Leadenhall Australia Pty Ltd v Doman - [2023] SADC 164

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master)
LEADENHALL AUSTRALIA PTY LTD v DOMAN & ORS
[2023] SADC 164
Judgment of his Honour Judge Dart
30 November 2023
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA
Appeal from a Master - costs orders made on interlocutory applications - costs awarded on an indemnity basis - the appeal relates only to the costs orders, not the outcome of the applications - no leave required - complaint about factual findings - not appropriate to disturb the factual findings when the primary outcome not subject of the appeal - the Master was critical of the conduct of the appellant - the findings of the Master justified the indemnity costs order - no reason why the interested party should not also have an indemnity costs order.
Held:
1. Appeal dismissed.
2. Appellant to pay the respondents' costs of the appeal.
Bankruptcy Act 1966 (Cth) s 58(1), s 58(3) and s 116(2); Enforcement of Judgments Act 1991 (SA) s 8; District Court Act 1991 (SA) s 42(1), referred to.
House v The King (1936) 55 CLR 499; Adelaide (SA Pools & Spa) Manufacturing & Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60; Collins v Djunaedi [2023] SASCA 97; Leadenhall Australia Pty Ltd v Doman & Anor [2018] SADC 123; Re Payne; Heuzenroeder v Trustees (1934) 7 ABC 127; Andersons Solicitors v Schigulski (2004) 88 SASR 1; Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; Leadenhall Australia Pty Ltd v Doman & Ors [2021] SADC 45, considered.

LEADENHALL AUSTRALIA PTY LTD v DOMAN & ORS
[2023] SADC 164

This is an appeal from orders made by a Master on 7 March 2022 and 10 March 2022. The appeal relates solely to costs orders made by the Master after the dismissal of various interlocutory endeavours undertaken by the appellant. The appeal should be dismissed.
What makes the appeal unusual is that the substantive decisions made by the Master in dismissing interlocutory applications and an argument about jurisdiction were not the subject of an appeal. There is no basis, therefore, to treat the substantive decisions as other than as correct.
The relevant orders
The costs orders the subject of the appeal were made by her Honour several days apart. The first order made on 7 March 2022 was as follows:
1.The judgment creditor is to pay the costs of the judgment debtors and the first interested party, Ms Doman, in relation to determination of the portion of the application FDN134/191 dealt with by FDN207, being Decision No. 25 of 2020 emailed to the parties on 16 October 2020.
2.Such costs are to be agreed or taxed on an indemnity basis and are payable forthwith.
3. With the exception of the costs relating to the argument, which is the subject of my reasons in Leadenhall Australia Pty Ltd v Doman & Ors (No. 4), Decision No. 20 of 2021, delivered 2 June 2021, the judgment creditor is to pay the costs of the judgment debtors and the first interested party, Ms Doman, in relation to the claims by the parties for their costs in relation to said application. Such costs to be agreed or taxed on an indemnity basis payable forthwith, and noting that the costs attributable to such claims are to include 50% of the costs incurred at the directions hearings on 25 November 2020 and 22 February 2021 and 90% of the costs of the argument on 8 June 2021, the other 10% of argument on that day relating to the costs of the threshold argument.
The second subject order was made on 10 March 2022:
1.The judgment creditor is to pay the costs of the judgment debtors and the first interested party, Ms Doman, in relation to determination of the threshold jurisdictional argument dealt with by FDN248, being Decision No. 20 of 2021 emailed to the parties on 2 June 2021.
2.Such costs are to be agreed or taxed on an indemnity basis and are payable forthwith.
3.The judgment creditor is to pay the costs of the judgment debtors and the first interested party, Ms Doman, in relation to the claims by the parties for their costs in relation to said threshold jurisdictional argument. Such costs to be agreed or taxed on an indemnity basis payable forthwith, and noting that the costs attributable to such claims are to include 100% of the argument on 27 April 2021, 50% of the argument on 27 May 2021 and 10% of the costs of the argument on 8 June 2021, the other 90% of argument on that day relating to the costs of FDN134/191 arising from decision number 25 of 2020.
At the hearing of the appeal it became apparent that the appellant had only two complaints.
The first is that it says the costs order should have been on the standard costs basis rather than on an indemnity basis. It accepts that the Master was correct to make an order for costs in favour of the respondents.
The second issue is that it says that no costs should have been awarded to the interested party. The same solicitors and counsel acted for the interested party who is the third respondent to this appeal.
The grounds of appeal
The grounds of appeal are quite voluminous. Many of the grounds appear to either cross over or are subsets of other grounds of appeal. They are as follows:[1]
[1]    Amended Appeal Grounds filed 1 April 2022, FDN 2.
