Bloc (ACT) Pty Ltd v Crafted Holdings Pty Ltd
[2021] ACTCA 37
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Bloc (ACT) Pty Ltd v Crafted Holdings Pty Ltd |
Citation: | [2021] ACTCA 37 |
Hearing Date: | 17 November 2021 |
DecisionDate: | 17 November 2021 |
Before: | Elkaim ACJ |
Decision: | See [26] |
Catchwords: | PRACTICE AND PROCEDURE – CIVIL LAW – Application for Leave to Appeal from Interlocutory Judgment – Appeal against costs decision – broad discretion on costs |
Legislation Cited: | Corporations Act 2001 (Cth) s 482 |
Cases Cited: | Arrow International Australia Ltd v Group Konstrukt Pty Ltd (2012) 7 ACTLR 48 |
Parties: | Bloc (ACT) Pty Ltd ( Appellant) Crafted Holdings Pty Ltd ( First Respondent) Crafted Central Pty Ltd (Second Respondent) Henry Joseph Kazar in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (in liquidation) (Third Respondent) Lachlan Macarthur Abbott in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (in liquidation) (Forth Respondent) |
Representation: | Counsel Dr A Greinke ( Appellant) K Petch ( First and Second Respondent) N Berry (Third and Forth Respondent) |
| Solicitors Mills Oakley ( Appellant) Terracon Legal ( First and Second Respondent) ERA Legal (Third and Forth Respondent) | |
File Number: | ACTCA 49 of 2021 |
Decision under appeal: | Tribunal: ACT Supreme Court Before: Mossop J Date of Decision: 27 September 2021 Case Title: Re Crafted Capitol Pty Ltd (in Liquidation) (No 2) Citation: [2021] ACTSC 233 |
ELKAIM ACJ:
In this matter I am sitting as a single judge in the Court of Appeal pursuant to s 37J of the Supreme Court Act 1930 (ACT).
On 8 October 2021 the applicant filed an application for leave to appeal from an interlocutory judgement of Mossop J decided on 27 September 2021 (Crafted Capital Pty Ltd (In Liquidation) (No 2) [2021] ACTSC 233).
The application is supported by an affidavit of Ms Madeleine Ness, affirmed on 1 October 2021.
Leave to appeal is required because the decision of Mossop J is an interlocutory decision.
The principles to be applied in an application for leave to appeal were listed by Refshauge J in Arrow International Australia Ltd v Group Konstrukt Pty Ltd (2012) 7 ACTLR 48, at [58]:
The principles on which a court will grant leave to appeal have been dealt with by the courts. The principles, which I set out in Capital Property Projects (ACT) Pty Ltd and Anor v Planning and Land Authority (ACT) (2008) 2 ACTLR 44, may be summarised as follows:
(a) leave will be granted sparingly to avoid delaying and fragmenting the hearing of cases;
(b) a court will be particularly hesitant to grant leave where the decision is one in respect of practice and procedure or is made in the exercise of a discretion;
(c) decisions which, though interlocutory, determine substantive rights will more readily be the subject of the grant of leave;
(d) the party seeking leave bears the onus of satisfying the court of the necessary criteria to justify the grant of leave;
(e) the court will ordinarily grant leave where the decision is wrong and prejudice will be suffered by the appellant;
(f) leave may also be granted where the decision is attended with sufficient doubt to warrant its reconsideration or, to put it another way, where the decision is ‘attended with difficulty and [its] correctness is open to dispute’ (Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400) and, if it is wrong, significant consequences will be suffered by the applicants; and
(g) it may be a factor favouring the grant of leave that:
i. the decision involves a matter of public importance; or
ii. the decision may affect the fairness of the trial, a consideration under s 21 of the Human Rights Act 2004 (ACT), though this can also weigh against the decision if the appeal results in unfair delay or fragmentation of the trial.
Factors b) and f) seem most relevant here.
