In the matter of Jabiru Satellite Limited (in liq) and NewSat Limited (in liq)

[2022] NSWSC 639

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Jabiru Satellite Limited (in liq) and NewSat Limited (in liq) [2022] NSWSC 639

Hearing dates:

31 March 2022, 11 April 2022 (written submissions as to costs)

Date of orders:

23 May 2022

Decision date:

23 May 2022

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

No order as to costs.

Catchwords:

COSTS — Party/Party — Orders against non-parties — where Plaintiffs unsuccessfully brought an application to appoint a special purpose liquidator —where non-parties opposed the application and appeared under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW) — whether the Plaintiffs should pay the non-parties’ costs of the application

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98

Supreme Court (Corporations) Rules 1999 (NSW), r 2.13

Cases Cited:

- Re Boart Longyear Ltd (No 3) [2017] NSWSC 1227

Category:

Costs

Parties:

Rockgold Holdings Pty Ltd (First Plaintiff)
Ever Tycoon Limited (a company registered in the British Virgin Islands) (Second Plaintiff)
Jabiru Satellite Limited (in liquidation) (First Defendant)
NewSat Limited (in liquidation) (Second Defendant)
Glen Ian Livingston in his capacity as liquidator of Jabiru Satellite Limited (in liquidation) and liquidator of NewSat Limited (in liquidation) (Third Defendant)

Representation:

Counsel:
Mr D Sulan SC/A Campbell (Plaintiffs)
S Rosewarne/A Batroney (Interested Persons)

Solicitors:
Bridges Lawyers (Plaintiffs)
Allen & Overy (Interested Persons)

File Number(s):

2022/63480

Judgment

Background

1. The Plaintiffs, Rockgold Holdings Pty Ltd and Ever Tycoon Ltd sought the appointment of a special purpose liquidator to Jabiru Satellite Ltd (in liq) and NewSat Ltd (in liq) (“Companies”) in these proceedings. Several secured lenders to those Companies (“Secured Lenders”), which were the Defendants in certain proceedings brought by the Companies in the Supreme Court of Victoria (“Victorian Proceedings”), were heard in opposition to the application under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW) (“Corporations Rules”). By my judgment delivered on 14 April 2022 ([2022] NSWSC 459) I dismissed the application for the appointment of the special purpose liquidator. I observed that, ordinarily, the Secured Lenders who appeared under r 2.13 of the Corporations Rules would not have an expectation of recovering the costs of their appearance, but reserved liberty for the Secured Lenders to apply in respect of costs.

The parties’ submissions

2. The Secured Lenders now seek an order that the Plaintiffs pay their costs of the application as agreed or as assessed on an ordinary basis. Mr Rosewarne, with whom Mr Batrouney appeared for the Secured Lenders, referred to s 98 of the Civil Procedure Act 2005 (NSW) which gives the Court broad powers with respect to costs, including the power to make a costs order against a party and in favour of a non-party. Mr Rosewarne also referred to my summary of the applicable principles in respect of an order for costs, where a party is heard under r 2.13 of the Corporations Rules, in Re Boart Longyear Ltd (No 3) [2017] NSWSC 1227 at [4] that:

“I should first refer to the principles that generally apply in respect of an application for costs by a person who is heard in proceedings without becoming party to them, under r 2.13 of the Supreme Court (Corporations) Rules, although those general principles were not addressed in BLY’s and the Snowside companies’ submissions. In Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681 at [20], Barrett J observed that the Court had power to make an order against a party to proceedings in favour of non-parties, but also noted that a person who is granted leave to be heard without becoming party under r 2.13(1) of the Supreme Court (Corporations) Rules chooses a course that involves limited costs exposure to it and can have little expectation of being awarded costs, and that such an award, if appropriate, would be “extraordinary and exceptional” and require “some very special factor outside the ordinary and expected course of events and engendering a justifiable expectation of compensation in the mind of the non-party”. In Pan Pharmaceuticals, Barrett J held that such special factors were not present. On the other hand, in Re HIH Casualty and General Insurance Ltd [2006] NSWSC 6, Barrett J observed that parties there heard under r 2.13 made separate submissions that were highly relevant to the task of the Court in reaching its decision and special and unusual circumstances therefore warranted a costs order in the particular circumstances, although his Honour considered that only one set of costs should be ordered in the particular circumstances. I adopted the same approach in Re Gia Firenze Investments Pty Ltd [2013] NSWSC 99.”

3. The Secured Lenders point to several factors which, they contend, support an order for costs. The first is that the application was not opposed by the general purpose liquidator of the Companies, so that the Secured Lenders were the only potential contradictors to the application and put relevant matters before the Court. They submit that they made appropriate submissions and that the Court accepted those submissions in substantial part and also accepted, as the Secured Lenders had contended, that the level of the proposed funding fee under a litigation funding arrangement was a significant matter in determining whether to appoint the special purpose liquidator. They submit, and I accept, that their participation did not substantially lengthen the hearing, as distinct from highlighting matters which were appropriately addressed in it. They also point out that the Secured Lenders were ultimately successful in their opposition to the appointment of the special purpose liquidator. They submit, in summary, that their participation was of assistance to the Court and that their submissions were relevant to the Court’s task in reaching its decision.

4. The Plaintiffs respond that the ordinary position in respect of r 2.13 of the Corporations Rules is that costs are not awarded in favour of a non-party. They submit that no special, unusual or exceptional circumstances exist here, where the Secured Lenders were motivated by their own interest to “stultify” the Victorian Proceedings. That submission is not particularly persuasive, where the issues as to the terms of the funding arrangement proposed by the Plaintiffs, which I noted in my primary judgment, were such that any stultification of the Victorian Proceedings results from the terms on which the Plaintiffs proposed to fund the special purpose liquidator to conduct them. The Plaintiffs also submit that the Court dismissed their application for reasons unrelated to the Secured Lenders’ submissions, because of the size of the funding fee proposed. I recognise that, although the Secured Lenders had emphasised the relevance of that matter, they had not made substantive submissions as to the size of that fee, because the Plaintiffs had served the funding agreement in a redacted form upon them, largely depriving them of the opportunity to do so. The Plaintiffs also acknowledge, grudgingly, that two submissions made by the Secured Lenders were adopted by the Court, which they characterise as relating to an issue of principle and a submission as to the funder’s control under the funding agreement, and submit that the Court was familiar with each matter.

Determination

5. I accept that the intervention of the Secured Lenders, who were acting in their own commercial interests, was appropriate and did not substantially lengthen the hearing. However, on balance, it does not seem to me that there was here any special factor that would take the matter outside of the ordinary and expected course of events, where a person was heard under r 2.13 of the Corporations Rules, to warrant an order for costs in favour of the Secured Lenders, whether against the Plaintiffs (as the Secured Lenders sought) or against the Companies. It was unlikely that a costs order would be made either for or against the Secured Lenders, and the likely result is also the proper result.

6. For these reasons, I make no order as to the costs of the application for the appointment of the special purpose liquidator.

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Decision last updated: 24 May 2022