In the matter of Mawson Flinders Cook Global Capital Pty Ltd

[2022] NSWSC 1369

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Mawson Flinders Cook Global Capital Pty Ltd [2022] NSWSC 1369
Hearing dates:	10 October 2022
Decision date:	10 October 2022
Jurisdiction:	Equity
Before:	Peden J
Decision:	The application is dismissed with costs.
Catchwords:	CORPORATIONS — Winding up — Public examination of directors, officers and others — Examination of director or officer of company — Costs of examination — Whether director liable to costs thrown away — Where examination postponed due to director testing positive for COVID-19 — Where costs not thrown away
Category:	Procedural rulings
Parties:	Domenico Alessandro Calabretta (Plaintiff) Grant Thomas (First Defendant) Jason Andrew Henry (Second Defendant)
Representation:	Counsel: J P Nathan (Plaintiff/Applicant) N Coburn (First Defendant/Respondent) No appearance (Second Defendant) Solicitors: Kazi Portolesi Lawyers (Plaintiff/Applicant) ERA Legal (First Defendant/Respondent) No appearance (Second Defendant)
File Number(s):	2022/58412
Publication restriction:	Nil

EX TEMPORE Judgment

1. The applicant is the plaintiff, who is the liquidator of Mawson Flinders Cook Global Capital Pty Limited in liquidation.

2. By interlocutory process filed 5 September 2022, the applicant seeks costs on an indemnity basis thrown away by reason of adjourned examinations, and fixed in the sum of $7,312.50 for counsel, and $4,655.75 for solicitors, totalling $11,968.25 payable forthwith. Those amounts are 50 per cent of the total invoice values.

3. The applicant relied upon two affidavits of Ms Hanin Judi sworn on 5 September 2022 and 7 October 2022, together with various documents. Mr Thomas relied upon two affidavits sworn by him on 3 August 2022 and 10 September 2022.

Background

4. On 28 February 2022, the applicant commenced proceedings seeking, inter alia, to examine the former directors of the Company, being Grant Thomas and Jason Andrew Henry.

5. On 10 May 2022, the examinations were listed for 27 and 28 June 2022.

6. On 23 June 2022, Mr Thomas’ lawyers wrote to the applicant’s lawyers seeking consent to standing the examination of Mr Thomas over for 6 months by reason of Mr Thomas’ medical health, relying on a report from his treating psychologist. The applicant did not consent to any adjournment.

7. On 27 June 2022, the first day of the scheduled examinations, Mr Thomas filed an application seeking an adjournment of the examinations for 6 months. Hammerschlag CJ in Eq dismissed the application with costs, but, with the consent of the applicant, allowed the examinations on 27 and 28 June 2022 to proceed by way of AVL, with Mr Thomas being located in South Australia.

8. During that examination, it appeared to the applicant that Mr Thomas may have used his mobile phone and stored company records on it. Hammerschlag CJ in Eq made orders that Mr Thomas not remove any information from the phone and to allow it to be examined by an independent technology expert. The report provided that the expert’s opinion was:

It is my opinion that the actions between 12 and 13 July 2022, would indeed have either deleted, removed or overwritten existing data from the device, assuming this device was in normal use prior to 12 July 2022.

9. On the basis of those matters, the applicant submitted that I ought to infer that Mr Thomas breached Court orders and such conduct supports the application for indemnity costs.

10. The proceedings were listed for directions on 25 July 2022 and the examinations were then listed to continue on 3-5 August 2022.

11. On 28 July 2022, Mr Thomas’ solicitors wrote asking the applicant’s solicitors if Mr Thomas could attend the upcoming examination by AVL because of his fear of COVID infections in New South Wales and other fears for his safety. The applicant did not consent.

