Mentha v Hughes
[2014] WASC 478
•16 DECEMBER 2014
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MENTHA -v- HUGHES [2014] WASC 478
CORAM: MARTIN CJ
HEARD: 28 OCTOBER 2014
DELIVERED : 28 OCTOBER 2014
PUBLISHED : 16 DECEMBER 2014
FILE NO/S: COR 121 of 2014
BETWEEN: MARK FRANCIS XAVIER MENTHA
CLIFFORD STUART ROCKE
First PlaintiffsBOSI SECURITY SERVICES LTD
Second PlaintiffAND
BRYAN KEVIN HUGHES
Defendant
Catchwords:
Corporations law - Winding up - Appointment of special purpose liquidator - Whether conflict of interests - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 588M
Result:
Application dismissed
Category: B
Representation:
Counsel:
First Plaintiffs : Mr M N Solomon SC & Mr C F McLeod
Second Plaintiff : Mr M N Solomon SC & Mr C F McLeod
Defendant: Mr M B J Lee SC & Mr W A D Edwards
Solicitors:
First Plaintiffs : Norton Rose Fulbright Australia
Second Plaintiff : Norton Rose Fulbright Australia
Defendant: William & Hughes
Case(s) referred to in judgment(s):
Boral Resources (SA) Ltd v Rick Martin Nominees Pty Ltd (No 2) [2012] SASC 192
IND Energy Inc (A Company Incorporated In The British Virgin Islands) v Scott David Harry Langdon and Clifford Stuart Rocke as Administrators of Petro Ventures International Ltd (Administrators Appointed) [2014] WASC 364
Onefone Australia Pty Ltd v One.Tel Ltd (in liq) (2003) 48 ACSR 562; [2003] NSWSC 1228
Re Obie Pty Ltd (in liq) (No 4) (1984) 8 ACLR 967
Re Spedley Securities Ltd (in liq) (1991) 4 ACSR 555
MARTIN CJ: (This judgment was delivered extemporaneously on 28 October 2014 and has been edited from the transcript).
This is an application by the receivers and managers of Westgem Investments Pty Ltd (Westgem), a company in liquidation, and by BOSI Security Services Ltd (BOSI), for the appointment of an additional liquidator to Westgem for a specific purpose. In the application that purpose is said to be 'for the purposes of investigating any voidable transactions of and insolvent trading by Westgem'.
The application proposes that the special purpose liquidator be given a number of specific powers, including the power to investigate, and for that purpose, to undertake inquiries and also to conduct public examinations pursuant to the provisions of the Corporations Act 2001 (Cth). I will return to the issue of public examinations in due course.
It is proposed that the appointment be made on the basis that the costs of the special purpose liquidator be borne by BOSI, the second applicant, as security trustee for and agent of the Bank of Western Australia Limited and BOSI International Australia Ltd. I am told from the bar table, and have no reason to doubt, that the undertaking extends to meeting the reasonable costs of the liquidator in liaising with any special purpose liquidator. That leaves open the question of whether costs might be incurred by the receivers in liaising with the special purpose liquidator, which costs might be debited to Westgem's account with the bank, pursuant to the security documents. That is, as yet, an unresolved question. It is entirely speculative as to how much those costs might be.
The grounds of the application are set out in an attachment to the amended originating process, and conveniently set out some of the background the application. On 11 January 2011 the defendant, Mr Hughes, was appointed as voluntary administrator of Westgem, and on 18 October 2012 he became the liquidator of the company.
The net effect of those events is that the winding‑up of Westgem is deemed to have commenced in January 2011. The significance of that date is that any claim commenced by the liquidator against any individual as a consequence of the provisions of the Corporations Act relating to insolvent trading would be statute‑barred if not commenced before 11 January 2017.[1]
[1] s 588M.
BOSI is the security trustee for the financiers of Westgem and was the party responsible for the appointment of the first plaintiffs as receivers and managers of Westgem's assets.
The principal activity in the liquidation of Westgem has been the investigation, initiation and conduct of action CIV 2722 of 2012 in this court, which has been conventionally referred to throughout these proceedings as the damages claim, and I will adopt the same terminology in these reasons.
That claim is brought on behalf of Westgem in conjunction with a number of other plaintiffs, whose claims depend upon the success of Westgem's claim. One of those plaintiffs is Mr Saraceni, who was the sole director of Westgem and a shareholder in Westgem, and who, in that capacity, has a significant stake in the outcome of the damages claim.
