Main Camp Tea Tree Oil Ltd v Australian Rural Group Limited (In liq) - [2003] NSWSC 953

CITATION: Main Camp Tea Tree Oil Ltd v Australian Rural Group Limited (In liq) [2003] NSWSC 953

HEARING DATE(S): 17 October, 2003

JUDGMENT DATE:
17 October 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Palmer J

DECISION: Plaintiff's application dismissed with costs.

CATCHWORDS: CORPORATIONS - STATUTORY DEMAND - COSTS ORDER AGAINST THIRD PARTY - LIQUIDATORS - SOLICITORS - Defendant served Statutory Demand for payment of costs certified under the Legal Practitioners Act - Plaintiff sought review of costs determination prior to service of Statutory Demand - review not determined at time of service of Statutory Demand - whether s.208KE(1) Legal Practitioners Act has effect of making no amount in respect of costs due until determination of review of costs assessment - whether liquidators and solicitors of Defendant ought to have been aware of effect of s.208KE(1) - whether their conduct in serving the Statutory Demand and defending proceedings to set it aside was so negligent and unprofessional that a personal costs order should be made against them. HELD: Conduct of liquidators and solicitors not unreasonable in the circumstances.

LEGISLATION CITED: Corporations Act, 2001 (Cth) - s.459G
Legal Profession Act 1987 (NSW) - s.208KE

CASES CITED: - Farrugia v Farrugia [2000] FCA 516
- Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452

PARTIES :
Main Camp Tea Tree Oil Ltd - Plaintiff
Australian Rural Group Limited (In liq) - Defendant

FILE NUMBER(S): SC 1589/03

COUNSEL: R.K. Eassie - Plaintiff
C.R.C. Newlinds SC - Defendant

SOLICITORS: Cordato Partners - Plaintiff
Clayton Utz - Defendant

Ex tempore
1 Before the Court is a Further Amended Originating Process filed by the Plaintiff, Main Camp Tea Tree Oil Ltd (“Main Camp”). The relief which Main Camp seeks today is set out in paragraphs 3 to 5 of the Further Amended Originating Process. In brief, the relief sought comprises an order that the Defendant (“ARG”) pay Main Camp's costs of these proceedings on an indemnity basis, an order that the liquidators of ARG themselves personally be jointly and severally liable to pay Main Camp's costs of the proceedings on an indemnity basis and, lastly, an order that the liquidators be joined to the proceedings for the purposes of costs orders being made against them. 2 The proceedings themselves were initiated by Main Camp pursuant to s.459G of the Corporations Act, 2001 (Cth) in order to set side a Statutory Demand which had been served by ARG on 5 February 2003. The debt claimed was an amount of $68,935.43, being the amount of costs ordered to be paid by Main Camp to ARG on 3 December 2001 in proceedings 2716 of 2001 as assessed by an Assessor under the Legal Profession Act 1987 (NSW) and certified by a certificate dated 21 August 2002. 3 Main Camp filed an Originating Process to set side the Statutory Demand on 25 February 2003. In support of the application there was filed an affidavit of Mr John Bax sworn on 25 February 2003. In paragraph 4…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Main Camp Tea Tree Oil Ltd v Australian Rural Group Limited (In liq) [2003] NSWSC 953
Case: [2003] NSWSC 953
Decision Date: 17 October 2003

CaseChat Overview and Summary

In the case of Main Camp Tea Tree Oil Ltd v Australian Rural Group Limited (In liq), the plaintiff sought to recover costs from the defendant under the Legal Practitioners Act. The plaintiff had issued a statutory demand for the payment of costs certified under the Act, and subsequently sought a review of the costs determination before the demand was served. The liquidators and solicitors of the defendant served the statutory demand and defended the proceedings to set it aside. The court was required to determine whether the conduct of the liquidators and solicitors was so negligent and unprofessional as to warrant a personal costs order against them.

The legal issues in the case revolved around the interpretation of section 208KE(1) of the Legal Practitioners Act, which provides that no amount in respect of costs is due until the determination of a review of the costs assessment. The court had to decide whether the liquidators and solicitors of the defendant should have been aware of the effect of this provision, and whether their conduct in serving the statutory demand and defending the proceedings to set it aside was unreasonable in the circumstances. The court also had to consider whether the liquidators and solicitors had acted negligently or unprofessionally in their conduct.

The court held that the conduct of the liquidators and solicitors was not unreasonable in the circumstances. The court found that there was no evidence to suggest that the liquidators and solicitors were aware of the effect of section 208KE(1) of the Legal Practitioners Act, and that they had acted in good faith in serving the statutory demand and defending the proceedings to set it aside. The court held that the liquidators and solicitors had not acted negligently or unprofessionally, and therefore, a personal costs order should not be made against them. The court dismissed the plaintiff's claim for costs.

The court did not make any orders for costs in favour of the plaintiff. The liquidators and solicitors of the defendant were not found to have acted negligently or unprofessionally, and therefore, they were not liable for any costs incurred by the plaintiff.

Orders