Ambridge Investments Pty Ltd (in liq) v Baker
[2020] VSC 534
•11 September 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2005 02014
| AMBRIDGE INVESTMENTS PTY LTD (RECEIVER APPOINTED) (IN LIQUIDATION) (ACN 077 299 051) | Plaintiff |
| v | |
| THEODORE BAKER & ORS (ACCORDING TO THE SCHEDULE) | Defendants |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 August 2020 |
DATE OF JUDGMENT: | 11 September 2020 |
CASE MAY BE CITED AS: | Ambridge Investments Pty Ltd (in liq) v Baker & Ors |
MEDIUM NEUTRAL CITATION: | [2020] VSC 534 |
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COSTS – Applications for costs – Application by Second Defendant for costs with respect to Plaintiff’s amendment of pleading, for costs arising from remuneration orders and for costs previously reserved – Application for costs by Plaintiff against Second Defendant with respect to the period from commencement of proceeding in 2005 to hearing and determination of preliminary issues in 2010 – Where Second Defendant was a bankrupt during certain parts of proceeding – Whether any entitlement of the Second Defendant to costs vests in the Second Defendant’s trustee in bankruptcy – Whether Second Defendant had standing to seek the amendment of pleading costs – No order as to costs with respect to the reserved costs – Proportion of remuneration costs allowed – Second Defendant ordered to pay the Plaintiff’s costs of, and incidental to, the trial of the preliminary issues less any costs of, and incidental to, the trial of the preliminary issues which have already been recovered by the Plaintiff from other defendants.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Jonathan Evans QC | Sinisgalli Foster Legal |
| For the Second Defendant | Pouyan Afshar | Clic Law Group Pty Ltd Town agent: Eales & MacKenzie |
HIS HONOUR:
By summons dated on 11 November 2019, the plaintiff (Ambridge Investments Pty Ltd (Receiver Appointed) (In Liquidation) (ACN 077 299 051)) (‘Ambridge’) sought, inter alia, to list for hearing three issues concerning costs. Pursuant to an order made by the Court on 14 July 2020, four issues concerning costs, (including those raised in Ambridge’s summons), are now listed for hearing and determination, namely:
(a) An application for costs by the second defendant (Mr Voukidis):
(i)for his costs of all claims that are no longer pressed and the costs of, and pertaining to, an amendment by Ambridge, to its statement of claim for which leave was granted on 15 March 2019 (‘Pleading Amendment Costs Claim’);
(ii)for costs, which were reserved by paragraph 5 of the order of Judd J made on 13 October 2016, (‘Reserved Costs Claim’);
(iii)for the payment of costs by reason of the operation of paragraphs 2(a) of the order of Judd J made on 13 October 2016 and paragraph 12 of the order of Judd J made on 16 February 2017 (‘Remuneration Claim’); and
(b)An application for costs by Ambridge against Mr Voukidis in relation to the period from 2005 to 2010 (being from the commencement of the proceeding to the determination of preliminary issues by Vickery J) (‘Preliminary Hearing Costs Claim’).
Ambridge sought to rely on the affidavits of Phillip Anthony Jones, sworn 13 February 2012; Angela Michelle Kennedy, sworn 3 February 2015; Alan James Foster, dated 26 November 2018, 11 November 2019 and 1 May 2020 respectively; and Barry Spinks, dated 4 November 2019. Mr Voukidis, by his Counsel, objected to the use of some of, or to some parts of, these affidavits. During argument, Ambridge confined its reliance to particular paragraphs of the contentious affidavits. To the extent necessary, I will rule on the objections in these reasons.
Mr Voukidis relies on an affidavit of Aoife O’Donohoe, affirmed 6 August 2020.[1]
[1]Mr Voukidis affirmed two affidavits on 27 March 2020. These affidavits relate to a change of solicitor, extension of time, health, failure to file an itemised bill, the cessation of practice of former solicitor and invoices and were not relied upon for the purposes of the substantive hearing.
Pleading Amendment Costs Claim
Mr Voukidis seeks costs of all of the claims that were no longer pressed by Ambridge, and the costs of, and pertaining to, the amendment of Ambridge’s statement of claim,[2] which Ambridge filed after receiving leave to do so on 15 March 2019.
[2]Filed pursuant to the order of Kennedy J made on 15 March 2019.
Mr Voukidis submits that:
(a)Ambridge effectively withdrew or discontinued all of its claims for relief against him after 15 years of litigation, such that rr 25.05 and 63.15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) are engaged, and that no reason has been articulated as to why costs should not follow upon that withdrawal.
(b)It is no defence for Ambridge to say that ‘a person in whose favour a costs order is made may not recover it because that costs order may vest in his bankruptcy trustee’, especially where a costs order is sought after Mr Voukidis’ discharge from bankruptcy and no order has yet been made.
(c)If and to the extent that the right to any costs vested in Mr Voukidis’ trustee in bankruptcy, Mr Voukidis would not benefit and may be directed to inform the trustee of the Court’s orders.
