Lindholm v Elliott (No 2)

Case •

[2023] VSC 572

•

27 September 2023
IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
GROUP PROCEEDINGS LIST

S CI 2012 7185

JOHN ROSS LINDHOLM in his capacity as Special Purpose Receiver of Banksia Securities Limited (ACN 004 736 458) (Receivers and Managers Appointed) (in liquidation) Plaintiff
v
MAXIMILLIAN ELLIOTT as personal representative of the estate of Mark Edward Elliott and others (as per the attached schedule)

Non-Parties

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JUDGE:

John Dixon J

WHERE HELD:

Melbourne

DATE OF HEARING:

22 September 2023

DATE OF JUDGMENT:

27 September 2023

CASE MAY BE CITED AS:

Lindholm v Elliott & Ors (No 2)

MEDIUM NEUTRAL CITATION:

[2023] VSC 572

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PRACTICE AND PROCEDURE – Costs – Costs sought from non-parties – Settlement approval for group proceeding remitted by Court of Appeal – Slip rule – Supreme Court Act 1986 (Vic), ss 24, 33ZF – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 36.07.

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APPEARANCES:

 Counsel Solicitors
For the Plaintiff Mr J Redwood SC Maddocks
For the Non-Parties Maximillian Elliott, Decoland Holdings Pty Ltd,
Elliott Legal Pty Ltd and MCM (Mt Buller) Developments Pty Ltd 		Mr T Wodak

Garland Hawthorn Brahe Lawyers

HIS HONOUR:

  1. On 1 March 2023, I entered judgment by consent in favour of John Ross Lindholm in his capacity as Special Purpose Receiver of Banksia Securities Ltd (ACN 004 736 458) (Receivers and Managers Appointed) (in liquidation) (SPR) in the following terms:

1.        Each of:

(a)Maximillian Edward Elliott, as the representative of the Estate of Mark Edward Elliott;

(b)Elliott Legal Pty Ltd (ACN 169 412 391);

(c)Decoland Holdings Pty Ltd (ACN 007 431 405); and

(d)MCM (Mt Buller) Developments Pty Ltd (ACN 087 073 872),

pay the costs of and incidental to this proceeding, including the Contradictor’s costs, on an indemnity basis.

2.        The first defendant’s costs of this application are reserved.

  1. It is relevant to note that the summons also sought relief against other respondents that was yet to be heard when the judgment was authenticated. For reasons that need not be set out, there was considerable delay before the remainder of the application against those respondents came on for hearing and then shortly prior to that hearing that application was compromised.

  1. During that period of delay, in order to avoid any further prejudice to debenture holders, and because the order was discrete, I authenticated the judgment against the entities involved in this present application (the Elliott entities). It would not be until 31 July 2023, following the compromise, that my reasons were delivered.

  1. Two issues remain. First, I reserved the costs of the non-party summons against the Elliott entities and the SPR now applies for an order in respect of those costs. Secondly, a dispute has arisen between the parties as to the precise scope of the order made on 1 March 2023, in particular whether it extends to the SPR’s costs of the appeal by Mrs Botsman, and I will deal first with this latter issue.

  1. Initially, the solicitors for the SPR sought clarification from the Court as to the meaning of the order although, as counsel for the Elliott entities submitted, seeking confirmation as to the proper interpretation of the 1 March 2023 order is inviting the Court to issue an advisory opinion. Such a course is inappropriate and counsel for the SPR did not suggest that I should adopt that course.

  1. What follows assumes familiarity with my reasons in Lindholm v Elliott & Ors [2023] VSC 442 (the reasons).

  1. The Elliott entities submitted that they did not resile from the concession made on 15 November 2022 when they informed the court that they did not resist the orders sought by the SPR and consented to the orders sought by the summons. In substance the relief specified in the summons was consented to but any further relief sought by the SPR was not resisted. This position requires further analysis.

