Ananda Marga Pracaraka Samgha Ltd v Tomar (No 7)

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FEDERAL COURT OF AUSTRALIA

Ananda Marga Pracaraka Samgha Ltd v Tomar (No 7) [2013] FCA 863

Citation: Ananda Marga Pracaraka Samgha Ltd v Tomar (No 7) [2013] FCA 863
Parties: ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 897), DEVENDHRAN VADIVELOO PILLAY and PRABANJAMURTHI PILLAI v SUNIL KUMAR SINGH TOMAR, CLAUDIA ALISTER, RICHARD PFEIFFER, TIWARI DAYASHANKAR, PAUL ALISTER, DIETER DAMBIEC, JAKE KARLYLE, LUKE DEACON, MIRAI DEACON, MICHAEL TOWSEY and DHARANENDRAN PARTHY
File number: VID 208 of 2010
Judge: DODDS-STREETON J
Date of judgment: 27 August 2013
Catchwords:

CORPORATIONS – whether company should be wound up on the just and equitable ground pursuant to s 461(1)(k) of the Corporations Act 2011 (Cth) – pattern of non‑compliance with statutory and inadequate procedures exposed at trial – independent expert report to the Court – winding up inappropriate

COSTS – whether unsuccessful defendants should pay costs of the litigation – no basis to depart from the usual rule that costs follow the event – no public benefit in litigation – whether defendants should pay costs on indemnity basis after 1 March 2011 – whether failure to accept Calderbank offer dated 15 February 2011 unreasonable
Legislation: Corporations Act 2011 (Cth) s 461(1)(k)
Federal Court Act 1976 (Cth) s 43
Cases cited: Ananda Marga Pracaraka Samgha Ltd v Tomar (No 2) [2010] FCA 1342
Ananda Marga Pracaraka Samgha Ltd v Tomar (No 6) [2013] FCA 284
Attorney General (Qld) ex rel Nye v Cathedral Church of Brisbane (1977) 136 CLR 353
Atton v National Mutual Life Association of Australasia (No 2) [2007] NSWSC 348
Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
Leichardt Municipal Council v Green [2004] NSWCA 341
McFadzean v Construction Forestry Mining and Energy Union (No 2) [2007] VSCA 313
Rapana v McBride Street Cars Ltd [2007] DCR 551
Stipanov v Mier (No 2) [2006] VSC 424
Seven Network Ltd v News Ltd (2007) 244 ALR 374; [2007] FCA 1489
Westbury Holdings Kiama Pty Ltd v ASIC [2007] NSWSC 1064
Date of hearing: 4 June 2013 and 1 August 2013
Date of last submissions: 1 August 2013
Place: Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 77
Counsel for the Plaintiffs: Mr C Gunst QC with Mr M Irving
Solicitor for the Plaintiffs: Holding Redlich
Counsel for the Defendants: Mr B Walters SC with Mr T Messer
Solicitor for the Defendants: Moores Legal

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 208 of 2010
BETWEEN:

ANANDA MARGA PRACARAKA SAMGHA LTD (ACN 003 193 897)
First Plaintiff

DEVENDHRAN VADIVELOO PILLAY
Second Plaintiff

PRABANJAMURTHI PILLAI
Third Plaintiff
AND:

SUNIL KUMAR SINGH TOMAR
First Defendant

CLAUDIA ALISTER
Second Defendant

RICHARD PFEIFFER
Third Defendant

TIWARI DAYASHANKAR
Fourth Defendant

PAUL ALISTER
Fifth Defendant

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Details
Case
[2013] FCA 863
Decision Date

CaseChat Overview and Summary

The case of Ananda Marga Pracaraka Samgha Ltd v Tomar (No 7) involves the plaintiffs, Ananda Marga Pracaraka Samgha Ltd, seeking an order for the winding up of the defendant's company on the just and equitable ground pursuant to s 461(1)(k) of the Corporations Act 2011 (Cth). The plaintiffs' case was based on the defendant's non-compliance with statutory and inadequate procedures. The legal issues that the court was required to decide included whether the company should be wound up and whether the unsuccessful defendants should pay costs of the litigation on an indemnity basis.

