Pascoe v Voukidis Holdings Pty Ltd (Costs)

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FEDERAL COURT OF AUSTRALIA

Pascoe v Voukidis Holdings Pty Ltd (Costs) [2024] FCA 1058

File number(s): VID 105 of 2023
Judgment of: BUTTON J
Date of judgment: 13 September 2024
Catchwords: COSTS – indemnity costs – allocation of costs award as between related parties – where Applicant succeeded on most substantive issues – indemnity costs awarded
Legislation:

Federal Court of Australia Act 1976 (Cth) s 43

Federal Court Rules2011 (Cth) rr 40.01, 40.02
Cases cited:

Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179

Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116

Pascoe v Voukidis Holdings Pty Ltd [2024] FCA 915
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 13
Date of last submission/s: 30 August 2024
Date of hearing: Determined on the papers
Counsel for the Applicant:  Mr J Evans KC
Solicitor for the Applicant: Sinisgalli Foster
Counsel for the Respondents:  Mr D Williams KC with Mr B Devanny
Solicitor for the Respondents: CLIC Law

ORDERS

VID 105 of 2023
BETWEEN:

SCOTT DARREN PASCOE

Applicant
AND:

VOUKIDIS HOLDINGS PTY LTD (ACN 067 238 144)

First Respondent

ZV ASSET MANAGEMENT PTY LTD (ACN 132 620 378)

Second Respondent

CHRISTOS VOUKIDIS

Third Respondent

ORDER MADE BY:

BUTTON J

DATE OF ORDER:

13 SEPTEMBER 2024

THE COURT ORDERS THAT:

1.The Second and Third Respondents are jointly and severally liable to pay 90% of the costs of the Applicant on an indemnity basis, to be taxed if not agreed.

2.There be no order as to costs against the First Respondent.

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


REASONS FOR JUDGMENT

BUTTON J:

  1. On 16 August 2024, I handed down judgment following the trial of this proceeding: Pascoe v Voukidis Holdings Pty Ltd [2024] FCA 915 (which I will refer to as the principal judgment). Final orders were made on relief, other than costs, on 23 August 2024. These reasons address the costs consequences. They assume familiarity with the principal judgment.

  2. The Court’s power to award costs is broad and discretionary: Federal Court of Australia Act 1976 (Cth) s 43. In the ordinary course, costs will follow the event and an order for costs will be made “as between party and party”: Federal Court Rules2011 (Cth) (Rules) r 40.01. While the Court will usually award costs to the successful party on a party and party basis, indemnity costs may be awarded where the circumstances of the case warrant a departure from the usual course: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 (Treasury Wine) at [4] (Jagot, Yates and Murphy JJ). See also r 40.02(a) of the Rules, providing that a party who is entitled to costs may apply to the Court for a costs order “other than as between party and party”, including…

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Details
Case
[2024] FCA 1058
Decision Date

CaseChat Overview and Summary

The case before the court involves an application for costs in the context of a proceeding brought by the trustee in bankruptcy of Peter and Kathy Voukidis against Voukidis Holdings Pty Ltd and related parties. The primary focus of the proceeding was to restore shares in Voukidis Holdings Pty Ltd to the bankrupt estates of Peter and Kathy Voukidis, to relieve the estates of an onerous loan, and to declare certain loans not to be secured against the bankrupts' real property. The court's judgment on the substantive issues was handed down on 16 August 2024, with final orders regarding relief made on 23 August 2024. The present reasons address the costs consequences of the proceeding.

The legal issues before the court pertained to the allocation of costs between the parties involved, particularly in light of the Applicant's success on most substantive issues. The court had to determine whether the usual rule of awarding costs on a party and party basis should be departed from and, if so, whether indemnity costs should be awarded. The court considered whether any special or unusual features of the case warranted such a departure, as established in previous case law.

In determining the appropriate allocation of costs, the court found that Voukidis Holdings Pty Ltd should be exempt from the costs order due to its connection to the bankrupt estates of Peter and Kathy Voukidis. The court noted that the shares in Voukidis Holdings Pty Ltd, which were central to the proceeding, are now an asset in the bankruptcies. The court concluded that special or unusual features existed in this case, warranting the imposition of costs on an indemnity basis but exempting Voukidis Holdings Pty Ltd from the costs order. Accordingly, the Second and Third Respondents were ordered to pay 90% of the Applicant's costs on an indemnity basis.

ORDERS:
1. The Second and Third Respondents are jointly and severally liable to pay 90% of the Applicant's costs on an indemnity basis, to be taxed if not agreed.
2. There be no order as to costs against the First Respondent.

Orders

Orders of the court

1. The Second and Third Respondents are jointly and severally liable to pay 90% of the costs of the Applicant on an indemnity basis, to be taxed if not agreed.

2. There be no order as to costs against the First Respondent.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 16 August 2024, I handed down judgment following the trial of this proceeding: Pascoe v Voukidis Holdings Pty Ltd [2024] FCA 915 (which I will refer to as the principal judgment). Final orders were made on relief, other than costs, on 23 August 2024. These reasons address the costs consequences. They assume familiarity with the principal judgment. The Court’s power to award costs is broad and discretionary: Federal Court of Australia Act 1976 (Cth) s 43. In the ordinary course, costs will follow the event and an order for costs will be made “as between party and party”: Federal Court Rules2011 (Cth) (Rules) r 40.01. While the Court will usually award costs to the successful party on a party and party basis, indemnity costs may be awarded where the circumstances of the case warrant a departure from the usual course: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 (Treasury Wine) at [4] (Jagot, Yates and Murphy JJ). See also r 40.02(a) of the Rules, providing that a party who is entitled to costs may apply to the Court for a costs order “other than as between party and party”, including on an indemnity basis. The discretion of this Court to depart from the ordinary course of awarding party and party costs will usually not be exercised unless some special or unusual feature arises: Treasury Wine at [5] (Jagot, Yates and Murphy JJ), citing Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3] (Finn J). For the reasons set out below, I consider that this proceeding does exhibit special or usual features that warrant the imposition of costs on an indemnity basis but exempting Voukidis Holdings Pty Ltd from the costs order. I address first why no costs order should be made against Voukidis Holdings Pty Ltd, even though it is the First Respondent, before addressing why I have concluded that the costs order should be on an indemnity basis. The Applicant is the trustee in bankruptcy of Peter and Kathy Voukidis. As a result of the orders made following the trial, 1003 of the 1004 ordinary shares in Voukidis Holdings Pty Ltd, which were transferred to Christos Voukidis (the Third Respondent) by ZV Asset Management Pty Ltd (the Second Respondent), are to be restored to the bankrupt estates of Peter and Kathy Voukidis. Those shares are now an asset in the bankruptcies. Throughout the course of the trial, Voukidis Holdings Pty Ltd was controlled by Christos Voukidis, who was the company’s sole director. The main objects of the proceeding brought by the Applicant were: to have the shares in Voukidis Holdings Pty Ltd restored to the bankrupt estates of Peter and Kathy Voukidis; for the bankrupt estates of Peter and Kathy Voukidis to be relieved of an onerous loan advanced by Voukidis Holdings Pty Ltd (then controlled by Christos Voukidis); and to have the loans made by that company to Peter and Kathy Voukidis declared not to be secured against real property held by the bankrupts (including by setting aside a registered mortgage).

Ratio Decidendi

Legal Principle Established

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