Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes (No 2)

Case •

[2025] NSWCA 60

•

04 April 2025

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes (No 2) [2025] NSWCA 60
Hearing dates: 3 April 2025
Decision date: 04 April 2025
Before: Leeming JA
Decision:

1. Amended notice of motion filed 25 February 2025 dismissed.

2. Subject to order 3 below, no order as to costs, with the intention that the parties bear their own costs of the motion concerning costs.

3. Mr Calabretta to pay the parties’ costs of the directions hearing held on 6 March 2025.

Catchwords:

COSTS – receivers – privately appointed receiver of company in liquidation brought appeal against another company in liquidation seeking to overturn decision of primary judge to depart from pro rata distribution – appeal failed – whether receiver should be ordered to pay costs of successful respondent – where acknowledgement that receiver liable for adverse costs requested but not provided – where security for costs not sought

Legislation Cited:

Corporations Act 2001 (Cth), s 488

Uniform Civil Procedure Rules 2005 (NSW), rr 36.11, 36.16

Cases Cited:

Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Pty Ltd (2011) 80 NSWLR 652; [2011] NSWCA 128

Brundza v Robbie & Co (No 2) (1952) 88 CLR 171; [1952] HCA 49

Devenish v Jewel Food Stores Pty Ltd (1990) 64 ALJR 533; [1990] HCA 35

Dolphin Quays Developments Ltd v Mills [2008] EWCA Civ 385; [2008] 1 WLR 1829

Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes [2024] NSWCA 301

HP Mercantile Pty Ltd v Dierickx [2013] NSWCA 87

In the matter of Sirrah Pty Ltd (in liq) [2024] NSWSC 784

In the matter of Sirrah Pty Ltd (in liq) [2024] NSWSC 857

In the matter of Sirrah Pty Ltd (in prov liq) [2021] NSWSC 413; 152 ACSR 212

Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28

McLaughlin v Daily Telegraph Newspaper Co Ltd (1904) 1 CLR 143; [1904] HCA 5

Planet Plumbing (ACT) Pty Ltd v Gentec Australia Pty Ltd [2022] NSWSC 1490

PM Works Pty Ltd v Management Services Australia Pty Ltd trading as Peak Performance PM [2018] NSWCA 168

Prynew Pty Ltd v Nemeth [2010] NSWCA 94

Category:Costs
Parties: Harris Health Care Pty Ltd (Receivers and Managers Appointed) (in liquidation) (Appellant)
Alan John Hayes in his capacity as liquidator of Sirrah Pty Ltd (in liquidation) (First Respondent/Applicant on motion)
Gregory Thomas Harris and Monica Mary Brown as Executors of the Estate of the Late Aileen Joyce Harris (Second Respondents)
The Bankrupt Estate of William Francis Harris (Third Respondent)
Michelle Joy Harris (Fourth Respondent)
Domenic Calabretta (Principal Respondent to motion)
Representation:

Counsel:
J R Anderson (Applicant on motion)
A d’Arville, J Ibrahim (Mr Calabretta)
E Wu (solicitor) (Harris Health Care)

Solicitors:
Addisons (First Respondent)
Deutsch Partners (Mr Calabretta)
YPOL Lawyers (Harris Health Care)
File Number(s): 2024/246775
Publication restriction: Nil
 Decision under appeal 
Court or tribunal:
Supreme Court of New South Wales
Jurisdiction:
Equity – Corporations List
Citation:

[2024] NSWSC 784

Date of Decision:
26 June 2024
Before:
Black J
File Number(s):
2023/444411

JUDGMENT

  1. LEEMING JA: On 19 December 2024, the Court of Appeal constituted by the Chief Justice, McHugh JA and me dismissed an appeal brought by Harris Health Care Pty Ltd (“HHC”), a company which is being wound up, to whose assets a receiver, Mr Domenic Calabretta, has been appointed: Harris Health Care Pty Ltd (receivers and managers appointed) (in liq) v Hayes [2024] NSWCA 301. HHC was ordered to pay the first respondent’s costs. The first respondent now seeks an order that Mr Calabretta pay his costs.