(d)The regimen imposed in orders made by Judd J in October 2016 and February 2017 was a condition of the leave granted to enable Ambridge to make a second attempt to further its claims against Mr Voukidis, the first attempt having been declared an abuse of process. The provision of funds pursuant to that regimen cannot on any principled basis be a bar to Mr Voukidis’ claim for costs. The remuneration order does not cover the costs of the application for leave or the costs Mr Voukidis has incurred.
(e)The Court has a discretion under r 63.17 of the Rules to order that Ambridge pay Mr Voukidis’ costs of the amendment including costs thrown away.
(f)The findings of Judd J in the judgment delivered on 13 October 2016[3] whereby Ambridge was granted conditional leave to amend its statement of claim in the form of Ambridge’s eighth FASOC and to bring a derivative proceeding on behalf of Break Fast Investments Pty Ltd (ACN 090 648 990) (‘Break Fast’), represented a substantive and a strategic victory for Mr Voukidis which would justify an order for costs.
[3]Ambridge Investments Pty Ltd v Baker & Ors [2016] VSC 616.
Ambridge submits that:
(a)Mr Voukidis has not articulated any basis upon which he says the ordinary rule as to costs after the amendment of a pleading, provided in r 63.17 of the Rules, should not apply.
(b)‘Costs of and occasioned by the amendment’ are prospective in nature. The effect of the amendment was to remove from the proceeding all claims in which Mr Voukidis may have had a reputational interest (save for the continuation of the Lane Cove proceeds claim). The amendment did not add any new claims against Mr Voukidis. Accordingly, Mr Voukidis has not incurred any costs which could be characterised as ’costs of and occasioned by the amendment’.
(c)Ambridge’s successful application to file an eighth FASOC which disposed of a number of the claims made without determination of those issues, was consistent with the overarching obligations and the overarching purpose of the Civil Procedure Act 2010 (Vic).[4]
(d)The eighth FASOC, in substance, amended the existing statement of claim so that Ambridge would no longer pursue claims which were of no economic utility to it or to Break Fast (and thus also to the other joint venturers and the Wellington Pde joint venture). These claims were substantially introduced in October 2016 when Judd J gave leave for Ambridge to file a sixth FASOC.
(e)Mr Voukidis was a bankrupt while the derivative claims made by the sixth FASOC were on foot. Any right to apply for a costs order in respect of Mr Voukidis’ costs during the relevant period vested in Mr Voukidis’ trustee in bankruptcy, who is the only person with standing to make the application for costs in respect of the pleading amendments.
(f)The effect of the orders of Judd J made on 13 October 2016, 11 November 2016 and 16 February 2017 for the payment of remuneration to a solicitor and junior counsel for trial, (including preparation) for Mr Voukidis from the Lane Cove proceeds, was that any entitlement of Mr Voukidis to costs in dealing with the matters the subject of the sixth FASOC, was already the subject of an order with respect to legal costs for his benefit such that no further order should be made in respect of his costs for the relevant period.
(g)The appropriate order as to costs associated with the claims the subject of the sixth FASOC, which would not now proceed to determination, is ‘no order as to costs’.
[4]Civil Procedure Act 2010 (Vic), s 7.
Analysis – Pleading Amendment Costs
A sequestration order was made against Mr Voukidis on 3 May 2016. On that date, pursuant to the provisions of the Bankruptcy Act 1966 (Cth), Mr Voukidis’ property rights vested in his trustee in bankruptcy, Mr Robert Woods (the tenth defendant). Leave to bring the derivative claim on behalf of Break Fast was granted to Ambridge pursuant to an order of Judd J on 13 October 2016 (resulting in the sixth FASOC), which was after the date of Mr Voukidis’ bankruptcy. Subsequent leave to further amend the statement of claim (resulting in the eighth FASOC) was granted pursuant to an order of Kennedy J on 20 March 2019. Mr Voukidis remained a bankrupt until his discharge from bankruptcy on 8 July 2019. It follows that Mr Voukidis was a bankrupt for the whole period of time during which the derivative claims by Break Fast remained on foot.
In my view, Mr Voukidis’ right to make an application in the proceedings in which he is a defendant, including a right to apply for costs, constitutes property in the nature of a chose in action that vests in the trustee.[5]
[5]Freeman v NAB Ltd [2006] QCA 260, [9]-[15] (McMurdo P); Johnson v Powrie [2018] ACTCA 46, [84]-[88] (Refshauge J).
It follows that any right to seek the costs of and occasioned by the amendment and any application for leave to make the amendment vests in the trustee.
There is no evidence to suggest that Mr Voukidis made application for these costs for and on behalf of the trustee, or that the trustee assigned or intended to assign any vested right to Mr Voukidis.
The fact that Mr Voukidis is now discharged from his bankruptcy does not change the position.[6] Insufficient time has elapsed for any such rights to revest in the bankrupt after discharge by operation of the statute.[7] In the circumstances, Mr Voukidis does not have standing to seek these costs. This finding is sufficient to dispose of this issue.
[6]See Freeman v NAB [2006] QCA 260, [13] (McMurdo P); Daemar v Industrial Commission of New South Wales (No 2) (1990) 22 NSWLR 178, 182-185 (Kirby P, Clarke and Meagher JJ agreeing).
[7]Bankruptcy Act 1966 (Cth), ss 127 and 129AA.
