeks the following orders: 1. an order that the plaintiff – as well as [NAME] – pay his costs of the proceedings; and, 2. an order that the plaintiff – as well as [NAME] – pay his costs of and in connection with the [NAME] and fifth cross claims.

1. Although one or other of the parties sought orders in connection with reserved costs made in the course of proceedings, or variations to orders for costs otherwise made in the written submissions filed, each party confirmed during the hearing that no such orders were pressed. In those circumstances, I shall deal with the applications for costs as I have outlined in [123], above.

2. I have earlier in these reasons set out some of the background facts. To the extent that additional findings are required, in order to deal with arguments raised, they are dealt with in what follows.

Rule 42.20 of the UCPR and background principles 1. The parties accepted that r 42.20(1) of the Uniform Civil Procedure Rules 2005 (NSW) ('the UCPR') was the applicable costs rule given the orders made on 24 August 2023 and on 18 October 2023 (relevantly) either dismissed particular causes of action or the proceedings generally.

2. Rule 42.20(1) of the UCPR provides: If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.

1. The parties also accepted that the relevant principles that inform the operation of r 42.20(1) include those summarised in [COMPANY] v [NAME] (No 4) [2023] NSWSC 1162 at [72]-[76]:

72. The relevant principles that inform the operation of r 42.20(1) may be summarised relevantly as follows.

73. Rule 42.20(1) is not an inflexible rule: it is to apply "unless the court otherwise orders". The rule does not give rise to a presumption that costs will be ordered against the discontinuing party or against the party whose claim is dismissed (Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 at [84]). In that respect it "goes no further than to state the first point of consideration; there is no presumption which must be outweighed; what the rule says is what the order for costs is to be unless there is a discretionary decision to order otherwise": Australiawide Airlines at [53]. Nevertheless, the plaintiff must demonstrate a "sound positive ground or good reason" for making a different costs order: Australiawide Airlines at [53]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [53]-[54], [70]-[71].

74. Not unexpectedly, although "there is no close control over the discretion of the Court to order otherwise" (Australiawide Airlines at [54]), there are circumstances that have been accepted as bearing upon whether a court should order otherwise that the plaintiff pay the defendant's costs of the dismissed proceedings. Those circumstances include (but are not limited to) the following. First, generally speaking, where a party litigates for a period and then, in effect, surrenders or capitulates to the other, that will usually be a basis to award costs against the party that surrendered or capitulated: [COMPANY] v [NAME] of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [6] ('[NAME]'); [NAME] at [27]-[29]. Secondly, cases where some supervening event removes or modifies the subject of the dispute such that proceeding further would be inutile: [NAME] at [6]. How that "event" might inform the costs discretion – one way or the other – depends upon its nature. Thirdly, a "marked difference in the reasonableness of the actions taken by the parties": Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5]. That is, if one party has acted "so unreasonably" that may justify a particular costs order, or the discretion on costs being exercised against that party: Re Minister for Immigration and Ethnic Affairs; ex parte [NAME] (1997) 186 CLR 622, 624; [1997] HCA 6 ('[NAME]'). Fourthly, even if both parties have acted reasonably, where the Court can be confident of the outcome – where a party would have "almost certainly" succeeded – that may also justify the favourable exercise of the discretion: Shellharbour City Council v Minister for Local Government [2017] NSWCA 256 at [6]-[7] ('Shellharbour City Council'); In the matter of [COMPANY] (in liquidation) (No 2) [2019] NSWSC 1381 at [12] (Gleeson JA sitting at first instance).

75. It is also, at this point, necessary to say something about how the Court is to approach the task of determining whether it should otherwise order that costs be payable by the plaintiff. I have touched upon these matters, earlier in these reasons.

76. Some matters are clear. It is not, on an application of this kind, permissible for the Court to undertake a hypothetical trial of the matter, under the guise of a costs application, in order to determine the likely outcome of the litigation: [NAME] at [3], [31]-[32]; Tomra Collection Pty Ltd v Minto [2021] NSWSC 1323 at [56] ('[NAME]'). These decisions drew upon what was said to that effect in [NAME] at 624. See also Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194, 200; [1993] FCA 585.

1. To that summary the following three matters may (relevantly) be added concerning the situation of where there is a settlement. First, in situations where there has been a compromise across substantially all issues in the proceedings except costs (and therefore no hearing on the merits), the discretion of the Court necessarily is exercised without the benefit of what ordinarily is either the most significant, or possibly the determinative, factor to be taken into account in the exercise of the costs discretion: that is because success "in the action or on particular issues is the fact that usually controls the exercise of the discretion": Re Minister For Immigration and Ethnic Affairs; ex parte [NAME] (1997) 186 CLR 622, 624; [1997] HCA 6 ('[NAME]'). Where settlement occurs, there is a general, and complementary, principle: where the parties "resolve their differences, except as to the costs already incurred in litigation, they should usually expect that the court will not award costs": Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 ('[NAME]') at [2]. In that same case Payne JA put the matter in these terms (at [30]): If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.

