Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 9]
[2015] WASC 343
•16 SEPTEMBER 2015
COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 9] [2015] WASC 343
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 343 | |
| Case No: | CIV:2265/2006 | 19 SEPTEMBER 2014 & ON THE PAPERS | |
| Coram: | SIMMONDS J | 16/09/15 | |
| 25 | Judgment Part: | 1 of 1 | |
| Result: | Application for certain orders to be made granted | ||
| B | |||
| PDF Version |
| Parties: | COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING BANNING HOLDINGS PTY LTD BAYSTAR HOLDINGS PTY LTD KIM DAVID HOLBROOK as Administrator of PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD FRASERS - THE PROPERTY MANAGERS PTY LTD R & S MOTORS PTY LTD WATER CORPORATION OF WESTERN AUSTRALIA COMPUTER ACCOUNTING AND TAX PTY LTD |
Catchwords: | Costs Leave to have costs against entity in liquidation taxed Costs Costs and other orders for application not prosecuted |
Legislation: | Corporations Act 2001 (Cth), s 445G, s 447B, s 471B Supreme Court Act 1935 (WA), s 37 |
Case References: | Australian Guarantee Corporation Ltd v Lawrence [1999] VSC 247 Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 Coastal Hire Pty Ltd v Ewers [2009] WASCA 36 (S) Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318; (2010) 246 FLR 143 Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) Computing Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166 Forbes v Frigger [2009] WASC 77 Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93 Swansdale Pty Ltd v Woodcrest Pty Ltd [2010] WASCA 129 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING
Second Defendant
- First-named Plaintiff
BAYSTAR HOLDINGS PTY LTD
Second-named Plaintiff
AND
KIM DAVID HOLBROOK as Administrator of PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
FRASERS - THE PROPERTY MANAGERS PTY LTD
First-named Second Defendant
R & S MOTORS PTY LTD
Second-named Second Defendant
WATER CORPORATION OF WESTERN AUSTRALIA
Third-named Second Defendant
COMPUTER ACCOUNTING AND TAX PTY LTD
Fourth-named Second Defendant
Catchwords:
Costs - Leave to have costs against entity in liquidation taxed
Costs - Costs and other orders for application not prosecuted
Legislation:
Corporations Act 2001 (Cth), s 445G, s 447B, s 471B
Supreme Court Act 1935 (WA), s 37
Result:
Application for certain orders to be made granted
Category: B
Representation:
CIV 2265 of 2006
Counsel:
Plaintiff : Mr P J Griffin
First Defendant : Mr T R Stephenson & Mr S V Forbes
Second Defendant : Mr T R Stephenson & Mr S V Forbes
Mrs A C T Frigger : In person
Mr K D Holbrook : Mr G Flynn
Solicitors:
Plaintiff : Peter J Griffin & Co
First Defendant : Eastwood Sweeney Law
Second Defendant : Eastwood Sweeney Law
Mrs A C T Frigger : Not applicable
Mr K D Holbrook : Hotchkin Hanly Lawyers
CIV 2001 of 2009
Counsel:
First-named Plaintiff : Mr T R Stephenson & Ms S V Forbes
Second-named Plaintiff : No appearance
First Defendant : Mr G Flynn
First-named Second Defendant : No appearance
Second-named Second Defendant : No appearance
Third-named Second Defendant : No appearance
Fourth-named Second Defendant : Mr P J Griffin
Solicitors:
First-named Plaintiff : Eastwood Sweeney Law
Second-named Plaintiff : No appearance
First Defendant : Hotchkin Hanly Lawyers
First-named Second Defendant : No appearance
Second-named Second Defendant : No appearance
Third-named Second Defendant : No appearance
Fourth-named Second Defendant : Peter J Griffin & Co
Case(s) referred to in judgment(s):
Australian Guarantee Corporation Ltd v Lawrence [1999] VSC 247
Banning Holdings Pty Ltd v Holbrook [2009] WASC 178
Coastal Hire Pty Ltd v Ewers [2009] WASCA 36 (S)
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318; (2010) 246 FLR 143
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S)
Computing Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166
Forbes v Frigger [2009] WASC 77
Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103
Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S)
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Swansdale Pty Ltd v Woodcrest Pty Ltd [2010] WASCA 129 (S)
- SIMMONDS J:
Introduction
1 This is an application by chamber summons for leave to proceed pursuant to Corporations Act 2001 (Cth) s 471B (the present application) and for certain costs orders. The chamber summons is an amended form (the amended chamber summons) of a chamber summons dated 11 September 2014 (the chamber summons). It is before me pursuant to programming orders I made on 19 September 2014 for the purposes of the present application (the programming orders).
2 By the amended chamber summons, leave to proceed is sought with respect to two types of proceeding.
3 One is the taxation of costs ordered in CIV 2265 of 2006 and in certain related proceedings, CACV 76 of 2008, COR 2 of 2010, CACV 76 of 2008 and P47 of 2009 (in the High Court).
4 The other type of proceeding with respect to which leave to proceed is sought is to seek costs and, if necessary, to tax any such costs in respect of further related proceedings, CIV 2001 of 2009. In addition, by the amended chamber summons certain costs orders are sought in the latter proceedings.
5 In these reasons, I first set out the background needed to understand the present application and the programming orders. I then consider and determine the matters of the leave and costs orders sought.