Nevertheless, as the issue was fully argued, I will briefly deal with some of the other matters raised.
Rule 63.17 of the Rules deals with costs in relation to pleading amendments. It provides:
Amendment
Where a pleading is amended (whether with or without leave) the costs of and occasioned by the amendment and the costs of any application for leave to make the amendment are the parties’ costs in the proceeding, unless the Court otherwise orders.
Mr Voukidis, through his Counsel, correctly submits that the Court has a discretion under r 63.17 of the Rules to order Ambridge to pay his costs, and by so doing, depart from the ordinary position and ‘otherwise order’.
Mr Voukidis submits that in this case the amendment was so extensive as to amount to a withdrawal or discontinuance, which would justify departure from the ordinary position.
In formal terms, the proceeding was neither withdrawn or discontinued, though it is correct to say that there were extensive amendments and many claims were no longer pursued.
Ambridge sought to rely on the affidavit of Alan James Foster sworn 26 November 2018 in support of its application for leave to file and serve the eighth FASOC, which purported to contain the rationale for the making of the amendments.
Mr Voukidis objected to the affidavit on the grounds of relevance, submitting that the affidavit contained a series of submissions or assertions, and it was not expressed to be sworn with the authority of Ambridge. In my view, the affidavit is in large part objectionable. It is replete with submissions and commentary, especially at paragraphs 14 and 20.
Whilst the deponent does not expressly depose to having authority on behalf of Ambridge, he does depose to being the solicitor for Ambridge and, in that capacity, is able to give evidence of factual matters of his own knowledge, including his instructions.
Among other things, Mr Foster deposes that he is instructed by Ambridge:
(a)that it does not seek to pursue claims on behalf of Break Fast which have no prospect of enhancing the assets of Break Fast;
(b)to seek to amend the claim in the proceeding to reduce the scope of the disputes to those claims which are necessary for Ambridge to pursue in order to obtain orders for the payment of the Lane Cove proceeds; and
(c)to seek to minimise the other claims upon the Lane Cove proceeds.
It follows, therefore, that the Court does not have admissible evidence of the precise reasons why the relevant claims were not pursued. But the absence of precise reasons does not avail Mr Voukidis’ quest to persuade the Court that it should ‘otherwise order’.
Nor is it apparent from a close reading of the eighth FASOC that there was a wholesale withdrawal or discontinuance.
In the eighth FASOC, it is alleged that Mr Voukidis knew there was no proper basis, obligation or requirement upon Break Fast to make certain alleged wrongful payments; that the payments were made in breach of his fiduciary duty; and that the purchase of the Lane Cove property and mortgage with respect to that property used the Lane Cove proceeds and as a consequence Mr Voukidis’ interest in the Lane Cove property was subject to an equitable charge. Further, Ambridge sought a declaration that the Lane Cove proceeds were held by Mr Woods on constructive trust for Break Fast as beneficiary. Alternatively, Ambridge argued that the proceeds were held subject to a charge in favour of Break Fast as security for repayment to Break Fast of wrongful payments for the benefit of Mr Voukidis (styled the ‘Lane Cove payments’) and interest thereon.
Plainly, in personam claims, including a claim which alleges the procuring of a breach of the joint venture agreement, knowing assistance, and receipt for which Ambridge sought damages or equitable compensation against Mr Voukidis could not proceed against Mr Voukidis while he was a bankrupt without the leave of the Court.[8]
[8]Bankruptcy Act 1966 (Cth), s 58(3)(b).
On the other hand, tracing claims for alleged breaches of fiduciary duties owed to Break Fast by Mr Voukidis in his capacity as a director of Break Fast resulting in alleged wrongful payments to C & O Voukidis, the Lane Cove payments, and the transfer of $598,225.25 from the Break Fast maximiser account to Break Fast’s cheque account, allegedly contrary to orders made by Williams J in proceeding No 2014 of 2005, could proceed and were being pursued.
These claims do not suggest wholesale withdrawal or discontinuance of claims based on the footing of wrongful conduct of Mr Voukidis. Each of these claims could have adverse reputational consequences for Mr Voukidis. I am not satisfied that the Court should ‘otherwise order’ costs in favour of Mr Voukidis of and occasioned by or ‘thrown away’ by reason of the pleading amendment.
Further, I am satisfied that the appropriate order as to costs associated with the claims the subject of the sixth FASOC which would not now proceed to determination is ‘no order as to costs’ particularly given that Mr Voukidis has already received remuneration pursuant to orders of Judd J made on 13 October 2016, 11 November 2016 and 16 February 2017.
Reserved Costs Claim
Mr Voukidis seeks costs reserved by Judd J in his order of 13 October 2016 wherein leave was granted to Ambridge to bring the proceeding on behalf of Break Fast by way of a derivative proceeding and to file an amended statement of claim substantially in the form of the sixth FASOC.
The leave to bring derivative proceedings was made conditional upon Ambridge and Break Fast co-operating to make available to a solicitor engaged by Mr Voukidis out of the Lane Cove fund an amount to be determined by the Court from time to time as reasonable remuneration for solicitor and junior counsel for the trial, including preparation. Among other things, his Honour reserved costs of Ambridge’s amended summons dated 13 April 2016, as well as a summons dated 9 August 2016 filed by Jonathan and Michelle Keene, the 11th and 12th defendants (who claimed an interest in the Lane Cove property).