Background

  1. HHC is hopelessly insolvent. It has no assets save perhaps for its entitlement to a distribution in the winding up of the first respondent, Sirrah Pty Ltd, in which it was a majority shareholder, and there is a judgment debt against it in favour of Sirrah in the amount of some $17 million. The judgment debt was the result of litigation in which the firm Yates Beaggi Lawyers acted for it: In the matter of Sirrah Pty Ltd (in prov liq) [2021] NSWSC 413; 152 ACSR 212.

  2. Yates Beaggi took security, for the payment of its fees, by way of equitable charge over the entirety of the assets of its client HHC. The law firm exercised the power granted under that charge to appoint Mr Calabretta. Mr Calabretta caused the company to oppose the application for special leave pursuant to s 488(2) of the Corporations Act 2001 (Cth) made by the liquidator of Sirrah to distribute the entirety of a surplus to Sirrah’s minority shareholder, with no distribution to HHC, on the basis that HHC had not contributed to the surplus in the winding up of Sirrah by satisfying any part of the $17 million judgment debt. The opposition by HHC on the instructions of Mr Calabretta failed: In the matter of Sirrah Pty Ltd (in liq) [2024] NSWSC 784, with the primary judge concluding at [104]:

My preliminary view is that Mr Calabretta’s conduct of these proceedings had the result that, contrary to the usual position, they had an adversarial character and were significantly lengthened and that he should be ordered to pay their costs.

  1. After an exchange of written submissions, the primary judge made an order in these terms (see In the matter of Sirrah Pty Ltd (in liq) [2024] NSWSC 857):

Mr Calabretta, in his capacity as receiver and manager of Harris Health Care Pty Ltd (in liq) (recs & mgrs apptd) pay the Plaintiff’s costs of and incidental to these proceedings, as agreed or as assessed.

  1. HHC appealed, and the appeal was dismissed. Paragraph 156 of the reasons was as follows:

At the end of the hearing, counsel for Sirrah’s liquidator flagged an application to amend to join the receiver for the purposes of seeking a costs order against him. A notice of motion to that effect, supported by affidavit, was filed on 12 December 2024. It is not clear at present what the receiver’s attitude to the motion is, and indeed whether there are disputed questions of fact. In circumstances where the issue was only formalised after the hearing, and relates only to costs in this Court, it is appropriate that the motion be remitted to a Judge of Appeal to be dealt with pursuant to s 46(1)(d) of the Supreme Court Act 1970 (NSW).

  1. An order to that effect was made, and in that way the notice of motion came to be heard by me.

  2. The notice of motion as originally filed sought an order that Mr Calabretta be joined as the fifth respondent to the proceedings, and did not seek an order that Mr Calabretta pay the costs of the proceedings. After this was pointed out at a directions hearing, an amended motion sought the following order:

1A An order that Mr Domenic Calabretta, in his capacity as receiver and manager of Harris Health Care Pty Ltd (in liq) (rec & man apptd), pay the First Respondent’s costs of and incidental to these proceedings, as agreed or assessed.

  1. The material before me comprises the solicitor’s affidavit of Mr Mattiussi sworn on 12 December 2024, an affidavit of service, and an affidavit made by Mr Calabretta on 14 March 2025. The following written submissions have been filed: 12 December 2024 (Sirrah); 28 February 2025 (Sirrah); 14 March 2025 (Mr Calabretta) and 21 March 2025 (Sirrah).

  2. The procedural history was a little unsatisfactory, including a non-appearance by the receiver at a directions hearing after being personally served, and a request by the receiver for an oral hearing if, belatedly, Sirrah’s liquidator was relying on Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28. In due course, the liquidator submitted, albeit only in reply, that “[t]his case is squarely within Knight (a case which itself concerned personal costs orders against receivers)”, and the receiver sought and obtained an oral hearing on 3 April 2025.

