Kubic Pty Ltd v Professional Advantage Pty Ltd

[2015] VCC 45

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISION

EXPEDITED CASES LIST

Case No. CI-11-05413

KUBIC PTY LTD (In liquidation)	Plaintiff
v.
PROFESSIONAL ADVANTAGE PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	30 January 2015
DATE OF JUDGMENT:	2 February 2015
CASE MAY BE CITED AS:	Kubic Pty Ltd v Professional Advantage Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VCC 45

REASONS FOR JUDGMENT

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Catchwords:             Costs – Application that a non-party pay the defendant’s costs of a dismissed proceeding – Non-party a director of plaintiff company placed in liquidation after the commencement of proceedings – Application based on director’s conduct – Degree of particularity required of the conduct.              

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	No appearance
For the Defendant/Applicant	Mr M. Clarke	Somerville Legal
For Mr Princi/Respondent	Mr S. Warne	Kliger Partners

HIS HONOUR:

1This is an application by a defendant for the payment of its costs of a dismissed proceeding, by a non-party. The non-party seeks particulars of the conduct relied upon as the basis for the application.

2Mr Joseph Princi was a director of the plaintiff. The plaintiff issued the writ in the proceeding on 11 November 2011. The company went into voluntary liquidation on 28 July 2014. The liquidators determined that they would not proceed with the action. On 22 September 2014, upon the application of the defendant, the Court dismissed the proceeding and ordered the plaintiff to pay the defendant’s costs of the proceeding.

3The defendant had also sought a costs order against Mr Princi. On 22 September, orders were made fixing that issue for hearing on 9 February 2015 and giving directions as to the pre-trial steps to be taken by the parties.

4During the course of the hearing on 22 September, and after hearing argument, I indicated to counsel that I would not accede to Mr Princi’s counsel’s request that the defendant file a statement of claim. I did agree, however, that the defendant should provide particulars of “any allegations of dishonesty or misconduct made against Mr Princi”. The parties then, between themselves, formulated the precise terms of the directions which were included in the orders made that day.

5Pursuant to the orders, the defendant filed and served a “submission as to non-party cost order” dated 10 October 2014 (“the submission”). Mr Princi, by summons filed 16 December 2014, sought an order that the defendant “provide a written statement of the conduct referred to in paragraph 28 of its filed submissions which is said to have been engaged in by Mr Princi and of any state of Mr Princi’s mind, including his knowledge, by reference to which the defendant intends at trial to allege that the conduct was dishonest or ought to be characterised as misconduct”.

6Paragraph 28, and the commencing words of paragraph 29, of the submission read as follows:

“28.     Alternatively, the defendant submits that Mr Princi should pay costs by reason of his conduct in setting up Kubic Constructions Pty Ltd as a phoenix company and allowing the plaintiff to be wound down, to be stripped of assets and to become insolvent, insulating the business from any adverse Costs Order, yet enabling Mr Princi (as a shareholder) to have a free ride in pursuing the proceeding, whilst concealing such conduct from the defendant.

29. It is submitted that the Court ought to draw these inferences from the following evidence:…”

7Twelve pages of detail follows. Mr Warne of counsel for Mr Princi, submitted that the matters set out in paragraph 28 of the submissions “sounded like”;

a.the dishonest stripping of assets;

b.“very likely”, criminal activities; and

c.trading whilst insolvent.

8In these circumstances, Mr Warne submitted that he was unable as counsel to draft Mr Princi’s affidavit in response until proper particulars were provided of his client’s alleged state of mind at relevant times, for example, when Mr Princi first knew the plaintiff was insolvent and what knowledge he had that the company’s assets were being stripped.

9Defendant’s counsel, Mr Clarke, informed the Court that the defendant made no allegation, in relation to Mr Princi, of:

a.dishonesty;

b.criminal conduct; or

c.insolvent trading.

10I consider that the application by Mr Princi should be refused, for the following reasons:

a.an application for costs against a non-party would rarely require the interlocutory processes of a proceeding itself;

b.in relation to the defendant’s application for costs, the supporting material provides adequate detail of its basis;

c.the specific shortcomings in the defendant’s affidavit material or submissions articulated by Mr Warne (for example, in paragraph 12 of his written submissions) that, it was said, made the preparation of responding material a difficult or unfair burden, were unconvincing;

d.the complaint about the defendant’s submissions dated 10 October 2014 (which were apparently delivered by the defendant about one week later than the agreed date) was not made until 10 December 2014, after the time for the delivery of Mr Princi’s material had expired, and promises had already been made that the material would be forthcoming;

e.the costs application should, if possible, be resolved at the proposed hearing date.

11Mr Princi chose to issue a summons rather than make his application pursuant to the liberty to apply reserved on 22 September 2014. This application could have been made any time after the receipt of the defendant’s submissions in mid-October. With the onset of the Court’s Christmas shut down, Mr Princi’s application by summons filed 16 December 2014 was not heard until less than two weeks before the hearing date fixed for the costs application. Mr Warne indicated that Mr Princi “does not seek an adjournment of the hearing” and that the preparation of “Mr Princi’s evidence…is well advanced” and “will be filed promptly in the event that his application by summons fails and is not appealed”.

12The orders I propose to make are as follows:

1.        The summons filed by Mr Princi on 16 December 2014 is dismissed.

2.The defendant’s costs of the summons, including the hearings on 30 January and to take judgment on 2 February 2015, shall be costs in the application by the defendant against Mr Princi, by summons filed 15 August 2014.

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Certificate

I certify that the preceding 3 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 2 February 2015.

Dated: 2 February 2015

Catherine Kusiak    

Associate to His Honour Judge Anderson