Background
6 I take the following from my judgment in Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [6], [8] - [9], whose short forms I use in this judgment with the additions indicated:
In the action CIV 2265 of 2006, [Computer Accounting and Tax Pty Ltd (CAT)] sought damages and other relief in respect of the conduct of the defendants in that action in the sale to CAT of a property in Armadale. Angela Cecilia Theresa Frigger [(Mrs Frigger)] and Hartmut Huber Josef Frigger [(Mr Frigger)] ([together,] the Friggers) were at all material times and are the sole shareholders and directors of CAT. The first defendant in CIV 2265 of 2006 is [Professional Services of Australia Pty Ltd (PSA)] and the second defendant in that action, Mr Banning, controlled PSA. There is a deed of company arrangement dated 20 March 2009 in respect of PSA (the DOCA). …
…
As a result of judgment orders following judgment on 9 July 2008 in CIV 2265 of 2006 (Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133), PSA and Mr Banning were ordered to pay the amount of $1,106,027.27 plus interest at 6% from the date of judgment (the judgment sum), as well as costs to be taxed (the taxed costs). That judgment is presently under appeal (CACV 76 of 2008). An application for a stay of judgment pending determination of the appeal was unsuccessful: Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2008] WASCA 222.
Mr Banning died in September 2008. Mr Donald Campbell-Smith is his personal representative, and was substituted as second defendant in CIV 2265 of 2006 [(Mr Campbell-Smith, references to whom in this judgment are to him in that capacity)].
7 In November 2008, an administrator of PSA was appointed by the creditors of PSA for the purposes of the administration of the company under Corporations Act pt 5.3A. Subsequently, the DOCA was entered into. At all material times, Kim David Holbrook (Mr Holbrook) was the administrator under the DOCA as subsequently amended. See Banning Holdings [13].
8 It will be seen from the present judgment that in CIV 2001 of 2009 the question of the status of the DOCA was raised.
9 The DOCA made provision for the judgment sum to be paid from the proceeds of the sale of certain assets of Banning Holdings. Banning Holdings is a company that until his death was controlled by Mr Banning, who held one half of its shares. See Banning Holdings [14] read with [11].
10 On 6 May 2009, I made certain costs orders in CIV 2265 of 2006 (my 6 May 2009 costs orders). My 6 May 2009 costs orders included orders for the costs of the trial as well as certain other costs. My reasons for making my 6 May 2009 costs orders are Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) (CAT WASC (S)).
11 By originating summons dated 29 May 2009, proceedings were commenced in CIV 2001 of 2009. The plaintiffs were Banning Holdings and another company that had been controlled by Mr Banning. The proceedings in CIV 2001 of 2009 were brought to extend the effect of the DOCA: Banning Holdings [21] - [24].
12 On 5 June 2009, for the reasons delivered 23 June 2009, I made orders principally in terms of the originating summons as amended with liberty to apply, costs reserved and the originating summons otherwise adjourned. See, for those reasons, Banning Holdings.
13 On 6 May 2009, I also made orders on the application by the defendants for stay of judgement in relation to costs issues in CIV 2265 of 2006 specified in that application. Those orders were for CAT to pay the defendants' costs of and incidental to the hearings on three specified dates.
14 In June 2009, as a result of payments made by Banning Holdings under the DOCA, an amount that was almost all of the judgment sum to the date of payment was paid to the plaintiff (the June 2009 payment): see Holbrook v Professional Services of Australia Pty Ltd [2012] WASC 444 [15].
15 On 27 August 2009, in CIV 2001 of 2009, CAT applied for orders including orders to the effect that the DOCA be terminated as well as certain related orders (the application of 27 August 2009 in CIV 2001 of 2009). There was an affidavit in support of that application sworn by Mrs Frigger on 27 August 2009 (the affidavit of Mrs Frigger of 27 August 2009), which is incorrectly headed by reference to 'CIV 2007 of 2009'.
16 I should note that in the preparation of the present judgement there were some difficulties experienced in respect of the affidavit of Mrs Frigger of 27 August 2009. The filed copy of that affidavit could not be found on any of the files CIV 2001 of 2009, CIV 2007 of 2009 or CIV 2265 of 2006. CAT's former solicitors, who prepared the affidavit, indicated that they were unable to provide the court with a complete copy. At the court's request, counsel for the defendants was able to produce both printed and scanned documents appearing to be copies of that affidavit. Mrs Frigger inspected the printed copy, and informed the court that she was unable to produce a copy of her affidavit as her computer had been damaged by a lightning strike. She appeared to accept the printed document produced by counsel for the defendants as being that which had been filed, but with a concern and a qualification.
17 Mrs Frigger indicated that she was concerned about the legibility of the printed copy produced by counsel for the defendants. Her qualification was in relation to the lack of initials on two pages (7 and 8) of that document. Counsel for the defendants indicated to the court that pages 7 and 8 were missing from the affidavit as served on the defendants and that counsel for CAT had provided 'replacement' pages to counsel for the defendants at one of the hearings of the application of 27 August 2009 in CIV 2001 of 2009. I did not understand Mrs Frigger's qualification to be on the basis that the filed copy of her affidavit lacked pages corresponding to pages 7 and 8 in the printed copy provided by counsel for the defendant, or that those pages in the respective documents were in different terms.
18 I consider the printed copy of the affidavit of Mrs Frigger of 27 August 2009 provided by counsel for the defendants to be sufficiently legible for my purposes. Further, in respect of pages 7 and 8, I conclude that I should treat them as part of the affidavit of Mrs Frigger of 27 August 2009. I have so concluded in view of the matters I described in the previous paragraph.
19 I have had the printed copy provided by counsel for the defendants included in the file in CIV 2001 of 2009, marked as the printed copy produced by counsel for the defendants. All subsequent references in this judgment to the affidavit of Mrs Frigger of 27 August 2009 are to that document.
