Bristow & Anor v McDermott & Anor

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 8176 of 2008

IAN DOUGLAS BRISTOW & ROBYN LEA BRISTOW	Plaintiffs
v
ROSS JOHN McDERMOTT (in his personal capacity and in his capacity as liquidator of MONEY MATTERS FINANCIAL SOLUTIONS PTY LTD (in liq)) and THE REGISTRAR OF TITLES	Defendants

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	6 OCTOBER 2008
DATE OF RULING:	6 OCTOBER 2008
CASE MAY BE CITED AS:	BRISTOW v MCDERMOTT
MEDIUM NEUTRAL CITATION:	[2008] VSC 444

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COSTS – Caveat lodged by liquidator – No evidence to support caveat – Indemnity costs ordered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A. Kirby	Nicholas O’Donohue
For the Defendants	Mr H. Aizen	WMB Lawyers

HIS HONOUR:

This is an application for indemnity costs to be paid personally by the liquidator, Ross McDermott, in his capacity as liquidator of the company Money Matters Financial Solutions Pty Ltd.

I accept that Mr McDermott was at all times acting not for personal advantage (other than the necessary advantage of obtaining appropriate fees for his services as liquidator) but with the interests of the creditors of the company in mind.

Nevertheless, it seems to me that in the circumstances of this case, I ought to accede to the application that he personally pay the plaintiffs’ costs on an indemnity basis.

The reason why it seems to me that an order of that kind is appropriate is that Mr McDermott has not favoured the court with any material seeking to justify the stance he has taken.

It is tempting for a liquidator to hide behind actions taken by him or her or not taken by him or her on the basis that the action or inaction is or falls within the rubric of protecting the interests of the creditors. But if that is used as an excuse for otherwise inexcusable behaviour then in fact it becomes no excuse at all. There is nothing to excuse Mr McDermott's failure to put before the court any material justifying a change in his position from that expressed in August 2006.

In a report dated 29 August of that year, Mr McDermott told the creditors of the company that a search had shown a current fixed and floating charge in favour of the National Australia Bank and a discharged fixed and floating charge in favour of the Investec Management Australia Pty Ltd. He went on to say that he had been advised, and on the basis of the investigations he had taken to that point, had accepted, that the charge given by the company to the National Australia Bank supported securities for other entities controlled by Mr and Ms Bristow; and, although the report does not go on to say this, the clear inference is that at that time Mr McDermott accepted that there was no evidence upon which to conclude that moneys had been borrowed by the company to support the purchase by Mr and Ms Bristow of their property in Warrandyte.

That property was sold pursuant to a contract of sale on 21 June this year. Settlement is due some time next month.

After the sale, the liquidator lodged caveats. They were lodged on 30 July 2008. I have already ordered that those caveats be removed. They were lodged with no prior notice to Mr and Ms Bristow and the basis for the claim supporting the caveat is not efficaciously worded in the instrument of the caveat itself.

More importantly, there is no material before the court to indicate the basis upon which Mr McDermott apparently changed his mind from the position he held in August 2006, a portion which could not support the interest he now seeks to maintain.

In the absence of any such explanation, I must, I think, proceed upon the basis that Mr McDermott has no explanation.

It is settled that proceedings brought without any proper basis may be the subject of an order for indemnity costs. In my opinion I must conclude in the absence of the information to which I have referred, that this is such a case.

I accordingly order that the costs of and incidental to the proceeding, including reserved costs, be paid by Mr McDermott on an indemnity basis.

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The case of Bristow & Anor v McDermott & Anor involved a dispute where the plaintiffs, acting as liquidators, sought to challenge the validity of a caveat lodged by the defendants, who were also acting as liquidators. The case was heard in the Supreme Court of New South Wales. The primary issue was whether the caveat lodged by the defendants was justified, given the lack of evidence supporting its basis. Additionally, the court had to determine whether the plaintiffs were entitled to indemnity costs due to the failure of the defendants' caveat.

The court examined the circumstances surrounding the caveat and the evidence, or lack thereof, that the defendants provided. It was noted that the defendants had not presented any evidence to substantiate the caveat, which was a critical factor in the decision. The court held that the lack of evidence to support the caveat rendered it unjustified. Furthermore, the court found that the plaintiffs were entitled to indemnity costs because the defendants' caveat was not only unjustified but also had caused unnecessary expense and inconvenience to the plaintiffs.

Consequently, the court ruled in favour of the plaintiffs, ordering the defendants to pay indemnity costs. The decision emphasised the importance of substantiating any legal actions with adequate evidence and highlighted the potential consequences of lodging unjustified caveats. The court's ruling served as a reminder of the necessity for liquidators to act with due diligence and responsibility in their actions.

The final orders of the court included the dismissal of the defendants' caveat and the awarding of indemnity costs to the plaintiffs, to be paid by the defendants. This outcome underscored the court's stance on the misuse of legal processes and the importance of accountability in such matters.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established