QBE Insurance (Australia) Ltd v Coffey
[2015] WADC 110 (S)
•17 SEPTEMBER 2015
QBE INSURANCE (AUSTRALIA) LTD -v- COFFEY [2015] WADC 110 (S)
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 110 (S) | |
| Case No: | CIV:2622/2015 | 10, SEPTEMBER 2015, 24 MARCH 2016 & 6 MAY 2016 | |
| Coram: | DAVIS DCJ | 17/09/15 | |
| PERTH | 9/06/16 | ||
| 28 | Judgment Part: | 1 of 1 | |
| Result: | Defendants successful in part on application for special costs orders No apportionment of costs made Costs to be payable in any event Defendants' claim for compensation dismissed | ||
| PDF Version |
| Parties: | QBE INSURANCE (AUSTRALIA) LTD JOSHUA COFFEY FRANK RICCI JGQ DEVELOPMENTS PTY LTD JGQ COMMERCIAL PTY LTD |
Catchwords: | Costs Defendants successful in application to discharge freezing order Whether special costs order should be made Costs of compliance with ancillary order Whether successful defendants should have all or only a portion of their costs Whether costs should be payable forthwith Whether defendants entitled to compensation pursuant to plaintiff's undertaking |
Legislation: | Legal Profession Act 2008 (WA) s 280 |
Case References: | Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) Como v Helmers [2011] WASC 179 (S) Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382 Cristovao v Butcher Paull & Calder [2008] WADC 49 Dakin Farms Pty Ltd v Elite Grains Pty Ltd [2012] WADC 43 European Bank Ltd v Evans (2010) 240 CLR 432 Fagan v Morien [2008] WASC 54 (S) Fraser v Burswood Resort (Management) Ltd [2014] WASCA 130 (S) Frigger v Lean [2012] WASCA 66 Frigger v Professional Services of Australia Pty Ltd (No 3) [2014] WASCA 69 Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Herbertson v Morton [2013] WADC 7 (S) Mango Boulevard Pty Ltd v Whitton; in the matter of Spencer (Bankrupt) (No 2) [2011] FCA 845 Miller v Evans [2010] WASC 127 (S) Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113 (S) O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) QBE Insurance (Australia) Ltd v Coffey [2015] WADC 110 Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; (2009) 257 ALR 503 Singh v Kaur Bal [2011] WASC 303 (S) |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 9 JUNE 2016 FILE NO/S : CIV 2622 of 2015 BETWEEN : QBE INSURANCE (AUSTRALIA) LTD
- Plaintiff
AND
JOSHUA COFFEY
First Defendant
FRANK RICCI
Second Defendant
JGQ DEVELOPMENTS PTY LTD
Third Defendant
JGQ COMMERCIAL PTY LTD
Third Party
Catchwords:
Costs - Defendants successful in application to discharge freezing order - Whether special costs order should be made - Costs of compliance with ancillary order - Whether successful defendants should have all or only a portion of their costs - Whether costs should be payable forthwith - Whether defendants entitled to compensation pursuant to plaintiff's undertaking
Legislation:
Legal Profession Act 2008 (WA) s 280
Result:
Defendants successful in part on application for special costs orders
No apportionment of costs made
Costs to be payable in any event
Defendants' claim for compensation dismissed
Representation:
Counsel:
Plaintiff : Mr S C M Wong
First Defendant : Mr E M Heenan (24 March 2016)
: Mr N D Billington (6 May 2016)
Second Defendant : No appearance
Third Defendant : Mr E M Heenan (24 March 2016)
: Mr N D Billington (6 May 2016)
Third Party : No appearance
Solicitors:
Plaintiff : Moray & Agnew
First Defendant : Gibson Lyons
Second Defendant : Not applicable
Third Defendant : Gibson Lyons
Third Party : Not applicable
Case(s) referred to in judgment(s):
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Como v Helmers [2011] WASC 179 (S)
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 5] [2012] WASC 382
Cristovao v Butcher Paull & Calder [2008] WADC 49
Dakin Farms Pty Ltd v Elite Grains Pty Ltd [2012] WADC 43
European Bank Ltd v Evans (2010) 240 CLR 432
Fagan v Morien [2008] WASC 54 (S)
Fraser v Burswood Resort (Management) Ltd [2014] WASCA 130 (S)
Frigger v Lean [2012] WASCA 66
Frigger v Professional Services of Australia Pty Ltd (No 3) [2014] WASCA 69
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Herbertson v Morton [2013] WADC 7 (S)
Mango Boulevard Pty Ltd v Whitton; in the matter of Spencer (Bankrupt) (No 2) [2011] FCA 845
Miller v Evans [2010] WASC 127 (S)
Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113 (S)
O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S)
QBE Insurance (Australia) Ltd v Coffey [2015] WADC 110
Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; (2009) 257 ALR 503
Singh v Kaur Bal [2011] WASC 303 (S)
1 DAVIS DCJ: On 17 September 2015 I discharged a freezing order originally granted on 28 July 2015 by Stone DCJ against the first and third defendants in this action, Mr Coffey and JGQ Developments Pty Ltd (to whom I shall refer together as 'the defendants'). My reasons for discharging the order are contained in QBE Insurance (Australia) Ltd v Coffey [2015] WADC 110 (my initial reasons).