1. Secondly, when a settlement occurs the Court ordinarily "will not look behind the settlement to the reasons or motivation of the parties to settle, and hence will not evaluate the reasonableness of the parties in settling": [NAME] 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424; [2014] NSWCA 107 at [29].

2. A further matter to note, in connection with the costs discretion involved in an application under r 42.20(1) of the UCPR, is that it remains relevant to consider (as I have, and as [NAME] submitted), that the power to award costs is an important aspect of rendering justice between litigants and that general rationale for costs provides important context "as does whether the formal disposition of the proceedings by dismissal truly reflects 'the event'": Nadilo v Eagleton (2021) 250 LGERA 89; [2021] NSWCA 232 at [6] and [7].

3. The specific focus of the parties' submissions was upon whether there had been a "supervening event" (being a settlement with the [NAME]) that had the effect of modifying the underlying subject matter, as the plaintiff essentially argued in connection with the settlement resulting in the 24 August 2023 orders; or whether those circumstances were, as the [NAME] submitted, properly characterised as a "surrender or capitulation". And, in connection with what occurred subsequent to the 24 August 2023 orders, the materiality of the overall settlement of the proceedings: the plaintiff essentially argued that the overall settlement was a significant matter that fully supported the principal order that the plaintiff sought, whereas the [NAME] maintained that that settlement was also properly characterised as a "surrender or capitulation".

4. Given the focus of the submissions of the defendant parties upon "surrender or capitulation" it is useful to briefly say something further about those matters, and some of the guiding principles that have emerged. Relevantly, they are as follows.

5. First, whether a party has surrendered or capitulated is to be distinguished from a situation where a party has been prosecuting (or defending) a claim with potential futility seeded in that action from its commencement – and foreseeably so: ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119 at [22]. (That is not, however, this case and it was not submitted by [NAME] that it was). Secondly, a plaintiff or a defendant "might be found to have effectively surrendered or capitulated": FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091 at [35](a).Thirdly, and as noted in the extract of principles at [128] above, whether a party has surrendered or capitulated is also to be distinguished from cases in which a supervening event or settlement renders the proceedings futile or moot or removes or modifies the subject of the dispute: [COMPANY] v [NAME] of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [6] ('[NAME]'). And, as to the distinction identified in [NAME], whilst it is of assistance, "neither category can be precisely defined, nor is the boundary between them clear": Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [80] ('[NAME]').

6. There was no dispute about the costs principles that have been set out so far; rather the arguments of the parties turned upon the characterisation of the events – essentially those surrounding the August 2023 settlement, the entry of orders made on 24 August 2023 and the settlement on 13 October 2023 – and the findings that should be made about them.

The 'overall' costs orders sought

Introduction and overview 1. The essential submission of the [NAME] is that the Court should otherwise order – specifically, make no order as to costs – for two overlapping reasons: first, they submit that, in real and practical terms, they have secured extra curial success (namely, the settlement with the [NAME] in August 2023) or, as they also described that settlement, a 'supervening event' (plaintiff's costs submissions at [6] and [7]); and, secondly, in relation to the claims that remained after that time, more recently, there has been an overall settlement – subject to the other matters which are addressed earlier in this judgment – between all parties across all issues and that provides a sound reason why the Court should make the order sought by them. 2. [NAME] submit that there has been a "complete capitulation" by the [NAME] evident by the terms of the orders made on 24 August 2023 and the nature of the subsequent settlement on 13 October 2023 ([NAME]' costs submissions at [10] and [11]). The [NAME] defendant adopted this position, and the submissions of the [NAME]. (The analysis that follows deals with the matter on that footing: the position of [NAME] was relevantly argued to be indistinguishable).

3. It should also be noted what was not argued by [NAME]. No defendant submitted that the proceedings were unreasonably commenced or maintained or that any particular conduct of the plaintiff, or [NAME] more generally, was unreasonable – such that the principal costs orders sought by [NAME] (as described in [123], above) could justifiably be made on that footing.

Consideration and disposition 1. Given the arguments of [NAME], it is appropriate to commence with an examination of the matters that are argued by them to support a finding that there has been a capitulation or surrender (these terms are used synonymously, and interchangeably, within these reasons) by the [NAME]. 2. [NAME] argued that that ultimate finding should be reached by an examination of – and intermediate findings based upon – "success". In particular, viewed through the lens of "success", it was argued that capitulation was evident because: (a) the recovery by the plaintiff (and [NAME] generally) was, in context, limited, and did not reflect any substantive measure of success, given what was claimed; and (b) the cross claims filed by [NAME] were "defensive" – in the sense that the cross claims "arose only by reason of the primary claim" – and, in any event, [NAME] "largely achieved the relief sought in their First Cross Claim and Fourth Cross Claim" ([NAME]' costs submissions at [9]).