It is also of some significance that Mr Saraceni guaranteed the debts of Westgem and the banks have foreshadowed a claim against him in that capacity for the balance of Westgem's alleged debt to the bank which is in the amount of approximately $133 million. As I understand it, one of the banks has already commenced a claim against Mr Saraceni in an amount of $15 million.
The affidavit material that has been filed by the parties in support of and in opposition to this application, is extensive. It is unnecessary for me to go through the evidentiary materials in detail. It is sufficient for present purposes for me to summarise the findings that I make.
Before doing so, it is appropriate for me to refer to the essence of the grounds upon which the application is brought. The application is essentially brought on the basis that there is good reason to exercise the power to appoint a special purpose liquidator because of the conflict which is said to arise from the liquidator's pursuit of the damages claim in which he is joined with Mr Saraceni. That claim is said to depend, at least to some extent, upon the acceptance of Mr Saraceni's evidence. On the other hand, the plaintiffs point to the need to fully and robustly investigate potential claims against Mr Saraceni and perhaps others - although if there are others none have been identified - arising from any voidable transactions that were undertaken prior to commencement of the administration of Westgem or any insolvent trading by Westgem in the period prior to administration. These two interests are said to give rise to conflict and the need for a special purpose liquidator.
The evidentiary material
In that context, it is significant that it is clear from the affidavit material that if Westgem is either wholly or substantially successful in the damages claim, then there is every reason to think that it may never have been insolvent and is not insolvent at the present time with the result that there would be no need to investigate any voidable transactions or insolvent trading, both of which depend critically upon an assumption that Westgem was at some point insolvent.
Conversely of course, if Westgem fails entirely and the banks succeed on their counter‑claims, including the counter‑claim foreshadowed against Mr Saraceni, there is every reason to suppose that Mr Saraceni will be bereft of assets capable of satisfying any other claim, including any claim by a liquidator of Westgem. The banks are the major creditors of Westgem and are also the major creditor of Mr Saraceni. So there would be little practical utility in commencing proceedings against him for any voidable transactions or insolvent trading by Westgem so as to justify the costs likely to be incurred in that pursuit if the damages claim fails and the banks' claims under the guarantees succeed.
Another matter that emerges from the evidence, quite clearly, is that any prospective claims arising from allegedly voidable transactions or insolvent trading by Westgem depend critically upon the outcome of issues that are to be determined in the damages claim, to which both Westgem and Mr Saraceni are parties, and who will therefore be bound by determinations made in those proceedings. So, if such proceedings were commenced prior to the conclusion of the damages claim, there is a very high probability, which I would describe as an inevitability, that those proceedings would be stayed pending the determination of the damages claim, not only to avoid dissipation of the limited resources of the court on proceedings that might become otiose but also for the purpose of avoiding the risk of inconsistent findings of fact if those proceedings were to be tried separately.
There is, therefore, every reason to conclude that there would be no practical utility in the commencement of such proceedings at this time, or at any time prior to the conclusion of the damages claims although there is an issue relating to the possible expiry of a limitation date in January 2017, to which I will return.
Given the limited utility of commencing any proceedings for voidable transactions or insolvent trading at the present time, the question is whether the appointment of a special purpose liquidator is justified in order that investigations might now commence with respect to the possibility of commencing such claims at some point in time after the damages claim has been resolved, or prior to the expiry of any relevant limitation period.
There are a number of considerations that are relevant to that question. First, there is every likelihood that the interlocutory steps that are to be taken in the damages claim will shed very considerable light on the question of the solvency of Westgem, and upon the question of whether any voidable transactions that were undertaken by Westgem in the period leading up to the administration of that company.
Second, aside from the general inference of fading recollection, there is no evidence that the pursuit of insolvent trading claims or voidable transaction claims would be prejudiced by the lapse of time given that the facts that are very relevant to those claims will be very thoroughly canvassed by the various parties to the damages claim. The receiver's complaint is that they will be investigated in a partisan way and not by somebody who is independent of Mr Saraceni. However, there seems little risk that any relevant evidence will be lost or destroyed, given the overlap between the issues in the damages.
However, it is clear from the evidence that the liquidator has decided to defer the further investigation and commencement of any claims for voidable transaction or insolvent trading. It follows that there is no current risk that those matters will be investigated in a partisan way. In my view, the liquidator's position is commercially realistic and, at present, causes no significant disadvantage in part because of the extent to which evidence relevant to those issues will be canvassed by all parties in the course of preparation for trial of the damages claim.