In Donohue v Volanne Pty Ltd (No 2) [2021] ACTCA 11 at [13], Murrell CJ, after noting that “there are no rigid and exhaustive criteria which govern the exercise of the discretion to refuse or grant leave to appeal from an interlocutory decision”, refined the principal considerations as follows:
(a)Is the decision attended with sufficient doubt to warrant its being reconsidered?
(b)Would substantial injustice result if leave was refused, supposing the decision to be wrong?
The second consideration posed by Murrell CJ clearly proceeds on an assumption that the original decision was wrong. This is a more difficult task when the original decision involves the exercise of a discretion, in turn making the principles stated in House v The King (1936) 55 CLR 499 relevant.
The background to the costs decision was set out by Mossop J at [1]:
On 20 August 2021 I dismissed the application made by Crafted Holdings Pty Ltd (Holdings) and Crafted Central Pty Ltd (Central) to terminate the winding up of Crafted Capitol Pty Ltd (Capitol): Re Crafted Capitol Pty Ltd (In Liquidation) [2021] ACTSC 190. On 26 August 2021 I made further orders to finalise proceedings SC 79 of 2021, SC 88 of 2021 and ES 9 of 2020. The only outstanding issue was the costs of proceedings SC 79 of 2021.
His Honour said this at [4]:
In my view it is desirable to deal with the question of costs in a way that finalises the proceedings and does not allow a party to subsequently open another front in the war.
The sentiments expressed by his Honour did not find favour with the applicant. That is not a criticism of the applicant which, of course, is perfectly entitled to pursue its assessment of its rights.
The applicant says that his Honour should have awarded costs in favour of the applicant, at least on an ordinary basis, but more appropriately on a solicitor/client basis.
The basis for the latter assertion is that the applicant had served an offer of compromise under Part 2.10 of the Court Procedures Rules 2006 (ACT). The offer was made on 12 July 2021, in the following terms:
1.The Interlocutory Process be dismissed.
2.There be no order as to costs in respect of the Interlocutory Process as between the applicants and the fourth respondent.
3.The offer is open for acceptance in writing until 9.00am on 22 July 2021.
His Honour clearly recognised the importance of the offer. This is what he said at [6] and [7]:
6.The offer of compromise is of some significance. The offer proposed that the proceedings be dismissed and that there be no order as to costs. In substance it was an invitation to the applicants to capitulate. If it was sufficient to enliven the provisions of the rules (a question which I do not decide), it was, at best, the slenderest of compromises, targeted only at obtaining a cost advantage. If the rules in Pt 2.10 of the Court Procedures Rules 2006 (ACT) are engaged, then I would order otherwise under rule 1012(2). That is for the following reasons.
7.First, the offer included only the slenderest of compromises, if any. Second, the proceedings involved the administration of a liquidation rather than proceedings over legal rights. Third, the positions taken by each of the relevant parties can be characterised as reasonable notwithstanding the ultimate outcome. Fourth, the ultimate result was determined not by the respective rights of the parties but rather for pragmatic reasons having regard to the progress made by the liquidator in quelling the controversies between the parties.
The applicant submitted that his Honour should have given effect to the offer of compromise. The offer was compliant in form and no “exceptional circumstances” existed to justify a departure from the application of the relevant rules.
Consistent with this point, I said this in Zeltner v Deputy Registrar of the Supreme Court of the ACT (No 2) [2021] ACTSC 278, at [18]:
Offers of compromise, under the rules, are designed to assist in the early resolution of litigation and the consequent saving of time and costs. For this reason a departure from the effect of an offer of compromise should not be taken lightly.
It was submitted that his Honour’s observation that the offer “included only the slenderest of compromises, if any” was erroneous. It was pointed out that an offer that each side pay its own costs was specifically contemplated by r 1002(3)(a)(i).