  1. The well accepted rule is that once an order of the court has been authenticated in a form which correctly expresses the intention with which it was made, the court has no jurisdiction to review, vary or set it aside.[1] Within the confines of that principle, the Rules of Court provide by r 36.07 that:

The court may at any time correct a clerical mistake in a judgment or an order or an error arising in a judgment or an order from any accidental slip or omission.

[1]Bailey v Marinoff (1971) 125 CLR 529, 539.

  1. As I will now explain it is clear to me that the precise form of the 1 March 2023 order contains an accidental slip or omission on my part that should appropriately be corrected. Although that correction will be sufficient to quell the perceived dispute, I am satisfied that absent consent the relief that will be ordered against the Elliott entities by the orders I now make is within the first limb of the concession made to the court on 15 November 2022, that is, that what was sought by the SPR was not opposed.

  1. On reviewing my copy of the court book, I see from the annotations I made to the summons that when I gave instructions to my associate to prepare the order for authentication I did so by reference only to paragraph 1 of the amended summons, overlooking paragraph 2.

  1. The amended summons stated that the relief sought was:

1.An order pursuant to section 24 of the Supreme Court Act 1986 (Vic) (the Act), or the inherent jurisdiction of the Court, that:

a)the Estate of Mark Elliott, deceased Maximillian Edward Elliott, as the representative of the Estate of Mark Edward Elliott;

b)Alexander Christopher Elliott;

c)Elliott Legal Pty Ltd (ACN 169 412 391) (Elliott Legal);

d)Decoland Holdings Pty Ltd (ACN 007 431 405) (Decoland);

e)Noysue Pty Ltd (ACN 167 179 044) (Noysue); and

f)Noysy Pty Ltd (ACN 061 266 475) (Noysy); and

g)MCM (Mt Buller) Developments Pty Ltd (ACN 087 073 872) (MCM),

(the Non-Parties),

each pay the costs of and incidental to this proceeding on an indemnity basis (including, for the avoidance of doubt, the Contradictor’s costs), or such portion of those costs as the Court considers to be just and equitable in all the circumstances.

2.Further or alternatively, an order pursuant to section 33ZF of the Act that each Non-Party pay the costs, or a sum equivalent to the costs of the:

a)SPR, of and incidental to the summons dated 7 December 2017 for approval of the settlement before Croft J;

b)SPR, of and incidental to the appeal; and

c)Contradictor and the SPR, of and incidental to this remitted application,

on an indemnity basis, or such portion of those costs or that sum as the Court thinks appropriate or necessary to ensure that justice is done the proceeding.

  1. The 1 March order is plainly directed only to the first paragraph of the amended summons. While it is open to debate precisely what is covered by the words ‘costs of and incidental to this proceeding’ (to which I will return), it was an accidental slip on my part not to have authenticated an order that I intended to make, namely one consistent with the consent given by the Elliott entities to an order in the terms of both paragraphs of the summons. That this was what I intended to do is clear from the reasons.

  1. Counsel for the Elliott entities, while expressly not resiling from the consent expressed at the hearing on 15 November 2022 stated that those parties did not consent to the orders now being amended. Accordingly, the orders that I will now make are not made by consent.

  1. What I have said is sufficient to exercise power under the slip rule to correct the order, but to quell any further debate between the parties I make the following further observations.

  1. I am satisfied that the Elliott entities did consent to the orders in the form that I am about to pronounce and further informed the court that they did not resist any orders sought by the SPRs. Notwithstanding that circumstance, I would consider removing the words ‘by consent’ from the order to make abundantly clear that in the circumstances of the hearing it was open to grant the relief claimed on the basis that it was, as the Elliott entities stated, not opposed. My reasons explain that the SPR sought and was entitled to the relief in the corrected form now being sought to avoid further contest. However, the inclusion of the words ‘by consent’ was not an accidental slip or omission.

  1. The crux of the dispute is whether the Elliott entities were required to pay the SPR’s costs of the Botsman appeal on an indemnity basis and whether the Elliott entities should be required to pay the costs of the application for non-party costs orders.