3. Thus, to be clear, [NAME] argued the matter on the basis that a consideration of "success" was to be derived from an assessment of, and drawing upon, what occurred in connection with all claims in the proceedings. And, undertaking that exercise, argued that the [NAME] should be found to have capitulated.

4. I will deal with each of the submissions of [NAME] that are argued to support a finding that the [NAME] capitulated. It is convenient to deal with the arguments in connection with the success (or otherwise) of the respective parties together. In approaching the matter in this way it is important to emphasise, given the terms of r 42.20(1) of the UCPR, that I am not suggesting that the burden of persuading the Court about what order as to costs ought be made rests upon the defendant parties; in this situation the plaintiff bears "the burden of persuading the Court that some other order is appropriate": [NAME] at [70] (and the authorities at [128], above). Rather I am addressing the respective matters that the defendant parties argued were destructive of the submissions of the [NAME] and demonstrated why, in effect, they were the "clear winners".

The "success" of each party 1. [NAME] argued that the [NAME] enjoyed only a modest recovery on their claims, in monetary terms, and that fact tended to support a finding in the terms sought by them – viz., capitulation. The thrust of the argument for [NAME] was that the negotiated position that the plaintiff (and [NAME] generally) secured with the [NAME] reflected a significant compromise of the claims that, to that point, were pursued in the 3FASOC. This was argued to be demonstrated by the fact that, on those claims, the [NAME] only recovered a portion of the monetary amounts sought on those claims.

2. In relation to this issue, the [NAME] argued that, in connection with the claim under the facility agreement and the $150K debt, the amount sought by those claims was less than the amount that was recovered by the settlement with the [NAME]: the amount claimed was submitted to be approximately $878,000, whereas the money recovered via the settlement with the [NAME] was $900,000 (exhibit B, p 85). [NAME] contested that this was so, pointing out that there was, an entitlement under (at least) the facility agreement to claim legal costs as well as interest – and these amounts were not factored into the $878,000 figure relied upon by the plaintiff. In aid of this submission, [NAME] also drew attention to the fact that, in relation to costs, they were quantified in an amount over $600,000 as at 11 February 2021 (exhibit B, p 85); and further, they submitted that a somewhat conservative estimate of interest would be an amount over $100,000. In that broader context, [NAME] submitted that the [NAME] had significantly compromised these claims and that compromise reflected capitulation.

3. The [NAME] accepted that there was an entitlement to claim legal costs and interest, but emphasised that this was a settlement and, like most settlements, was a product of compromise unquestionably informed by a range of considerations including commercial ones. In particular, the [NAME] submitted that the compromise was not a reflection or recognition that the claims that were compromised were weak or hopeless.

4. I accept the submissions made by the [NAME] and, to be clear, I am not prepared to infer (and find) that the compromise was in any way a reflection or recognition that the compromised claims were weak or hopeless. To the extent that there was a measure of compromise – something that I consider to be objectively unremarkable and unexceptional, and [NAME] to most "settlements" – then that does not, in my view, mandate a finding that the compromised claims were weak or hopeless, less still that the compromise amounted to a capitulation.

5. Nor am I prepared to find that the [NAME] had, in terms, no or limited success. Given the way this matter was argued, it is, with respect, difficult to accept that proposition given that the [NAME] are to be paid the sum of $900,000.

6. If the matter is approached somewhat more broadly (and practically), then that only reinforces why I am unwilling to make the intermediate finding that [NAME] seek: in addition to the recovery of $900,000, the plaintiff is entitled to judgment of approximately $150,000 against the [NAME] defendant in connection with the [NAME] debt (see [37]-[74], above), and the [NAME] have also recovered, by way of settlement, $150,000 from [NAME]. That evidence does not, in my respectful view, warrant the finding in the terms sought by [NAME].

7. In my view, although there are obviously questions of degree involved, the [NAME] have secured extra curial success by this settlement (or, as they also described it, the settlement constituted a supervening event) thereby removing the subject matter of the dispute, as they argued. I have, in being so satisfied, approached the matter by looking to the substance of the outcomes sought, and obtained, by the [NAME]: [NAME] at [85]. 8. [NAME] emphasised that the [NAME] had not identified any authority where an order of the kind now sought by them had been made on broadly similar facts – that is, where a settlement involved some, but not all, parties. I do not think the absence of authority matters. The costs issue is to be resolved according to the facts of the case informed by the rule and the organising principles to which reference has been made. In any event, to the extent an authority is needed, then the facts in Hyder Consulting (Victoria) Pty Ltd v CGU Insurance Limited [2003] VSC 223 ('[NAME]') are sufficiently similar, and that authority supports the making of the order that the [NAME] seek.

