ADX Building Systems Pty v Adelaide Fibrous Plasterboard Linings Pty Ltd (In Liq)

Adelaide Fibrous Plasterboard Linings Pty Ltd (In Liquidation) and its liquidators, Peter Ivan Macks and Timothy James Clifton, appealed against orders made by a Master that they personally pay the costs of ADX Building Systems Pty and Martin Towers Pty Ltd on an indemnity basis. The orders arose from the liquidators’ opposition to consent orders sought by ADX and Martin Towers. The dispute concerned the liquidators’ opposition to the consent orders, which sought payment from Martin Towers of moneys deposited by it with the Registrar General. The liquidators argued that the first defendant had a proper interest in the application for consent orders. The court was required to decide whether the liquidators had acted reasonably in opposing the consent orders and, if not, whether the costs orders were appropriate. The court found that the liquidators’ opposition was unjustified and their conduct unreasonable, leading to the costs orders. The liquidators had not demonstrated a proper interest in the application for consent orders, and their opposition was likely to fail. The court upheld the costs orders, holding that the liquidators had acted unreasonably and caused unnecessary costs to be incurred by the other parties. The appeal was dismissed.

The court’s reasoning focused on the liquidators’ conduct and the lack of a legitimate interest in the proceedings. The Master found that the liquidators had been clearly informed that their opposition was bound to fail and that costs would be sought against them personally. Despite this, they persisted in opposing the consent orders, indicating that they positively opposed them rather than simply contending that they wanted time to consider their position. The Master noted that costs might be awarded against liquidators even in the absence of misconduct or misfeasance, as long as their actions were unreasonable. The opposition was unlikely to succeed, and the liquidators’ conduct caused additional costs to be incurred by the other parties. The court held that it was appropriate to make orders for costs on an indemnity basis, as the liquidators had no legitimate interest in the subject matter of the settlement between ADX and Martin Towers. The liquidators were not entitled to prevent the payment of the moneys held by the Registrar General, and the other parties should not be penalised for the liquidators’ approach. The costs orders were justified, and the appeal was dismissed.