20 On 17 September 2009, the plaintiffs in CIV 2001 of 2009 filed written submissions with a list of authorities dated 16 September 2009 (the written submissions of 16 September 2009).
21 On 7 October 2009, an affidavit of Richard Charles McPherson sworn 7 October 2009 was filed (the McPherson affidavit of 7 October 2009). Mr McPherson was the sole director and shareholder of the second named fourth defendant. His affidavit was filed 'in answer' to the application of 27 August 2009 in CIV 2001 of 2009: see the McPherson affidavit of 7 October 2009 [1].
22 The application of 27 August 2009 in CIV 2001 of 2009 was initially heard on 7 October 2009, when it was adjourned sine die with costs reserved and liberty to apply.
23 On 23 October 2009, the Court of Appeal delivered its decision in the appeal from the trial judgement in CIV 2265 of 2006. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179 (PSA [No 2] WASCA). On 7 December 2009, the Court of Appeal made orders consequent on that decision that substantially reduced the judgment sum, set aside my 6 May 2009 costs orders, and remitted the costs of the trial to me for reconsideration in light of the Court of Appeal's reasons. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) (PSA WASCA (S)).
24 On 28 May 2010, the High Court in P47 of 2009 refused special leave to appeal the decision in PSA [No 2] WASCA with costs.
25 Most recently, I gave judgment in relation to the matters the subject of my 6 May 2009 costs orders, as well as certain other matters of costs in CIV 2265 of 2006. See Computing Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 8] [2015] WASC 166 (CAT [No 8] WASC).
26 On 1 December 2009, the affidavit of service of Bronwyn Elizabeth McKenzie with respect to the written submissions of 16 September 2009, sworn 1 December 2009, was filed. Ms McKenzie was an employee of the solicitors then acting for the plaintiffs.
27 On 2 December 2009, an affidavit of Mrs Frigger sworn 30 November 2009 was filed. That affidavit was sworn 'in support of CAT's application for an order that the parties, other than CAT, give full discovery in these proceedings prior to the substantive hearing of CAT's application for the termination of the DOCA' [3].
28 Also on 2 December 2009, an affidavit of Mr Holbrook sworn 1 December 2009 (the Holbrook affidavit of 1 December 2009) was filed in opposition to the application of 27 August 2009 in CIV 2001 of 2009 and 'to provide evidence that the [DOCA] has, save for the payment of costs of the Judgment Creditor that have yet to be taxed, been complied with in any event' [12].
29 On 2 December 2009, there was a further hearing at which I made orders for informal discovery by Mr Holbrook as the administrator under the DOCA and by the plaintiffs in CIV 2001 of 2009 of specified categories of documents. I also made orders for filing and service of any further affidavits by CAT and Mr Holbrook, and for filing and service of written submissions by CAT and Mr Holbrook and the plaintiffs in CIV 2001 of 2009 (if required), with costs reserved and liberty to apply.
30 On 11 December 2009, the first defendant's informal discovery was filed pursuant to the orders I made on 2 December 2009.
31 On 13 January 2010, I made orders extending the times for filing and service of affidavits by Mr Holbrook and for filing and service of written submissions by CAT, Mr Holbrook and the plaintiffs in CIV 2001 of 2009, with costs reserved.
32 Save for filings of notices of changes in solicitors and a notice of change of address for service, there were no further filings or steps taken in CIV 2001 of 2009 until the present application.
33 On 21 January 2010, in COR 2 of 2010, I made orders including an order for appointment of a provisional liquidator of CAT. This order came after the passage on 12 December 2009 of a resolution for a members' voluntary winding up and appointment of a liquidator, itself replacing an earlier resolution to those effects. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38 [14].
34 On 6 May 2010, also in COR 2 of 2010, Master Sanderson made orders including an order for the winding up of CAT and the appointment of a liquidator for the company. See his reasons in Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd[No 3] [2010] WASC 93 (PSA [No 3] WASC). Among his other orders were ones for payment by the Friggers and CAT (out of the assets of the company) of PSA's and Mr Campbell-Smith's costs of the originating process in COR 2 of 2010 seeking a winding up order, fixed in certain amounts.
35 On appeal, those costs orders were varied in a number of ways. See Frigger v Professional Services of Australia Pty Ltd[No 2] [2011] WASCA 103 [36] (Pullin & Newnes JJA & Mazza J). In respect of the originating process seeking a winding up order, they were varied to restrict the liability of CAT to the costs, including reserved costs, remaining after the additional costs which resulted from the opposition by, and attendance of, the Friggers were paid by them personally. In respect of the interlocutory process dated 30 April 2010 seeking an order for the appointment of a provisional liquidator, the orders were varied to provide for the payment of the plaintiffs' costs by the Friggers and their legal representative. All of the costs affected by the variations were also varied by substituting for the fixing of them provision for them to be taxed.
36 On 6 November 2012 in COR 205 of 2011, on the application of Mr Holbrook as administrator of the DOCA, I made an order for termination of the DOCA. See Holbrook [43] - [44].
37 I turn now to the terms of the programming orders and the present application.
The programming orders and the present application
38 The programming orders were in the following terms (leaving aside the provisions for the costs of the application and the liberty to apply):
1. Within seven days of today's date, 19 September 2014, the first and second defendants, and Banning Holdings Pty Ltd, file and serve an amended form of the Chamber Summons dated 11 September 2014 on Computer Accounting & Tax Pty Ltd, the liquidator, Peter J Griffin & Co and Kim David Holbrook.
2. There be leave for the Chamber Summons so served to be amended to provide for Kim David Holbrook to seek relief substantially in accordance with paragraph 2 of the Chamber Summons dated 11 September 2014.