On the other hand, there is a real risk that the appointment of a special purpose liquidator could cause an undesirable interference with the ordinary course of the liquidation which, at this stage, is focused upon the prosecution of the damages claim. Such an interference might be justified if there was a basis for believing that there are very real causes of action against Mr Saraceni or others which require prompt investigation and pursuit, or that there is reason to suppose that there are matters that would require a public examination conducted by somebody other than the current liquidator because of the tension that might arise between the robust pursuit of that examination and the desirability of preserving Mr Saraceni's credibility for the purposes of any damages proceedings.
Three propositions have been suggested to justify a public examination. Firstly, it is asserted that there should be a public examination to investigate the extent to which there was insolvent trading in the period prior to the administration of the company. In that regard, it is significant that the damages claim will, of necessity, involve a very thorough review and investigation of those issues, and that until decisions are made with respect to the damages claim, it would be impossible to say definitively whether or not Westgem was, at any particular point in time, insolvent. I therefore conclude that a public examination with respect to those matters would be of no particular advantage, either to the public or to any of the parties with an interest in this liquidation.
The second matter that is said to justify a public examination concerns the operation of what is called the GST account. It is unnecessary for me to go into that issue in any detail. It is sufficient for me to observe that there are proceedings on foot in relation to the operation of that account. There is therefore no prospect that any claim by the liquidator with respect to that matter will suffer from the expiry of a limitation period. It has been agreed by the parties to those proceedings that further prosecution of that case should await determination of the damages claim. These are not matters that would justify the current conduct of a public examination.
The third matter that is said to justify conduct of public examination concerns an inquiry into Mr Saraceni's assets. That seems to me to be a matter in which the greatest interest would lie with the banks who are claimants against Mr Saraceni as guarantor, rather than with any liquidator as a prospective claimant of an as yet unidentified claim. The practical likelihood that confronts the liquidator, and to which he has deposed, supported by submissions, is that if the damages claim is successful then Westgem may, in all likelihood, not be and will not have ever been insolvent.
By contrast, if the damages claim fails substantially, then Mr Saraceni's capacity to meet any claim by the liquidator is very doubtful indeed. That is a matter that can be investigated if it needs to be investigated if and when the liquidator of Westgem contemplates commencing proceedings against Mr Saraceni. I see no basis for using the procedure of a special purpose liquidator to conduct an inquiry into Mr Saraceni's assets for the purpose of anticipating the entry of judgment in proceedings that may or may not be brought against him.
I also note that the evidence does not establish any specific claim that has been identified that requires investigation other than the claim relating to the operation of the GST account, which is currently the subject of proceedings. There is no present basis for public examination which has been established on the evidence before me.
In relation to the alleged conflict of interest, while I can accept that there may be a tension between the liquidator's interest in preserving the credibility of Mr Saraceni for the purposes of the pursuit of the damages claim, and a robust public examination, this is not a case in which the evidence establishes that it is presently appropriate for the liquidator to conduct a public examination, for the reasons I have given. Additionally, the tension that might arise is quite different in character to the direct conflicts of interest that have arisen in other cases in which the appointment of special purpose liquidators has been justified.
In some, but, of course, not all of those cases, the interests that are in conflict have been direct and obvious - for example, those cases in which there was a personal interest of the liquidator which conflicted with an investigation appropriately undertaken in the course of the liquidation.[2]
[2] Onefone Australia Pty Ltd v One.Tel Ltd (in liq) (2003) 48 ACSR 562; [2003] NSWSC 1228; Re Spedley Securities Ltd (in liq) (1991) 4 ACSR 555; Re Obie Pty Ltd (in liq) (No 4) (1984) 8 ACLR 967.
This is a case in which the most that could be said is that while the damages claim is on foot there may be a tension, between the liquidator's interest in pursuing the damages claimed and a robust publication examination of Mr Saraceni. However, it has not been established that there is a pressing need for the conduct of any investigations other than those that have already been conducted by the liquidator to date. Nor has it been established that there are any investigations which ought to be undertaken prior to the further exploration of relevant issues through the course of preparation of the damages claim for trial.