9. In short, in [NAME], proceedings involving multiple [NAME] were settled. The [NAME] defendant to those proceedings had a cross claim and the parties to it agreed that as that cross claim was not to proceed (given the settlement of the primary claim), it should be dismissed (at [14]). The [NAME] defendant (the cross claimant), following on from the order dismissing the cross claim, sought an order that there be no order as to costs of the cross claim: the [NAME] defendant submitted that, the cross claim having been rendered "futile by settlement of the main proceeding" and each party having acted reasonably, "the proper exercise of the Court's discretion … was to make no order as to costs" (at [12]).

10. That submission – and the characterisation that the cross claim had been rendered futile by the settlement of the primary action – was accepted by [NAME] who made no order as to costs of the cross claim (at [15]): In this case the counterclaim has been rendered futile not by settlement of the counterclaim itself between the particular parties now before the Court, but has rather been rendered futile by other events namely, the settlement of the tunnel cases and of the claim by [NAME] against [NAME] in this proceeding.

1. It is evident from the above that [NAME] accepted that a settlement in the proceedings generally – involving some, but not all parties – could constitute a supervening event rendering the proceedings futile.

2. That is essentially the position that was argued by the [NAME]. As in that case, so too here, I consider the supervening event – being the August 2023 settlement removing the subject matter of the dispute – to be "some sound positive ground or good reason for departing from the ordinary course" provided by r 42.20(1) (Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [54]), as the [NAME] argued. I am satisfied that the proper exercise of the costs discretion, to that point, is to make no order as to costs of the proceedings. (I deal later with the position beyond then, but – to signpost – my holding is the same). 3. [NAME] also argued that the orders made on 24 August 2023 established that the [NAME] had been unsuccessful. Those orders are, of course, relevant, and I have considered them. But I do not regard them as foreclosing an assessment of "success": [NAME] at [2] and [6]. As was said in McNamara v San [2010] NSWSC 809 at [12]: "… all the relevant circumstances, and not just the fact of dismissal, should be considered". Nor do I consider that they dictate a different outcome to the one identified in [154] above. In my respectful view, in line with the way in which the matter was argued, it is not only important to consider the matters to which I have earlier referred to, but also important – so as to put the making of those orders into proper perspective – to consider the wider context of how the orders came to be made. 4. [NAME], in furtherance of the above argument, emphasised that the orders were made at the "behest" of the [NAME]. Whether – and if so in what way – that was intended to mean anything other than that the [NAME] filed a notice of motion seeking leave to discontinue the proceedings is unclear, and the submission was not developed further. In any event, the circumstances giving rise to the making of the orders are rather simple: there was a settlement and a term of the resolution involved the [NAME] agreeing not to proceed with the claims under the facility agreement and the $150K debt. (As I have mentioned elsewhere, a purpose of the settlement was to confine the exposure of the solicitors not only to the [NAME], but to the [NAME]). The making of the orders on 24 August 2023 was not opposed by [NAME] but in real terms agreed to by them – no doubt reflecting the fact that what the [NAME] had agreed to do assisted them. The background to the making of the orders is therefore important: it reflects the settlement that has been earlier described. Given that context, I do not consider that the orders made dictate, on their own, or in combination with the other matters raised by [NAME], a different finding about "success" or, more generally, a finding that there had been "capitulation" by the [NAME]. Nor do I accept that, given what I consider to be the other surrounding circumstances, including the "supervening event" (in the way earlier described), that the order reflects the event. 5. [NAME] further submitted that not only had the plaintiff and [NAME] more generally not been successful, but that they had been successful – a matter which, it was argued, was said to be evident from a consideration of three matters: first, the terms of the orders that were made; secondly, the fact that the first and fourth cross claims were "defensive"; and, thirdly, because, in any event, they enjoyed success on those cross claims. I am not prepared to find, unequivocally, that [NAME] were "successful", as argued. And, to be clear, I do not accept that any of these matters raised detract from my earlier findings, nor the conclusion at [154], above.

6. In relation to the submission that the "orders" made demonstrate that [NAME] were successful (I have earlier dealt with a similar argument – that the orders made demonstrated that the [NAME] had been unsuccessful – above), I accept, of course, that [NAME] had the benefit of what the [NAME] and the [NAME] agreed in consequence of their settlement, and that orders were made on 24 August 2023 giving effect to the terms of that agreement in the manner earlier described. In that sense they had a measure of success; but so too did the [NAME]. Nevertheless, as I have essentially already explained above, I am unable to accept that the making of those orders, in and of itself and as a matter of substance, inevitably translates into a finding that [NAME] succeeded. A consideration of the orders made on 18 October 2023 does not dictate a contrary finding: those orders were made consequent upon a settlement involving all parties and all remaining issues (except those requiring resolution by this judgment).