Mr Voukidis submits that:
(a)the condition imposed by Judd J cannot, on a principled basis, be a bar to Mr Voukidis’ claim as to costs;
(b)to the extent that those claims relate to the application for leave, they are not covered by Judd J’s order that Mr Voukidis receive an amount to permit Mr Voukidis to have the benefit of remuneration for legal representation for the trial including preparation; and
(c)there may be a gap between what was reasonably payable from the fund and the amount to which Mr Voukidis may be entitled after his costs are assessed or taxed.
Ambridge submits that:
(a)Mr Voukidis is not able to take advantage of the reservation of costs being a bankrupt at the relevant time;
(b)Mr Voukidis has no standing;
(c)the claims made in the proposed sixth FASOC were, to a significant extent, already made by the existing statement of claim;[9]
(d)Mr Voukidis had, by the time of the making of the application for leave to file his sixth FASOC, already been awarded his costs for the Break Fast proceeding;[10] and
(e)Mr Voukidis had failed in his strenuous opposition to the grant of leave whereas Ambridge was successful in seeking and obtaining leave.[11]
[9]Ambridge Investments Pty Ltd v Baker & Ors [2016] VSC 616, [3], [7].
[10]Ambridge Investments Pty Ltd v Baker & Ors [2016] VSC 616, [32].
[11]The appropriate order in fact would have been that Mr Voukidis pay Ambridge’s costs, alternatively there be no order as to costs.
First, I am satisfied that Mr Voukidis was bankrupt at the time when the costs (which were reserved) would have been incurred and has no standing to seek those costs. The chose in action with respect to those costs vested in Mr Woods as the trustee in bankruptcy.
Secondly, it is enough to say that Mr Voukidis unsuccessfully resisted the application for Ambridge to be permitted to bring the derivative proceedings and to file and serve an amended statement of claim to effect that objective.
In my view, the appropriate order is that there be no order as to costs vis a vis Ambridge and Mr Voukidis in relation to Ambridge’s amended summons dated 13 April 2016.
Remuneration Claim
Mr Voukidis seeks the payment of costs to him by reason of the operation of paragraph 2 of the order of Judd J made on 13 October 2016 and paragraph 12 of the order of Judd J made on 16 February 2017.
Order 2(a) of the order of Judd J made 13 October 2016 states:
2.The plaintiff has leave to bring the proceeding on behalf of Break Fast Investments Pty Ltd on the following conditions:
(a)the plaintiff and Break Fast cooperate to make available to a solicitor engaged by Mr Voukidis out of the funds held by Foster Nicholson Jones pursuant to the order of Justice Elliott made 2 December 2013 following the sale of 8 Third Avenue, Lane Cove (the “Lane Cove Fund”), or by some other means, an amount to be determined by the Court from time to time as reasonable remuneration for a solicitor and junior counsel for the trial, including preparation.
Orders 8 and 12 of the order of Judd J made 16 February 2017 state:
8.The solicitors for the second defendant are to provide to the solicitors for the plaintiff:
(a)an itemised bill of the reasonable legal costs and disbursements incurred by the second defendant for a solicitor and junior counsel for trial, including preparation, from 13 October 2016 to the date of this Order; and
(b)an estimate of the reasonable legal costs and disbursements to be incurred by the second defendant for a solicitor and junior counsel for trial, including preparation, from the date of this Order under receipt of the Final Accounts from the Expert which specifies the categories or types of those costs and disbursements.
…
12.The managing judge will thereafter determine the costs and estimated costs to be paid from the Lane Cove fund to the second defendant’s solicitors’ trust account by the plaintiff’s solicitors.
In support of this claim, Mr Voukidis relies on the affidavit of his solicitor Aoife O’Donohoe affirmed 6 August 2020. Ms O’Donohoe deposes that her client has incurred approximately $80,344.35 in legal costs and disbursements in defending this proceeding since 27 March 2019, which includes invoices totalling $64,984.35.[12]
[12]Exhibits AOD-1, index and bundle of invoices, AOD-2, and AOD-3 to the affidavit of Aoife O’Donohoe sworn 6 August 2020.
Mr Voukidis submits that:
(a)it should be inferred from the orders of Judd J and the terms of his Honour’s judgment that those orders were intended to protect Mr Voukidis throughout this proceeding and cannot be read down or restricted;
(b)the costs that have been claimed have been incurred in circumstances where Mr Voukidis is still resisting claims made by Ambridge and in pursuing his own costs claims;
(c)the provision of remuneration was made to provide Mr Voukidis with a proper opportunity to meet Ambridge’s claims in circumstances where Judd J did not think much of Ambridge’s prospects; and
(d)the order cannot be read down or restricted and has not been discharged.
