Niardone v Clubb (No 3)

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FEDERAL COURT OF AUSTRALIA

Niardone v Clubb (No 3) [2021] FCA 1449

File number: WAD 7 of 2021
Judgment of: COLVIN J
Date of judgment: 19 November 2021
Catchwords: COSTS - assessment of costs of urgent injunction application and cross-claim proceedings - where both parties seek payment of costs of proceedings - where respondent/cross-claimant appointed administrators to company to recover disputed fees - where orders made for appointment of administrators to be brought to an end - where party appointing administrators subsequently found to be successful as to claim to very limited extent as to entitlement to due diligence fee - where company indicated willingness to pay due diligence fee prior to appointment of administrators if not for insistence on payment of other disputed fees - whether conduct in appointing administrators unreasonable or justified on basis of limited success - whether provision in agreement between parties providing for liability for recovery costs applies - whether appropriate to award costs on indemnity basis by reason of unreasonable conduct in relation to offers to compromise - whether offers of compromise complied with Federal Court Rules 2011 (Cth)
Legislation:

Corporations Act 2001 (Cth) ss 435A, 435C, 447A

Federal Court of Australia Act 1976 (Cth) ss 43, 51A

Personal Properties Securities Act 2009 (Cth)

Federal Court Rules 2011 (Cth) r 25.14, Part 25
Cases cited:

Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112

Clifton (Liquidator) v Kerry J Investment Pty Ltd t/as Clenergy (No 2) [2020] FCAFC 112; (2020) 277 FCR 382

Createc Pty Ltd v Design Signs Pty Ltd [2009] WASCA 85

Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602

Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53

Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52

Forsyth v Sinclair (No 2) [2010] VSCA 195; (2010) 28 VR 635

Gray v Richards (No 2) [2014] HCA 47

Grocon Constructors (Qld) Pty Ltd v Dexus Funds Management Limited as Trustee for the Dexus 480Q Trust (No 2) [2019] FCA 1117

Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750; (2015) 237 FCR 127

Kazar (Liquidator) v Kargarian; In the matter of Frontier Architects Pty Ltd (In Liq) [2011] FCAFC 136; (2011) 197 FCR 113

Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; (2016) 247 FCR 61

Meehan v Glazier Holdings Pty Ltd [2005] NSWCA 24

Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 (S)

Nassif v Seven Network (Operations) Ltd (No 2) [2021] FCA 1390

Niardone v Clubb [2021] FCA 14

Norbis v Norbis (1986) 161 CLR 513

Oshlack v Richmond River Council (1998) 193 CLR 72

Pinot Nominees Pty Ltd v Commissioner of Taxation [2009] FCA 1508; (2009) 181 FCR 392

Queensland North Australia Pty Ltd v Takeovers Panel (No 2) [2015] FCAFC 128; (2015) 236 FCR 370

Re Sales…

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Details
Case
[2021] FCA 1449
Decision Date

CaseChat Overview and Summary

Niardone was the owner of a company, Ausnet Services, which entered into an agreement with Clubb, who operated under the business name Top Level Real Estate, for the sale of certain of Ausnet Services' assets. The agreement included a provision for the payment of due diligence fees, but also provided that if one party appointed receivers or administrators to recover the fees, the other party would be liable for all costs incurred in making the appointment. Niardone later sought an injunction to prevent Clubb from assigning the agreement to a third party, and Clubb cross-claimed for the payment of due diligence fees. Clubb appointed administrators to Ausnet Services to recover the fees, and Niardone sought an order to bring the appointment to an end. Niardone was ultimately successful in its claim to a limited extent, as it was found to be entitled to a due diligence fee, but Clubb was not found liable for the full amount of the fees claimed. The court was required to decide whether Clubb's conduct in appointing administrators was unreasonable or justified, and whether Niardone was entitled to indemnity costs by reason of Clubb's unreasonable conduct in relation to offers to compromise. The court found that Clubb's conduct in appointing administrators was unreasonable, as it was not justified by the limited success of the cross-claim, and that Niardone was entitled to indemnity costs by reason of Clubb's unreasonable conduct in relation to offers to compromise. The court also found that Clubb's offers of compromise did not comply with the Federal Court Rules 2011 (Cth). The court made orders for the payment of costs in the proceedings, including an order that the cross-claimant pay 95% of the cross-respondent's costs of the cross-claim. The court also made orders for the payment of costs in relation to the application for injunctive relief, and for the payment of costs paid out of the assets of a third respondent. Finally, the court made an order for the payment of $400,000 paid into court by the third respondent to be paid out to the third respondent.