3. Any written submissions by the first and second defendants, Banning Holdings Pty Ltd and by Kim David Holbrook be filed and served by 17 October 2014.
4. Any written submissions in response by Computer Accounting & Tax Pty Ltd and its liquidator through Peter J Griffin & Co acting on instructions of Mr and Mrs Frigger be filed and served by 7 November 2014.
5. The decision be on the papers.
39 It may be noted that there is provision for service of the amended chamber summons on Peter J Griffin & Co in [1] and for written submissions in response by CAT and its liquidator through that firm of solicitors acting on the instructions of the Friggers in [4]. By orders I made on 18 February 2011, I gave leave to the Friggers as sole shareholders and former directors of CAT to conduct, through a legal representative, the defence of CAT against an application for costs by PSA and Mr Campbell-Smith as described in certain minutes of orders. Peter J Griffin & Co was appointed as that legal representative and Mr Griffin made written and oral submissions at hearings in relation to the consolidated form of those minutes. My decision following those hearings was CAT [No 8] WASC.
40 It is not clear that the amended chamber summons falls within the scope of that leave. However, it was accepted at the hearing in which the programming orders were made that written submissions might be made by CAT on the amended chamber summons by its liquidator through Peter J Griffin & Co, acting on instructions from the Friggers.
41 In any event, no such written submissions were filed.
42 The terms of the amended chamber summons are as follows:
1. Pursuant to section 471B of the Corporations Act 2001 the Defendants and Banning Holdings Pty Ltd and Kim David Holbrook (as former Deed Administrator of the First Defendant) be granted leave to proceed with taxations of the following costs:
a. costs in CIV 2265 of 2006 in the Supreme Court of Western Australia by orders made on 6 May 2009 in relation to the cost of an application to stay delivery of judgement;
b. costs in CIV 2265 of 2006 in the Supreme Court of Western Australia generally;
c. costs in CACV 76 of 2008 by orders of the Court of Appeal of Western Australia made on 7 December 2009;
d. costs in P47 of 2009 in the High Court of Australia by orders of the High Court of Australia made on 28 May 2010;
e. the costs in COR 2 of 2010 in the Supreme Court of Western Australia pursuant to the orders of Master Sanderson made on 6 May 2010 as varied by the Court of Appeal of Western Australia in CACV 51 of 2010 by orders made on 3 June 2011; and
f. to seek costs, and, if necessary to tax any such costs in respect of proceedings CIV 2001 of 2009 in the Supreme Court of Western Australia.
2. The Defendants' costs of this application be paid by the Plaintiff to be taxed together with and in the same bill as any costs payable by the Plaintiff in CIV 2265 of 2006.
43 I note that the form of the amended chamber summons is not altogether clear as to the scope of the orders sought by [1(f)]. However, I consider that at the hearing on 19 September 2014, at which those present included Mr Griffin acting on the instructions of the Friggers, it was contemplated that the submissions the programming orders provided for might go to the matter of the orders for costs that might be made in CIV 2001 of 2009.
44 In the event, there were only two sets of written submissions filed and served under the programming orders. One set was for PSA, Mr Campbell-Smith and Banning Holdings. The other was for Mr Holbrook.
45 I consider that I am called upon to deal with two principal matters.
46 One principal matter is the grant of leave to proceed as provided for in amended chamber summons [1(a)] to [1(f)].
47 The other principal matter is the orders that should be made as to the costs of CIV 2001 of 2009.
48 There are a number of other matters to which I will also refer, including the costs of the present application. I will reach those other matters after I deal with the two principal matters.
49 For the purposes of the present application, I have the written submissions filed and served under the programming orders.
50 I also have the affidavit of Cameron Victor Eastwood in CIV 2265 of 2006, sworn 11 September 2014 in support of the application that became the present application (the Eastwood affidavit of 11 September 2014). Mr Eastwood was and is the solicitor acting for PSA, Mr Campbell-Smith and Banning Holdings.
51 I further have the affidavit of Gilbert Alexander Flynn sworn 17 October 2014 in support of Mr Holbrook's application in his written submissions for the fixing of costs (the Flynn affidavit of 17 October 2014). Mr Flynn was and is the legal practitioner acting for Mr Holbrook in the present application.
52 I will also have occasion to refer to the affidavit of Mrs Frigger of 27 August 2009.
The matter of the grant of leave
53 Section 471B of the Corporations Act provides as follows:
While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:
(a) a proceeding in a court against the company or in relation to property of the company; or
(b) enforcement process in relation to such property;
except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
54 In my view, a party who seeks to proceed in the manner proposed by amended chamber summons [1(a)] to [1(f)] is required to seek the leave referred to in Corporations Act s 471B. The contrary was not put to me in the written submissions.
55 Under the present heading I deal with the amended chamber summons [1(a)] to [1(e)]. I deal separately with the amended chamber summons [1(f)] under the next heading.
56 I consider that the principles applicable to whether or not the court should grant leave are sufficiently stated for my purposes in McPherson's Law of Company Liquidation [7.970] read with [7.1020] (as at 31 July 2015), referring to authorities.
57 There are two principal considerations. One is the nature of the claim, which has been explained as follows (McPherson [7.970]):
The nature of the plaintiff's claim will be relevant to whether it is more appropriate that it should be pursued by lodging a proof of debt rather than a separate proceeding. McPherson J has put it as follows:
'The question whether a claimant should be permitted to proceed by action, or should be required to submit his proof of debt and if dissatisfied, appeal to a judge is therefore reduced largely to choosing between alternative forms of procedure. The effect of s 230(3) [now s 471B] is to require the claimant to adopt the course of lodging proof of debt unless he can demonstrate that there is some good reason why a departure from that procedure is justified in the case of a particular claim in dispute. This is really all that is meant in this context by expressions such as "convenience" and "balance of convenience" that appear in judgments on the matter [citations omitted]. [Ogilvie-Grant v East (1983) 1 ACLC 742, 744.]'