The court found that the defendants' case was very fragile and the prospects of success were poor. The court rejected the argument that the defendants should not be ordered to pay costs on an indemnity basis, finding that there was no basis to depart from the usual rule that costs follow the event. The court noted that there was no public benefit in the litigation and that the defendants had rejected a Calderbank offer. The court also found that the defendants' rejection of the Calderbank offer was unreasonable given the state of the proceeding at the time the offer was made. The court concluded that it was just that the defendants pay the plaintiffs' costs of the claim and cross-claim on an indemnity basis from 1 March 2011.

The court ordered that the defendants pay the plaintiffs' costs of the claim and cross-claim on a party and party basis up to 1 March 2011, and thereafter on an indemnity basis. The court found that the defendants' case on the true nature of the Ananda Marga religion and its intersection with the company was not hopeless, untenable or doomed to fail. However, the court found that the substantial and longstanding non-compliance with statutory obligations would not have been resolved had the Calderbank offer been accepted.

Orders

Orders of the court

1. The defendants pay the plaintiffs’ costs of the claim and the cross claim on a party and party basis up to 1 March 2011, and thereafter on an indemnity basis.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The reasonableness or otherwise of rejecting a Calderbank offer must be assessed at the date on which it was made. The state of the proceeding as at the date of the Calderbank offer in this case is discussed in detail above. In my view, albeit the defendants’ case was not hopeless, it was very fragile and the prospects of success were poor.CONCLUSION Accordingly, in my opinion, in all the circumstances, including the rejection of the Calderbank offer, it is just that the defendants pay the plaintiffs’ costs of the claim and cross‑claim on an indemnity basis from 1 March 2011.

Ratio Decidendi

Legal Principle Established

The defendants submitted that any costs order made against them should not be on an indemnity basis. They submitted that their rejection of the Calderbank offer was not unreasonable in circumstances where:(a)the terms of the Calderbank offer were unclear and would not have disposed of the proceeding in its entirety, as there was no reference to one of the persons whom they alleged to be members (Jake Karlyle);(b)the Calderbank offer contained merely negligible elements of compromise and in essence required their total capitulation. The plaintiffs’ offer to pay $35,000 in respect of the defendants’ costs was offset by the defendants’ existing liability to satisfy a considerably higher costs order in the plaintiffs’ favour. Further, the plaintiffs surrendered only their allegations that Messrs Tanner and Largey were members of the company;(c)the defendants’ case on the true nature of the Ananda Marga religion and its intersection with the company was not hopeless, untenable or doomed to fail; (d)given the stage of the litigation at the date of the Calderbank offer, important aspects of the evidence were as yet unclear; and (e)had the Calderbank offer been accepted, the substantial and longstanding non‑compliance with statutory obligations would not have been resolved.CONSIDERATIONThe Court’s power to order costs Section 43 of the Federal Court Act 1976 (Cth) provides:…(2)Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge. (3)Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following: (a)make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; (b)make different awards of costs in relation to different parts of the proceeding; (c) order the parties to bear costs in specified proportions; (d) award a party costs in a specified sum; (e)award costs in favour of or against a party whether or not the party is successful in the proceeding; (f) order a party’s lawyer to bear costs personally; (g)order that costs awarded against a party are to be assessed on an indemnity basis or otherwise; (h)do any of the following in proceedings in relation to discovery:(i)order the party requesting discovery to pay in advance for some or all of the estimated costs of discovery; (ii)order the party requesting discovery to give security for the payment of the cost of discovery; (iii)make an order specifying the maximum cost that may be recovered for giving discovery or taking inspection. … It is well established that the Court has a wide discretion in relation to costs, which must, however, be exercised judicially.No basis to depart from the usual rule that costs follow the event In my opinion, in this case, there was no basis to depart from the usual rule that costs follow the event and should be borne by the unsuccessful parties. Contrary to the defendants’ submissions, the present case is not relevantly analogous to Attorney-General (Qld) Ex Rel Nye. In that case, the Attorney‑General, at the request of interested individuals, sought, inter alia, to restrain the respondents (the Corporation of the Lesser Chapter of the Cathedral Church of Brisbane and the Corporation of the Synod of the Diocese of Brisbane (“Synod”)) from applying for other purposes moneys donated in a public appeal to conduct a hospital, which had since become impossible to maintain on its existing site. The Synod had resolved to demolish the hospital and use funds accumulated from its operation to build a new hospital elsewhere. The Attorney‑General sought, broadly speaking, declarations that the respondents held certain lands and funds on trust for the purposes of conducting a hospital thereon and an injunction restraining them from demolishing the existing hospital on the lands or using the lands or accumulated funds for any other purpose.