Ambridge submits that:
(a)the Court orders contemplate that the appropriate manner in which Mr Voukidis was to seek to establish any right to further remuneration pursuant to the orders made by Judd J on 13 October and 16 February 2017 was by filing a bill in taxable form. Having failed to file a bill in taxable form, Mr Voukidis’ application should be dismissed;
(b)the orders of the Court made on 27 March 2019 and 8 August 2019 have the effect that the quantum of ‘reasonable remuneration payable to a solicitor and junior counsel’ for the period from 13 October 2016 to 23 May 2019 has already been determined by the Court;
(c)Mr Spinks makes no further claim and it was Mr Spinks who was entitled to remuneration in accordance with paragraph 2(a) of the order made by Judd J on 13 October 2016 and to receive payment of amounts under paragraph 8 of the 16 February 2017 order;
(d)on 8 August 2019, the Court made orders by consent between Mr Voukidis’ solicitors and Mr and Mrs Keene that for the period 30 October 2018 to 23 May 2019 there be paid:
(i)to Spinks Eagle Lawyers - Nil
(ii)to Spinks Eagle Lawyers on account for Mr Afshar - $19,481.60;
(e)the practical effect of paragraphs 1 and 3 of the order of Riordan J made on 6 December 2019 by which the Lane Cove proceeds were released (save for an amount withheld of $46,000), was to discharge any continued operation of paragraph 2(a) of the order made by Judd J on 13 October 2016, because from that date that there were no longer any claims made against Mr Voukidis which had been introduced by the sixth FASOC and there were no longer any claims maintained against Mr Voukidis in respect of his personal conduct such as might justify his continued involvement in defending the claims made in the proceeding;
(f)any costs incurred by Mr Voukidis in the proceeding since 6 December 2019 have been incurred in addressing the matters which are the subject of the present applications before the Court; these are not covered by paragraph 2(a) of the order made by Judd J on 13 October 2016; and
(g)Ambridge concedes that Mr Voukidis is entitled to a claim on behalf of junior counsel for reasonable remuneration payable to him for the period from 23 May 2019 to 6 December 2019 or a claim by other solicitors in respect of that period, namely seventy per cent of invoices 1, 2 and 10 or a total of $5,862.50.[13]
[13]Letter from Sinisgalli Foster Legal to CLIC Law dated 3 August 2020, exhibit AOD-5 to the affidavit of Ms O’Donohoe sworn 6 August 2020.
Analysis – Further remuneration claims
Mr Voukidis was ordered to file and serve a bill in taxable form regarding the costs he seeks in relation to the further remuneration claim.[14] No bill in taxable form was filed despite numerous extensions being granted to Mr Voukidis.
[14]Orders of Almond J dated 15 April 2020 and 8 May 2020.
Instead, Mr Voukidis sought to adduce the evidence to support his remuneration claim in the form of invoices exhibited to the affidavit of Ms O’Donohoe. This meant that the presentation of the further remuneration argument, despite the best efforts of Counsel, was fundamentally compromised as it was not possible in many instances to adequately evaluate whether the amounts claimed fell within the terms of the remuneration order.
Ms O’Donohoe’s evidence that her client has spent approximately $80,344.35 in defending the matter since 27 March 2019 is not sufficiently specific to be helpful. The solicitor for Ambridge, in a letter dated 3 August 2020, complains at paragraph 12 that invoices numbered 3 to 9 and 11 to 15 represented costs for work done in the period January 2020 to 7 July 2020, including costs which Ambridge claims are not recoverable because they relate to work done in connection with affidavits of Mr Voukidis sworn 27 March 2020 (not relied upon) and in further purported compliance with the preparation of a bill in taxable form (not produced).
Further, Senior Counsel for Ambridge submitted with some justification that the invoices are not adequately particularised. I granted leave to Ambridge to file and serve a document briefly setting out objections to amounts claimed by Mr Voukidis for remuneration.[15] Following the hearing, Ambridge filed and served a list of objections and the solicitor for Mr Voukidis submitted three additional invoices: an invoice from counsel for fees of and incidental to the hearing including for appearing, an invoice from Mr Voukidis’ instructing solicitor for fees for the period from 22 July 2020 to 13 August 2020 including fees for instructing counsel at the hearing and for reviewing Ambridge’s objections, and an invoice for photocopying charges. In the covering email from the solicitor for Mr Voukidis, the solicitor stated that their client ‘did not agree to the objections raised by [Ambridge]’.
[15]A document listing the objections was filed and served on 13 August 2020 which has been considered in these reasons.
In ruling on this matter, I propose to consider and take into account both the objections raised in Ambridge’s objections document and the additional invoices provided on behalf of Mr Voukidis.
First, it is convenient to deal with the issue of the scope of the order of Judd J made on 13 October 2016. In my view, the expression ‘reasonable remuneration for a solicitor and junior counsel for the trial’ is not to be confined literally to reasonable remuneration of the trial itself. On its proper construction, a broader view must be taken of the word ‘trial’. This is evident from the qualifying words ‘including preparation’, which not only expand the meaning, but expand the meaning inclusively, and therefore do not preclude other matters which are ancillary to trial. I accept that reasonable remuneration could include reasonable remuneration for a solicitor and junior counsel for a discovery contest prior to trial or (relevantly for present purposes) a contest about costs. Therefore, I accept in principle that Mr Voukidis may be entitled to reasonable remuneration for a solicitor and junior counsel, for a costs contest including preparation for that contest.