There should be a presumption in favour of leaving those with claims against companies in liquidation (particularly those being wound up in insolvency or by the court) to the ordinary proof of debt procedure, which is generally speaking a cheaper and more efficient way of resolving their claims: see [7.900]. [Ingot Capital Investments Ltd v Macquarie Equity Capital Market Ltd [2003] NSWSC 307; (2003) 21 ACLC 833, 837-838; Ogilvie-Grant v East (1983) 1 ACLC 742, 743-745.] As also discussed at [7.900], it is important not to distract the liquidator's attention and resources and force her or him to expend substantial company funds on defending proceedings by those with claims against the company unless there is a reason for departing from the usual procedure of calling for and adjudicating upon creditors' proofs of debt, with a right of appeal under s 1321 for those dissatisfied with the liquidator's decision in relation to the claim. [Ingot Capital Investments Ltd v Macquarie Equity Capital Market Ltd [2003] NSWSC 307; (2003) 21 ACLC 833, 837-838; Ogilvie-Grant v East (1983) 1 ACLC 742, 744; Ibbco Trading Pty Ltd v HIH Casualty & General Insurance Ltd (in prov liq) [2001] NSWSC 346; (2001) 19 ACLC 1093, 1099-1102; Thomson v Mulgoa Irrigation Co Ltd (1894) 4 BC (NSW) 33; [7.900].]
On the other hand, leave will usually be granted if the claim sought to be pursued is one that by its nature cannot be accommodated under the usual proof of debt procedure, such as a proprietary claim to recover property or that the company holds property on trust for the plaintiff, or claims for rectification (or its statutory equivalent), specific performance, injunction or rescission: [Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) (2008) 26 ACLC 1333; [2008] ACTSC 124 at [34]-[36].] see [7.990].
58 The other principal consideration is justice on the balance of convenience, which has been explained as follows (McPherson [7.970]):
Other factors which are said to have been important in determining whether leave should be granted are, according to McPherson J (as he was then):
'the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved, and the stage to which the proceedings, if already commenced, may have progressed. [Ogilvie-Grant v East (1983) 1 ACLC 742, 744-745. See also Commonwealth of Australia v Davis Samuel Pty Ltd (No 5) [2008] ACTSC 124; (2008) 26 ACLC 1333 [30].]'
60 The first consideration should be considered with the second, which in my view also favours the grant of leave in this case. It does so because of the amount and seriousness of the claims for costs and the complexity of the factual issues involved in this litigation, in light of its duration and the constellation of matters described above. Relatedly, the stage which the proceedings have reached is also such as to strongly favour the grant of leave.
61 Finally, I note that the liquidator's attitude to the application is a relevant factor to be taken into account: McPherson [7.1020], referring to authority. In this case, the Eastwood affidavit of 11 September 2014 attaches a letter from the liquidator's solicitors indicating that the liquidator does not oppose orders for the grant of leave of the kind sought by the amended chamber summons under this heading. See Annexure 'F', read with Annexure 'E'.
62 Having regard to all of these matters, I would grant the leave sought.
63 I now turn to the second principal matter in the present application.
The matter of the costs orders to be made in CIV 2001 of 2009
64 Two principal issues might be seen to arise here. One is of leave to proceed with and, if necessary, to tax any order for costs in CIV 2001 of 2009. The other is the issue of the costs orders to be made.
65 As to the first issue, I consider that, on the applicable law described in the previous section of these reasons, leave should be granted.
66 As to the first consideration described above, it is not as clear as for the claims the subject of the previous section that the nature of the claim (save in respect of any eventual taxation) favours the grant of leave.
67 However, in my view, the process of seeking costs before the court in which CIV 2001 of 2009 was brought and, if necessary, having them taxed before that court, would clearly be more efficient and expedient than the proof of debt process. This is due to the complexity of the relevant issues arising from the nature of the proceedings in CIV 2001 of 2009, their history and their connections to other parts of the litigation in the constellation of matters in this case. Thus, the second consideration strongly favours the grant of leave.
68 Finally in respect of the grant of leave I note, based on the same material referred to in the previous section of these reasons, that the liquidator does not oppose an order for the grant of leave of the kind sought by the amended chamber summons under this heading.
69 I turn then to the nature of the costs orders to be made.
70 As indicated in the Background section of these reasons, there are two sets of costs for which orders fall to be made. Both are addressed in the written submissions of PSA, Mr Campbell-Smith and Banning Holdings. The first is the costs reserved with the orders made for the reasons given in Banning Holdings. The second is the costs of the application of 27 August 2009 in CIV 2001 of 2009.
71 There are two further matters arising out of the second set of costs, which concern the orders to be made.
72 One is the matter of the orders to be made which would properly reflect the capacity of Mr Holbrook as the former administrator of PSA.
73 The second matter is whether I should order the dismissal of the application of CAT by the chamber summons of 27 August 2009 in CIV 2001 of 2009.
74 I will deal with those two further matters after the second principal issue is dealt with.
75 In respect of that issue, and as to the costs reserved in Banning Holdings, I consider that as a result of that decision the plaintiffs in CIV 2001 of 2009 and Mr Holbrook (who supported the plaintiffs' submissions and joined in the hearings in that way) were successful. I rejected the submissions of the Friggers, who as the directors and shareholders of the fourth named second defendant, CAT, made submissions as interested parties without objection by the plaintiffs or Mr Holbrook. There were no appearances for the remaining defendants, including CAT.