  1. The Elliott entities submitted that the group proceeding, the appeal and the remitter were different proceedings and not ‘this proceeding’ as described in the 1 March order. I do not agree that any technical distinction should trump the substance of this matter. When the group proceeding (the Bolitho proceeding) and the SPR’s proceeding (on behalf of debenture holders) each against TrustCo (and others) was settled, Mrs Botsman, a group member and debenture holder, appealed against the court’s approval of the settlement, an approval required by s 33V of the Supreme Court Act 1986 (Vic). Although the appeal was distinct and given a separate file number, its substance related to the question of whether the settlement should be approved. In part, the settlement was approved although the Court of Appeal remitted certain questions back to the Trial Division to be resolved by a judge. The appeal was essentially, and in substance, a continuation of the process required by s 33V. Equally, the remitter was also a continuation of the process of settlement approval pursuant to the Act.

  1. In my view, substantively, this has been one continuing proceeding and I am not persuaded that it is either just or logical to adopt an artificial and technical construction to the contrary. Further, I have rehearsed my reasons for this conclusion in earlier rulings in this proceeding. In particular, in the Remitter judgment[2] I concluded that the Remitter is not a separate proceeding from the Botsman appeal.

    [2]Bolitho v Banksia Securities Ltd (No 18) (Remitter) (2021) VSC 666, [2024]–[2029].

  1. The appeal proceeding was a proceeding conducted under Part 4A of the Act in relation to a settlement approval under s 33V. This Court, on the remitter from the Court of Appeal to resolve certain limited aspects of that settlement approval has power under s 33ZF to make these orders in respect of the application that the costs be paid by non-parties. It was beside the point to suggest that the Elliott entities were not parties to the appeal as I explained in the reasons. Section 33ZF provides:

In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

  1. When dealing with Mrs Botsman’s costs on the appeal, the Court of Appeal determined that no order as to costs should be made in respect of the SPR.[3] However, this ruling was in the context of applications by Mrs Botsman as the successful appellant and was not determinative of the issue now before me. So much is clear because the Court of Appeal distinguished the position of the SPR from that of Bolitho against whom a costs order was made. The Court of Appeal continued noting that Bolitho defended the appeal in a representative capacity and it reserved liberty to apply in respect of the recoupment of costs, adding ‘There may also be a need for further clarification of the capacity in which submissions were made on his behalf on the appeal’. It is clear from the Court of Appeal’s reservation and its caution that the issue of the SPR’s costs incurred in the appeal as against parties other than Mrs Botsman, particularly the contraveners, was not determined and remained open for consideration on the remitter.

    [3]Botsman v Bolitho [2018] VSCA 348, [23].

  1. I am satisfied that it is both appropriate and necessary to ensure that justice is done in the proceeding that the 1 March 2023 order be varied as I propose.

  1. Next, notwithstanding that the Elliott entities by their solicitor consented to the relief in the rectified form that I will pronounce, I would make the same order irrespective of their consent for several reasons.

  1. First, as noted, the Elliott entities did not oppose the relief being sought by the SPR.

  1. Secondly the Elliott entities failed to comply with any of the directions to file and serve affidavits in opposition, or submissions in response, to the SPR’s claim for relief notwithstanding that time was extended to grant them further opportunities on more than one occasion. Given the detail in the affidavits and submissions served by the SPR, it is untenable to suggest that the Elliott entities did not know what relief was being sought against them and on what basis. More importantly, the Elliott entities have not made that submission.

  1. Thirdly, that detail is found in the following material in the application:

(a)   paragraph 2 of the summons dated 18 August 2020;

(b)  the affidavit of David Charles Newman dated 17 August 2020, at [7]-[12];

(c)   paragraph 2 of the amended summons dated 8 December 2021;

(d)  the SPR’s notice of contentions dated 8 December 2021 at [3];

(e)   the SPR’s submissions dated 9 November 2022 at [172]; and

(f)    in oral submissions at the hearing on 15 November 2022.

