MSPR Pty Ltd v Advanced Braking Technology Ltd (No 2)

[2014] NSWCA 283

Court of Appeal

New South Wales

Case Title:

MSPR Pty Ltd v Advanced Braking Technology Ltd (No 2)

Medium Neutral Citation:

[2014] NSWCA 283

Hearing Date(s):

On the papers

Decision Date:

25 August 2014

Before:

Macfarlan JA
Ward JA
Gleeson JA

Decision:

(1) Leave is granted pursuant to s 500(2) of the Corporations Act to continue these appeal proceedings against the first appellant.

(2) Order pursuant to s 98(4)(c) of the Civil Procedure Act that the respondent is entitled to a specified gross sum in the amount of $260,848.87 in satisfaction of the costs orders in its favour at first instance and on appeal.

(3) Declare that the amount of $130,950.00 held on account of security for costs in the Trust Account of Holman Webb Lawyers is held on trust for the respondent to partially satisfy the costs orders made at first instance and on appeal.

(4) Order that Mr John Wakefield of Holman Webb Lawyers pay to the respondent the amount of $130,950.00 referred to in order (3) above.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

PRACTICE AND PROCEDURE - costs - appellants ordered to pay appeal costs of respondent - respondent sought and obtained specified gross sum for costs - order made for payment to respondent of amount lodged as security for costs

PRACTICE AND PROCEDURE - Corporations Act s 500(2) - first appellant in liquidation - whether interests of justice favour grant of leave to respondent to continue proceedings - appeal proceedings near completion - leave granted

Cases Cited:

Calderbank v Calderbank [1976] Fam 93
Distinctive FX 9 Pty Ltd v Statewide Developments Pty Ltd [2012] NSWCA 393
DSG Holdings Australia Pty Ltd v Helenic Pty Ltd [2014] NSWCA 96
Dwight v Commissioner of Taxation [1992] FCA 178; 37 FCR 178
Hamod v State of New South Wales [2011] NSWCA 375
Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 211

Category:

Consequential orders

Parties:

MSPR Pty Ltd (First Appellant)
Phyro Holdings Pty Ltd (Second Appellant)
Advanced Braking Technology Ltd (Respondent)

Representation

- Counsel:

Counsel:
C Birch SC/T Lynch SC (Appellants)
I R Pike SC (Respondent)

- Solicitors:

Solicitors:
Aitken Lawyers (Appellants)
Marque Lawyers (Respondent)

File Number(s):

CA 2012/290296

Decision Under Appeal

- Court / Tribunal:

District Court

- Before:

Knox SC DCJ

- Date of Decision: 

22 August 2012

- Citation:

MSPR Pty Ltd and Phyro Holdings Pty Ltd v Advanced Braking Technology Ltd [2012] NSWDC 140

- Court File Number(s):

2009/338826

JUDGMENT

1. THE COURT: On 9 December 2013 the Court dismissed MSPR Pty Ltd and Phyro Holdings Pty Ltd's appeal and ordered those companies to pay the appeal costs of the respondent ("ABT") ([2013] NSWCA 416).

2. Within 14 days after entry of the Court's orders, being the period delimited by r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW), ABT filed a Notice of Motion seeking varied and additional orders. In its amended form, the Notice of Motion sought orders to the following effect:

   (1)A grant of leave to ABT pursuant to s 500(2) of the Corporations Act 2001 (Cth) to continue these proceedings against the first appellant, it being in liquidation.

   (2)Variation of the Court's costs order to provide for the appellants to pay ABT's appeal costs from 7 December 2012 on an indemnity basis.

   (3)An order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) entitling ABT to be paid a gross sum of $260,848.87 in satisfaction of the costs orders in its favour at first instance and on appeal.

   (4)A declaration of ABT's entitlement to $130,950 held as security for its costs in the Trust Account of Holman Webb Lawyers and an order for release of that sum to ABT.

3. The appellants were served with ABT's original and amended Notice of Motion but did not appear before the Registrar of the Court and did not lodge with the Court any affidavits or submissions. The first appellant's liquidator however indicated by letter that he does not consent to any directions or orders being made in the proceedings. On the other hand, ABT provided written submissions, supported by a number of affidavits. Holman Webb Lawyers were served with the amended Notice of Motion but did not appear in the proceedings.

Leave to proceed

1. Section 500(2) of the Corporations Act is in the following terms:

   "After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes."

2. As the first appellant is in liquidation, leave to continue these proceedings is required (Distinctive FX 9 Pty Ltd v Statewide Developments Pty Ltd [2012] NSWCA 393 at [12]-[13]; DSG Holdings Australia Pty Ltd v Helenic Pty Ltd [2014] NSWCA 96 at [54]). The appeal proceedings are near to completion and no significant time or expense is required to be expended by the liquidator. Indeed, he has elected not to provide evidence or submissions to the Court. Further, his letter (referred to at [3] above) does not identify any basis for refusing leave. In our view, the interests of justice favour the grant of leave to ABT to continue the proceedings.

Indemnity costs on appeal

1. ABT does not press its claim for indemnity costs in the event, as is the case, that its claim for a specified gross sum for costs succeeds.

A specified gross sum for costs

1. By affidavit of 16 May 2014 Mr Damian Sturzaker, the solicitor for ABT and a lawyer of considerable experience, estimated at $260,848.87 the costs that would be assessed by a costs assessor as recoverable by ABT under the orders made in its favour at first instance and on appeal. For this purpose, Mr Sturzaker took the conservative approach of assuming that this Court's order for appeal costs would remain the party/party order made on 9 December 2013. Mr Sturzaker has made what appears to be a "logical, fair and reasonable" estimate (see Hamod v State of New South Wales [2011] NSWCA 375 at [820]) and the appellants have not lodged any submissions contending otherwise.

2. Furthermore, it appears that ABT is unlikely to recover more of its costs than is held by Holman Webb Lawyers as security for its costs: MSPR is in liquidation, and the second appellant has a nominal paid up capital of $116. As well, in having its costs assessed in a formal fashion, ABT would be likely to incur additional unrecoverable expense of between about $30,000 and $45,000.

3. These matters favour the making of the specified gross sum order sought by ABT.

The amount held as security for costs

1. The appellants lodged with Holman Webb Lawyers amounts totalling $130,950 as security for ABT's costs of the proceedings. The appeal has now concluded and, as we have found, ABT is entitled to an amount by way of costs exceeding the amount held by Holman Webb. Whatever may have been the position prior to crystallisation of ABT's entitlement to costs, it is clear that it is now a secured creditor in respect of the amount held by Holman Webb (see Dwight v Commissioner of Taxation [1992] FCA 178; 37 FCR 178 at 186, 192; Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 211 at [21]-[25]). Accordingly, the Court should make the declaration and order sought by ABT.

Conclusion

1. For the reasons above, the Court makes the following orders:

   (1)Leave is granted pursuant to s 500(2) of the Corporations Act to continue these appeal proceedings against the first appellant.

   (2)Order pursuant to s 98(4)(c) of the Civil Procedure Act that the respondent is entitled to a specified gross sum in the amount of $260,848.87 in satisfaction of the costs orders in its favour at first instance and on appeal.

   (3)Declare that the amount of $130,950.00 held on account of security for costs in the Trust Account of Holman Webb Lawyers is held on trust for the respondent to partially satisfy the costs orders made at first instance and on appeal.

   (4)Order that Mr John Wakefield of Holman Webb Lawyers pay to the respondent the amount of $130,950.00 referred to in order (3) above.

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