Oztech Pty Ltd v Public Trustee of Queensland (No 18)
[2020] FCA 399
•27 March 2020
FEDERAL COURT OF AUSTRALIA
Oztech Pty Ltd v Public Trustee of Queensland (No 18) [2020] FCA 399
File numbers: NSD 937 of 2014
NSD 1185 of 2018Judge: YATES J Date of judgment: 27 March 2020 Catchwords: COSTS – application for lump sum costs order – referral to Registrar of the Court for inquiry and report as a referee – whether mediation of costs questions before referral to referee preferable - liability of litigation funder for costs of appeal Legislation: Federal Court of Australia Act 1976 (Cth) ss 53A, 54A
Federal Court Rules 2011 (Cth) Div 28.6, rr 28.65(1), 28.65(7), 28.67
Date of hearing: Determined on the papers Date of last submissions: 24 March 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 24 Counsel for the Applicant: A Hochroth Solicitor for the Applicant: The Banton Group Counsel for the Respondent: DB O’Sullivan QC and FY Lubett Solicitor for the Respondent: Clayton Utz Solicitor for International Litigation Partners No.9 Pte Ltd: Cornwalls ORDERS
NSD 937 of 2014 BETWEEN: OZTECH PTY LTD ACN 005 907 871
Applicant
AND: THE PUBLIC TRUSTEE OF QUEENSLAND
Respondent
JUDGE:
YATES J
DATE OF ORDER:
27 MARCH 2020
THE COURT ORDERS THAT:
1.The interlocutory application filed in NSD 1185/2018 on 28 February 2020 (the NSD 1185 application) be heard concurrently with the interlocutory application filed on 28 February 2020 in proceeding NSD 937 of 2014 (the NSD 937 application).
2.Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) and Div 28.6 of the Federal Court Rules 2011 (Cth) (the Rules), the issues of fact and law raised by paras 2 and 3 of the NSD 1185 application, and paras 1 and 2 of the NSD 937 application be referred to a Registrar of the Court for inquiry and report as a referee (the referee).
3.The referee shall provide his or her opinion as to the matters referred, including:
(a)whether a lump sum costs order should be made in the proceedings at first instance, and/or on appeal; and
(b)if so, the quantum of the lump sum costs order/s.
4.In the conduct of the reference, the referee is to afford the parties procedural fairness, and is otherwise to conduct the reference in such manner as he or she thinks fit, including as to:
(a)the time for the filing of the statement required by r 28.65(7) of the Rules;
(b)directions otherwise to be made as to the filing of submissions and/or evidence;
(c)the time and place of any hearing; and
(d)the manner in which any hearing is to be conducted.
5.The referee is to report by 30 June 2020, or such later date as the Court orders.
6.The report shall be provided to the Court, and a copy to each of the parties.
7.Any application by a party for orders pursuant to r 28.67 of the Rules shall be made within 14 days of receipt of the report by that party.
8.The parties have liberty to apply for directions under r 28.65(1) of the Rules, or otherwise in connection with the reference, or the applications referred to in Order 1, on 3 days’ written notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1185 of 2018 BETWEEN: OZTECH PTY LTD ACN 005 907 871
Applicant
AND: THE PUBLIC TRUSTEE OF QUEENSLAND
Respondent
JUDGE:
YATES J
DATE OF ORDER:
27 MARCH 2020
THE COURT ORDERS THAT:
1.The interlocutory application filed in NSD 1185/2018 on 28 February 2020 (the NSD 1185 application) be heard concurrently with the interlocutory application filed on 28 February 2020 in proceeding NSD 937 of 2014 (the NSD 937 application).
2.International Litigation Partners No.9 Pte Ltd be jointly and severally liable, with the appellant, for the respondent's costs of the appeal to the Full Court.
3.Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) and Div 28.6 of the Federal Court Rules 2011 (Cth) (the Rules), the issues of fact and law raised by paras 2 and 3 of the NSD 1185 application, and paras 1 and 2 of the NSD 937 application be referred to a Registrar of the Court for inquiry and report as a referee (the referee).
4.The referee shall provide his or her opinion as to the matters referred, including:
(a)whether a lump sum costs order should be made in the proceedings at first instance, and/or on appeal; and
(b)if so, the quantum of the lump sum costs order/s.