76 However, I also noted in Banning Holdings (see [63]) that CAT was given only a limited opportunity to make good the bases for the claims made by the Friggers in respect of the DOCA. Those claims were two-fold.
77 One claim was that the DOCA should be allowed to terminate as described in Banning Holdings as follows:
One basis, as I understood them, is that the DOCA is an abuse of the provisions of Corporations Act pt 5.3A (s 447A(2)(b)) or is 'oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more such creditors', being CAT (s 445D(f)(i)). The abuse, oppression, unfair prejudice and unfair discrimination lie in two effects of the DOCA. One is that the DOCA has the effect of staying the payment of CAT's claim against PSA, even though the defendants in CIV 2265 of 2006 have been unsuccessful in obtaining a stay of execution pending their appeal in that action. The other effect of the DOCA is that CAT would, unlike any of the other creditors, not be assured of receiving full satisfaction of its claim against PSA [56].
78 The other claim was that the DOCA should be allowed to terminate as described in Banning Holdings as follows:
The other basis which the Friggers say I have for allowing the DOCA to terminate is that the DOCA was improperly procured as not all of the creditors listed in the recent creditors' mailing list (forming part of an annexure to the Holbrook affidavit) had been invited to the meeting in February 2009 to approve the DOCA, while two of the creditors, the first and second named second defendants, who were invited to attend, and who attended and voted for the DOCA, were not creditors with claims against PSA. However, there is no evidence before me that the creditors on the mailing list were not invited to attend the meeting, nor is it established on the evidence (see the affidavit of Mrs Frigger dated June 2009 in the present proceedings [11] and [12] and annexures 2 and 3) that the first and second named second defendants did not have claims as creditors against PSA at the date of the execution of the DOCA [62].
79 I indicated that I considered it appropriate, as part of the liberty to apply that I ordered, to allow CAT to have an opportunity to make good those claims: see Banning Holdings [63].
80 I consider the application of 27 August 2009 in CIV 2001 of 2009 to have been at least in part directed to the claims described in the previous paragraphs. However, as I will indicate below when I consider the matter of costs in relation to that application, the application was not litigated further than I have indicated in the Background section of these reasons and should now be dismissed.
81 In my view, it follows that in the exercise of my discretion as to costs I should award the plaintiffs and Mr Holbrook the costs reserved in respect of that part of the proceedings in CIV 2001 of 2009 which resulted in the decision in Banning Holdings. I understood that of the plaintiffs only Banning Holdings incurred costs and no orders were sought for the benefit of the other plaintiff in CIV 2001 of 2009. Further, it was my understanding that no costs orders were sought against the first, second and third named second defendants in CIV 2001 of 2009, but only against CAT.
82 I would make costs orders accordingly.
83 For Banning Holdings, an indemnity costs order is sought. I took the asserted basis for such an order to be the lack of a foundation for resistance to the orders I made in Banning Holdings. That lack of foundation was confirmed, as appears to have been contended, by matters which went to show that CAT would not have made good its claims in respect of the DOCA. I will reach those matters below.
84 On the material I have before me, it seems to me that the discretion to make an indemnity costs order is enlivened on the basis that I have referred to. CAT persisted in what, on a proper consideration of the materials available to me, should be seen as a hopeless case. See Swansdale Pty Ltd v Woodcrest Pty Ltd [2010] WASCA 129 (S) [10] (Pullin JA & Kenneth Martin J).
85 I would, on that basis, make the order for indemnity costs sought in respect of that part of the proceedings in CIV 2001 of 2009 which resulted in the decision in Banning Holdings.
86 I turn now to the matter of the costs of the application of 27 August 2009 in CIV 2001 of 2009.
87 As the Background section of these reasons indicates, there was no substantive hearing on that application. The only written submissions filed in relation to it were the plaintiffs' written submissions of 16 September 2009. There were no submissions filed for the applicant, CAT, before the liquidation of CAT supervened on 6 May 2010 pursuant to the orders of Master Sanderson.
88 On the filings in CIV 2001 of 2009, which I referred to in the Background section of these reasons, and the written submissions of 16 September 2009, there remained a contest on the challenge to the DOCA as indicated in the affidavit of Mrs Frigger of 27 August 2009. That challenge included, but went beyond, the two bases put forward for the court to allow the DOCA to terminate to which I previously referred. I will deal with those two bases and then the further challenge.
89 As to the first of the two bases, oppression, unfair prejudice and unfair discrimination, the affidavit of Mrs Frigger of 27 August 2009 appears to rest it on the failure of the DOCA to provide adequately or at all for the payment, not only of the judgment sum under my 6 May 2009 costs orders, but also of the taxed costs of the action and (if not included in those taxed costs) post-judgment enforcement costs.
90 However, I consider that on the material I have such a basis could not have been made out, given the June 2009 payment made as a result of the reliance by Banning Holdings on the DOCA, and the revision of the judgment sum as a result of PSA WASCA (S) and my decision in CAT [No 8] WASC. See Corporations Act s 445G(3) and Australian Guarantee Corporation Ltd v Lawrence[1999] VSC 247 (O'Bryan J).
91 As to the second of the two bases, improper procurement of the DOCA, there is matter in Mrs Frigger's affidavit of 27 August 2009 which challenges the enforceability of the mortgage claimed by Banning Holdings and the bona fides of the other two creditors there referred to, being the first and second named second defendants in CIV 2001 of 2009. I took these to be challenges that went to the entitlement of the three entities to vote as they did at the meeting of creditors to which Banning Holdings [62] refers.