7. To the extent that [NAME] sought findings that they had been "successful" by reason of the fact that the cross claims that they made were merely "defensive" and, irrespective of that, they enjoyed success upon them, I am not prepared to make those findings. On the contrary, in my view, the appropriate findings (which I make) are that their cross claims were not merely defensive, as they argued; and, further, to the extent that one can determine, on an application of this kind, "success" of those claims, in my view it is inapt to describe the outcome of those cross claims in those terms. (I explain why I have reached these conclusions later in these reasons: see [169]-[180], below).

8. Thus, I do not accept any of the submissions raised to support the intermediate finding sought by [NAME] – viz., that they were "successful". They have had a measure of success, in the way that I have described and found.

9. In furtherance of [NAME]' overarching "capitulation" submission, it was submitted that the [NAME] "unilaterally decided not to pursue significant and numerous claims against" [NAME], and to do so "amounts to a capitulation not resulting from any settlement with the [[NAME]] or other change of position in relation to the [[NAME]]" but rather from "a commercial decision, the basis of which is not apparent or not disclosed" ([NAME]' costs submissions at [13]). It is, of course, at least partly correct, as [NAME] submitted, that the decision not to pursue the claims involving the facility agreement and the $150K agreement was unilateral in the sense that they were not a party to the agreement resulting in the dismissal of those claims. (The reason for why they were not involved is not known, and no submissions were made about this by [NAME]). But it is not correct, in my view, to suggest that the basis was neither apparent, nor disclosed: it is quite clear that the settlement resulted from a compromise involving the [NAME] and the [NAME]. And nor do I consider that, axiomatically, the fact that the resolution did not directly involve the defendant parties dictates a finding that the defendant parties succeeded, as I have earlier explained.

10. Separately, I would add the following. In my view the submissions of [NAME] tended to downplay a practical reality: that there were multiple parties involved in a dispute encompassing many and varied, not to mention overlapping and intertwined, issues between all parties (to be clear, including the [NAME]) to the dispute. The short point is that the considerations involved in success cannot, realistically, exclude this wider setting.

11. That wider context not only informed the finding that I have made in connection with whether the [NAME] succeeded (as to which, see [148]ff above), but also feeds into the following related matter. Assuming (for present purposes) it is permissible to infer whether there had been a capitulation by a party based upon what has occurred in August 2023 (as [NAME] argued), then a possible inference is that the capitulation was by the [NAME] (at least in connection with the liabilities under the facility agreement and the $150K loan). Yet, notwithstanding what had occurred by the August 2023 settlement, the defendant parties each subsequently agreed, by the agreement entered on 13 October 2013, not only to the dismissal of all claims they had brought against the [NAME], but also agreed to there being no orders as to costs between them. Regardless of whether it is permissible to draw that inference, determining whether the [NAME] 'capitulated' upon their claims cannot occur in a vacuum – the point remains that an important participant in the overall dispute was the subject of an agreement between that party and [NAME], and that agreement dealt with all questions of costs in the proceedings between them.

12. The settlement reached on 13 October 2023 between all parties essentially resolved all remaining issues – an agreement that resulted in the orders made on 18 October 2023 – and I accept, as the [NAME] submitted, that the Court should not, contrary to what was argued by [NAME], attempt to dissect the settlement so as to ascertain a "winner" or "winners".

13. In any event, it is important to emphasise, that the deed itself is the product of compromise and agreement and, further, was expressed to be "without prejudice". In my view that settlement between the parties is "some sound positive ground or good reason for departing from the ordinary course" as provided by r 42.20(1): in that situation (which deals with the period beyond the August 2023 settlement and entry of orders) I am satisfied that the proper exercise of the costs discretion is to make no order as to costs of the proceedings: [NAME] at [2] and [30]. To be clear, I do not accept, as [NAME] submitted, that the orders made following on from the settlement can reasonably and fairly be viewed as determinative of, and reflect, the event. Nor do I accept that any of the other matters argued by the defendant parties in connection with the period leading up to the orders made on 24 August 2023 – which I have earlier addressed and made findings about – detract from that conclusion.

The first and fourth cross claims were 'defensive' and advanced only a modest claim for damages 1. I have already made findings about whether the cross claims were defensive and advanced only modest claims for damages: see [159], above. What follows are my reasons for making those findings.

2. The [NAME] each submitted that the cross claims they filed – in the case of [NAME], the first and fourth cross claims; in the case of the [NAME] defendant, the [NAME] and fifth cross claims – were "defensive". That characterisation was argued to support a finding that [NAME] had been "successful".