Facts bearing on the motion seeking a costs order against Mr Calabretta

  1. Contrary to what was contemplated in [156] of the principal decision of the Court of Appeal reproduced above, there are no disputed questions of fact. It is common ground that Mr Calabretta was responsible for HHC’s commencement and conduct of the appeal. It is not disputed that the appeal was reasonably brought. It is not suggested that any aspect of the prosecution of the appeal was unreasonable or improper.

  2. Finally, there is no dispute that after the appeal was commenced, in connection with the possibility of an application for security for costs, Sirrah’s liquidator’s solicitors had sought confirmation that Mr Calabretta would agree to pay any costs order against HHC. This was addressed in Mr Calabretta’s affidavit, and was prominent in the oral hearing on 3 April 2025, and warrants a somewhat detailed account.

  3. A notice of appeal was filed on 5 July 2024 and Sirrah’s liquidator filed a notice of appearance on 23 July 2024. The proceeding came before the Registrar on 31 July 2024 when it was allocated a hearing date of 22 October, with an estimate of one day. The directions made on 31 July 2024 contemplated an amended notice of appeal and the exchange of submissions, and a further directions hearing on 11 September, to be vacated in the event the timetable was complied with. The timetable was not complied with, and on 11 September, the Registrar vacated the hearing, put in place a new timetable, and set down the appeal for hearing on 28 November 2024, and it was on that date that the appeal was heard.

  4. No application for security for costs was ever made. Nor was any application flagged, so far as the directions made on 31 July 2024 and 11 September 2024 record, and if there were to have been an application, those directions hearings which put in place a timetable for submissions and set the matter down for final hearing would have been the time for it to be flagged and incorporated into the timetable.

  5. By email sent at some time on Friday 18 October 2024, the solicitor for Sirrah’s liquidator wrote to the appellant’s solicitors, noting that the appeal was commenced by HHC on the authority and direction of the receiver, noting that there will be no return to the creditors of HHC, asserting that “[i]n the usual way” the receiver will be personally liable for any adverse costs order, and then stating:

Please confirm your client’s acknowledgement and agreement that Mr Calabretta will pay our client’s costs of the proceedings in the event that a costs order is made against HHC. Otherwise, please explain (with supporting documents) your client’s position in respect of the matters referred to at numbered paragraphs 1 and 2 above.

Absent a satisfactory response, our client may seek appropriate orders for security for its costs.

Please provide your response by Monday, 21 October 2024.

  1. The firm of solicitors acting for HHC’s receiver did not respond to that request, either within the time specified or at all. Sirrah’s liquidator’s solicitors took the matter no further. Mr Calabretta said that he instructed his solicitors not to provide the acknowledgment sought by Sirrah’s liquidator’s solicitors. He deposed that:

At that time, I expected that the Sirrah Liquidator may bring an application for security for costs in respect of the appeal. Had the Sirrah Liquidator done so, I would then have needed to consider (in consultation with my appointor, a secured creditor of HHC), whether we would agree to provide such security in order to continue with the appeal. I do not know whether the appointor would have agreed to provide security. As I understand it, had security not been provided, HHC’s appeal would have been stayed or dismissed at that stage.

However, I did not need to have that discussion with the secured creditor of HHC because the Sirrah Liquidator did not bring that application.

  1. Mr Calabretta relied on the failure to seek security in advance of the appeal as an important consideration telling against the ordering of costs against him after the appeal, relying on Knight and Dolphin Quays Developments Ltd v Mills [2008] EWCA Civ 385; [2008] 1 WLR 1829.

  2. Mr Calabretta also made the point that the appeal was not conducted purely for the benefit of the secured creditor, Yates Beaggi. If the appeal had succeeded, the secured creditor would have been paid in full, and the unsecured creditors of HHC would have received a dividend.

