Australian Securities Commission v Aust-Home Investments Ltd

[1995] FCA 105

CATCHWORDS

Costs - interlocutory application to prevent sale of property beyond power of receivers and managers.

Australian Securities Commission v. Aust-Home Investments Limited and Others

No. QG3004/92

Cooper J., Brisbane, 7 March, 1995

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION  No. QG3004 of 1992

IN THE MATTER OF AUST-HOME INVESTMENTS LIMITED AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

AUST-HOME INVESTMENTS LIMITED AND OTHERS

Respondents

JUDGE MAKING ORDER:Cooper J.

WHERE MADE:   Brisbane

DATE OF ORDER:               7 March, 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.   The receivers and managers pay the seventh and eighth respondents costs of and incidental to their notice of motion filed 12 March, 1993 up to and including the hearing of the motion on 19 March, 1993 and their costs of today to be taxed if not agreed.

2.   The receivers and managers pay the seventh and eighth respondents the costs of perusal of the receivers and managers notice of motion and supporting material filed 16 March, 1993 to be taxed if not agreed.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION  No. QG3004 of 1992

IN THE MATTER OF AUST-HOME INVESTMENTS LIMITED AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

AUST-HOME INVESTMENTS LIMITED AND OTHERS

Respondents

CORAM:                    Cooper J.

PLACE:   Brisbane

DATE:             7 March, 1995

REASONS FOR JUDGMENT

On 12 March, 1993 the seventh and eighth respondents filed a notice of motion returnable on 19 March, 1993 wherein they sought orders restraining the proposed sale by the receivers and managers of real property owned by the respondents.  They also sought the termination of the receivership and the making of orders for payment of costs by either the Australian Securities commission ("ASC") or the receivers and managers.

On the return of the notice of motion, the receivers and managers appeared as respondents, as did the ASC.  The ASC took a neutral position in relation to the orders sought by way of injunction to stop the proposed sales of property but were opposed to the termination at that stage of the receivership.  In the event, the issue of the termination of the receivership was not addressed on that occasion and was adjourned over for further consideration to 23 April, 1993.  The court was essentially concerned, on the first return date, with the question of whether or not the impending proposed sales ought to be enjoined. 

On 19 March, 1993 I directed the receivers and managers not to sell the properties at auction as proposed on 20 March, 1993 and 26 March, 1993 or at all  without the leave of the court.  I gave reasons on that occasion as to why, in my view, such a direction ought to be given.  I will not repeat the reasons, save to say that I took the view, which I continue to hold, that the receivers and managers had misconceived the interim nature of their appointment and were seeking to do things which were not contemplated by the order of Northrop J. appointing them and which were beyond power.  I reserved the question of costs of the notice of motion because there remained the outstanding issue of the termination of the receivership.

The receivership was terminated by order of the court on 23 April, 1993.

The proceedings today raise for determination the issue of the costs reserved on the seventh and eighth respondents'  notice of motion filed on 12 March, 1993.

The question arises as to whether the ordinary order ought to be made, namely, that the applicants on the notice of motion having succeeded in restraining the proposed sales are to be paid their costs of and incidental to the motion to be taxed if not agreed, by the unsuccessful receivers and managers.

There is in the material before me a substantial body of correspondence proceeding over some months prior to the filing of the notice of motion challenging the receiver and managers power to sell any of the property.  Indeed, commencing shortly
after the appointment of the receivers and managers the seventh and eighth respondent by their solicitors put the receivers and managers and the ASC on notice that, if necessary, injunctive relief would be sought from the court if the receivers and managers attempted to sell any of the properties pending their tenure as interim receivers and managers.  The correspondence indicates that the receivers and managers formed the view that they were entitled to sell, and the material indicates that there were certain reasons as to why they adopted that view, namely, the length of the administration, the fact that they had not been paid, and the absence of effective management in the companies.

For reasons I gave on 19 March, 1993 the receivers and managers were not empowered to do what they intended to do for the reasons they relied upon.  If these matters were causing them a problem or a difficulty in fulfilling their duty as receivers and managers, the appropriate course was, in my opinion, for the receivers and managers to come back to the court in order to seek directions at an early stage.  It was not for the receivers and managers to adopt a course directed ultimately to a liquidation of the seventh and eighth respondents and a distribution of their assets as on a winding up.  There is nothing in the circumstances that persuades me that the ordinary course ought not to be followed.  The seventh and eighth respondents were forced to come to court in order to protect their property and were successful.  The receivers and managers resisted the relief sought and failed with the consequence that they must pay the costs of and incidental to the seventh and eighth respondents on their notice of motion filed on 12 March, 1993 up to and including the hearing of the motion on 19 March, 1993.