I would also observe in this context that it is commonplace in insolvency situations for conflicts of interest of a general character to arise. It is commonplace for one person to be both creditor and debtor of the company, and it is commonplace for liquidators acting in the interests of all creditors to have to rely upon the testimony and assistance of former officers in order to collect debts and recover assets that were properly belonging to the company, while at the same time investigating the role of those former officers in relation to the insolvency of the company.[3]
[3] Boral Resources (SA) Ltd v Rick Martin Nominees Pty Ltd (No 2) [2012] SASC 192; IND Energy Inc (A Company Incorporated In The British Virgin Islands) v Scott David Harry Langdon and Clifford Stuart Rocke as Administrators of Petro Ventures International Ltd (Administrators Appointed) [2014] WASC 364 [137] (Heenan J).
That general situation is not uncommon and does not, in the ordinary course, give rise to a need for a special purpose liquidator. The situation would be different in this case if it were credibly established that there were matters that required immediate investigation and in respect of which the failure to conduct such an investigation might prejudice the interests of creditors or the public interest, but for the reasons I have given I do not consider this is such a case.
There are a number of specific allegations of particular misconduct that were levelled against the liquidator. It is unnecessary for me to go into those allegations in detail other than to say that I am not satisfied that any of those allegations give rise to a reasonable doubt that the liquidator could not be relied upon to act appropriately if and when evidence came to light which would suggest the need for the conduct of an investigation.
The liquidator's conduct to date and the reports that he has presented to those interested in the liquidation of the company lead me to conclude that he is well aware of his obligations and of the need to maintain independence from those who stand behind the company. The liquidator's actions to date strike an appropriate balance of his general obligations as liquidator, including the obligation of pursuing the interests of those who have an interest in the liquidation by pursuing the damages on behalf of Westgem.
Of course, the views that I have expressed are based upon the evidence that I have received at this stage. It is quite possible that the situation may change at some time in the future as the damages claim is prepared for trial. If it becomes apparent that the damages claim will not be resolved prior to the expiry of the limitation period relevant to any claims by the liquidator, and there are matters that need specific investigation sufficient to justify the step of appointing a special purpose liquidator in order to conduct investigations prior to the expiry of the relevant limitation period, that might provide a basis upon which a special purpose liquidator might then be appointed.
However, that point has not yet been reached. It cannot be said with certainty that the damages claim will not be resolved prior to January 2017. One would hope that in the ordinary course it should be, if not resolved, at least substantially advanced by then to the point at which the evidence that will have been exchanged by the parties will enable all parties and the court to assess whether there are matters that justify the appointment of a special purpose liquidator in order to conduct investigations independent of the liquidator presently appointed.
In that context I should observe that it seems to me that the solution proposed on behalf of the liquidator of simply issuing writs generally endorsed prior to the limitation period without previously conducting investigation would not adequately satisfy the interests of those who are concerned in the liquidation.
If there are matters that require investigation and which are apparent from the materials that are disclosed in the course of preparation of the damages claim, and if it becomes apparent that there is a real reason to believe that there are causes of actions which would lapse if not commenced prior to January 2017, then those matters in combination may be sufficient to justify the appointment of a special purpose liquidator. But we have not reached that point yet.
On the evidence before me, for the reasons that I have given, there is not presently justification for the appointment of a special purpose liquidator, and the application will be refused.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq) -v- HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S)
CORAM: MARTIN CJ
HEARD: ON THE PAPERS
DELIVERED : 26 FEBRUARY 2015
FILE NO/S: COR 121 of 2014
BETWEEN: MARK FRANCIS XAVIER MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq)
CLIFFORD STUART ROCKE as Receiver and Manager of Westgem Investments Pty Ltd (in liq)
First PlaintiffsBOSI SECURITY SERVICES LTD
Second PlaintiffAND
BRYAN KEVIN HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq)
Defendant
Catchwords:
Costs - Special costs order - Legal Profession Act 2008 (WA), s 280(2) - Importance and complexity
Legislation:
Legal Profession Act 2008 (WA), s 280(2)
Result:
Application for special costs order allowed in part
Category: B
Representation:
Counsel:
First Plaintiffs : No appearance
Second Plaintiff : No appearance
Defendant: No appearance
Solicitors:
First Plaintiffs : Norton Rose Fulbright Australia
Second Plaintiff : Norton Rose Fulbright Australia
Defendant: William & Hughes
Case(s) referred to in judgment(s):
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Cifuentes v Fugro Spatial Solutions Pty Ltd [2009] WASC 316 (S)
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Frigger v Lean [2012] WASCA 66
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2)
MARTIN CJ:
Summary
For reasons given orally at the conclusion of the plaintiff's application for the appointment of an additional liquidator to Westgem Investments Pty Ltd (Receivers and Managers Appointed) (in liq) (Westgem) for a specific purpose, I dismissed that application and ordered the plaintiffs to pay the defendant's costs of the application to be taxed if not agreed. I granted liberty to apply with respect to any special orders for costs. The defendant has exercised that liberty and moves for orders pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (the Act) directing the taxing officer to disregard the scale and hourly limits imposed under the applicable cost determination with respect to the originating application (scale item 11(a)), attendance at the hearing by instructing legal practitioners (scale item 11(c)) and taxing including drawing bills of costs (scale items 30(a) and (b)), and further directing the taxing officer to make reasonable allowances for the preparation and attendance at the hearing of the application by both senior and junior counsel and two senior practitioners.