2 At the time of the making of the order for discharge, the issue of costs was adjourned to a special appointment, with programming orders made. The defendants also foreshadowed making an application for compensation, pursuant to the undertaking as to damages given by the plaintiff, QBE, when the freezing order was made. These matters were originally listed for hearing before me in November 2015, but adjourned.
3 The defendants now seek the following orders:
1. The plaintiff pay the first and third defendants' costs of the plaintiff's chamber summons dated 23 July 2015 (when the original freezing order was sought), to be taxed without limitation of time and total costs imposed under Item 10(a) of Table B of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 (WA) (the Determination) and paid forthwith.
2. The plaintiff pay the first and third defendants' costs of the first and third defendants' chamber summons dated 20 August 2015 (ie their application to discharge the freezing order), to be taxed without limitation of time and total costs imposed under Item 10(a) of Table B of the Determination and paid forthwith.
3. The plaintiff pay the first and third defendants the sum of $30,781 pursuant to the undertaking as to damages provided by the plaintiff on 28 July 2015.
4 These orders are opposed by QBE. While acknowledging that it should pay the defendants' costs, QBE has submitted that the appropriate orders are that:
1. The plaintiff pay 50% of the first and third defendants' costs of the chamber summons for freezing order dated 23 July 2015 and the chamber summons to set aside freezing order dated 20 August 2015, to be taxed if not agreed.
2. The first and third defendants pay the plaintiff's costs of this application.
5 QBE has submitted that the limits on item 10(a) of the Determination should not be lifted, that there should apportionment because the defendants raised a number of issues upon which they failed, and costs should not be paid forthwith but that the usual costs orders should apply. QBE has also submitted that the defendants have not made out any basis for compensation pursuant to the undertaking.
6 For the reasons set out in this judgment I will allow in part the defendants' application to remove the limits of the Determination, but only in respect of the plaintiff's chamber summons dated 23 July 2015 and only to lift the limits by a relatively small amount. I am not satisfied that costs should be apportioned, as QBE has sought. I am not prepared to order that the costs be paid forthwith and I will order that they be taxed and paid in any event. In relation to the application for compensation I am not satisfied that the defendants have proved they are entitled to the compensation as sought.
General principles relating to making a special costs order to remove the limits of the Determination
7 Section 280(2) of the Legal Profession Act 2008 (WA) permits me to make a special costs order, removing the limits of the Determination, if I consider that Determination is inadequate because of the unusual difficulty, complexity or importance of the matter. The following principles apply to my consideration.
8 In order for the court to make a special costs order under s 280(2) the court must form an opinion that has two components. First, the court must form an opinion that the costs allowable under the Determination would be inadequate. Secondly, the court must then conclude that such inadequacy arises because of the unusual difficulty, complexity or importance of the matter: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC254 (S) [11] (Martin CJ); Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) [3].
9 The requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit imposed by the Determination: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [15], [16], [22];Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [4].
10 Because the inadequacy of costs is ordinarily decided in advance of taxation, this should be addressed as a matter of impression rather than of detailed evaluation: Heartlink [20], [22]; Cape Lambert Resources [3].
11 Evidence of the costs actually incurred by the applicant will not always be required. In some cases it may be necessary to prove the criteria in s 280 by specific evidence. In other cases, the court may be able to form a view from its knowledge of the case (particularly when the judge hearing the costs application was the judge hearing the matter): Frigger v Lean [2012] WASCA 66 [81] - [82] (Allanson J, Newness and Murphy JJA agreeing).