1. With respect to orders 1, 2 and 3 of Master Olsson dated 7 March 2022 in decision 8 of 2022, the discretion to award indemnity costs miscarried as:
a.     It was fairly arguable that the judgment debtors had a legal interest in the real property CT volume 5921 Folio 484 and CT Volume 5891 folio 877 by virtue of being registered proprietors thereof as joint tenants with no survivorship;
b.     The pursuit of the appointment of a receiver over the shares in the companies deregistered by the judgment debtors and/or Rosalind Doman was not pursued;
c.     It was fairly arguable that Rosalind Doman had no interest in the property to which the receiver was sought to be appointed, namely the judgment debtors interest in the the (sic) real property CT volume 5921 Folio 484 and CT Volume 5891 folio 877.
d.     In Leadenhall Australia v Doman & anor (No 7) Master Keither (sic) held, “The creditor submitted that this application is not the appropriate vehicle to determine the merits of the claims or actions relied on by the creditor. I agree it cannot be for this court to determine the merits of such claims or actions.”
e.     The Master erred in finding at [27] that Master Keith found the judgment judgment debtors had no interest in the companies and that they held the land as trustees of a trust.
f.     The ‘respondents’ referred to at [28] of the reasons of the Master were not the judgment debtors.
g.     The Master erred at [64] that Master Keith had found that the judgment creditor was not a secured creditor, Master Keith holding at [74] of No 8, “The question of whether the creditor here is or is not a “secured creditor” for the purposes of the Bankruptcy Act is not before me and does not need to be decided at this stage.”
h.     It was fairly arguable by the judgment creditor that the charging order of 12 December 2021 constituted the judgment creditor as a secured creditor;
i.      The Master erred at [63] in construing the submissions of the judgment creditor at [15]-[21] of FDN253 as improper in the context of submission that indemnity costs were not warranted.
j.      The Master had regard to an irrelevant consideration at [68] in considering the power to stay proceedings for abuse of process as a criterion to favour the award of indemnity costs in circumstances where the respondents had never sought a stay of the application on the basis of abuse of process.
k.     The Master erred at [71] in finding that FDN134/191 could never have succeeded, as the appointment of a receiver to the legal interest of the judgment debtors in the land was always available as a matter of discretion.
l.      The Master erred at [71] as there were no relevant findings of the Master prior to the pursuit of FDN134/191 by the judgment creditor.
m.      The master erred at [71] as any finding that pursuit of FDN134/191 following the findings of Master Keith did not give rise to a basis for an award of indemnity costs for the period prior to such findings.
n.     The judgment creditors’ resistance to an order for indemnity costs did not warrant an order of indemnity costs on the respondents’ application for the same.
2. With respect to Orders 2 and 3 of Master Olsson dated 10 March 2022 in decision 11 of 2022 the discretion to award indemnity costs miscarried as:
a.     It was fairly arguable that:
i. the applications for costs were steps in the proceedings taken after the UCR commenced;
ii. any discretion under the UCR for a Master to apply the DCCR ought not be exercised so as to exercise a jurisdiction not otherwise avalaible (sic) to a Master under the UCR;
iii. the hearing before the Master of the claim for costs on disputed facts was a hearing of a separate issue in the action and could only be heard by a Master only be heard and determined by a Master or Judicial Registrar if— the Chief Judge so directs; or all parties consent;
iv. UCR 11.2(1) restricted the jurisdiction of the Master to exercise the jurisdiction of the Court; and
v. it was in the interests of justice and the overarching obligations to have all costs matters decided by the one judicial oficer (sic).
b.     the judgment creditor had never submitted that the UCR fettered the discretion conferred on the Court by s 42 of the District Court Act;
c.     erred at paragraph [58] of the reasons in concluding that the objection to jurisdiction demonstrated a wilful disregard of established law regarding the nature of costs orders, interlocutory applications, enforcement procedures and the statutory power to award costs in s 42 of the District Court Act;
d.     made no intermediate findings of fact supporting such a conclusion;
e.     erred at paragph (sic) [59] in concluding that the raising of the threshold jurisdiction point was clearly an abuse of process that was oppressive and burdensome to the judgment debtors and first interested party, which lead to further costs being incurred by them and further delay in the determination of the costs claims;
f.     made no intermediate findings of fact supporting such a conclusion;
g.     erred at paragraph [60] in concluding that, rather there being any genuine concern as to jurisdiction, the raising of the threshold argument was an attempt, just as the application (FDN229) heard by Judge Slattery appears to have been, to delay any possible determination of costs and to avoid any such determination being made by me.