I also accept the submission made on behalf of Mr Voukidis that the order was not discharged when the derivative proceeding was finalised (in so far as it related to Mr Voukidis) by orders made by Riordan J on 6 December 2019. Clear words would be required to discharge the order.
The provision made by Riordan J for the hold back of $46,000 is not inconsistent with the continued operation of paragraph 2(a) of the order made by Judd J on 13 October 2016. Further, there is no evidence before the Court to suggest that any attempt was made to vary the reasonable remuneration order at the point at which the Lane Cove proceeds were released. Orders could have been sought to this effect either for variation or discharge but they were not. Accordingly, the remuneration order remains in force and is capable of operation in relation to the ancillary question of costs, even though some of the costs in question have been incurred in relation to determining the reasonable remuneration issue.
Doing the best I can on the evidence before me, I rule on the various invoices in the list exhibited to the affidavit of Ms O’Donohoe and the three additional invoices sent to the Court by email as follows:[16]
[16]Exhibit AOD1, p5 of 67.
·Invoice 1 – No dispute. Allow 70% of $1,446.50.
·Invoice 2 – No dispute. Allow 70% of $2,500.00.
·Invoice 3 – Allowed in part. The invoice is itemised and appears to relate to the determination of the reasonable remuneration issue. Allowed save for a discount of $1,000 with respect to preparation of an affidavit seeking an extension of time. Allow 70% of $6,210.00.
·Invoice 4 – Disallowed. Insufficient detail.
·Invoice 5 – Disallowed. Junior Counsel’s fees relate to Mr Voukidis seeking an extension of time.
·Invoice 6 – Disallowed. Insufficient detail.
·Invoice 7 – Disallowed. Insufficient detail.
·Invoice 8 – Allowed. Sufficiently itemised. Details of time spent by solicitor. Hourly rates are not unreasonable. Allow 70% of $3,880.00. Work performed was reasonable at the time it was performed.
·Invoice 9 – Disallowed. Insufficient detail.
·Invoice 10 – No dispute. Allow 70% of $5,016.00.
·Invoice 11 – Disallowed. Insufficient detail.
·Invoice 12 – Disallowed. Insufficient detail.
·Invoice 13 – Clearly relates to this matter for instructing counsel. Allow 70% of $550.00.
·Invoice 14 – Allow as to 50%. Discounts item dealing with costs assessment and communications with previous solicitor but allows client communications, costs relating to the directions hearing, and preparing and finalising brief for counsel. Allow 70% of $2,750.00.
·Invoice 15 – Counsel’s fees allowed save for $600.00 for conference with costs assessor; Costs assessment not pursued and Bill of Costs not filed. Allow 70% of $2,453.00.
·Invoice 16 – Allow 70% of $5,940.00.
·Invoice 17 – Sufficiently itemised. Allow 70% of $5,333.00.
·Invoice of solicitor 046 dated 19 August 2020 for $9,510. Sufficiently itemised. Allow 70% of $9,510.00.
·Invoice of barrister dated 12 August 2020 for $8,000. Sufficiently itemised. Allow 70% of $8,000.00.
·Photocopying court book $178.54. Allow 100% $178.54.
In total, I allow $37,690.49 (being 70% of $53,588.50 plus $178.54)) as reasonable remuneration for a solicitor and junior counsel pursuant to order 2(a) of the order of Judd J dated 13 October 2016.
Preliminary hearing costs claim
Ambridge seeks costs with respect to the preliminary hearing before Vickery J for the period from the commencement of the proceeding in 2005 until the hearing and determination of the preliminary issues in March 2010.[17]
[17]See order 4 of the orders of Vickery J made 6 October 2009.
The relief sought by Ambridge in the determination of the preliminary issues was:
(a)a declaration that there was a joint venture agreement between the third defendant (Career Path Australia Pty Ltd (ACN 084 086 064) (‘Career Path’)), fourth defendant (IMF Pty Ltd (ACN 075 604 027)), fifth defendant (C and O Voudikis Pty Ltd (ACN 064 693 054)), Ambridge and Break Fast as pleaded.
(b)alternatively, a declaration that Break Fast held a 25% interest in property at 176 Wellington Pde, East Melbourne on a constructive trust for Ambridge.
(c)a declaration that Break Fast held the property as nominee and trustee for the joint venturers including Ambridge as to its 25% share of the joint venture.[18]
[18]Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59, [28].
Ambridge submits that Mr Voukidis was one of the (then) seven defendants who unsuccessfully defended Ambridge’s claims for declarations in respect of the preliminary issues and that he was found to have falsified documents and lied on oath in the course of the proceeding.[19]
[19]Ibid, [132]-[146] and [314]-[329].
Ambridge sought to rely upon the affidavits of Phillip Jones, sworn 13 February 2012 and the affidavit of Angela Michelle Kennedy, sworn 3 February 2015 as material setting out the relevant history justifying the costs order sought. These affidavits were objected to by Mr Voukidis.