5.In the conduct of the reference, the referee is to afford the parties procedural fairness, and is otherwise to conduct the reference in such manner as he or she thinks fit, including as to:
(a)the time for the filing of the statement required by r 28.65(7) of the Rules;
(b)directions otherwise to be made as to the filing of submissions and/or evidence;
(c)the time and place of any hearing; and
(d)the manner in which any hearing is to be conducted.
6.The referee is to report by 30 June 2020, or such later date as the Court orders.
7.The report shall be provided to the Court, and a copy to each of the parties.
8.Any application by a party for orders pursuant to r 28.67 of the Rules shall be made within 14 days of receipt of the report by that party.
9.The parties have liberty to apply for directions under r 28.65(1) of the Rules, or otherwise in connection with the reference, or the applications referred to in Order 1, on 3 days’ written notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
YATES J:
INTRODUCTION
In proceeding NSD 937/2014 (the primary proceeding) and in the appeal therefrom, NSD 1185/2018 (the appeal), the respondent, the Public Trustee of Queensland, has filed interlocutory applications seeking lump sum costs orders. In the appeal, the respondent also seeks an order that International Litigation Partners No. 9 Pte Ltd (ILP) be jointly and severally liable, with the applicant (in the appeal, the appellant), Oztech Pty Ltd, for its costs. On 21 December 2018, an order to that effect was made in the primary proceeding, by consent.
A case management hearing in respect of each interlocutory application was listed for 16 March 2020. On 13 March 2020, my Associate sent an email to the solicitors for the applicant and the solicitors for the respondent advising them of my view that, because of concerns about COVID-19 and the need to avoid unnecessary travel and public meetings, the case management hearings should be vacated. The parties agreed to that course.
In her email, my Associate also advised the parties of my preliminary view that the question whether, in each proceeding, there should be a lump sum costs order and, if so, the quantum of that sum, is one that could be handled expeditiously and efficiently by the appointment of a Registrar of the Court to act as a referee, pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (the Act) and Div 28.6 of the Federal Court Rules 2011 (Cth).
I have since received submissions from the applicant and the respondent, and competing draft orders, as to how the interlocutory applications should now proceed.
THE POSITION OF THE PARTIES
The respondent submits that, in each proceeding, the question whether a lump sum costs order should be made and, if so, the quantum of that sum, should be referred to a Registrar as a referee for inquiry and report. He has proposed orders that would advance that course.
The applicant opposes that course, for two principal reasons.
First, it says that it was not until 24 December 2019 that the respondent made an offer in respect of the costs of the two proceedings and provided the information that now supports the interlocutory applications, including two reports from a costs assessor, Ms Rosati. This offer was left open until 13 January 2020. The applicant sought an extension until 6 March 2020 to respond to the offer. The respondent was only prepared to keep the offer open until 31 January 2020. The interlocutory applications were filed on 21 February 2020.
In short, the applicant says that, given the complexity of the matter and the volume of materials to be reviewed and considered; the need to engage its own costs assessor; and the need to engage with ILP as a key decision-maker in the litigation, it has not had sufficient time to respond to the respondent’s offer.
Secondly, the applicant says that, in these circumstances, the better course is not to appoint a referee now, but to order that the costs questions raised by the interlocutory applications be referred to a Registrar for mediation, pursuant to s 53A of the Act. The applicant submits that a mediation would be significantly cheaper and, if successful, quicker than a contested reference. The applicant submits that, with proper engagement by the parties and the assistance of an independent mediator, there is a good prospect that the parties may be able to resolve their remaining differences without further contest.
THE POSITION OF ILP
The respondent submits that ILP should be made jointly and severally liable with the applicant for the costs of the appeal. The respondent submits that the applicant has a paid-up capital of only $3.00, and no other known assets. The Litigation Funding Agreement between ILP and the applicant obliges ILP to pay any adverse costs order that the Court makes in the proceedings. It submits that where a non-party not merely funds the proceedings but substantially controls and/or stands to benefit from them, justice will ordinarily require that, if the proceedings fail, the non-party should pay the successful party’s costs. It submits that ILP stood to make a profit on both legal costs incurred and on gross recoveries awarded in the proceedings had the applicant been successful. Therefore, ILP had a real interest in the appeal, which went beyond the mere recovery of funds provided. The respondent also points to the fact that ILP had been made jointly and severally liable for the respondent’s costs of the primary proceeding. It has not provided any reasons why it should not also be made jointly and severally liable for the costs of the appeal.