92 However, there is no material in Mrs Frigger's affidavit of 27 August 2009 that I could discern addressed to the adequacy of the invitation to attend that meeting.
93 It was not made apparent to me that the challenges referred to are sufficient to show improper procurement.
94 As to the challenge to the enforceability of the mortgage, it is not apparent to me that the challenge goes to the underlying debt Banning Holdings is said to have claimed. Further, in my view, the basis of the challenge, being the registration of the mortgage at a time when freezing orders I had made which might have precluded such registration were in force, was not one that made a representation by Banning Holdings that it had a secured claim a misrepresentation.
95 As to the bona fides of the second named second defendant, the evidence in Mrs Frigger's affidavit of 27 August 2009 that Mr McPherson told her he was never a creditor of PSA, which I took to mean that his company was never such a creditor, is contradicted by the McPherson affidavit of 7 October 2009.
96 As to the bona fides of the first named second defendant, in my view the evidence in Mrs Frigger's affidavit of 27 August 2009 that the director of that company had been a business partner or associate of Mr Banning and had occupied the only asset of PSA rent free is not sufficient to impugn the bona fides of the first named second defendant's claim.
97 Mrs Frigger's affidavit of 27 August 2009 also refers to material contraventions of the DOCA and what appear to be alleged misrepresentations by its administrator.
98 As to the asserted material contraventions, these are of two kinds.
99 One is alleged failures in respect of certain payments called for by the DOCA that were dependent upon funds to be obtained from Banning Holdings by the times provided for in the DOCA. However, in view of the payment of June 2009, the lack of any evidence that any other payments under the DOCA were not made (and indeed the evidence to the contrary referred to in Banning Holdings [30])and the extension of the DOCA as a result of Banning Holdings, it is not apparent to me that any such contraventions were 'material'. See again Corporations Act s 445G(3) and Lawrence.
100 The other kind of asserted material contravention is the alleged failure to discharge by 30 April 2009 the receivership over a share in Banning Holdings established by an order made by this court on 21 November 2008. The provision requiring the discharge is shown as deleted from the DOCA (as at 20 March 2009) annexed to Mrs Frigger's affidavit of 27 August 2009. In that affidavit there is a claim that this deletion, among others, was made without a further meeting and resolution by the creditors of PSA. However, the DOCA is shown by the Holbrook affidavit of 1 December 2009 [2] to have been the subject of further resolutions passed by meetings of creditors dated 24 June 2009 and 28 August 2009. That claim is not challenged on the evidence before me. Further, the share was discharged from the receivership as a result of my decision in Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318; (2010) 246 FLR 143. In view of those matters, it is not apparent to me that there was a contravention of the DOCA or if there was that it was 'material'.
101 Finally, as to the alleged misrepresentations by the administrator of the DOCA, these concern the administrator alleging that CAT refused to allow Banning Holdings to sell its surplus collection of vintage motor vehicles to meet funding deadlines under the DOCA. However, there is evidence that the freezing orders obtained by CAT had caused the relevant government agency to indicate that it would not permit a sale to take place. This evidence is reviewed in brief in CAT [No 8] WASC [202] in the context of a review of an application made at about the same time as the application of 27 August 2009 in CIV 2001 of 2009. That other application, in CIV 2265 of 2006, was by PSA and Mr Campbell-Smith to overcome the effect of the freezing orders on the relevant government agency. This application ultimately became unnecessary, as described in CAT [No 8] WASC [195] - [203].
102 On the material I have described, I conclude that CAT would not have been able to make good the allegation of misrepresentation.
103 I should further note, apart from the matters I have just reviewed, that the fact that the DOCA ultimately achieved the purpose of more than meeting the just claim of the only creditor of PSA that objected to the DOCA - CAT - indicates that there would have been no order to terminate the DOCA or otherwise to qualify the effect of actions under it as sought by the application of 27 August 2009 in CIV 2001 of 2009.
104 In all of the circumstances and on the material I have just reviewed, it seems to me I should conclude that the application of 27 August 2009 in CIV 2001 of 2009 would have been unsuccessful. Below I explain my conclusion that the application of 27 August 2009 in CIV 2001 of 2009 should be dismissed.
105 Based on those conclusions, I should award the costs of the application of 27 August 2009 in CIV 2001 of 2009 to Banning Holdings and Mr Holbrook.
106 The material available to me indicates that I should include the reserved costs in this award. The adjournment of 7 October 2009 was at least in part the result of the failure to affect proper service of the affidavit of Mrs Frigger of 27 August 2009. The orders made at the hearing of 2 December 2009, which had the effect of providing for a later hearing of the application of 27 August 2009 in CIV 2001 of 2009, were, on my record of the hearing, made at the request of the solicitor for CAT, at least in part on the basis of insufficient time to review the Holbrook affidavit of 1 December 2009 or the McPherson affidavit of 7 October 2009.
107 I would award all of those costs on an indemnity basis for the reasons given in relation to the costs in respect of that part of the proceedings in CIV 2001 of 2009 which resulted in the decision in Banning Holdings.
108 For Banning Holdings, it appears to be contended that costs should be taxed in the usual way. I would allow for such taxation.