Orders

Orders of the court

1. In the proceedings on the notice of cross-claim filed 8 February 2021, there be judgment for the cross-claimant against the cross-respondent in the sum of $11,000 (including GST) together with interest fixed in the sum of $1,500.

2. Within two business days after payment of the amount specified in order 1, the cross‑claimant lodge financing change statements in respect of each of the registrations under the Personal Property Securities Act 2009 (Cth) as set out in the Schedule.

3. The cross-claimant do pay to the cross-respondent 95% of its costs of the cross-claim such costs being assessed on a lump sum basis in the amount of $140,505.

4. The cross-claimant do pay the cross-respondent's costs of the determination of final orders such costs to be fixed in the amount of $4,000.

5. The second respondent do pay to the third respondent the amount of the applicants' costs of and incidental to the application in the proceedings on the original application filed 19 January 2021 for injunctive relief, such costs being assessed on a lump sum basis in the amount of $28,266.

6. The second respondent do pay the third respondent the further sum of $39,498 in respect of the legal costs, fees and remuneration of the first respondents paid out of the assets of the third respondent.

7. The amount of $400,000 paid into court by the third respondent be paid out to the third respondent.

8. Save as otherwise ordered, there be no order as to costs of the proceedings on the original application filed 19 January 2021 and the proceedings on the notice of cross‑claim filed 8 February 2021.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Schedule

Name

ACN number

Registration number

The Agency Group Australia Ltd

118 913 232

202005010061395

Top Level Real Estate Pty Ltd

615 413 879

202005010061428

The Agency Sales NSW Pty Ltd

616 016 365

202005010061437

The Agency Project Sales NSW Pty Ltd

616 018 850

202005010061444

The Agency Property Management NSW Pty Ltd

616 297 646

202005010061459

The Agency Marketing Pty Ltd

616 015 877

202005010061485

The Agency Auctions NSW Pty Ltd

616 016 141

202005010061542

The Agency Project Sales QLD Pty Ltd

616 015 500

202005010061574

The Agency Property Management QLD Pty Ltd

616 298 161

202005010061588

The Agency Auctions QLD Pty Ltd

616 016 310

202005010061601

The Agency Sales VIC Pty Ltd

616 015 948

202005010061617

The Agency Project Sales VIC Pty Ltd

616 015 671

202005010061629

The Agency Property Management VIC Pty Ltd

616 297 753

202005010061638

The Agency Canberra Pty Ltd

616 016 445

202005010061640

Top Level Real Estate Sales Pty Ltd

616 869 210

202005010061655

Top Level Real Estate Holdings Pty Ltd

615 413 879

202005010061883

Courtesy Real Estate (N S W) Pty Ltd

002 934 152

202005010061672

S.J. Laing & Son Pty Ltd

000 628 482

202005010061693

Ausnet Real Estate Services Pty Ltd

093 805 675

202005010061705

Move Property Solutions Pty Ltd

600 209 881

202005010061714

The Agency Property Management WA Pty Ltd

124 331 166

202005010061746

Westvalley Corporation Pty Ltd

101 816 586

202005010061751

Ausnet Financial Pty Ltd

125 118 916

202005010061767

Jelina Holdings Pty Ltd

100 588 832

202005010061780

Ausnet Financial Planning Services Pty Ltd

109 525 242

202005010061798

Value Partner Program Pty Ltd

131 327 654

202005010061808

Vision Capital Management Limited

111 063 024

202005010061812

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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