12 An applicant is also not required to demonstrate that a limit is inadequate by reference to a detailed evaluation of a draft bill for taxation: Heartlink [20] - [21]; Frigger v Lean [82]. The court should not conduct a provisional taxation of costs and then ascertain whether, on the basis of that provisional taxation, the amount allowed in the Determination is inadequate. That would result in significantly usurping the role of the taxing officer and would also result in the undesirable practice of double handling of the assessment of costs. All that is required of a court is that it form a view on the question of whether there is an arguable case to be put before a taxing officer to the effect that the limits imposed by the Determination would be inadequate because of the 'unusual difficulty, complexity or importance of the matter': O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) [20] - [21] (Martin CJ).
13 'Unusual' in s 280(2) qualifies 'difficulty' only and not the terms 'complexity' or 'importance': Heartlink [17]; Lambert Resources [5].
14 'Unusual difficulty' suggests that a matter was more difficult than would ordinarily be expected in a matter of the kind under consideration: Fagan v Morien [2008] WASC 54 (S) [19] (Templeman J); Como v Helmers [2011] WASC 179 (S) [18] (Corboy J).
15 The reference to 'importance' includes consideration of whether the work done was appropriate to the significance of the issues that arose in the litigation. The significance of issues can be to the parties themselves or to other prospective parties, or to the public or to the community generally: Heartlink [17] - [19].
16 However, the fact that the matter is considered to be of great importance to the parties, or even a matter of significance to others beyond the parties, may not be enough. As stated by Hall J when he considered the equivalent provision to s 280(2) in the Legal Practice Act 2003 (WA) (s 215) in Miller v Evans [2010] WASC 127 (S) [36] – [37]:
In regards to the importance of the matter, it would be too easy to dismiss the matters at issue in this case as being a neighbourhood dispute. The matter was considered to be of great importance to the parties and, as I have noted, proceeded over six days. It could also be fairly argued that the issues are of significance to prospective parties given that the restrictive covenant at issue in this case is one that burdens other properties in the area. One of the matters at issue at the trial was the interpretation of the covenant and the nature of structures which are covered by it. I accept that that is a matter of significance to others beyond the parties to this action.
However, those factors alone do not convince me that the matter was of unusual difficulty, complexity or importance. The usual order of party/party costs might be too readily departed from if cases such as this were thought to justify the exercise of the power under s 215(2). No doubt an argument could be made for almost every case that is difficult, complex or important in some respect or other. Certainly the parties might often see it that way. In my view the issues in this case would not in themselves justify an order in broad terms …
17 The assessment of the question of whether or not there is 'unusual difficulty, complexity or importance' is also a matter of impression rather than science or mathematics. It is essentially a value judgment having regard to the court's experience of the particular case (the court being familiar with the way the case was conducted and the issues which were litigated) and compared to the usual run of cases: O'Rourke [23] - [24]; Dakin Farms Pty Ltd v Elite Grains Pty Ltd [2012] WADC 43 [25] (Commissioner Gething); Cape Lambert Resources [3].
Are the costs allowable under the Determination inadequate?
18 The first matter about which I must be satisfied, is that the Determination is inadequate, in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the Determination limits.
19 Item 10(a) of the Determination allows, for proceedings in chambers, an amount of $11,550. That allows for an appearance by counsel at a one day hearing and two days preparation. On the evidence before me (which include invoices and summaries of the work done annexed to the affidavit of Neale Billington sworn 9 October 2015), the amount to be claimed by the defendants on taxation is $61,044.50.
20 It is apparent that the solicitors for the defendants have 'merged' the costs of each of the chamber summonses. It is true that there were common hearings of both summonses on occasions, but there were other separate hearings and appearances on the plaintiff's chamber summons dated 23 July 2015 before the filing of the defendants' chamber summons dated 20 August 2015 and the substantive hearing on 10 September 2015.
21 There are also, as submitted by counsel for QBE, some items in the schedules of both counsel's and the solicitors' costs which either would not be allowed on a taxation, or might be claimable under another item in the Determination.
22 Even after allowance for these matters, I am satisfied that it is fairly arguable that the defendants' costs in relation to the two chamber summonses (and in particular the hearing on 10 September 2015) may tax at an amount greater that the limits imposed by item 10(a) of the Determination.