3. Before dealing with the argument, the following two matters should be noted. First, all parties agreed that the substance of the cross claims brought by [NAME], and the [NAME] defendant, respectively, were relevantly the same – thus, there was no need to distinguish between the cross claims brought by [NAME] in the analysis that follows. Secondly, although not the subject of any precise explanation, I understood [NAME], by the employment of the term "defensive" to mean responsive – and only responsive – to the specific claims raised by the plaintiff and not extending to advancing independent and separate claims.

4. I do not accept [NAME]' characterisation of their cross claims as being defensive.

5. It is important to provide some brief context, and to deal with each of the cross claims advanced by [NAME] – the first and fourth cross claims – separately. Much of what was claimed, and a general overview of the causes of action advanced, has been earlier set out and need not be repeated. Drawing upon that, without undue repetition, the following emerges. In relation to the amended first cross claim, it is clear that although [NAME] sought relief in connection with the claims under the facility agreement and the $150K loan, they advanced a number of other claims against the [NAME] beyond dealing with those claims. For example, there were claims for damages and exemplary damages founded upon a cause of action of actionable interference in contractual relations (as to the 'claims', see also at [180], below). Further, as later explained and contrary to what was submitted by [NAME] did not simply press a modest and confined claim for damages, but rather a substantial one: [NAME], in a Scott Schedule dated 3 October 2023, maintained a claim for $1,464,836.61 against the [NAME] (Scott Schedule, item 1).

6. Separately, the practical reinforcement of why I consider [NAME]' characterisation of the amended first cross claim to be inapt, is evident from what occurred following the orders made on 24 August 2023 – orders that included dismissal of parts of the 3FASOC, and the amended [NAME] cross claim.

7. Notwithstanding the making of these orders, [NAME] continued to maintain the amended first cross claim. If indeed this cross claim was, as submitted, truly "defensive" (in the sense described) then it is difficult to see how or why the overall claim (or at least some of the causes of action within it) was to be pursued following the making of the 24 August 2023 orders. That is, being defensive, at least some of the claims within the cross claim inevitably should have fallen away. But that did not occur. Rather, [NAME] pressed on with those cross claims in their entirety – as the plaintiff submitted, "undeterred". I will explain this in some more detail.

8. Against the backdrop of the notice of motion dated 28 July 2023 and filed by the [NAME] on 31 July 2023 – a notice of motion that sought orders that the [NAME] be granted leave to discontinue those parts of the 3FASOC that had been the subject of a settlement with the [NAME] and to discontinue the [NAME] cross claim filed 9 September 2019 – on 3 August 2023 Cavanagh J made a number of orders, including the following order:

1. By 9 August 2023 [NAME] are to identify what parts (if any) of the: (a) Amended Defence; (b) Amended First Cross-Claim; and, (c) Fourth Cross-Claim, they continue to press in light of the Plaintiff's motion dated 28 July 2023 … and the basis upon which those parts of the Amended Defence, the Amended First Cross-Claim and Fourth Cross-Claim are pressed.

1. In relation to the amended first cross claim, [NAME] made no amendments, by way of contraction, to that cross claim and in fact advised the parties and the Court that they intended to press it, without any form of amendment. In my view, that conduct is a practical demonstration that reinforces why the 'defensive' characterisation they now seek to advocate is inapt; with respect, that conduct, and what the Court was advised, is inconsistent with it.

2. In relation to the fourth cross claim, I also do not accept, as [NAME] argued, that it was "defensive". Again, following on from the order made by Cavanagh J on 2 August 2023, [NAME] confirmed to the parties and subsequently to the Court that that cross claim was also to be maintained unamended, despite the application to discontinue those parts of the 3FASOC and the [NAME] cross claim. Further, when the matter was before me on 24 August 2023: (a) counsel for [NAME] confirmed this; (b) counsel for [NAME] also actively resisted the application for summary relief filed by the [NAME] in connection with that cross claim (that application was returnable for hearing on that day and in substance sought summary relief based on the fourth cross claim disclosing no reasonable cause of action as a consequence of the settlement and orders made); and (c) counsel for [NAME] advised the Court that not only did there remain a viable claim notwithstanding the orders made, but also that [NAME] intended to amend that claim to seek other kinds of loss and damage. In relation to that last matter, [NAME] thereafter filed a notice of motion on 29 August 2023 (as did the [NAME] defendant, who made an identical application) seeking leave to amend the fourth cross claim to claim those further damages which was heard (on 6 September 2023) and subsequently dismissed (by orders made on 7 September 2023): McMillan Investment Holdings Pty Limited v Mangos [2023] NSWSC 1078.