  3. Mr Calabretta said that Black J’s costs orders, properly construed, were orders against the company, not against him personally. He maintained that even if the orders were against Mr Calabretta, “that is irrelevant to the question of the appropriate costs order on the appeal”. Somewhat inconsistently with that stance, Mr Calabretta also submitted that if on their proper construction the costs orders were orders against the company, “that is a further reason that the costs order made in this appeal should not be disturbed”.

  4. There is thus no way of avoiding construing the effect of the orders made by Black J.

The proper construction of the costs orders made by Black J

  1. Sirrah’s liquidator relied on two orders. The first arose from an ex tempore judgment of Black J on 11 June 2024, in response to a request made by HHC and Ms Michelle Harris for various extensions of time. Sirrah’s liquidator submitted:

Importantly, his Honour’s judgment records that Yates Beaggi Lawyers filed a notice of appearance on behalf of HHC and Ms Harris on 25 January 2024, and that counsel “who appears for HHC and Ms Harris has now confirmed that the notice of appearance was filed for HHC on the instructions of Mr Calabretta, the receiver and manager of HHC. Plainly, that matter is of some significance, so far as questions of costs may ultimately arise in the proceedings.” To similar effect, his Honour observed (p 2) that “Here, it is, relevantly, Mr Calabretta as receiver and manager who has the entitlement to be heard, representing the interests of HHC as a shareholder in the application, and that distinction is of some significance where any adverse order for costs will ordinarily be made against Mr Calabretta and not against YBL in respect of the conduct of the proceedings.” Black J declined to make the orders sought “by Mr Calabretta in his capacity as receiver and manager of HHC” (p 5) and ordered Mr Calabretta, in his capacity as receiver and manager of HHC and Ms Harris, jointly and severally, pay the costs of and incidental to the relevant listing (p 6).

  1. Secondly, Sirrah’s liquidator relied on the costs order made by Black J when the proceedings were concluded, reproduced above. The liquidator said the order was unambiguous. It was the natural consequence of unchallenged findings made by Black J inter alia that the “relief sought by Mr Hayes, at least in respect of the basis on which the surplus is to be distributed, is opposed by Mr Calabretta, who is the receiver and manager appointed to HHC by a firm of solicitors, Yates Beaggi ...”, as his Honour recorded at [2] of the main judgment, and the unchallenged findings made by Black J in his Honour's judgment on costs in [2024] NSWSC 857. Relevantly, Black J held that it was “Mr Calabretta, as the receiver appointed by the secured creditor to HHC, who opposed the application”: [2024] NSWSC 857 at [20]. Those observations were entirely consistent with the ex tempore judgment of 11 June 2024 and the orders made that day, referred to above.

  2. Sirrah’s liquidator submitted:

No independent challenge was ever made to the costs orders below or the findings which led to them. There is nothing to differentiate the conduct of the litigation in the Court below from the appeal to this Court.

  1. The authentic text of this Court’s orders is the form recorded on JusticeLink, and UCPR r 36.11(2) deems orders to have been entered when they are so recorded. As recorded in JusticeLink, the orders are:

Mr Calabretta, in his capacity as receiver and manager of HHC and Ms Harris, jointly and severally, pay the costs of and incidental to the listing today, as agreed or as assessed (order made on 11 June 2024).

Mr Calabretta, in his capacity as receiver and manager of Harris Health Care Pty Ltd (in liq) (recs & mgrs apptd) pay the Plaintiff’s costs of and incidental to these proceedings, as agreed or as assessed (order 2 made on 15 July 2024).