Ambridge filed an application for its costs by summons dated 22 March 2010 which Ambridge submits has never been dealt with; and there have been successive orders adjourning the summons since February 2015, at which time Elliot J adjourned the hearing of Ambridge’s costs application against Mr Voukidis to 11 March 2016 or on any later (adjourned) date.
It appears from the record that nothing further has occurred in relation to this summons. There was no hearing of the summons on 11 March 2016 or on any later date. As has been previously noted, on 3 May 2016, Mr Voukidis became a bankrupt. Ambridge submits that due to the numerous adjournments of its application for costs, the bankruptcy of Mr Voukidis on 3 May 2016 occurred before a costs order was able to be obtained against him. Ambridge submits that it was not entitled to prove for its costs against Mr Voukidis in his bankruptcy because the liability for those costs, not having been determined, meant there was no debt or liability provable in his bankruptcy.[20]
[20]Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52.
Ambridge also points to orders made on 4 July 2014 and 6 February 2015 in which costs were ordered in its favour on a ‘party and party’ basis against Break Fast and Career Path.
Mr Voukidis submits that:
(a)the preliminary question did not advance the litigation towards a conclusion;
(b)there is no proper explanation as to why Ambridge waited nine years to pursue the costs application;
(c)Ambridge’s claim that the pursuit of its application was due to ‘adjournments’ ignores the Break Fast proceeding and its disposal by Judd J;
(d)the Court should be concerned that the costs application appears to have been held over and agitated after Mr Voukidis was discharged from his bankruptcy and that the length of time between the determination of the preliminary question and this application should weigh strongly against the granting of any costs;
(e)no evidence has been led by Ambridge to demonstrate that it has not received money on account of its costs for the period 2005 to 2010 from the other defendants in relation to that stage of the proceeding;[21]
(f)the absence of evidence from Ambridge as to settlement arrangements between it or Break Fast and the other defendants (co-fiduciaries and accessories) raises a fundamental problem with Ambridge’s case;
(g)the release or abandonment of claims against co-fiduciaries or accessories leads to the release in equity of claims against the remaining fiduciary;[22]
(h)there is prejudice inherent in the making of such a costs order given that its taxation would require consideration of files that are more than a decade old, and that this would involve excessive cost and also prolong the already lengthy proceeding; and
(i)in all the circumstances, the Court should not order that Mr Voukidis pay Ambridge’s costs for the period from the commencement of the proceeding in 2005 until the hearing and determination of the preliminary issues.
[21]Mr Voukidis refers to the order made in favour of Ambridge by Elliot J dated 4 July 2014.
[22]Edgewater Homes Pty Ltd v Donohoe [2019] NSWSC 44.
Analysis – preliminary hearing costs claim
Before addressing the submissions, it is convenient to deal with the question of the admissibility of the affidavits of Phillip Jones, sworn 13 February 2012 and the affidavit of Angela Michelle Kennedy, sworn 3 February 2015.
In my view, the affidavit of Phillip Jones is inadmissible. It is substantially a combination of submissions and recitations of relevant findings in the judgment of Vickery J. It is also plain that it was sworn in support of an application for indemnity costs (which are not sought here). The affidavit also contains irrelevant material which relates to Mr Baker, not to Mr Voukidis.[23] Further, Mr Jones does not depose that he is authorised to swear the affidavit on behalf of Ambridge.
[23]Affidavit of Christos Voukidis sworn 24 August 2009, [33].
Mr Jones’ affidavit exhibits an affidavit sworn by Mr Voukidis on 24 August 2009. This affidavit forms part of the Court record and as a primary source does provide helpful background. The affidavit includes an apology made to the Court by Mr Voukidis and details of alterations made by Mr Voukidis to numerous bank statements. Significantly, Mr Voukidis deposes to the effect that the defendants at no time accepted that there was a joint venture as alleged by Ambridge or that if there was a joint venture, that Ambridge had any right or interest in that joint venture.
The judgment of Vickery J and the affidavit of Mr Voukidis sworn 24 August 2009 speak for themselves.
In relation to the affidavit of Angela Michelle Kennedy, Mr Voukidis’ objection is based on relevance. The matters contained in the affidavit relate to historical payments, none of which were claimed in the application before the Court. I uphold the objection on the ground of relevance.
Dealing now with Mr Voukidis’ submissions, first that the preliminary question did not advance the litigation towards conclusion. It is difficult to know whether the determination of the preliminary issues which resulted in the making of the declarations advanced the litigation towards a conclusion.
In his affidavit sworn on 24 August 2009 (referred to above), Mr Voukidis deposes that the defendants had at no time accepted that there was a joint venture as alleged by Ambridge, or if there was a joint venture (which was specifically denied), that Ambridge had any right or interest in that joint venture. Significantly, Mr Voukidis deposes: ‘Accordingly, until such a right is established it is difficult to see how any of the transactions sought to be investigated by [Ambridge’s] lawyers are relative to the issues between the parties’. It can be inferred from this statement that at least in August 2009, Mr Voukidis considered the determination of the question of whether there was a joint venture was of importance to the parties.
