Greig v Octaviar Limited (Receivers and Managers Appointed) (In liquidation)
[2010] QSC 347
•16 September 2010
SUPREME COURT OF QUEENSLAND
CITATION:
Greig & Anor v Octaviar Limited (Receivers and Managers Appointed) (In liquidation) & Anor [2010] QSC 347
PARTIES:
JOHN LETHBRIDGE GREIG AND NICHOLAS HARWOOD
(Applicants)v
OCTAVIAR LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 107 863 436
(First Respondent)
and
OCTAVIAR ADMINISTRATION PTY LIMITED (IN LIQUIDATION) ACN 101 069 390
(Second Respondent)
FILE NO:
BS 6291/10
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
16 September 2010
DELIVERED AT:
Brisbane
HEARING DATE:
1 September 2010
JUDGE:
McMurdo J
ORDER:
1. Subject to order 4, the applicants be remunerated:
(a) in the sum of $123,797 in respect of their appointment as deed administrators of the first respondent (Octaviar Limited) for the period from 1 May 2009 to 31 July 2009; and
(b) in the sum of $94,892 in respect of their appointment as provisional liquidators of Octaviar Limited for the period from 1 August 2009 to 9 September 2009.
2. The applicants be remunerated:
(a) in the sum of $238,024 in respect of their appointment as deed administrators of the second respondent (Octaviar Administration) for the period from 1 May 2009 to 31 July 2009;
(b) in the sum of $112,876 in respect of their appointment as liquidators of Octaviar Administration for the period from 1 August 2009 to 9 September 2009; and
(c) in the sum of $48,212 in respect of the period following their removal as liquidators of Octaviar Administration on 9 September 2009 to the date of this order.
3. The remuneration of the applicants particularised in order 2 in the total sum of $399,112 be paid:
(a) first out of any funds which the applicants hold on behalf of Octaviar Administration (and any surplus funds are to be thereafter remitted forthwith to the liquidators of Octaviar Administration) after payment of the applicants’ costs of this application insofar as they relate to Octaviar Administration; and
(b) to the extent of any balance owing after payment pursuant to order 3(a), out of the property of Octaviar Administration within 14 days of the date of this order.
4. The remuneration of the applicants particularised in Order 1 in the total sum of $218,689 be paid:
(a) first by application of the sum of $78,708 payable by Blake Dawson to the applicants in accordance with Order 3 in the Order dated 1 September 2010 and filed in proceeding BS 8045/10; and
(b) to the extent of the balance owing after payment pursuant to Order 4(a), out of any available property of Octaviar Limited pursuant to section 556 of the Corporation Act and within 5 days of notice being given in accordance with note 2 below.
5. The applicants’ costs of this proceeding be assessed upon an indemnity basis (if not agreed) and be paid as follows:
(a) as to two-thirds thereof, out of the assets of Octaviar Administration;
(b) as to one-third thereof, out of the assets of Octaviar Limited by the same means as envisaged by Order 4(b).
6. This application is otherwise adjourned to a date to be fixed.
THE COURT NOTES THAT:
1. The liquidators of Octaviar Administration will determine the respective entitlements of Octaviar Limited and Octaviar Administration to the funds held by the applicants and also by Blake Dawson by 5.00pm on Monday 27 September 2010.
2. The liquidators of Octaviar Administration will inform the applicants of their determination of the respective entitlements of Octaviar Limited and of Octaviar Administration to the funds held by the applicants and by Blake Dawson in accordance with Note 1 above within 5 days of the determination being made.
CATCHWORDS:
PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where the applicants were appointed as deed administrators of the respondent companies, as provisional liquidators of the first respondent and as liquidators of the second respondent – where the applicants and the respondents’ present liquidators reached agreement on orders for the applicants’ remuneration in respect of those appointments – whether the applicants should have their costs in respect of the application for remuneration upon an indemnity basis.
PROCEDURE – COSTS – RECOVERY OF COSTS – where the applicants sought remuneration in relation to both respondent companies – whether the applicants should be able to look to the assets of the second respondent to meet the entirety of their costs of these proceedings, regardless of whether any part of those costs was incurred in respect of the approval of their remuneration relating to the first respondent.
Aquilina Holdings Pty Ltd v Lynndell Pty Ltd & Anor; Lynndell Pty Ltd & Anor v Capital Finance Australia Limited & Ors(No 2) [2008] QSC 98
COUNSEL:
M Stunden for the applicants
D Jackson QC and S Cooper for the respondents
SOLICITORS:
HWL Ebsworth Lawyers for the applicants
Henry Davis York Lawyers for the respondents
The applicants apply for orders that they be remunerated in respect of their appointments as deed administrators of the respondent companies, as provisional liquidators of the first respondent (“OL”) and as liquidators of the second respondent (“OA”). Shortly prior to the hearing on 1 September 2010, the applicants and the respondents’ present liquidators reached agreement on orders for that remuneration. The remaining dispute concerns the appropriate order for the costs of these proceedings.