  1. Against the proposition that those orders bore their ordinary meaning, Mr Calabretta said that: (a) Mr Calabretta had not been joined, and it was “unlikely that the experienced trial judge would have intended to make an order against a non-party who had not been served with any motion”, (b) in his costs judgment, the judge made no reference to applicable case law, including non-party costs orders, and indeed said that costs “should be paid in a way which is fair, having regard to what the court considers to be the responsibility of each party for the incurring of costs” (emphasis in Mr Calabretta’s submissions), and (c) the trial judge referred to “Mr Calabretta” throughout his judgment. It is best to reproduce this submission in the terms in which it was advanced:

Third, the trial judge referred to “Mr Calabretta” in the place of “HHC” throughout its judgment. For example, in paragraph 2 of the Costs Judgment, the Court refers to submissions put by “Mr Calabretta and ... Mr Calabretta’s contention”. In paragraph 16, the Court also refers to “... a wider argument initially put by Mr Calabretta” and “… other issues raised by Mr Calabretta”. Plainly, given Mr Calabretta was not a party to the proceedings, the reference to any contentions, arguments or submissions cannot be a reference to Mr Calabretta personally. Read fairly and logically, these are all references to HHC, as a defendant in the proceeding. In the same manner, it follows that the order as to costs in paragraph 22 of the Costs Judgment is a reference to HHC.

  1. I cannot accept this. His Honour’s references to “Mr Calabretta” are to be understood as bearing their ordinary meaning, the man rather than the company in respect of whose assets he had been appointed receiver. There is an obvious difference between the receiver appointed by the law firm pursuant to its charge and the company which was a party to the litigation and which participated on instructions from the receiver. That is obvious to any reader of the judgment, and must be taken to have been obvious to the primary judge.

  2. In fact, the potential for ambiguity between “HHC” the company being wound up and the receiver was expressly raised at the hearing on 11 June 2024. In light of Mr Calabretta’s submissions, it is as well to reproduce what occurred extensively, which makes it clear that his Honour was acutely aware of the difference between HHC and its receiver.

  3. The context was that HHC and one of its shareholders who aligned herself with HHC were in default of the timetable, and sought a further extension. It is also clear that his Honour had received an affidavit from Mr Amirbeaggi which had referred to that firm’s claim as a secured creditor in the winding up of HHC.

  4. The transcript records the following:

HIS HONOUR: Yes, I will take appearances in this matter.

MATTIUSSI: Your Honour, Mattiussi initial S for the plaintiff

HIS HONOUR: Yes. Thank you, Mr Mattiussi.

CASTLE: May it please the Court, Ms Castle on behalf of the first and fourth Defendants.

HIS HONOUR: Well, let us pause there, Ms Castle. When you say “on behalf of the first defendant”, there is an ambiguity to the notice of appearance filed by the first defendant. I take it that what you mean by that is you appear for Harris Health Care Pty Ltd on instructions of its receiver, is that right?

CASTLE: Your Honour, I have to be frank and say I don't know if that’s correct or not. I am not doubting the proposition that underlies what your Honour has put to me, and so I would have to check that.

  1. After a short adjournment, the transcript records:

CASTLE: Yes. Thank you, your Honour. Your Honour, I appear, on instructions, for the receiver of the first defendant and I appear for the fourth defendant.

HIS HONOUR: Yes. And who is the receiver of the first defendant?

CASTLE: Mr Calabretta.

HIS HONOUR: Thank you. And you appear for the fourth defendant?

  1. After hearing from the parties as to the extension of time, and delivering oral reasons, there was the following exchange:

HIS HONOUR: Ms Castle, is there any reason that Mr Calabretta should not pay the costs of this application?

CASTLE: Your Honour, I am just wondering about the difference between Mr Calabretta and Ms Harris, but no, your Honour, no. I am appearing on behalf of both, but no, there’s no reason.

HIS HONOUR: Yes. Well, there doesn’t appear to be any great utility - well, I am sorry. You’re quite right, you are appearing on behalf of Ms Harris, so in those circumstances the application is brought by both of them, isn’t it?

CASTLE: Yes it is.

HIS HONOUR: Yes, all right. So in fairness the order for costs should be made against both of them.

CASTLE: Probably, your Honour.

HIS Honour: Yes. Right.

  1. The primary judge then delivered the reasons for making the costs order against Mr Calabretta and Ms Harris reproduced above.

