Londish v Sheahan and Ors – In re Valofo Pty Ltd (No 2)

[2010] NSWSC 446

CITATION:	Londish v Sheahan & Ors – In re Valofo Pty Ltd (No 2) [2010] NSWSC 446
HEARING DATE(S):	11 May 2010
JUDGMENT DATE :	11 May 2010
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	11 May 2010
DECISION:	Plaintiff to pay Defendants’ costs.
CATCHWORDS:	CORPORATIONS – COSTS – Whether submitting party should have costs of representation throughout hearing.
CATEGORY:	Consequential orders
PARTIES:	Peter Londish (Plaintiff) John Sheahan and Ian Lock (First Defendants) David Bowman (Second Defendant) Sidney Londish (Third Defendant)
FILE NUMBER(S):	SC 2009/291621
COUNSEL:	S.J. Burchett (Plaintiff) M. Stevens (Sol) (First Defendant – Submitting Appearance) P. Evans (Sol) (Second and Third Defendants)
SOLICITORS:	Hartmann & Associates (Plaintiff) O’Neill Partners (First Defendants – Submitting Appearance) Philip Evans & Associates (Second and Third Defendants)

2009/291621 In re Valofo Pty Ltd: Londish v Sheahan & Ors (No 2)

JUDGMENT – Ex tempore

11 May, 2010

1 I gave judgment in this matter on 28 April, 2010. The result of the proceedings was that the Defendants succeeded.

2 Costs would normally follow the event and Mr Burchett of Counsel, for the Plaintiff, says nothing about why that course should not be followed, except upon one aspect. The point of dispute is whether the First Defendants, the liquidators of Valofo, despite filing a submitting appearance on 22 December 2009, should have their costs of solicitor and counsel actually attending the hearing of the proceedings.

3 Mr Burchett says that if a party files a submitting appearance, then there is no reason for that party to be represented during the trial and the losing party should not have to bear the submitting party's costs of appearing and doing nothing throughout the hearing.

4 This is a rather unusual matter. As I have explained in my reasons for judgment, the proceedings are part of a protracted dispute between Mr Sidney Londish and Mr Bowman on the one hand, and Mr Peter Londish on the other. It is plain that there is some animosity between the parties.

5 The liquidators' solicitors wrote to the Plaintiff's solicitors on 22 February 2010, only a few days before the trial was to commence. They noted that their clients had filed a submitting appearance and said that, now having reviewed the Plaintiff's outline of submissions, they were instructed to seek confirmation that there was to be no personal attack on the credibility of the liquidators in respect of their conduct of the administration to date. What the solicitors meant was that, although the Plaintiff's Statement of Claim made certain criticisms of the liquidators' conduct, those criticisms did not appear to be carried through in the Plaintiff's outline of submissions which, in accordance with the Court's directions, was provided to the Defendants some days before the trial commenced.

6 The liquidators' solicitors noted that the allegations of inappropriate conduct or misconduct on the part of the liquidators did not appear to be substantiated in the affidavits filed on behalf of the Plaintiff. They continued:

“We request that you confirm in writing that there will be no personal attack on our clients’ credibility in respect of their conduct of the administration to date. If we do not receive your response by 9am, Tuesday, 23 February 2010 m we are instructed to engage Counsel to appear at the hearing.

The costs incurred by our clients in briefing and attendance of Counsel at hearing will be claimed from your client.”

7 This letter was clearly a request to confirm that the liquidators would be safe in relying upon their submitting appearance and not attending throughout the trial by legal representatives in order to repel any attack on the liquidators' credit or on their conduct.

8 On the same day, the Plaintiff's solicitors responded. They said that the Plaintiff contested the propriety and bona fides of the liquidators and objected to the liquidators entering a submitting appearance and yet seeking the assurance that was requested in the liquidators' letter of 22 February. They said:

“… it is improper for you to seek any undertakings or to attempt to limit in any way the scope of the hearing, other than as to costs. It is a matter for you, whether you now seek to change the nature of your appearance, but any such application will be resisted in view of the lateness of the application.”

9 In those circumstances, Mr Coleman of Counsel appeared for the liquidators at the hearing and remained in Court throughout the hearing. As it transpired, there was no direct attack on the liquidators' credit or conduct in the course of the trial by Mr Burchett, who appeared for the Plaintiff, and there was no occasion for Mr Coleman to address the Court. Nevertheless, the liquidators seek an order that the costs incurred by the liquidators in briefing solicitor and counsel to be present throughout the trial should be borne by the Plaintiff.

10 There is much force in what Mr Burchett says as to the position of a party who files a submitting appearance. One either submits to whatever the outcome of the proceedings is, save as to costs, or one participates. However, this case presents a very unusual situation.

11 As I explained in the reasons for judgment, the course which Mr Burchett followed in the trial was not, if I may say so with respect, easy to plot in advance. That was because of the somewhat difficult and unusual situation in which his client came to the Court to complain about the conduct of the Defendants. There were elements of attacking and manoeuvring, particularly on the part of the Plaintiff, as I think emerged in discussion between the Bench and the Bar in the initial stages of the trial. In view of the assurances sought by the liquidators' solicitors and refused by the Plaintiff's solicitors, there was a valid apprehension on the part of the liquidators that in the course of the trial, and perhaps without prior warning, the Plaintiff would perceive a change of wind, if I could put it that way, which made it expedient to attack the liquidators directly, and it was for that reason, and to avoid the possible adverse consequences of not being present to meet such an attack, that counsel and solicitors remained throughout the trial.

12 If the Plaintiff's solicitor had made it perfectly plain in response to the liquidators' solicitor's letter of 22 February that there would be no such attack then, indeed, the liquidators' fears would have been unjustified and the incurring of legal representatives' costs for appearance in the trial would have been unwarranted. But the Plaintiff's solicitors responded in a way which left the Plaintiff free to take such course as he chose as to whether he would attack the conduct of the liquidators or not. An assurance that the liquidators would be safe in relying upon their submitting appearance having been refused, in my opinion, they were justified in endeavouring to protect their position by maintaining representation at the trial. The liquidators' solicitors made it perfectly plain in their letter that if they felt compelled to have representation at the trial they would be seeking costs against the Plaintiff.

13 In those circumstances, unusual as they are, I think that it is only right that the Plaintiff should bear the liquidators' costs of representation at the trial.

14 I would prefer not to make an order for a lump sum amount of costs. The liquidators have submitted their accounts, including Counsel's fees for attendance at the trial. I think it is best that, if costs in the matter generally are to be assessed as between the Plaintiff and other parties, the liquidators’ costs also ought to be the subject of an assessment.

15 I make the orders in the Short Minutes.

– oOo –