3. If, as was argued by [NAME], the fourth cross claim was truly "defensive" then it is somewhat difficult to reconcile that submission to the various matters which I have referred to in [175], above. In my view they cannot be. 4. [NAME] next argued that although the amended first cross claim did contain a claim for damages, it was said to be a very modest one. It was submitted that I should make that finding because the limit of the claim for damages advanced in this cross claim was expressly linked to the affidavit of the first defendant affirmed 26 February 2019 – which was said to confine that claim for damages at between $233,000 and $260,000. The submission was that the claim (what was described in submissions as damages that followed from the 'improper use' of the money by the [NAME]) was, by evidence, confined to that amount.

Accordingly, so it was submitted, that was the "real figure".

5. I do not accept that [NAME], by the amended first cross claim, only advanced a modest claim for damages in the way submitted. I will briefly explain why.

6. On 20 September 2023 I made an order (order 1) requiring [NAME] to file and serve a schedule of damages in the following terms: The [NAME] serve a schedule of damages in Scott Schedule form identifying the heads of damage and amount claimed in relation to the first and [NAME] cross claims by 3 October 2023.

1. In compliance with that order [NAME] served a schedule of damages, in Scott Schedule form, dated 3 October 2023 – which identified that [NAME] were claiming the amount of $1,464,836.61 from the [NAME] pursuant to the amended first cross claim. The Scott Schedule referred to par 29 of the amended first cross claim. That paragraph, which needs to be read with par 30 of the amended first cross claim, identified causes of action supporting this claim for damages as being "breach of the terms of the Facilities Agreement, the Fiduciary Duties or the provisions of the Corporations Act Duties".

2. In my view the filing and service of that Scott Schedule makes plain that the claim advanced was not, as argued, modest but a substantial one.

3. The position of the [NAME] defendant was, in relation to this last matter, different from the position of [NAME]. [NAME] – who complied with the order made on 20 September 2023 requiring the service of a schedule of damages, in Scott Schedule form, by 3 October 2023 – the [NAME] defendant did not. I am conscious of the fact that the [NAME] defendant, of course, at least at that time, may well have been representing himself. Nevertheless, it remained an order to be complied with. In any event, no specific submission was advanced by the [NAME] defendant to the effect that, by an examination of the pleadings or other evidence, the [NAME] defendant was not going to pursue a claim of the kind advanced by [NAME] in their cross claim (or any other claim). As it happens, a similarly pleaded claim remained in the [NAME] cross claim seeking the same quantum of damages that was sought by [NAME]. In those circumstances I accept, as the [NAME] submitted, those claims not being expressly abandoned, must be taken to have been pressed by the [NAME] defendant. (That submission, I add, is entirely consistent with the approach taken by [NAME] when dealing with the cross claims by [NAME] during the course of submissions – that is, it was accepted that the claims advanced by the [NAME] defendant in his cross claims relevantly mirrored those advanced by [NAME] in their cross claims: see [168], above).

Miscellaneous submissions of [NAME] 1. [NAME] also raised a number of further matters which they argued either supported the findings that they sought or, more generally, told against the orders that the [NAME] sought. (To be clear, I considered these submissions as part of my overall determination as to costs; organisationally, however, in order to achieve some structure to the reasons, it has been necessary to provide the reasons as a separate part and at this point in the judgment). They are as follows.

Refund and release of monies 1. [NAME] submitted that because the [NAME] "have agreed to refund monies and to the release of monies to the [[NAME]] which it otherwise sought" as part of its claims against them, that also evidences a capitulation ([NAME]' costs submissions at [13]). This submission was not developed during the course of the hearing and I understood it to be directed to the agreement that there be an order that money be paid into Court.

2. In substance, [NAME] invite an inference to be drawn that, because as part of the overall settlement between the parties an agreement was reached in connection with money having previously being paid out of Court being paid back into Court, this constituted another indication of capitulation. (I have described the circumstances of this when dealing with the interest claim: see [75]-[122], above).

3. I do not accept that the agreement between the parties for this to occur is in some way evidence supportive of a capitulation and I am not prepared to infer that it does. Nor am I prepared to go behind the agreement between the parties which, as I have earlier pointed out, was made without prejudice. Thus, as I have earlier held, I do not accept that any orders made decide the 'event' for costs purposes.

The costs order should extend to the first and fourth cross claims 1. [NAME] further submit that not only should an order for costs be made in their favour in relation to the proceedings (including the [NAME] cross claim), but also it should extend to the payment of its costs in connection with the cross claims that they filed – namely, the amended first cross claim and the fourth cross claims: the submission is that the commencement and prosecution of those costs claims "were a direct result of the original claim being filed", and in those circumstances it was argued to be "appropriate" for the Court to make that order ([NAME]' costs submissions at [14]).