  2. This exchange was raised by me at a directions hearing on 25 February 2025, where the following was said:

HIS HONOUR: … the issue that seems to be soaking up a lot of attention today arose not merely after the final hearing before Black J, but also early on. And on 11 June 2024, when Ms Castle was appearing for the receiver, she was asked by Black J, after announcing her appearance, “When you say on behalf of the first defendant there’s an ambiguity in your notice of appearance, I take it that what you mean by that is you appear for Harris Health Care on instructions of its receiver. Is that right?” There was then an adjournment for her to take some instructions, and then his Honour mentioned that there would be costs consequences, and in the ex tempore judgment that he gave that time, the order was that Mr Calabretta, in his capacity as receiver and manager of HHC, and Ms Harris jointly and severally pay the costs of an incidental delisting today as agreed or assessed. That was because, in his Honours’ reasons, he recorded that Ms Castle, who appears for HHC and Ms Harris, has now confirmed that the notice of appearance was filed for HHC on the instructions of Mr Calabretta, the receiver and manager.

Plainly, that matter is of some significance so far as questions of costs may ultimately arise in the proceedings. Now I mention that to all of you because I suspect most, if not all of you, were not there only seven months ago when this proceeding commenced, but the sorts of arguments that I seem to be facing were anticipated by his Honour a long time ago. And, to be blunt about it, I’m expecting at some stage Mr Anderson to say there is no substantial difference to what happened in the Court of Appeal than what happened before Black J. And if he says that, someone speaking on behalf of Mr Calabretta will no doubt seek to explain why that is not the case.

  1. Mr Calabretta did not appear at that directions hearing, despite his having been served and a notice of appearance having been filed. When the transcript became available, it was sent by my Associate to all parties, including the solicitor on the record for Mr Calabretta, attached to an email dated 4 March 2025 which said:

Justice Leeming is also conscious that the receiver was not present on 25 February 2025. The transcript of that hearing is attached.

  1. I conclude that, contrary to Mr Calabretta’s submissions, the orders made on 11 June and 15 July which name Mr Calabretta in his capacity as receiver and manager mean what they say. They name him personally. They do so by reference to his capacity as receiver and manager. In that way, they impose a liability upon Mr Calabretta in his capacity as receiver and manager. They are not to be read as imposing a liability upon the hopelessly insolvent company over whose assets Mr Calabretta was appointed as receiver.

  2. If it be permissible to resort to the context in order to construe the orders, nothing in the context supports Mr Calabretta’s contention and everything mentioned above tells against it.

  1. If the order were on its proper construction for HHC to pay costs, it was utterly worthless. HHC was hopelessly insolvent, even if it achieved utmost success in the appeal. The fact that the primary judge was taking care to specify the terms of the order, and in the case of that made on 11 June 2024, that it imposed a joint liability with Ms Harris, suggests that his Honour was not wasting time in an arid exercise of ordering costs against a hopelessly insolvent company.

  2. Contrary to Mr Calabretta’s submission that he had not been joined and that told against the order naming him meaning what it said is wrong in law; a person need not be joined as a party in order for a costs order to be made against him, her or it: see Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Pty Ltd (2011) 80 NSWLR 652; [2011] NSWCA 128 at [21]-[25].

  3. Contrary to Mr Calabretta’s proposition that the experienced trial judge would not make an order against a non-party without being served with a motion, the experienced trial judge raised the issue at the outset, warning counsel who then appeared for HHC on the instructions of the liquidator to be very clear as to where her instructions were coming from, and then in his reasons stating explicitly that her confirmation that the notice of appearance was filed for HHC on instructions from Mr Calabretta and stating that the “matter is of some significance so far as questions of costs may ultimately arise in the proceedings”. Although there was no reference to the “relevant case law” it is trite that a receiver who causes an insolvent company to incur costs is within the general category of case recognised in Knight.