h.     made no intermediate findings of fact supporting such a conclusion;
i.      erred at paragraph [61] in concluding: i. that the raising of the threshold jurisdiction point was clearly an abuse of process; and ii. that the raising of the threshold jurisdiction point was oppressive and burdensome to the judgment debtors and first interested party;
j.      made no intermediate findings of fact supporting such conclusions;
k.     erred at paragraph [62] in concluding that the pursuit of the threshold jurisdictional argument was also a waste of court time and resources;
l.      erred at paragraph [63] in concluding that this situation warrants an award of indemnity costs, both for the substantive argument on the threshold jurisdictional argument and the costs of the same.
m.      nothing in the judgement creditor’s conduct in opposing costs being awarded on an indemnity basis on the argument on jurisdiction warranted any award of costs of the subsequent argument on costs also being made on an indemnity basis.
The making of a costs order is the exercise of a discretion. The grounds of appeal are to be considered consistent with the approach of House v The King.[2]
[2] (1936) 55 CLR 499.
In Adelaide (SA Pools & Spa) Manufacturing & Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd[3] his Honour Justice Doyle said:[4]
Before addressing the appellants’ submissions in relation to these issues, it is relevant to observe that the decision of the Master was a discretionary one, such that the appeal is subject to the principles in House v The King. Accordingly, the appellant must establish that the Master acted on a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts or did not take into account some material consideration. Alternatively, the appellant must establish that the result embodied in the orders made is, upon the facts, unreasonable or plainly unjust, such that it can be inferred that there has been a failure to properly exercise the relevant discretion despite the precise nature or source of the error not being identifiable.
[3] [2016] SASC 60.
[4] Ibid, at [22].
Is leave required?
Normally, when an appeal relates to a question of costs only, leave is required.[5] This was confirmed recently by the Court of Appeal.[6]
[5] UCR 213.1.
[6] Collins v Djunaedi [2023] SASCA 97.
I asked the parties to file submissions based on that Court of Appeal judgment. The appellant says in respect of this appeal no leave is required. The respondents agree with that position.
It appears that there is a lacuna in the Rules. An appeal from a Master of the District Court does not seem to have been dealt with in the Rules. This is clearly an appeal in relation to which leave ought to be required. I accept the submission of the parties that, based on the Rules as they presently stand, no leave is required.
Background
It is apparent that this matter has a lengthy post-trial interlocutory history. The appellant succeeded at trial before Judge Chivell and in November 2018 obtained a judgment in the sum of $706,019 against the first two respondents.[7] The judgment was for contractual services rendered. The judgment appears as FDN 126 on the court file. The respondents thereafter became bankrupt. It seems there have been numerous interlocutory applications in an endless and fruitless attempt to recover some or all of the judgment sum. The court file is now up to FDN 285. The action needs to be finalised.
[7] Leadenhall Australia Pty Ltd v Doman & Anor [2018] SADC 123.
Much of the interlocutory history has been the result of the appellant’s attempts to step around the consequences of the respondents becoming bankrupt.
There was an argument before Master Keith in relation to the effect of the charging order. Master Keith found that the land was held on trust. Much of the criticism made by the Master in the subject decisions is that the appellant was trying to reargue things before her that had already been decided adversely to it by Master Keith in earlier applications.
It is appropriate to consider the scheme of the Bankruptcy Act 1966 (Cth) before dealing with this appeal. Upon the making of a sequestration order, the property of a bankrupt vests in his trustee.[8] A creditor thereafter loses the right to enforce a remedy against the bankrupt or the property of the bankrupt, the exception where leave of the court is obtained.[9] The relevant court for the granting of leave is the Federal Court.
[8] Bankruptcy Act 1966 (Cth) s 58(1).
[9] Bankruptcy Act 1996 (Cth) s 58(3).
Such was the position which the appellant found itself in after the bankruptcy of the two respondents. The third respondent in this appeal is the wife of the first respondent and mother of the second respondent. She was joined to the proceedings because the appellant sought freezing orders in relation to various property after the bankruptcy which included property of the third respondent.
In a bankruptcy an unsecured creditor’s claim against the bankrupt ceases to be a cause of action and becomes a right to prove in the bankrupt estate.[10] An exception is in relation to secured creditors. A trustee in bankruptcy takes the property which is vested subject to its plight. That is, the trustee has the same rights in relation to the property as were held by the bankrupt. Accordingly, if there is a security, that binds the trustee.
[10] Re Payne; Heuzenroeder v Trustees (1934) 7 ABC 127.