2. I am not prepared to make that order given the overall order that I consider should be made in the case, and the reasons for making that order. In particular, I would emphasise that I have not accepted the submission by [NAME] that these claims were only defensive.

The [NAME] could not succeed 1. [NAME] also argued that the [NAME]' claim would have failed: in particular, [NAME] submitted that the [NAME] "could not establish the claim as alleged, particularly on the issue of quantum" and that the evidence served "does not establish the loss allegedly suffered" ([NAME]' costs submissions at [16], [18]-[19]). I do not accept that submission.

2. The authorities make it clear, in my view, that is not permissible on an application in circumstances such as the present, to undertake a hypothetical trial of the matter, under the guise of a costs application, in order to determine the likely outcome of the litigation: [NAME] at [3], [31]-[32]. In any event, short of undertaking an examination of all evidence on this topic that would be adduced at trial, it could not be a legitimate exercise of the costs discretion to select only some evidence and based solely upon that evidence find that there was a fatal flaw in the case for the plaintiff or the [NAME] more generally.

3. To the above I would add the following. Although this was not argued by [NAME], I should make clear that this is not a case where it is "possible to identify success which is manifest on the face of the record" ([NAME] at [3]) nor, assuming there is a difference, is it a case where [NAME] "almost certainly" would have succeeded (see Shellharbour City Council v Minister for Local Government [2017] NSWCA 256 at [6]-[7]).

The failure to account for the settlements 1. [NAME] also argued that there had been a "failure to account" by the [NAME] in connection with the settlement that had been reached with [NAME] and the [NAME] and a refusal "to disclose the terms or sums received" ([NAME]' costs submissions at [17]).

2. These submissions are, with respect, unclear given that all claims have now been dismissed and the settlements deeds between the [NAME] and the [NAME] and [NAME] and the [NAME] are in evidence. The submission appears to suggest – the submission was not addressed at all during the hearing by [NAME] – an argument relating to the rule against double compensation. To the extent that this assumption is right, then no attempt was made to explain why or how that rule was engaged nor why the finding should be made that there had been a "failure to account" for the settlements referred to. To the extent that the submission sought to embrace some other legal concept, then that other concept was not identified.

The 'delay' submission 1. [NAME] also submitted that the proceedings had been commenced in 2018 and that, following the commencement, the plaintiff amended the claim with a degree of frequency – as was submitted, the plaintiff was "simply getting its house in order". In this respect [NAME] drew attention to the summary of those amendments (which occurred in the period 8 November 2018 to 26 April 2019) provided in the judgment of [NAME] in McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 37 at [16].

2. In my view that submission, aside from restating the commencement of the proceedings, is of limited significance; to the extent that [NAME] were implicitly critical of the plaintiff, and [NAME] more generally, I do not accept the submission. As is clear, the amendments were made over a relatively confined period (around five months) and, absent any detailed consideration about what those amendments involved (and matters such as their materiality and why they were made – a task not undertaken), then I do not respectfully consider that a glimpse of the procedural history adds to what has been argued. That is particularly where, first, no party argued that there was any particular conduct of an opposing party that was unreasonable, in any respect, that would justify the primary order sought by that party; and, secondly, to the extent that it would be necessary to examine the conduct of the parties in the context of the procedural history – to assess, as it was put by [NAME] why "these proceedings have dragged on" – it would be necessary to look at the full history, rather than in the confined way argued, in order to make findings. For example, part of the delay is plainly a consequence of the first and [NAME] (and [NAME]) [NAME] failing to serve their evidence on time and thereby requiring an adjournment and vacation of the 10 day listing of the matter that was to commence on 7 February 2022 – see the judgment of [NAME] that vacated that hearing date: McMillan Investment Holdings Pty Ltd v Mangos [2021] NSWSC 1635 at [4]-[14].

Orders 1. For the reasons I have given, I consider that the appropriate order for costs is that there be no order as to costs of the proceedings.

Pro bono assistance 1. The [NAME] defendant appeared through counsel, [NAME], on a pro bono basis. I wish to record my gratitude for her doing so, and for the quality of the assistance that she provided to the Court.

Orders 1. For the above reasons I make the following orders:

1. In relation to the [NAME] debt claim:

1. Judgment for the plaintiff against the [NAME] defendant in the sum of $157,231.25.

2. Order the [NAME] defendant to pay the plaintiff's costs of the [NAME] debt claim.

1. In relation to the interest claim:

1. Order that [NAME]' claim for interest be dismissed.

2. Order that [NAME] pay the plaintiff's costs of, and incidental to, the interest application.

1. In relation to costs:

1. Make no order as to costs of the proceedings such that each party is to bear their own costs of the proceedings.

********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 November 2023