Howard Finance Ltd v Mintvale Pty Ltd
[1996] FCA 214
•15 Mar 1996
CATCHWORDS
Lindgren J
Sydney
NOT FOR DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No NG 652 of 1995
GENERAL DIVISION )
BETWEEN:
HOWARD FINANCE LIMITED
Applicant
AND:
MINTVALE PTY LIMITED
First RespondentMINTVALE FACTORS PTY LIMITED
Second RespondentRODNEY BERKLEY
Third RespondentRUSSELL THORLEY
Fourth RespondentTERRENCE WYNN
Fifth RespondentA & I SMASH REPAIRS
Sixth RespondentANGELO CINCOTTA
Seventh RespondentP & L SMASH REPAIRS PTY LTD
Eighth RespondentLOUIS MICK SEMRANI
Ninth RespondentMOHAMED ISSAM DANNOUN
Tenth Respondent
CORAM:Lindgren J
PLACE:Sydney
DATE:15 March 1996
MINUTE OF ORDERS
THE COURT ORDERS:
THAT the costs of the motion of the second, fourth and fifth respondents brought by notice of motion filed 20 September 1995 be reserved.
THAT the costs of the motion of the third respondent brought by notice of motion filed 30 October 1995 be reserved.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No NG 652 of 1995
GENERAL DIVISION )
BETWEEN:
HOWARD FINANCE LIMITED
Applicant
AND:
MINTVALE PTY LIMITED
First RespondentMINTVALE FACTORS PTY LIMITED
Second RespondentRODNEY BERKLEY
Third RespondentRUSSELL THORLEY
Fourth RespondentTERRENCE WYNN
Fifth RespondentA & I SMASH REPAIRS
Sixth RespondentANGELO CINCOTTA
Seventh RespondentP & L SMASH REPAIRS PTY LTD
Eighth RespondentLOUIS MICK SEMRANI
Ninth RespondentMOHAMED ISSAM DANNOUN
Tenth Respondent
CORAM:Lindgren J
PLACE:Sydney
DATE:15 March 1996
REASONS FOR JUDGMENT
The issue before the Court is one of costs. It is necessary to give some background.
The application was filed on 24 August 1995, although, as I will note shortly, orders were made ex parte on the preceding day, 23 August. The applicant is Howard Finance Limited ("Howard"); the first respondent is Mintvale Pty Limited ("Mintvale"), a company associated with the third respondent, Rodney Berkley ("Berkley"); and the second respondent is Mintvale Factors Pty Limited ("Mintvale Factors"), a company associated with the third, fourth and fifth respondents. I will refer to the fourth respondent as "Thorley" and the fifth respondent as "Wynn". The sixth, seventh, eighth, ninth and tenth respondents are two smash repair companies and individuals associated with them. They do not feature further in this judgment.
It is not necessary for me to explain in any detail the nature of the substantive issues in the proceedings. It suffices to say that Howard alleges that it has been defrauded by various respondents, if not by all of them, in connection with various factoring agreements. Allegations of, for example, bogus invoices are made.
On 23 August 1995, certain interlocutory relief was granted on the ex parte application of Howard. An "Anton Piller order" was made authorising personnel associated with Howard and its solicitors, Holmes & Bevan, to attend on various premises including a property which featured later in the case at 4/73 Bellingarra Road, Miranda, said to be the business premises of Mintvale Factors. The other premises at which the Anton Piller order was to be executed were those (apparently the places of abode) of Berkley, Wynn and Thorley. The Anton Piller order does not feature further.
As well, on 23 August 1995, a "Mareva injunction" was granted on the ex parte application of Howard. It was expressed in para 8 of the orders made on that day. It restrained Berkley, Thorley and Wynn from disposing of assets and removing assets from the jurisdiction subject to an exception in favour of each of them of living expenses up to $600 per week and certain other expenditure not presently relevant.