What happened here is that after judgment the appellant obtained a charging order pursuant to s 8 of the Enforcement of Judgments Act 1991 (SA). In Andersons Solicitors v Schigulski[11] Mullighan J held that a charging order does not create an interest in the land for the benefit of a judgment creditor. The question of whether a charging order is security for the purposes of the Bankruptcy Act does not need to be determined. It may be.
[11] (2004) 88 SASR 1.
The practical problem that the appellant faced was that in relation to the two titles of land the respondents were registered on the title as proprietors with no survivorship. That is the usual conveyancing practice for recording that land is held on trust. There was a finding by Master Keith that the land was held on trust. The first two respondents had no beneficial interest in the land. There is no entitlement of the appellant to enforce its judgment against the land. Land held by a bankrupt on trust does not form part of the bankrupt estate.[12]
[12] Bankruptcy Act 1966 (Cth) s 116(2).
The interested party was the director and shareholder of the corporate entity which was the successor in title to the respondents as the trustee of the Doman Investment Trust. That trust owned the two pieces of real property.
In her reasons for decision, the Master found that the operation of the Bankruptcy Act 1966 (Cth) precluded the appellant from taking the enforcement proceedings it sought. The Master also found that the respondents had no interest in the real property. In that regard, the Master accepted and applied the decision of Master Keith. She noted that Master Keith’s decision had not been appealed.
Apart from its claim to be a secured creditor with respect to the land, it was otherwise an unsecured creditor in the bankruptcies. It is not clear why the appellant would have standing to pursue assets that it says belonged to the first two respondents. That is the trustee’s function.
I note that an appeal book with nearly 900 pages was provided to the Court. That is completely disproportionate to what is in issue. The appeal deals solely with costs orders made in relation to interlocutory matters.
The Master’s reasons for decision
The Master provided written reasons in relation to the two sets of costs orders. The reasons are separate and distinct from the reasons for dismissing the interlocutory applications.
In relation to the costs orders made on 7 March 2022, the Master stated as follows:[13]
[13] Reasons for Decision (No 6) of District Court Master Olsson emailed to the parties on 7 March 2022 at [62]-[66] and [71]-[72].
The judgment creditor did not appeal my decision in FDN207. Despite this, it sought to advance arguments as to why I had erred in my decision. Whilst such arguments might have relevance to an appeal, they had no place in an argument on costs.
In the case of paragraphs [15]-[18] the submissions ignore the fact that I did have consideration of the documents referred to when reaching my decision. It also ignores that I did make an independent assessment of the arguments advanced as set out in my reasons highlighted at [32] above.
The judgment creditor also once again sought, to argue that it was a secured creditor of the judgment debtors, despite Master Keith and I both finding to the contrary.
These types of arguments are indicative of the attitude of the judgment creditor to the applications. Despite detailed reasons to the contrary by both Master Keith and myself, the judgment creditor persisted in pursuing arguments that it ought to have known had no chance of success and had no legal basis.
As detailed in my reasons, the judgment creditor chose to ignore the application of section 58(3) of the Bankruptcy Act and the findings of Master Keith that the judgment debtors had no interest in the various companies referred to in the application, or the two parcels of land and continued to pursue FDN134/191.
…
So too in this instant case. Given the findings of Master Keith, and the findings by me, continued pursuit of FDN134/191 could never have succeeded and there was no purpose in continuing the application after the decisions by Master Keith were delivered.
The continued ventilation of those arguments in the submissions re costs demonstrates a wilful disregard of the decisions of both Master Keith and myself.
(footnotes omitted)

In the reasons with respect to the costs orders made on 10 March 2022, the Master said as follows:[14]
Whilst I acknowledge that the Uniform Civil Rules 2020 had only been in operation for about a year, the argument advanced by the judgment creditor seeking to deny jurisdiction demonstrated a wilful disregard of the established law regarding the nature of costs orders, interlocutory applications, enforcement procedures and the statutory power to award costs in section 42 of the District Court Act.
The jurisdictional threshold issue ought never to have been made, unduly prolonged the proceedings and the judgment creditor ought to have known it had no chance of success.
Having considered the arguments, documentation put before me and the events that transpired, I am driven to the conclusion that, rather there being any genuine concern as to jurisdiction, the raising of the threshold argument was an attempt, just as the application (FDN229) heard by Judge Slattery appears to have been, to delay any possible determination of costs and to avoid any such determination being made by me.
The raising of the threshold jurisdiction point was clearly an abuse of process that was oppressive and burdensome to the judgment debtors and first interested party, which lead to further costs being incurred by them and further delay in the determination of the costs claims.