  4. Contrary to Mr Calabretta’s submission based on his Honour’s use of the term “party”, it was and is natural to use that word to indicate the person giving instructions to conduct the litigation. The terms “real party” and “real party in interest” are examples: see the discussion of those terms in PM Works Pty Ltd v Management Services Australia Pty Ltd trading as Peak Performance PM [2018] NSWCA 168 at [27]-[32].

  1. Despite the exchange between counsel and the primary judge on 11 June 2024 being referred by me at a directions hearing, and it being provided to Mr Calabretta, the written submissions did not engage with it.

  2. When at Mr Calabretta’s request there was an oral hearing, counsel for Mr Calabretta did not seek to elaborate on this part of his written submissions.

Litigation for the benefit of unsecured creditors?

  1. Mr Calabretta also maintains that the application was not solely for the benefit of Yates Beaggi. That is because in the event the appeal succeeded, there would be a partial distribution to HHC’s unsecured creditors, which included the Australian Taxation Office. I do not see how this is relevant to whether the costs should be borne by the receiver who caused the unsuccessful litigation to be incurred and the successful parties to incur costs. The receiver was entitled to have regard to the interests of the secured creditor which appointed him, and there is no reason to doubt that it is the secured creditor which is the source of his instructions as well as the source of his remuneration.

The significance of failing to seek security for costs

  1. But for one matter, I would have made the orders sought in paragraph 1A of the amended notice of motion. The critical matter is that Sirrah’s liquidator’s solicitors raised this very point in advance of the appeal, in the context of threatening an application for security for costs. That application, had it been made promptly, could scarcely have been opposed: the appellant was hopelessly insolvent, costs had already been ordered against the receiver personally, and the appeal was being conducted in accordance with instructions from the secured creditor Yates Beaggi who stood to recover the entirety of the firm’s debt if the appeal succeeded, and nothing if it failed. Yet despite a notice of appeal being served in early July 2024, and despite there being hearings before the Registrar in late July and September, it was not until mid October, some 3½ months later, only weeks before the appeal was listed for hearing, that Sirrah’s liquidator’s solicitors sought an acknowledgement that the receiver was liable for an adverse costs order which if not provided might lead to an application for security for costs, and then, when it was not provided, failed to bring any such application.

  2. Applications for security for costs should be made promptly: McLaughlin v Daily Telegraph Newspaper Co Ltd (1904) 1 CLR 143 at 145; [1904] HCA 5; Brundza v Robbie & Co (No 2) (1952) 88 CLR 171 at 175; [1952] HCA 49; Devenish v Jewel Food Stores Pty Ltd (1990) 64 ALJR 533 at 534; [1990] HCA 35. There is no explanation for the delay in seeking the acknowledgement and presaging an application for security. True it is that, for the reasons explained by Mason CJ in Devenish, if an application for security had been made in late October or early November, weeks or days before the appeal was set down, it might well have been refused in the absence of an explanation:

it is obvious that the major steps preparatory to the hearing of the appeal have been taken, so that the appeal is ready for hearing and the bulk of the costs of the appeal would already have been incurred by the second appellant. In the result, the application for security comes at the heel of the hunt. ... As a general rule, applications for security for costs should be made promptly and before significant expense is incurred by the appellant.

  1. But it is hard to see that there could have been any good reason for the letter sent in mid October not having been sent months earlier, well in advance of the hearing date and before substantial costs had been incurred.

  2. In the present case, there is the unchallenged evidence of Mr Calabretta on receipt of the request that he provide an acknowledgement. There is force in his submissions that Sirrah’s liquidator is now adopting a different stance than had been taken in the months leading up to the hearing of the appeal, and that he and the law firm which appointed him have lost the chance to consider whether to proceed with an appeal at the price of providing security.

  3. Sirrah’s liquidator submitted that Mr Calabretta did not in fact provide evidence of sufficient prejudice. I do not accept that submission. Mr Calabretta does not engage in a wholly hypothetical exercise of what the decision making with his appointor might have been. But there is at least a chance that it would have been determined that the appeal would have been compromised rather than run had a prompt application for security been made.