23 However, that is not the end of the matter because I need to be satisfied, and form an opinion, that the inadequacy arises because of the unusual difficulty, complexity or importance of this matter.
Was there an unusual difficulty, complexity or importance in the matter?
24 The defendants submit that there were unusual difficulties and complexity as a result of a combination of the following:
(a) The number and length of the sittings required for the hearing of the applications;
(b) The involvement of third parties – JGQ Commercial Pty Ltd (JGQ Commercial) and National Australia Bank (NAB);
(c) The substantial body of evidence adduced by the parties. There were particularly long affidavits in support, annexing documentation; and
(d) The length and complexity of the parties' written submissions and of counsel's oral submissions.
25 First dealing with the number and length of the sittings, as I recorded in my initial reasons [18] - [22], there were a number of hearings before the substantive hearing of the two chamber summonses which took place before me on 10 September 2015. However, the appearances were generally short, with the parties seeking further time to see if the matter could be resolved. When the matters finally came on for hearing on 10 September 2015, it took a single day.
26 In relation to the involvement of the third parties, JGQ Commercial and NAB, their involvement took up little time and neither of them was involved in the hearing of 10 September 2015. NAB sought variations to the freezing order to take account of its interest as the mortgagee of certain properties. On 4 September 2015 orders were made in favour of NAB by consent after discussions between all parties. Similarly, that part of the freezing order against JGQ Commercial was discharged on 4 September 2015 by the consent of the parties. In the circumstances I do not consider that the involvement of these third parties added to the difficulty or complexity of this matter.
27 In relation to the evidence adduced by the parties, the length of the affidavits mostly related to the annexures to those affidavits. The first affidavit filed on behalf of QBE, sworn 23 July 2015 by Mr Hutchings, included the documents relevant to the background to QBE's claim, the deed of indemnity by which each of Mr Coffey and Mr Ricci agreed to indemnify QBE, and the various claim forms relevant to the payments QBE made on the claims by homeowners under the insurances. None of the background was contentious and indeed no issue was taken by the defendants that QBE had an arguable case.
28 Counsel for the defendants submitted that Mr Coffey's affidavit sworn 21 August 2015 sets out in some detail 'the factual scenario of his finances' (ts 308) in order to explain why there was no risk of dissipation of assets. While he did provide details of a number matters which I summarised in my initial reasons [86] and [87], his affidavit did not go into any detail about his personal financial circumstances. As I noted in my initial reasons [86](e) and [90] he did not provide any details of the debts he owed to other creditors. Again, the length of his affidavit largely relates to the annexures.
29 The party's submissions were thorough and detailed but in my view did not raise anything which would be considered more difficult or complex than would ordinarily be expected in a matter of the kind under consideration.
30 I should also observe that the freezing order from the outset was a limited one, confined only to specific properties registered in the names of the first and third defendants and, until 4 September 2015, the third party, JGQ Commercial. There was no prohibition on either of the defendants or the third party from disposing of assets or their interest in assets other than those specific properties.
31 Whether or not the freezing order should be discharged turned on whether there was a danger or risk of dissipation of assets. This did not involve any new principles of law and only involved an assessment of the evidence that was before me.
32 Most of the legal issues arose from the three grounds upon which the defendants argued that the original freezing order made by his Honour Judge Stone should never have been made:
(a) There was insufficient evidence before his Honour Judge Stone to demonstrate the danger or risk of dissipation of assets;
(b) The order was over-reaching and exceeded the monetary value of QBE's claim and therefore went beyond the jurisdiction of the court; and
(c) There had been non-disclosure at the hearing before his Honour Judge Stone.
33 The defendants were unsuccessful in setting aside the freezing order on the basis of any of these three grounds, for the reasons set out in my initial reasons. I do not consider the issues were unusually difficult or complex, either legally or factually.
34 Finally, the defendants assert the importance to the parties. (It is not submitted that this was of general importance to the public). The submission made on behalf of the defendants is that the applications were very important to the parties because as set out in par 14 of the defendant's written submissions:
The effect of the freezing order was to indefinitely prevent:
(a) the sale by Mr Coffey and Mrs Coffey (a non-party) of their [Francis street] property;
(b) the progression and completion of the [Villena Parade] development; and
(c) any dealings with the Brown Street property.