On 7 September 1995, the Court appointed Vince Christopher Barilla as receiver of the business, property and affairs of Mintvale Factors. Apparently a receiver had been previously appointed, pursuant to a power in a deed, in respect of Mintvale. In addition to the appointment of the receiver of Mintvale Factors, the Court also on 7 September granted Howard a Mareva injunction in respect of the seventh and ninth respondents but, as I indicated earlier, they do not feature in today's judgment.
On 14 September 1995, Howard filed a statement of claim. I do not need to give an account of that pleading.
Importantly for present purposes, on 20 September 1995, Mintvale Factors, Thorley and Wynn filed a notice of motion. They were represented by the solicitors M. Roper & Co. The notice of motion actually bore the date 19 September 1995. What they sought was relief from the terms of the ex parte orders which
Howard had obtained on 23 August. They sought three forms of relief as follows:
"1.An Order varying the so-called Mareva Orders made 23 August, 1995 and varied 7 September, 1995 so as to permit the fourth and fifth respondent [sic] to obtain their share of the proceeds of the sale of the property known as 21 Gibson Avenue, Padstow for the purpose of paying for legal services defending these proceedings.
2.An Order further varying the Mareva Orders so as to authorise the sale forthwith of the property known as 4/33 Bellingarra Road, Miranda for the purpose of reducing secured indebtedness to the ANZ Bank.
3.An Order increasing the sum of money to be made available to the fourth and fifth respondents for the purposes of ordinary living expenses."
At that time, the amount of the proceeds of sale referred to in para 1 was $40,611.88 and was held by solicitors, Watkins, Tapsell & Nolan. In effect, Thorley and Wynn were seeking, by para 1, an order permitting those solicitors to pay to each of them an amount of the order of $13,000 - $14,000 representing their respective one third shares of the proceeds.
What was being sought by para 2 was essentially an order that a property which was already subject to a mortgage to the Australia and New Zealand Banking Group Ltd ("the ANZ Bank") be enabled to be sold so that the proceeds could be paid off the indebtedness to the ANZ Bank, thereby saving unnecessary accrual of interest.
Paragraph 3 speaks for itself. What was sought was of course an increase beyond the amount of $600 per week to which I referred
earlier.
The motion of Mintvale Factors, Thorley and Wynn came on for hearing on 4 and 6 October 1995. At the outset Howard indicated that it agreed to the making of an order in terms of para 2 (T pp 11-12). There was some minor variation from the terms of the order as sought in para 2, but in substance the order (made on 4 October 1995) permitted Berkley, Thorley and Wynn to sell the property at 4/33 Belingarra Road, Miranda subject to conditions designed to ensure that it was sold at the best price reasonably available and that the proceeds were paid to the ANZ Bank.
Accordingly, the substance of hearing on 4 and 10 October concerned paras 1 and 3 of the motion. Most of the hearing occupied the cross-examination of Mr Thorley. The matter was not concluded in those two days.
Apparently it was thought by those advising Howard, as a result of the evidence which emerged in the hearing on that occasion, that a case could be made that the proceeds of sale of the property at 21 Gibson Avenue, Padstow, were held by Berkley, Thorley and Wynn, not for their own benefit, but upon trust for Howard. If Howard could not sustain such a claim, prima facie the three individuals were entitled to be paid the proceeds of sale, subject only to any Mareva-style relief.
On 14 October 1995 Howard filed an amended application in which it sought amended relief designed to establish that Berkley, Thorley and Wynn held the proceeds of sale upon trust for it. This claim was amplified when, on 16 October, Howard filed an amended statement of claim. The amended statement of claim includes paras 33A‑33N which were designed to support the claim of a trust. That claim was ultimately made in paragraph 33N which is as follows:
"33N.In the premises, the balance of the sale proceeds now held by Watkins, Tapsell & Nolan, solicitors in the sum of $40,208.66 is now held on trust for Howard Finance.