109 However, for Mr Holbrook it is contended that the costs of the application of 27 August 2009 in CIV 2001 of 2009 should be fixed in the amount of $2,970. Reference is made to the practice of fixing costs in interlocutory matters as described in Consolidated Practice Directions 4.7.1. Reference is also made to the insolvency of CAT; the long history of the proceedings in CIV 2265 of 2006, which includes the related proceedings in CIV 2001 of 2009; and the desirability of incurring as few costs as possible in dealing with 'minor interlocutory issues, and saving time and expense associated with taxations' [12]. I have the Flynn affidavit of 17 October 2014 in support of the application to fix Mr Holbrook's costs. That affidavit provides a bill of costs for the two appearances of Mr Flynn on 7 October 2009 and 2 December 2009, as well as the response to the orders for informal discovery and the preparation of the Holbrook affidavit of 1 December 2009. The costs are fixed by reference to Item 10 of the applicable scale, the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008 (WA).
110 In my view this is a suitable case in which to fix the costs as sought for by Mr Holbrook, and to do so at the amount sought. While the application of 27 August 2009 in CIV 2001 of 2009 is not easily accommodated as being 'in the usual run of routine matters' (Consolidated Practice Direction 4.7.1 [8]), the considerations referred to in the submissions for Mr Holbrook outlined in the previous paragraph, and his subordinate role in CIV 2001 of 2009, favour the fixing of his costs. The amount sought, having regard to the work performed as described in the previous paragraph, and having regard also to the amounts referred to in Consolidated Practice Direction 4.7.1.1 [2], is in my view an appropriate amount at which to fix Mr Holbrook's costs of the application of 27 August 2009 in CIV 2001 of 2009.
111 The written submissions for Mr Holbrook contend for an order for his costs to be made payable directly to PSA. As those submissions acknowledge, this order would allow PSA to set off those costs payable by CAT against any liability by PSA to CAT arising from the initial judgement in these proceedings.
112 I accept that Mr Holbrook's costs of the application of 27 August 2009 in CIV 2001 of 2009 were ultimately borne from assets of PSA pursuant to the terms of the DOCA, as indicated in Mr Holbrook's submissions. I further accept that the order Mr Holbrook seeks would minimise the costs of the liquidation of CAT and minimise further costs by Mr Holbrook (including solicitor's costs), as is also indicated in his submissions.
113 In my view, it cannot be contested that this court has power under Supreme Court Act 1935 (WA) s 37 to make a costs order of the kind Mr Holbrook seeks. Comparisons between that order and a 'Sanderson order' are apt. See, on a Sanderson order, Coastal Hire Pty Ltd v Ewers [2009] WASCA 36 (S) [22] - [24] (Newnes JA, Wheeler & Buss JJA agreeing). In my view, the insolvency of CAT is a relevant consideration in determining whether to make the orders sought by Mr Holbrook, together with the other considerations I have outlined above.
114 Based on these matters, I would make the orders sought by Mr Holbrook. Those orders might be said to properly reflect the capacity in which he was made a party to CIV 2001 of 2009.
115 Another order is sought by Mr Holbrook. It is for the dismissal of the application of 27 August 2009 in CIV 2001 of 2009. I have concluded that such an order would be appropriate, given the lack of any further steps on that application by CAT and the considerations which I took into account as to the likely fate of that application.
116 I should note that the submissions for Mr Holbrook further include a claim for 'the costs of dealing with the present summons in CIV 2265 of 2006, and again it is sought to fix costs on current case management principles dealing with costs in interlocutory proceedings' [15]. Included in the Flynn affidavit of 17 October 2014 is a bill of costs for 'the present summons'. The amount concerned is $1,353. I understood this to be a request to the court to fix Mr Holbrook's costs of the present application. So understood, I would make the costs order sought. I would do so for the same reasons, mutatis mutandis, as I gave in relation to Mr Holbrook's application to fix his costs in relation to the application of 27 August 2009 in CIV 2001 of 2009.
117 The order as to the costs of the present application that is sought by PSA and Mr Campbell-Smith (see the amended chamber summons [2], as supplemented by the written submissions for PSA, Mr Campbell-Smith and Banning Holdings) is for their costs to be paid by CAT and taxed together with, and in the same bill as, any costs payable by CAT in CIV 2265 of 2006. I took those costs to be the costs of the amended chamber summons [l(a)] to [l(e)].
118 It seems to me that the applicants in the present application have been entirely successful and that the method of taxation proposed is appropriate. I would make the order sought.
119 I note there is no claim by PSA or Mr Campbell-Smith, in the amended chamber summons or otherwise, for the costs of the amended chamber summons to be on an indemnity basis.
120 However, I note that in the written submissions for PSA, Mr Campbell-Smith and Banning Holdings there is a claim by Banning Holdings for its costs of the amended chamber summons to be awarded on an indemnity basis. I took those costs to be the costs of the amended chamber summons [1(f)].
121 Reference is also made in those written submissions to the written submissions of 16 September 2009 [6] - [15]. Those paragraphs are addressed to matters to do with the costs of CIV 2001 of 2009; matters with which I have already dealt.
122 There are no written submissions addressing why I should award Banning Holdings' costs of the amended chamber summons on an indemnity basis. However, I should note that, on these reasons and in the absence of any contrary written submissions, it is not apparent to me that there was any foundation for resistance to the making of the orders sought by the amended chamber summons [1(f)]. On that basis, I would make the orders sought by Banning Holdings as to its costs of the amended chamber summons.
123 I should add that in my view it might readily be said that the same reasoning would arguably apply to PSA's and Mr Campbell-Smith's costs of the amended chamber summons [1(a)] to [1(e)]. However, in the absence of any claim by them for indemnity costs of the amended chamber summons, it seems to me it could also readily be said that CAT had not been alerted to the possibility of such an order against which submissions might have been made or sought to have been made. I would thus not make an equivalent order for the costs of PSA and Mr Campbell-Smith.
Call for orders
124 I will hear from the parties as to the precise terms of the orders I should make.
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