The ASC also seeks its costs on the notice of motion to be paid by either
the seventh and eighth respondents or the receivers and managers.  It submitted it was not a necessary respondent to the application for injunctive relief and took a neutral position in relation to such relief.  However, the ASC did intend to oppose on that day any orders which would have had the effect of terminating the receivership and the seeking of orders for costs of the principal application against the ASC.  Those matters were not addressed on 19 March, 1993 and were effectively adjourned over, with the costs of the parties on the notice of motion being reserved.

It seems to me that the costs of the ASC incurred on 19 March form part of the costs on the motion.  Those costs form part of the Commission's cost in the principal application and fall to be determined by reference to the ASC's pending application for those costs.  That is, whether or not the costs incurred by the ASC on 19 March, 1993 by attendance at court as a respondent to the notice of motion ought to be recovered against the seventh and eighth respondent falls to be determined by reference to the arguments which I heard yesterday as to whether in the circumstances which have occurred I ought to make any order as to costs and if so against whom.  I propose to deal with the question of the costs of the ASC of 19 March, 1993 in that context.

It does not appear to me as presently advised that the receivers and managers ought, in relation to the appearance on 19 March 1993, be ordered to pay the costs of the ASC, or to indemnify the seventh and eighth respondent in relation to those costs if ultimately I form the view that the ASC ought to recover the costs of that appearance from the seventh and eighth respondents.

There is, in relation to a motion filed by the receivers and managers on 16 March, 1993 a question as to what orders, if any, ought to be made in relation to the costs of that notice of motion.  The notice of motion sought declaratory relief as to the ownership of property, the proper trustee under certain trusts, orders leading to the sale of real properties and to the winding up of the business and affairs of the seventh and eighth respondents.

The receiver's notice of motion filed on 16 March, 1993 was, as I have said in my previous reasons, in the relief which it sought, misconceived having regard to the role, purpose and powers of an interim receiver and manager.   The notice of motion was not the subject of argument before me on its return date but rather was stood over to a date to be fixed by the Registrar for further consideration.   In the events which occurred, the receivership was terminated shortly thereafter and the relief sought by the receivers and managers was never pressed.  

Mr. McHugh, for the seventh and eighth respondents, advises me that there are additional costs incurred in relation to the notice of motion and material filed in support of it.  Those additional costs are for perusal of the notice of motion and supporting material and he seeks those costs.   Having regard to the nature of the relief sought, the impending sales and the fact that the notice of motion was returnable for 19 March, 1993, the seventh and eighth respondents and their legal advisers had to treat the application as a serious one and properly acquaint themselves with the content of the material.  In these circumstances, the relief sought having been misconceived, the receivers and managers ought to pay the seventh and eighth respondents' costs of the notice of motion insofar as the respondents are able to identify specific costs relating to perusal not associated with the costs incurred by them in the preparation of their own notice of motion returnable on the same date seeking injunctive relief.

THE COURT ORDERS THAT:

1.   The receivers and managers pay the seventh and eighth respondents costs of and incidental to their notice of motion filed 12 March, 1993 up to and including the hearing of the motion on 19 March, 1993 and their costs of today to be taxed if not agreed.

2.   The receivers and managers pay the seventh and eighth respondents the costs of perusal of the receivers and managers notice of motion and supporting material filed 16 March, 1993 to be taxed if not agreed.

I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.

Date: 7 March, 1995

Associate

Counsel for the Applicant ASC:   Mr. R. Hansen Q.C.

J. McKenna

Solicitor for the Applicant ASC:   B. Behan, ASC

Counsel for the Receivers and

Managers:   Mr. D. Smith

Solicitors for the Receivers and

Managers:   Halletts, Solicitors

Counsel for the Seventh and

Eighth Respondents:   Mr. P.J. McHugh

Solicitors for the Seventh and

Eighth Respondents:   Biggs & Fitzgerald.

Date of Hearing:   7 March, 1995

Place of Hearing:   Brisbane

Date of Judgment:   7 March, 1995