Directions were made for the exchange of written submissions and the parties agreed to the determination of the application on the papers. These are my reasons for concluding that the application for a special costs order should be allowed in part.
Section 280(2) of the Act
Section 280(1) of the Act provides that the taxation of legal costs is regulated by an applicable costs determination. However, s 280(2) provides:
(2)Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
The principles governing the exercise of the powers conferred upon the court by s 280(2) of the Act are well established. The discretion conferred by the section can (but need not) be exercised if the court is of the opinion first that the amount of costs allowable in respect of a matter the subject of a cost determination is inadequate, in the sense that a limit or other amount imposed by the determination would preclude the presentation of a fairly arguable case for the allowance of costs at a greater amount[4] and second, that the inadequacy arises because of the unusual difficulty, complexity or importance of the matter.[5]
[4] Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [16], [22], cited with approval in Frigger v Lean [2012] WASCA 66 [81] (Allanson J, Newnes & Murphy JJA agreeing).
[5] Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S).
When a party moves for an order pursuant to s 280(2) of the Act, the questions arising under the section are addressed as matters of impression rather than science or mathematical precision.[6] In some cases it will be necessary to adduce evidence to enable the formation of the requisite opinion. However, in other cases, a court might be able to form the necessary opinion from its knowledge of the case and its circumstances.[7] Moreover, it must be remembered that when an order is sought removing limits on costs fixed in an applicable determination pursuant to s 280(2)(c), the order made will do no more than that. Accordingly, the court considering the application for such an order need go no further than determine whether there is a fairly arguable case for the allowance of costs at an amount greater than the amount allowable under the relevant determination - it is for the taxing officer to consider the necessity for the work that was done and the reasonableness of the remuneration claimed.[8]
[6] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7].
[7] Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] - [15], cited with approval by Allanson J in Frigger v Lean.
[8] Cifuentes v Fugro Spatial Solutions Pty Ltd [2009] WASC 316 (S) [22]; Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, 404.
The evidence in support of the application
The defendant relies on two affidavits which have been filed in support of his application. In those affidavits one of the solicitors engaged by the defendant deposes to the general nature of the work undertaken in opposition to the application and to the costs actually paid by the defendant to his legal advisers for the services and in respect of disbursements incurred by those advisers, which total $227,655.36. Pursuant to item 11 of the costs determination applicable at the time of the hearing, the maximum amount allowable for originating process of this kind heard over one day or less is $35,200, based on two days preparation for hearing and 50 hours preparation of the case, together with an hourly rate for the attendance of a senior practitioner at the hearing. The defendant submits that the costs actually incurred by him reflect the unusual difficulty and complexity of the matter and enable the court to confidently form the opinion that there is a fairly arguable case for the allowance of costs at an amount greater than those limited by item 11 of the applicable costs determination.
In amplification of that submission, the defendant points to the volume of the affidavit material filed and served by the plaintiffs in support of their application (which exceeded 1000 pages) and which raised various issues connected with substantive proceedings on foot in this court between these and other related parties, including a substantive claim for damages which is being prosecuted by the defendant in these proceedings against the second plaintiff in these proceedings, and against an associated bank. Because of the relationship between the issues raised in these proceedings, and the substantive issues in those other proceedings, the solicitors representing the defendant in these proceedings engaged the solicitors representing the defendant in those other proceedings to provide advice and assistance, and approximately $48,000 of the total costs incurred by the defendant was incurred in respect of the services provided by those other solicitors.