35 Looking at these submissions, the issue of the importance in this case really only relates to the importance to the defendants.
36 In addition, these submissions really overstate the effect of the freezing order. It did not 'indefinitely prevent' dealings over those properties. While initially the freezing order against Mr Coffey was couched in terms of preventing his disposal of the Francis Street property, it became apparent that he had already done so (having entered into a contract of sale before the freezing order, unknown to QBE). The settlement of the sale was not imminent. The freezing order was later varied so that he was restrained from disposing of the sale proceeds of the property.
37 While Mr Coffey and JGQ Commercial were ordered not to dispose of or deal with or diminish the value of the interest in the other two properties, the NAB had an interest in, and was supervising, these properties as mortgagee (see my initial reasons [87]). On 4 September 2015 a specific variation to the freezing order was made to add an order that the freezing order did not prevent the NAB from exercising any of its rights, powers or entitlement with respect to its mortgages.
38 While I accept the matter was important to the defendants, I do not believe that they were in a different position from any other person who is affected by the making of a freezing order and who is applying to discharge such an order.
39 In my view none of the matters raised by the defendants demonstrate that this case was of unusual difficulty, complexity or importance.
40 There is, however, another matter which in my view does raise an issue in relation to the difficulty or complexity of the plaintiff's chamber summons dated 23 July 2015 (when the original freezing order was sought), and this relates to ancillary orders made by his Honour Judge Stone (orders 9 - 12).
41 The ancillary orders required the defendants to provide, by certain dates in August 2015, information as to the first defendant's assets and bank accounts over which he had control, information as to loan or credit facilities or other agreements secured by mortgages over the properties the subject of the freezing order, and the most recent financial statements of the third defendant.
42 The defendants complied with these orders. When reviewing both the invoices and schedule F annexed to Mr Billington's affidavit of 9 October 2015 I observed items which relate to the costs of compliance with the orders.
43 I called for a further hearing so that I could hear submissions from each of the parties as to whether these items were costs or compensation recoverable pursuant to the undertaking and, if they were costs:
(a) whether they properly fall within item 10(a) of the Determination or some other item of the Determination; or
(b) whether I should make a specific order that the plaintiff pay the defendants' reasonable costs of compliance with the ancillary orders, to be taxed.
44 At that hearing the defendants provided a schedule setting out the costs incurred in relation to compliance with the ancillary orders, which total $2,970.
45 After hearing further submissions, I have concluded (and both parties agreed) that these are costs covered by item 10(a) of the Determination and no other item, and there is no scope for making a specific order that the plaintiff pay the defendants' reasonable costs of compliance with the ancillary orders. This is because the ancillary orders were designed to elicit information from the defendants for the purpose of determining, on the next return date of the plaintiff's chamber summons, the continuation of the freezing order and any variations to that order. The costs of compliance with the ancillary orders are therefore costs which were incurred incidental to the hearing of the plaintiff's chamber summons.
46 In my view the requirement to comply with the ancillary orders takes this matter out of the usual 'proceedings in chambers' provided for in the Determination item 10(a). I consider the compliance with the ancillary orders to be an unusual difficulty or complexity, leading to the defendants incurring additional costs which would not be incurred in the usual run of chambers proceedings dealt with in this court.
47 Accordingly I consider that, in respect of the first and third defendants' costs of the hearing of the plaintiff's chamber summons dated 23 July 2015, the limits of item 10(a) of the Determination should be lifted to take into account the defendants' costs of compliance with the ancillary orders.
Conclusions on special costs order application
48 I will grant that part of the application by the defendants for special costs orders in respect of the chamber summons of the plaintiff dated 23 July 2015. I am satisfied that I should make an appropriate order to ensure that the defendants have the ability to recover their costs of compliance with the ancillary orders under item 10(a) of the Determination.
49 Section 280(2) of the Legal Profession Act permits me to, inter alia, order the payment of costs above those fixed by the Determination, or fix higher limits of costs than those fixed in the Determination. In my view it is appropriate to take the latter course to cater for the defendants' claimed costs of compliance with the ancillary orders of $2,970. Of course, whether those claimed costs are reasonable and should be allowed will be a matter for taxation.