  4. Sirrah’s liquidator also submitted that a flaw in Mr Calabretta’s submissions was that there would inevitably be applications such as this even if security were sought and ordered, because a court will only order a partial security (to use the figure mentioned in oral submissions, 70% - which as it happens was the discount applied in Planet Plumbing (ACT) Pty Ltd v Gentec Australia Pty Ltd [2022] NSWSC 1490 and Prynew Pty Ltd v Nemeth [2010] NSWCA 94 and HP Mercantile Pty Ltd v Dierickx [2013] NSWCA 87). I do not accept that submission. In a case such as this, there is much to be said for the receiver (or the secured creditor standing behind the receiver) giving an acknowledgement. But even if no acknowledgement is given and security for costs is ordered which when duly drawn upon does not suffice to discharge the liability imposed by a costs order, then it will be difficult for a receiver or the secured creditor standing behind the receiver to resist an application such as that belatedly brought by Sirrah’s liquidator.

  5. But the short point for present purposes is that this was a case where an application for security should have been made promptly and where after it was made and the liquidator did not receive the acknowledgement requested, the liquidator did nothing. The application which is now made is inconsistent with the stance put forward by Sirrah’s liquidator’s solicitors on 18 October 2024 prior to the appeal being heard, and nothing has been put forward to explain why so little was done, so late, and when that was done, why it was not followed through. Contrary to Sirrah’s liquidator’s submission that the position on appeal is the same as before the primary judge, warranting a further order that the unsuccessful receiver pay the successful liquidator’s costs, the position is quite different. There was no scope for an application for security for costs when the receiver caused HHC to oppose Sirrah’s liquidator’s application for special leave. In the very different circumstances where the receiver caused HHC to bring an appeal, security for costs should have been sought promptly, and further there is the fact that the liquidator sought an acknowledgement of the receiver’s liability but took the matter no further when the acknowledgement was not forthcoming.

  6. For those reasons, I decline to make an order for costs against Mr Calabretta personally. That is the only order in the amended notice of motion which matters. It is unnecessary to give separate consideration to the application for joinder.

  7. Ordinarily, the costs of a motion such as this, heard and determined after an appeal, are severable from the costs of the appeal, and those severable costs would follow the event unless reason were shown to make some other order. However, there is a good reason to depart from the usual rule, which would result in Sirrah’s liquidator being ordered to pay Mr Calabretta’s costs of the motion. Here Sirrah’s liquidator caused those costs to increase, in a number of ways. In part that was because personal service was necessary. It should not have been necessary for a privately appointed receiver to be personally served with a notice of motion concerning costs when the appointor is a firm of solicitors. The short oral hearing yesterday sought by Mr Calabretta was helpful, but unnecessary, and did not cause me to depart from the view I had tentatively reached. But the main reason for departing from the usual rule is because the submissions advanced by Mr Calabretta concerning the meaning of the costs orders made by the primary judge against him (addressed at [20]-[37] above) are so close to being untenable, if they are indeed capable of being properly advanced, that they warrant a departure from the usual discretion as to costs.

  8. Mr Calabretta has successfully opposed the orders sought by Sirrah’s liquidator, but I think that in all the circumstances, there should be no order as to costs of the motion, with the intention that each party bears his or its own costs, and subject to the exception that Mr Calabretta should pay the other parties’ costs of the directions hearing on 6 March 2025, made necessary because of an earlier non-appearance, and in respect of which he concedes a costs order should be made against him.

  9. Neither side sought to be heard separately as to costs. However, if for any reason they wish to be heard against orders 2 or 3, application may be made within the period specified by UCPR r 36.16.

  10. The Court’s orders are as follows:

  1. Amended notice of motion filed 25 February 2025 dismissed.

  2. Subject to order 3 below, no order as to costs, with the intention that the parties bear their own costs of the motion concerning costs.

  3. Mr Calabretta to pay the parties’ costs of the directions hearing held on 6 March 2025.

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Decision last updated: 04 April 2025

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