John Sheahan and Le Poidevin Industries Pty Ltd (in Liquidation) v Northern Australia Land and Agency Co Ltd, Dean Kiverton Le Poidevin and Gloria Dawn Le Poidevin No. 4260 Judgment No. SCGRG 92/195 Number of Pages..

[1993] SASC 4260

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Costs - Claim by successful plaintiff for solicitor and client costs against defendants - declaration made to the effect that certain transactions effected by plaintiff company, now in liquidation, after the commencement of the winding up, purporting to transfer assets to the defendant company, being a company controlled by the same directors, were void under s.468 of the Corporations Law - held that, having regard to the fragmentary and unconvincing evidence adduced by the defendants and the lack of substance in the defence, solicitor and client costs should be awarded against them.

HRNG ADELAIDE, 4 November 1993 #DATE 4:11:1993
Counsel for plaintiffs:     Mr J. Cudmore
Solicitors for plaintiffs:    Ward and Partners
Counsel for defendants:     Mr D K LePoidevin
Solicitors for defendants:    LePoidevin and Co.

ORDER
Order that defendants pay costs on a solicitor and client basis.

JUDGE1 PERRY J In this matter I delivered reasons for judgment on 29 October 1993 in which I found for the plaintiffs on the issues which at that stage had been brought to trial. The issues tried were those which arose out of s.468 of the Corporations Law. 2. In applying that section, I found that purported transfers by the plaintiff, Le Poidevin Industries Pty Ltd, to the defendant, Northern Australia Land and Agency Co Limited, of certain parcels of land were within s.468 and accordingly void, and further that a counterclaim to validate the transactions should be dismissed. 3. At the time I pronounced judgment I heard the parties briefly as to costs, and made an order that the defendants pay the plaintiffs' costs of action to be taxed. The order, of course, was limited to the costs of action so far as they related to the issues arising out of s.468. 4. The formal judgment and order of the Court has not yet been sealed. I adjourned the matter to today to give to the parties an opportunity to address the court as to what is to become of the residual claims which find expression in the plaintiffs' statement of claim. Mr Cudmore of counsel for the plaintiffs has informed me that the liquidator of the plaintiff company feels the need to consult its creditors as to whether or not the residual claims which have not yet been litigated are to be pursued. I have already intimated that I would allow a little further time for that course to be followed. There was no opposition to that course from Mr Le Poidevin for the defendants. 5. Separately, Mr Cudmore seeks to reopen the question of costs and now seeks an order in lieu of that which was ordered on 29 October 1993, that the defendants pay costs on a solicitor client basis. 6. In my opinion, given that the final judgment is not yet sealed, the plaintiffs are able to address further argument on the question of costs, or alternatively, should be given leave to do so. I have, therefore, heard Mr Cudmore in support of that application. 7. He bases his application on the submission that the defendant's defence was so unmeritorious that it should not have been pursued, and that the s.468 issues should not have been brought to trial. 8. The case is an unusual one. There is little doubt that the relevant transactions would have been validated if the defendants had been able to satisfy me that there was a bona fide transaction for value underlying the transfers which were impugned. However, this it has failed to do, for the reasons which appear in the judgment which I pronounced on 29 October 1993. 9. I was totally unconvinced of the genuineness of various book entries which the defendants contended proved the underlined transaction, and I was led to reject the counterclaim seeking validation of the transfers by reason of that view considered against the background of the absence from the witness box of anyone involved in the transaction who might have been able to speak to its authenticity. 10. It is true that the plaintiffs would be on firmer ground if I had reached the point of a finding of deliberate concoction or fraud or fabrication. I did not go so far as to make such a finding. It was sufficient to dispose of the counterclaim to reach the conclusion which I did, namely, that the defendants had failed to satisfy me that on the balance of probabilities that there was a genuine underlying transaction to support the transfers. 11. Mr Cudmore draws attention to the fact that there was a failed application by the plaintiffs for summary judgment limited to the s.468 claim, and that the basis upon which the matter came to trial on that issue was that there was at least an arguable case by the defendants either against the application of s.468 or for an order validating the relevant transaction pursuant to that section. 12. It seems to me that given the history of the matter, it is to say the least surprising that at the end of the day so little evidence was offered to support the alleged underlying transaction, and that what evidence was offered was so fragmentary and so unconvincing. 13. The question of costs is completely within the discretion of the Court. I acknowledge that it is only in exceptional circumstances that costs to a successful party are awarded other than on a party and party basis. In this case, however, the defence, including the prosecution of the counterclaim, was so unmeritorious and so lacking in credibility that in my opinion it is a proper case in which to order the defendants to pay costs on a solicitor and client basis. 14. Mr Cudmore has brought into court minutes of the final judgment and order. As I have given liberty to the parties to speak to the minutes, I will now, within that final judgment and order, pronounce an order for costs on the s.468 issues on a solicitor and client basis.