Felkro Nominees Pty Ltd (in liq) v Commonwealth of Australia

[1999] FCA 514

FEDERAL COURT OF AUSTRALIA

Felkro Nominees Pty Ltd (in liq) v Commonwealth of Australia [1999] FCA 514

FELKRO NOMINEES PTY LTD (IN LIQUIDATION) and MOREPACK MERCHANDISING (NSW) PTY LTD (IN LIQUIDATION) v COMMONWEALTH OF AUSTRALIA and JOHN SYDNEY DAWKINS

VG 341 OF 1996

RYAN J
28 APRIL 1999
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 341 OF 1996

BETWEEN:

FELKRO NOMINEES PTY LTD
(ACN 005 574 514)
(IN LIQUIDATION)
First Applicant

MOREPACK MERCHANDISING (NSW) PTY LTD
(ACN 056 351 592)
(IN LIQUIDATION)
Second Applicant

AND:

COMMONWEALTH OF AUSTRALIA
First Respondent

JOHN SYDNEY DAWKINS
Second Respondent

JUDGE:

RYAN J

DATE OF ORDER:

28 APRIL 1999

WHERE MADE:

MELBOURNE

MINUTES OF ORDER

THE COURT ORDERS:

1.That the Order of Ryan J of 16 December 1998 be amended by deleting paragraph 3 and substituting in lieu thereof the following paragraph:

“3.That the costs of all parties of and incidental to the respondents’ motions on notice dated 16 March 1998 and 9 April 1998 be costs in the cause.”

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 341 OF 1996

BETWEEN:

FELKRO NOMINEES PTY LTD
(ACN 005 574 514)
(IN LIQUIDATION)
First Applicant

MOREPACK MERCHANDISING (NSW) PTY LTD
(ACN 056 351 592)
(IN LIQUIDATION)
Second Applicant

AND:

COMMONWEALTH OF AUSTRALIA
First Respondent

JOHN SYDNEY DAWKINS
Second Respondent

JUDGE:	RYAN J
DATE:	28 APRIL 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT AS TO COSTS

1. On 16 December 1998 I published reasons for judgment dismissing, in part, a motion on notice dated 16 March 1998 by which the respondents sought, amongst other things, that these proceedings be dismissed or permanently stayed on the grounds that:

   “(a)the further amended statement of claim dated 23 July 1997 was delivered without the authority of the Applicants; or

   (b)the leave of the Court has not been obtained in relation to the further prosecution of the proceeding, as required by s 471B of the Corporations Law.”

2. The respondents failed to obtain the dismissal or permanent stay of the proceedings on either of those grounds.  However, they did obtain an order for security for costs which was the other form of relief sought by their notice of motion.  The concluding paragraph of my reasons for judgment of 16 December 1998 was in these terms:

   “Although the respondents have failed on the issues raised by their motion which occupied almost all of the time taken to hear the motion, they have obtained an order for security for costs.  As well, the adjourned hearing of the motion was arguably attributable, at least in part, to the applicants’ failure at the outset to disclose fully the circumstances in which Norton Vale came to indemnify Precious Metal against the costs of the action and the complicated relationship between Precious Metal, the liquidators of Morepack and the Felberbaum interests including Norton Vale.  In these circumstances, my initial inclination, without the advantage of argument on the matter, is to order that the costs of all parties of and incidental to the motion on notice dated 16 March 1998 be costs in the cause.  However, should any party desire to contend that some different order as to those costs should be made, that party should file and serve those contentions in writing by 23 December 1998.  Any answering contentions by the other parties should also be in writing and filed and served by 15 January 1999.”

3. The applicants accepted the invitation there extended which was reflected in paragraphs 3 and 4 of the orders which were pronounced also on 16 December 1998.  As a result, written submissions were filed on behalf of the applicants contending that the respondents should be ordered to pay their costs of and incidental to the motion on notice dated 16 March 1998.  In support of that contention, it was pointed out that the respondents had also filed a further notice of motion dated 9 April 1998 in respect of which the costs of all parties were reserved on 16 April 1998.  By that motion, the respondents sought:

   “1.The Respondents’ motion dated 16 March 1998 be listed for further hearing on 7 May 1998.

   2.The Respondents have leave to adduce further evidence in support of their motion.

   3.Any subpoena issued to Alfred Felberbaum, William Shagrin or David Chapman be made returnable before the Court on 7 May 1998.”

4. However, Counsel for the applicants derived comfort from this passage from the reasons for judgment which I published on 16 April 1998 dealing with the notice of motion of that date:

   “As I understand it, the respondents seek to put into controversy whether the present action is properly being pursued in the interests of the assignee named in the deed of assignment dated 24 March 1998, Precious Metal Sales Pty Ltd, or is being unlawfully maintained in the interests of another company, Norton Vale Pty Ltd.  That is a controversy which the respondents can pursue; whether or not its pursuit is facilitated by my acceding to the present motion.  Of course, the respondents’ pursuit of that controversy by whatever vehicle will be at their risk as to costs.”

5. For the applicants it is urged that “the respondents accepted that risk and should now bear the consequences of their failure in that pursuit”.

6. However, it is to be borne in mind that the order as to costs which I proposed in my reasons of 16 December 1998 does not eliminate the respondents’ risks as to the costs of the notice of motion of 16 March 1998.  What it does is provide that those costs be part of the general costs of the action so that, if the applicants succeed at the trial of the action, they will almost certainly recover the costs of and incidental to the notice of motion of 16 March 1998 as part of the general fruits of that success. 

7. Despite the earnest submissions of Counsel for the applicants, I do not consider that I should make any different order in respect of the costs of the notice of motion of 16 March 1998 from that tentatively suggested in the reasons for judgment of 16 December 1998.  It is true that no request for security for costs was made before service of the notice of motion of 16 March 1998 and by far the greater part of the hearings over four days was devoted to argument and evidence directed to relief which the respondents ultimately failed to obtain.  However, the challenge to the authority of Messrs Kelly & Chapman to continue to pursue, as solicitors for the applicants, the causes of action pleaded in the amended statement of claim, was reasonably made having regard to the information which had been provided to the respondents’ solicitors up to February 1998.  It was only after the full circumstances had been teased out in argument and evidence that Precious Metal’s chain of title to the causes of action pleaded as vested in Felkro and Morepack, and the legitimate interest of Norton Vale in indemnifying Precious Metal against the costs of the present proceedings, became clear.  Moreover, the whole of the notice of motion of 16 March 1998 was directed to interlocutory matters and the respondents did succeed in obtaining security for costs, for which concededly there had been no earlier request.  In these circumstances, I consider that the order proposed in my reasons for judgment of 16 December 1998 was an appropriate exercise of the Court’s discretion as to costs.  I shall therefore confine myself to varying the order pronounced on that date to read:

   “That the costs of all parties of and incidental to the respondents’ motions on notice dated 16 March 1998 and 16 April 1998 be costs in the cause.”

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated:            

Counsel for the First and Second Applicants: (Respondents to the Motions on Notice dated 16 March and 9 April 1998)	Mr T Rosen
Solicitors for the First and Second Applicants: (Respondents to the Motions on Notice dated 16 March and 9 April 1998)	Kelly & Chapman
Counsel for the First and Second Respondents: (Applicants to the Motions on Notice dated 16 March and 9 April 1998)	Mr M Bruckard
Solicitor for the First and Second Respondents: (Applicants to the Motions on Notice dated 16 March and 9 April 1998)	Australian Government Solicitor
Dates of Written Contentions as to Costs:	23 December 1998, 15 January 1999
Date of Judgment:	28 April 1999