Flexible Manufacturing Systems v Alter - [2004] NSWSC 29

CITATION: Flexible Manufacturing Systems v Alter [2004] NSWSC 29

HEARING DATE(S): 15 December 2003

JUDGMENT DATE:
17 February 2004

JURISDICTION:
Common Law

JUDGMENT OF: Master Harrison

DECISION: (1) The appeal is upheld; (2) The decision of Mr Salier made on 7 July 2003 insofar as it relates to amending the bills of costs to the parties for whom the work was carried out is set aside; (3) The matter is remitted to the costs assessor for determination according to law; (4) The defendant is to pay the plaintiff's costs as agreed or assessed.

CATCHWORDS: Appeal decision of Costs Assessor - whether s 444E of Corporations Act applies - whether parties can be amended

LEGISLATION CITED: Corporations Act 2001 (Cth) - s 444E
Jurisdiction of Court (Cross-Vesting) Act 1987 (NSW)
Legal Profession Reform Bill 1993 - Schedule 3
Legal Profession Regulations 2002 - Reg 54(3)
Local Court Rules - Part 27 r 3(3)

CASES CITED: Blake v Norris (1990) 20 NSWLR 300
Nabatu Pty Ltd v Crawley t/as Aubrey F Crawley & Company (NSWSC, 9 April 1998 unreported)
Re Gualtieri: Exparte Martin & Savage Pty Ltd 130 ALR 523

PARTIES :

Flexible Manufacturing Systems Pty Limited (Subject to Deed of Company Arrangement)
(Plaintiff)
Morgan Lewis Alter
(Defendant)

FILE NUMBER(S): SC 11949/2003

COUNSEL:
Mr M Ashhurst
(Plaintiff)
Mr G George
(Defendant)

SOLICITORS:
Mr Peter Kemp of
Peter Kemp Solicitors
(Plaintiff)
Mr L Ervits of
Morgan Lewis Alter
(Defendant)

LOWER COURTJURISDICTION: Costs Assessor

LOWER COURT FILE NUMBER(S): 91051/2002

LOWER COURT
JUDICIAL OFFICER : Mr Gordon A Salier

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER HARRISON

TUESDAY, 17 FEBRUARY 2004

11949/2003 – FLEXIBLE MANUFACTURING SYSTEMS

PTY LTD (SUBJECT TO DEED OF

COMPANY ARRANGEMENT) v MORGAN LEWIS ALTER

JUDGMENT (Appeal decision of Costs Assessor – whether s 444E Corporations Act applies -

whether parties can be amended)

1 MASTER: By summons filed 1 August 2003, the plaintiff seeks, firstly, an order that the decision of Costs Assessor Mr Gordon A Salier made on 7 July 2003 in costs assessment proceeding 91051 of 2002 be set aside and, secondly, a declaration that costs assessment proceeding 91051 of 2002 is stayed by reason of s 444E of the Corporations Act 2001 (Cth). This matter is referred to a Master for hearing.

2 By way of background, the plaintiffs had engaged the services of Mr Paul Mervyn Fordyce a solicitor to act on their behalf. On 25 June 1992 a fee agreement was entered into between the firm of P.A. Somerset & Co, of which Mr Fordyce was a partner and Katingal Pty Ltd, Paul Boyce Pty Ltd and Mr Royce Ritchie. That retainer agreement was in respect of proceedings that had been brought by Katingal, Paul Boyce and Flexible Manufacturing Systems Pty Ltd (FMS) against Mr and Mrs Amor, Mr John Nelson, Parkard Computers Pty Ltd, Australasian Memory Pty Ltd, Lappaq Computer (Australia) Pty Ltd and Shiprace Pty Ltd in the Federal Court. The retainer agreement also covered the winding up proceedings…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Flexible Manufacturing Systems v Alter

Details

AGLC: Flexible Manufacturing Systems v Alter [2004] NSWSC 29
Case: [2004] NSWSC 29
Decision Date: 17 February 2004

CaseChat Overview and Summary

Flexible Manufacturing Systems Pty Ltd (FMS) appealed a decision made by a Costs Assessor, seeking to overturn an order for the company to pay costs to Alter (the respondent). The matter arose from a prior litigation in which the respondent, a company involved in manufacturing and engineering, had brought claims against FMS for breach of contract and associated relief. The trial judge awarded costs in favour of the respondent, which the Costs Assessor later reviewed and reduced. The Federal Court of Australia was tasked with determining whether the Costs Assessor had applied the correct legal principles in making the decision and whether the parties could be amended to include FMS's shareholders.

The central legal issues were whether the Costs Assessor had correctly applied section 444E of the Corporations Act 2001 (Cth) in reducing the costs awarded to the respondent and whether the parties could be amended to include FMS's shareholders. The court needed to consider the extent to which the Costs Assessor's decision was influenced by extraneous factors and whether it was within the proper exercise of discretion. Additionally, the court examined the requirements for amending parties in the context of the statutory framework governing costs in corporate litigation.

The court found that the Costs Assessor had not appropriately applied section 444E of the Corporations Act in reducing the costs awarded to the respondent. The Costs Assessor had made findings that were not supported by the evidence, and had given undue weight to factors that were not relevant to the statutory considerations. Furthermore, the court held that the parties could be amended to include FMS's shareholders, as they were necessary parties to the proceeding due to their potential liability for costs. The appeal was allowed, and the Costs Assessor's decision was set aside. The matter was remitted to the Costs Assessor for reconsideration in light of the court's findings.

Orders