Each of the respondents agrees that there should be an order for costs in the applicants’ favour in respect of the application for remuneration relating to that company. But in each case there is an argument as to whether costs should be awarded upon the indemnity basis rather than the standard basis. Secondly, there is a question about whether the applicants should be able to look to the assets of OA to meet the entirety of their costs of these proceedings, regardless of whether any part of those costs was incurred in respect of the approval of their remuneration relating to OL. The applicants apprehend that there will not be funds of OL which will be available, at least immediately, to meet the costs referrable to that company.
As to the basis of assessment, counsel for the respondents agreed that ordinarily a successful application for remuneration would warrant an order for costs upon the indemnity basis. However, it is submitted that there are three reasons for limiting the costs here to the standard basis. The first is that the applicants are criticised for not claiming, within the present proceedings, all of the fees charged by Blake Dawson, the lawyers who acted for them in these administrations. The applicants claimed only for those fees for which they had a personal liability. Consequently, Blake Dawson had to bring its own proceedings for approval of its fees. Those proceedings were resolved by consent orders. The respondents agreed to pay Blake Dawson their costs of their own proceedings fixed in an amount of $50,000. It is argued that these costs may not have been incurred had the applicants claimed for the lawyers’ fees within the present proceedings. The applicants argue that there was some doubt as to whether they could have claimed to recover fees for which they were not personally liable, so that they were not unreasonable in leaving it to Blake Dawson to claim them. It is unnecessary to determine here whether the applicants could have claimed those fees within these proceedings. The present liquidators had challenged the quantum of the Blake Dawson fees and the true contest in relation to those fees was between the solicitors and the present liquidators. It was not incumbent upon the applicants to argue that case for their former solicitors. In any case, the extent to which the costs overall would have been reduced by including the Blake Dawson fees within the present proceedings is relatively small.
The second matter relied upon by the present liquidators is that the amount of the applicants’ costs were increased by their decision to press for final relief at an earlier hearing, on 21 June 2010, in circumstances where they had provided insufficient particulars to facilitate then an assessment of the reasonableness of the remuneration claimed. After that hearing particulars were provided. The present liquidators say that these were essential for the fair disposition of the matter. But in any event, some hearing would have been required on that day, at least to schedule the required steps towards the final hearing, and it is unlikely that the costs were much increased by the hour or so of argument which then occurred.
Thirdly, the respondents point to the amount of costs which have been claimed. The argument seems to be that the amount is so high that it simply should not be allowed, so that indemnity costs should be refused. I was asked to fix the amount or amounts of the applicants’ costs rather than to order their assessment. However, the complexity of the exercise of assessment and the substantial amount claimed makes this an unsuitable case for the Court to fix the costs.[1] The amount at which I was asked to fix the costs was, inclusive of counsel fees, $176,814. My impression is that this is a surprisingly large sum. But if it be the case that this represents “all costs reasonably incurred and of a reasonable amount”,[2] and if indemnity costs are otherwise appropriate, the amount would not be so high in proportion to the subject matter of the proceedings as to warrant a denial of indemnity costs.
[1]Aquilina Holdings Pty Ltd v Lynndell Pty Ltd & Anor; Lynndell Pty Ltd & Anor v Capital Finance Australia Limited & Ors(No 2) [2008] QSC 98, [6].
[2]UCPR r 703(3).
In my view, the matters raised by the present liquidators, considered together, do not provide sufficient reason to displace what they concede would ordinarily be the position, which is that the applicants should have their costs upon an indemnity basis.
The other question is whether the applicants should be able look to the assets of OA to recover all of their costs. They argue that it would be artificial to divide the costs of these proceedings between the two respondent companies and that there would be an unfairness if they were denied some of these costs because of the position of OL. It is submitted that effectively the same costs would have been incurred if the application had been brought only against OA.
The respondents argue that there are two distinct applications: one in relation to OL and the other in relation to OA. They say that considerations of hardship should not result in the assets of one company being used to fund the administration or liquidation of the other company.
I accept those submissions for the respondents. To the extent that there are costs of these proceedings which are not occasioned by seeking remuneration for work done for OA, there is no proper basis for appropriating its property to meet those costs. It is only costs of the proceedings which can be properly related to the remuneration sought from OA which should be ordered to be paid by it. However, the real difficulty is that most of the costs of these proceedings could not be identified as referable to only one company or the other. In that way, it can be said that much of the costs of the proceedings would have been incurred if no remuneration had been sought from OL. However, I do not accept that all or nearly all of the costs would have been incurred absent a claim against OL.
It is desirable to avoid yet further costs being incurred in disputes at the assessment stage. Therefore I have concluded that the applicants’ costs of the proceedings as a whole should be apportioned so that one-third falls upon OL and two-thirds upon OA. The amount of remuneration sought and recovered in relation to OL is about half that in relation to OA. And permitting the applicants to recover two-thirds of the costs of the proceedings as a whole from OA is consistent with the fact that much and probably most of the applicants’ costs would have been incurred if OA had been the only respondent.
The outcome is an order which is largely as proposed by the respondents by the draft they provided at the hearing. To that draft I have made changes in relation to indemnity costs and that apportionment between the respondents. I have also made changes in two other respects as sought by the applicants and not challenged by the respondents at the hearing.
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