12. On 2 August 2022 at 4.47pm, the applicant’s solicitors received a letter from Mr Thomas’ solicitors indicating that Mr Thomas had taken a rapid antigen test (RAT) and it was positive and therefore he was unable to travel to attend Court in Sydney on 3 August 2022. Further correspondence that evening attached a photograph of a positive RAT and noted that Mr Thomas was seeking a medical certificate as requested by the applicant and he had been advised to rest.

13. On 3 August 2022, the applicant’s solicitors wrote indicating that, without a doctor’s certificate and/or an opportunity to speak with Mr Thomas’ doctor, they would not consent to an adjournment of the examinations due to commence later that day.

14. When the matter was called before Senior Deputy Registrar Hedge, Mr Thomas sought an adjournment relying on an affidavit sworn on 3 August 2022 explaining his positive RAT and inability to travel and the advice he had received to self-isolate and rest. In that affidavit, Mr Thomas sought a few weeks adjournment “to recover from COVID”. Mr Thomas’ doctor’s certificate also dated 3 August 2022 indicated that he was unable to work between 3 August 2022 and 10 August 2022. There is no evidence that the applicant made any attempt to speak with the doctor.

15. Orders were made adjourning the examinations of Mr Thomas and Mr Henry to 12, 13 and 14 September 2022. Costs of the adjournment were reserved.

16. By agreement with the applicant, Mr Thomas obtained a PCR test on 4 August 2022. The result of that PCR test was received on 5 August 2022 and was negative with advice to rest if flu-like symptoms persisted.

17. In early September 2022, the applicant demanded over $18,000 from Mr Thomas for costs thrown away by reason of the adjournment. The applicant had previously notified creditors that the total legal costs would be capped at $20,000 but based on the material available to the applicant at the time.

18. After the demands on 5 September 2022, the interlocutory process seeking costs of the adjourned examinations was filed.

19. The examinations continued in mid-September 2022 as ordered. Mr Thomas attended Court in Sydney in person.

Determination

20. It is not in dispute that the Court has power to make a costs order against an examinee, such as Mr Thomas. However, the applicant bears the onus of persuading me I ought to exercise my discretion to order indemnity costs against Mr Thomas for 50 per cent of the costs invoiced by counsel and solicitors to the applicant or some other sum.

21. I am not persuaded to make such an order for at least the following reasons:

1. There is no evidence of the costs agreements with counsel and solicitors that entitled the payment of costs thrown away for all of the examination dates. Further, there is no evidence that the costs incurred preparing for the examinations were “thrown away”, as the examinations did in fact proceed in September 2022.

2. There is no evidence that the examination of Mr Henry or other witnesses could not have continued on the allocated hearing dates. I note that the examinations of both Mr Henry and Mr Thomas were listed for the same time and days. While it was submitted that the applicant was entitled to examine witnesses as he saw fit, and that might be accepted as a general proposition, there is no evidence about what, if any, consideration was given to that matter by the applicant. For example, there was no evidence as to why Mr Henry, the other director, could not have been examined on the allocated days at which he was in fact required to attend.

3. There was no expert evidence about the state of COVID infections and medical advice in South Australia and New South Wales at the relevant time. Nor were submissions made about the government policies and health advice at the relevant time. I do not accept that I can determine that it was incumbent upon Mr Thomas around 2 August 2022 to immediately seek a PCR test when his RAT was positive, or immediately make an adjournment application, when his solicitors had in fact taken prompt steps to notify the applicant’s solicitors of his medical issues. There was no submission made that the RAT results were false, or the PCR was accurate, or that Mr Thomas was not in fact unwell.

4. Mr Thomas did attend the later examination dates in September 2022 in person as ordered and it cannot therefore be inferred that he was intent on avoiding being examined. On both occasions, when he failed to attend the examination scheduled, he had medical evidence from medical practitioners that was not challenged.

5. Any alleged misconduct by Mr Thomas during the previous examinations and in relation to his phone do not, in my view, relate to costs thrown away by the applicant and do not provide a causal link to the costs claimed.

22. The application is therefore dismissed with costs.

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Decision last updated: 11 October 2022