The fact that an offer of compromise makes only a “slender compromise” is not necessarily relevant. In Nash v State of New South Wales (No. 2) [2015] NSWDC 156, Gibson DCJ reviewed the authorities arising from the corresponding rule in New South Wales. Her Honour’s summary included this observation, at [22]:
(c).The Rules do not in fact require that the offer should be substantially less than the amount claimed or recovered. There is no “5% minimum discount” or other “rule of thumb” which applies. In Forbes Services Memorial Club Ltd v Hodge (New South Wales Court of Appeal, Kirby P, Priestley and Cole JJA, 8 March 1995), the court held that an offer to compromise an appeal for an amount only $129.24 less than the trial judgment was a sufficient compromise, having regard to the slight prospects of success in the appeal.
In Forbes, Kirby P also stated:
However, for the operation of the rule, it would appear that the principle contemplates that so long as some actual offer of compromise, short of the full amount payable under the order under appeal, the rule will apply.
If the reason behind his Honour’s decision was that the compromise that had been offered was no better than slender, then it would have been arguable that the decision was “attended with sufficient doubt to warrant its reconsideration”.
But this was not the basis upon which his Honour reached his conclusion. To the contrary, his Honour specifically put the offer of compromise to the side in reaching his conclusion. He said, at [8]:
In my view, for the above reasons, whether or not the rules relating to offers of compromise are engaged, the appropriate order is that as between Bloc, Central and Holdings there be no order as to the costs of the interlocutory process dated 1 June 2021. That will include the costs reserved by McWilliam AsJ on 5 August 2021.
Clearly his Honour was not making a decision on the validity or otherwise of the offer of compromise. He was endeavouring to exercise his discretion, as already noted at [4], “to deal with the question of costs in a way that finalises the proceedings and does not allow a party to subsequently open another front in the war”.
The applicant also criticised his Honours refusal to make an order under s 482 of the Corporations Act 2001 (Cth). His Honour specifically dealt with s 482 at [3] and [4]:
3.Central and Holdings submitted that there should be no order in favour of Bloc, with the result that it would bear its own costs. They submitted that the ordinary rule in relation to costs does not apply because of the operation of s 482 of the Corporations Act which permits costs to be met as part of the cost of the liquidation and that Bloc had voluntarily joined itself in the proceedings at a time when the applicants had tried to pay it the full amount owed to it by Capitol.
4.An order under s 482(4) of the Corporations Act is one which is available in the circumstances, but it is discretionary. The written submissions provided by Bloc do not explain the reason for its change of position. That change of position may be because it anticipates that any costs ordered to be paid under s 482(4) will fall within the obligation created by the undertaking given to the court by Central to pay the liquidator’s fees and disbursements. If that is the case, then the court would have been assisted by the submissions making that position express. The orders proposed by Bloc would reserve the question of costs against Central and Holdings, leaving it open to reopen the issue of costs if it didn’t achieve satisfaction from the order under s 482(4). In my view it is desirable to deal with the question of costs in a way that finalises the proceedings and does not allow a party to subsequently open another front in the war.
It is apparent that his Honour, having recognised the discretion contained within s 482, decided that he should deal with this section within the overall discretion that he had in respect of costs. This exercise of discretion was specifically utilised to achieve the purpose stated by his Honour at the end of [4]:
In my view it is desirable to deal with the question of costs in a way that finalises the proceedings and does not allow a party to subsequently open another front in the war.
Looked at against this background and recognising the wide discretion held by a court, albeit to be exercised judicially, I cannot see the decision as either “being attendant with sufficient doubt” or having any attributes that would overcome the particular hesitancy that is required to grant leave to appeal from the exercise of a discretion.
Accordingly, the application for leave to appeal filed on 8 October 2021 is dismissed with costs.
| I certify that the preceding twenty-six [26] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Chief Justice Elkaim. Associate: Date: 22 November 2021 |
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Amendments
22 November 2021 Replace “in respect of course” with “in respect of costs” Paragraph [24]
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