The plaintiffs oppose the orders sought. They assert that it was inappropriate to engage the solicitors acting in the other proceedings to provide services in this matter, and further assert that the amount claimed in respect of the work done by those other solicitors is excessive. They further assert that there was duplication of the work done in preparing the defendant's affidavit in these proceedings, and further assert that as the hearing occupied less than a day, it would not be appropriate to allow appearance fees for both senior and junior counsel for an entire day, and that the travel costs of those counsel should not be allowed. They further submit that the sheer volume of the affidavit upon which they rely in support of their application does not of itself establish that these proceedings were unusually difficult or complex.
Disposition
Of course there may be cases in which argument with respect to the particular components of the costs which might properly be allowed on taxation might influence the formation of an opinion as to whether the amount allowable under an applicable costs determination is inadequate, in the sense described in the authorities to which I have referred. However, in this case even if the costs incurred in respect of the services of the legal practitioners acting in the other proceedings to which I have referred are entirely excluded, along with the travel costs claimed in respect of counsel, and allowance is made for the fact that the hearing did not occupy the entire day, the costs actually incurred by the defendant in opposing these proceedings were still more than four times the limit imposed by item 11 of the relevant costs determination. I reiterate that when an application is made for an order with respect to the limit imposed by any relevant costs determination, it is not the function of the court hearing that application to determine precisely what amounts should or should not be allowed - that being the function of the taxing officer - rather the question which the court must address is whether there is a fairly arguable case for the allowance of costs at an amount greater than the limit imposed by the relevant determination. In this case I am satisfied that there is such a fairly arguable case, because of the work actually done by the solicitors and counsel involved in the preparation and presentation of the defendant's case which significantly exceeded the allowances made in item 11 of the scale (two days preparation for hearing and 50 hours preparation of the case). It is neither necessary nor appropriate for me to express any opinion with respect to the particular items of cost to which the plaintiffs refer. Those will be matters properly addressed by the taxing officer if the parties are unable to agree the amount of costs which should be paid.
The next question which I must address is whether the inadequacy of the costs which might be allowed under the relevant costs determination arises because of the unusual difficulty or complexity of these proceedings. I have no doubt that, having regard to the general run of matters falling within item 11 of the scale, these proceedings were unusually difficult and complex because of the variety of different and discrete issues which were raised and which are connected with other proceedings pending in this court which are of quite exceptional difficulty and complexity. I am also satisfied that there is a causal connection between the unusual difficulty and complexity of these proceedings, and the inadequacy of the amount which might be allowed under the applicable costs determination, because the amount and extent of the professional work required to properly prepare and present the defendant's response to these proceedings is directly related to their difficulty and complexity.
For these reasons, I have formed the opinion required by s 280(2) as a condition of the exercise of the powers conferred by that section. In the circumstances of this case, I can see no reason why I should not proceed to exercise the discretion conferred by the section, and make appropriate orders.
The orders properly made
The particular orders sought by the defendant are a little unusual in that they propose that costs be taxed 'without regard to the scale or hourly limits imposed under the relevant legal costs determinations'. I am not prepared to make an order in those terms, as it seems to me that the scale, and the amount formulated by reference to the allowances included within the scale is relevant to the process of taxation. However, I am prepared to make an order under s 280(2)(c) removing the limits on costs fixed in the relevant item of the applicable determination, which is item 11.
As I have noted, the defendant also seeks orders lifting the limits applicable with respect to drawing and taxing his bill of costs (scale items 30(a) and (b)). As far as I can see, no evidence or argument has been directed to supporting that aspect of the orders sought, and I am not prepared to make an order in those terms.
The defendant also seeks directions with respect to the allowances properly made by the taxing officer, including allowances for the attendance of senior and junior counsel and for two senior practitioners at hearing.
As I have no doubt that this was an appropriate case for the engagement of two counsel, I am prepared to make a direction to the taxing officer to that effect. However, in my view the question of whether it was appropriate for two senior practitioners to attend at hearing is a matter better left to the taxing officer than determined by me.
Conclusion
For these reasons there will be orders that:
(a)if the costs payable by the plaintiffs to the defendant pursuant to the orders made on 28 October 2014 are taxed, they be taxed without regard to the limit on costs fixed by item 11 of the scale in the applicable costs determination;
(b)the taxing officer is to make reasonable allowances for the preparation and attendance at the hearing by both senior and junior counsel;
(c)the amount of costs properly allowed on taxation is otherwise left to the taxing officer; and
(d)the plaintiffs are to pay the defendant's costs of this application for an order pursuant to s 280(2) of the Act to be taxed if not agreed.
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