The matter was again before the Court on 30 October 1995. On that occasion Berkley, through his solicitor Mr P A Terrett, filed in Court a notice of motion seeking, in effect, an order which would grant him access to his one third share of the proceeds of sale of the Padstow property. There was no substantive hearing on that occasion in the sense that no further evidence was heard and the hearing of the two motions (that by Thorley and Wynn and that by Berkley) were adjourned to 4 March 1996 with an estimated hearing time of two days. The costs of 30 October were reserved.
When the matter came before the Court on 4 March I was informed that neither Thorley and Wynn on the one hand, nor Berkley on the other hand, wished to proceed with the motions. It was common ground, therefore, that the motions were to be dismissed. An order dismissing them was made on 4 March. The question before the Court is what order should be made in relation to costs.
Counsel for Howard submits that the moving parties on the motions should be ordered to pay Howard's costs, and that there should be an order pursuant to O 62 sub-r 3 (3) granting Howard leave to tax those costs immediately. Howard has made detailed submissions in favour of the making of such orders. The moving parties on the motions submit that there should be no order as to costs at this time, or, alternatively, that there should be an order for costs in their favour.
It is unnecessary for me to traverse all the submissions which have been made. Much can be said in favour of the respective positions advanced. I have read all the correspondence which has been relied upon by the parties.
It seems to me that a dominant, perhaps the dominant, consideration is the ultimate fate of the claim made in paras 33A-33N of the amended statement of claim. If Howard fails on the final hearing on those paragraphs, that will be an important factor to be taken into account in relation to the costs of the two motions. If Howard succeeds on those paragraphs, that will be an important consideration to take into account likewise in its favour on the motions.
I have considered several courses. A possibility would be to order that the costs of the motions be the respective parties' costs of the proceedings. Another possibility would be to order that the costs of Howard of the motions be Howard's costs of the proceedings. Another would be to reserve costs of the two motions. I think that because the consideration to which I have referred remains undetermined and will play an important part in the determination of the costs question, the appropriate order is to reserve the costs of the motions.
Matters which will have to be taken into account in deciding the fate of the costs of the motions finally will include the obvious one that the motions have been dismissed. There is a general approach to the exercise of the discretion on costs that the successful party should have its costs. That general approach, as applied to an interlocutory application of this kind, does not assist greatly. The approach is a general one applicable in the context of final hearings; see Ritter v Godfrey [1920] 2 KB 47. It may be appropriate also in the case of straightforward self-contained interlocutory hearings. But interlocutory hearings concerned with the question what state of affairs is to obtain pending the final hearing and determination of proceedings are usually of a different order. It is usually a weighty consideration against the making of a final order on costs in such a case that it cannot be known which party will be ultimately be shown to have been justified in seeking or opposing the grant of the interlocutory relief sought. There may however be exceptional cases in which it will be proper to conclude that the stance taken by a party in relation to the question of the maintenance of the status quo is insupportable.
I am of the view that in the present case the costs of the motions should be reserved. It may be that the result will be that the costs of the two motions will fall to be determined in accordance with the fate of paras 33A-33N in the amended statement of claim. However, I would not exclude the possibility that the position might be otherwise. The important point is that there ought not to be a final determination of the costs issue until the result on those paragraphs is known. Accordingly, I will reserve to the final hearing the costs of the motion of the second, fourth and fifth respondents brought by notice of motion filed 20 September 1995 and the motion of the third respondent brought by notice of motion filed 30 October 1995.
I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.
Associate:
Dated:27 March 1996
Heard: 15 March 1996
Place: Sydney
Decision: 15 March 1996
Appearances: Mr M Skinner of counsel instructed by Holmes & Bevan appeared for the applicant.
Mr S J Motbey of counsel instructed by M Roper & Co appeared for the 2nd, 4th and 5th respondents.
Mr P A Terrett of Bamford Terrett Lawyers appeared for the 3rd respondent.
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