It is a matter of conjecture as to whether the determination of the preliminary issues advanced the litigation towards a conclusion. I would not deny Ambridge its costs for seeking to have that issue resolved. Clearly Vickery J accepted the importance of the issue in the context of the overall claim by ordering that these issues be determined first, including the issue of whether there was a joint venture (but not including the taking of accounts, breaches of any alleged agreement or of any duties and damages which were to be tried subsequently).[24]
[24]Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59, [26].
Ambridge’s explanation of the extensive delay for the determination of the costs issue is less than compelling. The reasons for the numerous adjournments is not elaborated upon, nor is it clear why the issue of costs of the preliminary issue was not determined by the summons filed 22 March 2010, though it was common ground that it had never been dealt with. As noted above the summons was adjourned on at least five occasions[25] during the years 2015 to 11 March 2016 and Mr Voukidis’ bankruptcy intervened on 3 May 2016 until his discharge three years later.
[25]Orders made on 6 February 2015, 30 April 2015, 22 June 2015, 8 September 2015 and 11 December 2015.
Whilst there is something to be said for the submission that there is no proper explanation as to why Ambridge waited nine years to pursue the costs application, it is apparent that the delay was partly due to Mr Voukidis having consented to or not having opposed successive adjournments of the 22 March 2010 summons. In that sense, Mr Voukidis is implicated in the delayed resolution of the costs issue up to a point immediately before the date of his bankruptcy.
As a matter of law, I accept Ambridge was not entitled to prove for its costs against Mr Voukidis in the bankruptcy because the costs were not at that point ‘debts and liabilities’ provable in his bankruptcy, the issue of costs having yet to be heard and determined.[26] However, it is true that there is no evidence before the Court of any costs recovery from other defendants despite orders having been made in favour of Ambridge with respect to costs of the preliminary hearing on 4 July 2014 against Break Fast and on 6 February 2015 against Career Path. This does concern me, as does the extreme length of time between the determination of the preliminary question and the determination of this application and at least a theoretical possibility that the consequences of an order against Mr Voukidis may lead to a second bankruptcy.
[26]Foots v Southern Cross Mine Management (2007) 234 CLR 52.
Had the costs issue been determined prior to Mr Voukidis’ bankruptcy on 3 May 2016, Ambridge would have been confined to prove in the bankruptcy along with other unsecured creditors.
Mr Voukidis submits that Ambridge may have entered into settlement arrangements with other defendants or given releases which might have had the effect of releasing co-fiduciaries therefore relieving him of any liability. Adverting to the possibility of this having occurred is not enough to satisfy the evidentiary onus required. Steps could have been taken by Mr Voukidis to subpoena terms of settlement or to compel production from Ambridge (with suitable protection as to confidentiality) on a basis which would enable the proposition to be tested. He has chosen not to do so.
I do not accept that Mr Voukidis should be required to pay all the costs of, and incidental to, the proceeding from the date of commencement of the proceeding in 2005 to the date of the judgment delivered by Vickery J in 2010. In his judgment, Vickery J noted that the trial of the preliminary issues did not include the taking of accounts, the alleged breach of any agreement, the alleged breach of duties or damages.[27] Naturally I cannot speculate on the outcome of the determination of issues which have not been adjudicated upon.
[27]Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59, [26].
Having read the reasons of Vickery J and after considering the admissible material and the submissions, I am satisfied that it is appropriate that Mr Voukidis should be required to pay Ambridge’s costs of, and incidental to, the trial of the preliminary issues which were adjudicated upon and which Mr Voukidis resisted unsuccessfully. In other words, costs should follow that event. However, to guard against the possibility of double recovery by Ambridge, the order for costs shall be qualified by limiting Mr Voukidis’ liability for these costs to the costs of, and incidental to, the hearing of the preliminary issues, save and insofar as those costs have not already been recovered from the other defendants. This can be determined by consultation between the solicitors for the respective parties, and if no agreement is reached, by the Costs Court on a taxation application.
SCHEDULE OF PARTIES
| BETWEEN: | |
| AMBRIDGE INVESTMENTS PTY LTD (RECEIVER APPOINTED) (IN LIQUIDATION) (ACN 077 299 051) | Plaintiff |
| AND | |
| THEODORE BAKER | First Defendant |
| CHRISTOS VOUKIDIS | Second Defendant |
| CAREER PATH AUSTRALIA PTY LTD (ACN 084 086 064) | Third Defendant |
| IMF PTY LTD (ACN 075 604 027) | Fourth Defendant |
| C & O VOUKIDIS PTY LTD (ACN 064 693 054) | Fifth Defendant |
| BREAK FAST INVESTMENTS PTY LTD (ACN 090 648 990) | Sixth Defendant |
| OXLEY GROUP FINANCE PTY LTD (ACN 107 651 507) | Seventh Defendant |
| MARK STANLEY | Eighth Defendant |
| GRAVITY VENTURES PTY LTD (ACN 117 153 509) | Ninth Defendant |
| ROBERT WOODS AS TRUSTEE OF THE PROPERTY OF CHRISTOS VOUKIDIS, A BANKRUPT | Tenth Defendant |
| JONATHAN EDWARD FRANCIS KEENE | Eleventh Defendant |
| MICHELLE MARIE KEENE | Twelfth Defendant |
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