Cote v Devine
[2013] WASC 79 (S)
•30 AUGUST 2013
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | COTE -v- DEVINE [2013] WASC 79 (S) |
| CORAM | : ALLANSON J | ||
| HEARD |
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| DELIVERED |
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| FILE NO/S |
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| MATTER |
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Aurora Balanced Living Pty Ltd (Administrators
Appointed)
| BETWEEN | : ROBERT COTE |
MARIE CELINE SOLANGE CHOUINARD
GEORGINA MARGARET MOOREApplicants
AND
TRENT DEVINE
SULE ARNAUTOVIC
RODERICK MACKAY SUTHERLANDRespondents
Catchwords:
Costs - Interlocutory application dismissed - Whether costs to be in the cause or paid by unsuccessful party - Turns on own facts
[2013] WASC 79 (S)
Legislation:
Corporations Act 2001 (Cth)
Result:
Respondents' application for costs granted
Cost orders made
Category: B
Representation:
Counsel:
| Applicants | : | No appearance |
| Respondents | : | No appearance |
Solicitors:
| Applicants | : | Culshaw Miller |
| Respondents | : | Sparke Helmore |
Case(s) referred to in judgment(s):
Cote v Devine [No 2] [2013] WASC 313
Johnson v Cetin [2011] WASC 344
[2013] WASC 79 (S)
ALLANSON J
ALLANSON J: The respondents are the liquidators of two companies: Aurora Balanced Living Properties Pty Ltd and Aurora Balanced Living Pty Ltd. Unless it is necessary in these reasons to distinguish between them, I will refer to them collectively as the Aurora Companies. The respondents were the administrators of those companies.
2 On 25 February 2013 the applicants filed an originating process
under s 449B of the Corporations Act 2001 (Cth) for relief, including orders removing the respondents as administrators the Aurora Companies and replacing them with another administrator. They also sought declarations that two of the applicants (Ms Chouinard and Ms Moore) are creditors of one or the other company for stated amounts, and that other persons are not creditors of either company.
3 On 1 March 2013, the applicants filed an interlocutory process
seeking orders that pt 5.3A of the Corporations Act is to operate in relation to each of the Aurora Companies such that concurrent meetings of creditors convened for 5 March 2013 were to be vacated and to take place at a later date to be fixed by the court.
4 The interlocutory process was made returnable on 5 March 2013 –
the date of the proposed meetings. As Monday, 4 March, was a public holiday in Western Australia, there were no business days between the filing of the application and the hearing.
5 In effect, the orders sought were equivalent to an injunction
restraining the holding of the meetings on 5 March. Very substantial affidavits were filed in support. In submissions, the applicants said that in the originating process they sought to remove the respondents as administrators on the grounds of bias, the respondents had refused to agree a process to allow the bias allegation to be determined before the meetings on 5 March, and the date for the meetings should be put back until after the removal application had been heard. Various allegations of misconduct or deficiencies in the administration were made against the administrators, as evidence of apparent bias.
6 I dismissed the application and reserved costs. The respondents now
ask for those costs. The applicants submit that there should be no order as to costs, alternatively costs should be in the cause. I made orders for the filing of written submissions with the question of costs to be determined on the papers.
7 As for any costs order, costs of an interlocutory application are
within the discretion of the court. On an application for interlocutory
[2013] WASC 79 (S)
ALLANSON J
relief, where relief has been refused, it is common to make an order for the costs to be in the cause, or reserved, at least where the applicant has established a prima facie case for relief. Even where an injunction is refused, the rights which the applicant seeks to protect may be established at trial: see Johnson v Cetin [2011] WASC 344 [52]. In this regard, there has been a significant development in the principal proceedings since the interlocutory application was heard. On 7 August 2013, Master Sanderson permitted the applicants to amend their originating process. Relevantly, the applicants no longer seek the removal of the respondents as liquidators of the Aurora Companies: see Cote v Devine [No 2] [2013] WASC 313.
The applicants resist a costs order on two bases.
9 First, they say the interlocutory application was 'substantially
motivated' by the refusal of the respondents to explain their previous dealings with the directors of the two Aurora Companies. They point to deficiencies in the first declaration of relevant relationships made by the respondents as administrators, and to the respondents' failure or refusal to give 'full disclosure' (including notes of any communications) of their dealings with the directors of the Aurora Companies.
In refusing the application to adjourn the meetings, I made findings
that:
1. there was nothing before me to suggest that there had been communications between the respondents and the directors of the Aurora Companies to raise questions about their independence and impartiality;
2. the applicants had not shown the respondents had any obligation to disclose their notes, or that the respondents had behaved improperly or not impartially when they did not accede to the applicants' requests;
3. while there was omission in the declaration of relevant relationships, which the respondents intended to correct at the meeting of 5 March, it was not a ground for apprehending bias.
11 Apart from these matters of disclosure, the allegations made by the
applicants as to the conduct of the administrators, and the conduct of the first meeting of creditors, were much more wide ranging. Their complaints extended even to the location of the respondents in Sydney.
[2013] WASC 79 (S)
ALLANSON J
There was a detailed critique of the report prepared by the administrators for the second meeting of creditors.
12 In the circumstances, I am not persuaded that the claim that the
application was substantially motivated by the question of 'disclosure' is a reason for denying costs or ordering that they be in the cause. The claim of bias was much more significant and relied on a wider factual basis than the issue of disclosure.
13 The second matter relied upon by the applicants is that the costs are
not 'thrown away' as the affidavit material filed in respect of the interlocutory application will be the evidentiary basis for determining the originating process.
14 There is certainly overlap in the issues between the interlocutory
process and the final relief sought. There are documents that will be common. But the questions to be determined are substantially different. On the interlocutory hearing, the court was primarily concerned with the conduct of the administrators in the period up to and including the hearing, and whether it gave rise to a reasonable apprehension of bias. This included the respondents' conduct of the first meeting of creditors, the declaration of relevant relationships, and the content of the report to creditors. Those issues are quite separate from what is now to be determined on the amended originating process.
15 Further, I have regard to the way in which the application was
brought: it was filed four days after the originating process was filed; the application was accompanied by a large volume of material; the hearing was requested for the day of the meeting. I do not accept that the costs that were incurred in meeting the particular application in those circumstances should be seen as absorbed into the principal application generally, and are not costs thrown away.
16 Further, I take into account that the removal of the respondents is no
longer pursued. The issue of their partiality, whether as administrators or liquidators, is not now in issue. An order for costs in the cause will not do justice where that issue has been abandoned.
17 I also have regard to the position of the respondents as, initially
administrators, and now liquidators of the Aurora Companies. An order that there be no order as to costs will move the expense of responding to the application to the creditors.
[2013] WASC 79 (S)
ALLANSON J
18 In my opinion, in these circumstances, it is just that the costs of the
interlocutory application be paid by the applicants. They failed to establish a sufficient case for relief on the grounds of apprehended bias and were refused on that basis. As I noted at the time, there was little room for argument on the balance of convenience. If the applicants had demonstrated reasonable grounds for apprehending that the administrators would not act impartially, the holding of the meeting would have been restrained.
19 The costs should be taxed and paid forthwith. This is not a matter
where costs can be fixed. The respondents are to file a minute of orders to
give effect to these reasons.
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