In the matter of Australian Forest Managers Ltd (in liq) Australian Forest Managers Ltd (in liq) v Bramley, Roger Vanet (No 2)

[1996] FCA 185

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )       No NG 3099 of 1994
GENERAL DIVISION                 )

IN THE MATTER OF:  AUSTRALIAN FOREST MANAGERS LIMITED (IN LIQUIDATION)

AUSTRALIAN COMPANY NO: 003 359 411

BETWEEN:

AUSTRALIAN FOREST MANAGERS LIMITED (IN LIQUIDATION) ACN 003 359 411
  Applicant

AND:

ROGER VANET BRAMLEY
                   First Respondent

BRIAN ALEXANDER SMIBERT
                  Second Respondent

GRAHAM BRADSHAW HOUSTON
                   Third Respondent

JENNIFER MARGARET SMIBERT
                  Fourth Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:29 March 1996

REASONS FOR JUDGMENT (No 2)

In this matter, I published Reasons for Judgment on 22 March 1996 relating to two motions, one brought by the first and third respondents and the other brought by the second and fourth respondents.  I need not repeat or even attempt to summarise what was contained in those Reasons for Judgment.  They will be taken as read and I incorporate them here by reference.  As appears from them, the application by the company in liquidation is to be dismissed.  The appropriate order as to costs on the proceedings generally is that the applicant, that is to say Australian Forest Managers Limited (In Liquidation) (ACN 003 359 411), pay the respondents' costs.

The area of debate concerns the two motions by which the respondents sought orders that the two successive liquidators pay their costs.  They failed on those two motions for the reasons previously given.  Those motions must be dismissed. 

The two motions are distinct from the proceedings generally.  They are brought against the liquidators personally.  The question is what order as to costs should be made as between the liquidators personally and the respondents on the two motions.

Normally, where a motion can be properly regarded as "self contained" costs follow the event.  Accordingly, if the motions are properly to be regarded in that way, the order which would usually be expected to be made would be that the respondents pay the liquidators' costs of the motions.  But questions of costs are discretionary.  There is always the possibility of a special case.

I did refer to some circumstances in the earlier Reasons for Judgment which gave rise to some concern and which, in my view, take the present motions out of the usual category.  Although I refused to order the liquidators to pay the respondents' costs for the reasons appearing in the earlier Reasons for Judgment, I think it is permissible to take into account on the question of costs on the respondents' two motions that the conduct of the proceedings over such a long period without reference to creditors has led to the respondents' having outlaid legal costs without any prospect of recovery.  The application was filed as long ago as 24 March 1994.  The original liquidator Mr Gagie and his successor Mr Jay have, through Mr Chamberlain, caused the proceeding to be begun and carried on without seeking the approval or support of creditors until 31 August 1995.  That was done only after an order was made by consent on 25 August 1995 that the applicant furnish security for the respondents' costs in amounts totalling $30,000.  Apparently the creditors wished to have nothing to do with the proceeding (which is apparently to recover a principal sum of $41,000 plus interest).  Without the support of any of the creditors, the applicant could not provide the security and the proceeding has promptly come to a halt.

Prior to the respondents' motions for security there were motions by them for dismissal or stay leading to grants to the applicant of leave to amend and orders that it pay the respondents' costs of the motions.  Apparently, the respondents are unable to recover from the applicant those costs, their costs of their motions for security or the costs of the proceedings generally which the applicant is now also to be ordered to pay to them.  It was perhaps understandable, although it has proved fruitless, that the respondents sought redress from the liquidators personally.

It does appear that the two liquidators did leave the conduct of this liquidation very much in the hands of Mr Chamberlain.   Mr Chamberlain put on a lengthy affidavit but neither liquidator did so.  The liquidators are bound by Mr Chamberlain's conduct of the liquidation and they have not suggested otherwise.  Of course, it is not to be thought that a liquidator must personally perform every act in the carrying out of a liquidation.  I proceed on the basis, in view of the dismissal of the proceedings generally, that because of the decisions of the successive liquidators to launch and prosecute the proceedings, the respondents have been put to expense without warrant and without prospect of recovery.

Although the motions have failed, it cannot be said that they were, beyond argument, doomed to fail.  Of course, if the proceeding had never been brought, the occasion for the bringing of the motions would not have arisen. 

Taking all the foregoing matters into account, I think the appropriate exercise of discretion is to order that there be no order as to costs of the motions. 

Accordingly, the orders of the court will be as follows.  First, I order that the application and motions be dismissed.  Secondly, I order that the applicant pay the respondents' costs of the proceedings, except the costs of the motion of the first and third respondents brought by amended notice of motion filed on 22 March of the one part, and motion of the second and fourth respondents brought by amended notice of motion filed on 25 March 1996 of the other part.  Thirdly, in relation to the costs of those motions, there will be no order as to costs, to the intent that the parties to those two motions bear their own respective costs.

I certify that this and the preceding 4 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:3 April 1996

Heard:       29 March 1996

Place:       Sydney

Decision:     29 March 1996

Appearances:  Mr D A C Robertson of counsel instructed by Walsh & Blair appeared for the former liquidator Richard Andrew Gagie and the liquidator Alan Jay.

Mr M Gorrick of counsel instructed by W J Kell appeared for the 1st and 3rd respondents.

Mr M Anderson of counsel instructed by Wallace de Garis & Co appeared for the 2nd and 4th respondents.