There is evidence before me of the correspondence passing between the respondent and the solicitors for ILP on this question. On 13 March 2020, the respondent’s solicitors sent an email to ILP’s solicitors asking whether ILP intended to oppose an order that it be made jointly and severally liable for the costs of the appeal. The email noted that, in the primary proceeding, ILP had consented to such an order being made.
On 16 March 2020, the respondent’s solicitors sent an email to the applicant’s solicitors and ILP’s solicitors enclosing a draft of the orders he was seeking. The draft orders in respect of the appeal included an order that ILP be made jointly and severally liable with the applicant for the respondent’s costs of the appeal.
On the evening of 16 March 2020, the applicant’s solicitors responded. The email shows that it was copied to ILP’s solicitors. The email expressed the view that the question of a lump sum costs order should be referred to mediation and not referred to a referee. It stated, in part:
I confirm that our clients (notwithstanding what you perceive as a delay on their part) are of the view that they want to resolve the issue in the quickest and most cost-effective way possible. They do not wish to cause further delay by the request for mediation and hope to resolve the issue on the day.
I infer that the reference to “our clients” in the quoted passage is to the applicant and ILP, given the connection between them in the litigation.
The evidence before me indicates that as of 19 March 2020 no separate response was made by ILP’s solicitors. This was the date by which, failing agreement, the parties were to provide their proposed orders, written submissions and affidavits dealing with the areas of disagreement on the course that should be adopted.
On 24 March 2020, my Associate received an email from ILP’s solicitors stating that ILP did not wish to be heard separately and that it adopted the submissions made by the applicant, in particular that the question of lump sum costs be referred to mediation.
In light of these matters, I will proceed on the basis that ILP is aware that the respondent seeks an order that it be made jointly and severally liable with the applicant of the costs of the appeal and that it wishes to say nothing on that particular issue beyond the position that has been adopted by the applicant.
CONSIDERATION
I accept that, as at 31 January 2020, the applicant might not have been in a position to respond meaningfully to the offer that the respondent made on 24 December 2019. That offer, of course, is not before me. Nonetheless, the respondent has filed some affidavit evidence in support of the respective interlocutory applications and thus the costs orders he seeks. I accept that this material raises matters that require the applicant’s detailed consideration and that this might take more time than the respondent allowed. Even so, the extension of time that the applicant sought for keeping the offer open (6 March 2020) has now well and truly passed.
I am not persuaded that I should make an order that the costs questions raised by the interlocutory applications be referred to a Registrar for mediation, pursuant to s 53A of the Act. It is now three months since the respondent made its offer. Even allowing for the Christmas/New Year period, a substantial period of time has now passed and the question of costs should be determined as soon as reasonably possible so that the primary proceeding and the appeal can be brought to an end.
I note that the applicant does not oppose the principle that, if unresolved, the costs questions raised by the interlocutory applications should be referred to a referee for inquiry and report.
I am satisfied that the better case management decision is to make orders now appointing the referee and providing for the conduct of the inquiry. Given what I perceive to be the complexity of the questions raised, I propose to allow an appropriate period of time for the inquiry to be undertaken and for the report to be prepared. This will allow the parties time to engage in meaningful discussions, concurrently with the procedures I envisage for holding the inquiry, if that is their choice.
As to the order sought against ILP, I am satisfied that such an order is appropriate, for the reasons advanced by the respondent.
There has been no objection to the form of the orders proposed by the respondent. The substance of the orders he seeks in each proceeding will be made, except that I will allow a longer period for the referee to report to the Court, namely by 30 June 2020. It may be that the report can be finalised before then. However, if the complexity of the task is such that a report cannot be finalised by that date, I would certainly entertain an application to extend the period.
DISPOSITION
Orders, substantially as sought by the respondent, will be made in each proceeding.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate:
Dated: 27 March 2020
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