From a public policy standpoint and noting the overarching obligations of UCR 3.1, which counsel for the judgment creditor asserted should be taken into account no matter what rules applied, the pursuit of the threshold jurisdictional argument was also a waste of court time and resources.
(footnote omitted)
[14] Reasons for Decision (No 8) of District Court Master Olsson emailed to parties on 10 March 2022 at [58]-[62].
Consideration
One unusual aspect of the appeal is that the appellant seeks to attack the factual findings relied upon by the Master. The factual findings were made in relation to the substantive arguments put by the appellant which was seeking interlocutory relief. Those findings had an ancillary use in relation to the Master’s determination on costs. There is no appeal from the Master’s decision dismissing the interlocutory arguments of the appellant.
For the purpose of the substantive findings, the factual matters are unchallenged. The question is whether there can be an attack on those facts in relation to the costs orders made. The respondents say it is not permissible to make such an attack on the factual findings.
In response, the appellant relies on the decision of the High Court in Gerlach v Clifton Bricks Pty Ltd.[15] The matter related to the question of whether, in an appeal against a final judgment, there can also be an appeal against an interlocutory order made during the course of proceedings. In the joint judgment of Gaudron, McHugh and Hayne JJ it was said:[16]
The proposition that any interlocutory order can be challenged in an appeal against the final judgment in the matter is often stated in unqualified terms. The better view, however, is reflected in the formulation adopted in Spencer Bower, Turner and Handley where it is said that “on an appeal from the final order an appellate court can correct any interlocutory order which affected the final result” (emphasis added).
(footnotes omitted)
[15] (2002) 209 CLR 478.
[16] Ibid, at [6].
That principle would appear to have no application here. This is not an appeal from a final judgment. The appellant seeks to overturn an order that was ancillary to the main decision, which was the dismissal of the interlocutory applications. There is no appeal from the final interlocutory orders.
The appeal is a collateral attack on the factual findings of the Master. It is undesirable to have different factual findings for the substantive issue as opposed to the costs order. The appeal should be determined on the facts as found by the Master.
The power of the court to award costs is found in the District Court Act 1991 (SA). In particular:
42—Costs
(1) Subject to subsection (2) and the rules, costs in any proceedings in the Civil Division will be in the discretion of the Court and may be awarded against any person (whether a party to or a witness in the proceedings or not).
It is a broad discretion and subject to the Rules of Court which give guidance but do not restrict the broad discretion.
The Master was critical of the conduct of the appellant. A Judge or Master with the conduct of the interlocutory stages of a proceeding will have a close knowledge and understanding of that process and the conduct of the respective parties. The appellant’s complaint is that it was not fair to award indemnity costs. On the facts as found by the Master, the decision to award indemnity costs appears entirely appropriate. The interlocutory applications she dealt with were vexatious.
A separate issue relates to the third respondent who was an interested party. The same statutory discretion extends to the costs of an interested party. Ordinarily courts are more circumspect about the costs of interested parties. However here the appellant, in effect, brought the interested party into the litigation. She is the wife of one of the judgment debtors. Unsurprisingly, her assets were intermingled with those of her husband and the appellant’s attempts to realise those assets affected her interests as well.
In other applications the third respondent was awarded her costs. On a separate appeal in this action, Judge Slattery said:[17]
The order for costs was made by the Master after argument was put by Leadenhall that an interested party has no right to obtain a costs order. Rosalind Doman is an interested party in the proceedings and is therefore a respondent to an application to extend the scope of the orders made by the Court which has failed. I am satisfied that the Master was entitled to deal with the costs of the interested party and she did so appropriately. There is no basis in law or in fact to interfere with the exercise of the discretion of the Master. I am also satisfied that there were no orders to quash; the orders made on 22 February 2021 were the appropriate orders.
[17] Leadenhall Australia Pty Ltd v Doman & Ors [2021] SADC 45 at [25].
In a practical sense it is difficult to understand what difference the costs order made in favour of the interested party will make. The same solicitors and counsel attended for all three respondents on the interlocutory arguments. It is unlikely that the involvement of the third respondent as interested party has had a material effect on the quantum of those costs.
In light of the factual findings made by the Master, the award of costs on an indemnity basis in favour of the third respondent appears justified. The third respondent appeared and made submissions on the arguments. She was obliged to appear as the subject matter of the interlocutory application affected property in which she had an interest. The criticisms of the appellant’s conduct by the Master affects the costs position of the third respondent in the same way as the other respondents.
The appeal is dismissed.