  1. When the legal representative of the Elliott entities made the concession noted earlier, the application was not summarily completed but heard in full with counsel for the SPR taking the court through all of the material and making submissions in support of the relief sought. The Elliott entities’ solicitor was present throughout and did not take the opportunity to contest any aspect of the relief being sought at the conclusion of the hearing. No form of consent minute or minute from the Elliott entities was provided to the court.

  1. By reference to the reasons, I consider it clear that the expression ‘costs of and incidental to the proceeding’ clearly encapsulates the costs of the Botsman appeal.

  1. By reason of the accidental omission that I made in authenticating the 1 March 2023 order and pursuant to r 36.07 I will order that paragraph 1 of that order be varied. Read in conjunction with the variation order I will make (as marked) the order will read as follows:

Each of:

(a)Maximillian Edward Elliott, as the representative of the Estate of Mark Edward Elliott;

(b)Elliott Legal Pty Ltd (ACN 169 412 391);

(c)Decoland Holdings Pty Ltd (ACN 007 431 405);

(d)MCM (Mt Buller) Developments Pty Ltd (ACN 087 073 872);

pay the costs of and incidental to the appeal in this proceeding being S APCI 2018 0037 Botsman v Bolitho and the Remitter proceeding ordered by the Court of Appeal being S CI 2012 07185, including the Contradictor’s costs, on an indemnity basis.

  1. The final outstanding matter is the costs reserved by the 1 March order. I accept the SPR’s submission that the Elliott entities should pay these costs and that they should be assessed on an indemnity basis. That those entities should be ordered to pay those costs is an orthodox application of the costs discretion.

  1. Several reasons justify assessment of the costs on an indemnity basis.

(a)   There was continuous non-compliance by the Elliott entities with court direction for the preparation of the application. This non-compliance was not satisfactorily explained. Directions given by the court on 8 November 2021, 4 February 2022, 21 March 2022, 26 April 2022 and 16 June 2022 were not complied with by the Elliott entities. Even though the Elliott entities consented to the orders that were made on 26 April 2022, they failed to produce documents by way of discovery in non-compliance with those orders.

(b)  It appeared that by their non-compliance, the Elliott entities were seeking a collateral advantage in negotiations, and that their purpose or intention was to improperly gain some advantage in those negotiations.

(c)   No indication was given either to the SPR or to the court until the commencement of the hearing on 15 November 2022 that the Elliott entities were not defending the application and were consenting to the relief sought.

(d)  The principal judgment records the extent of the reprehensible conduct engaged in by Mark and Alexander Elliott, and the reasons make plain the involvement of the Elliott entities in the maintenance of the litigation and the objectives and purposes of Mark Elliott. The Elliott entities sought to gain benefits from the conduct of the principal contraveners.

(e)   There has been on this application continuance of a pattern of obfuscation and resistance to the expeditious completion of court processes, demonstrating opposition to the SPR’s application that lacked a proper basis causing further substantial delay to the detriment of elderly and long-suffering debenture holders.

  1. I am satisfied that it is properly in the interests of justice that the costs of this application, insofar as they relate to them, be paid by the Elliott entitles and that those costs be assessed on an indemnity basis.

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SCHEDULE OF PARTIES

S CI 2012 07185

BETWEEN:

LAURENCE JOHN BOLITHO First Plaintiff
AUSTRALIAN FUNDING PARTNERS PTY LTD Second Plaintiff
-and -
JOHN ROSS LINDHOLM IN HIS CAPACITY AS SPECIAL PURPOSE RECEIVER OF BANKSIA SECURITIES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) First Defendant
NORMAN O’BRYAN SC Second Defendant
MICHAEL SYMONS Third Defendant
ANTHONY ZITA AND PORTFOLIO LAW PTY LTD Fourth Defendant
ALEXANDER CHRISTOPHER ELLIOTT Fifth Defendant
KATERINA PEIROS, AS THE REPRESENTATIVE OF THE ESTATE OF PETER TRIMBOS Sixth Defendant

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Lindholm v Elliott [2023] VSC 442
Botsman v Bolitho (No 2) [2018] VSCA 348