50 I therefore propose to order, on the application for costs as to the plaintiff's chamber summons dated 23 July 2015, that the limits as to time and total costs in item 10(a) of the Determination be lifted from $11,550 to $14,520 to enable the taxation officer to make a reasonable allowance for the defendants' compliance with the ancillary orders.
51 I refuse the application by the defendants for special costs orders in respect of their chamber summons dated 20 August 2015. While I have formed the opinion that the costs under Item 10(a) of the Determination may tax at an amount which is greater than the allowable costs under that Item, I am not of the opinion that the inadequacy arises because of any unusual difficulty, complexity or importance in their application for the discharge of the freezing order.
Whether the costs should be apportioned
52 QBE has submitted that I should make some apportionment of the costs, ordering that it should pay only 50% of the defendants' costs, because the defendants were unsuccessful on the three issues which I have identified and set out in [32] above.
53 Counsel for the defendants submitted that ultimately they did succeed in having the freezing order discharged and that not a great deal of the costs was involved in arguing the three issues. Most of the costs were incurred in the preparation of the matter generally, including reading the affidavits filed on behalf of QBE and preparing the affidavits of Mr Coffey. It was not correct to say that 50% or even a vast bulk of the costs were attributable to the arguments on the three issues. In any event, as the defendants were ultimately successful, costs should follow the event.
54 The principles relevant to QBE's apportionment application were most recently summarised by the Court of Appeal in Fraser v Burswood Resort (Management) Ltd [2014] WASCA 130 (S) [2]:
The general principles governing the resolution of the contentious issues with respect to costs are well established. Although the court has a general discretion with respect to the costs of all proceedings before the court, 'the Court will generally order that the successful party to any action or matter recover his costs'. However, where a generally successful party has increased the costs by introducing an issue or issues on which that party failed, the court may order that party to pay the costs of that issue or issues or, more commonly in practice, will reduce the costs payable to the successful party to reflect the costs attributable to the issue or issues on which that party failed. However, the discretion to reduce the costs payable to the generally successful party by reason of its failure on one or more issues will generally only be exercised where the issues upon which the successful party failed are discrete and severable, and have added to the costs of the proceedings in a significant and readily discernible way. Further, the discretion to reduce the costs of a generally successful party will be exercised with caution, for the reasons enunciated by this court in Bowen v Alsanto Nominees Pty Ltd: …
55 In Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) the Court of Appeal stated:
5 It is clear that while the court has a broad discretion as to costs, generally costs will follow the event: Rules of the Supreme Court 1971(WA), O 66 r 1(1). It is incumbent upon the unsuccessful party to satisfy the court that there are good reasons why it should not pay the other party's costs: Nikolaou v Papasavas, Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 407.
6 The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: see MacKinnon v Petersen (Unreported, NSWSC, 19 April 1989) (Cole J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] - [68] (McHugh J). Litigation is time-consuming, expensive and burdensome enough already.
7 In addition, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 [24].
8 In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the position was put as follows:
'[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7].'
57 Applying these principles, I am not satisfied that I should exercise my discretion to apportion the costs because of the three issues raised by the defendants.
58 The three issues were all part of the arguments presented on the defendants' application to discharge the freezing order, on which they were ultimately successful. It is true that the three issues occupied a substantial portion of the parties' written submissions and some time at the hearing on 10 September 2015. However these issues did not raise any new facts or affect any of the affidavit evidence filed in support of either of the plaintiff's or defendant's chamber summonses. There was, in substance, one contest – whether the freezing order should continue or be discharged – which arose from the same facts: seeSingh v Kaur Bal [2011] WASC 303 (S) [14] (Beech J).In the circumstances I do not consider that it can be said the issues were discrete and severable so that the defendants should be deprived of some portion of their costs. This is a different situation, in my view, from that in Netline Pty Ltd v QAV Pty Ltd [No 2].
59 Counsel for QBE pointed to an exchange I had with counsel for the defendants on 4 September 2015 where I queried whether the defendants would be seriously pursuing their jurisdictional challenge (ts 101 – 102). However, I am mindful of what was said in Bowen v Alsanto Nominees. While parties should be encouraged to consider carefully what matters they put in issue, the defendants were entitled to canvass all the issues which they considered might be material to the decision to discharge the freezing order. I should be slow to use, as the basis for a costs order, a dissection of the case to identify who succeeded on which issues.
60 In the particular circumstances of this case, I am satisfied that justice would not served by deciding the question of costs according to success on particular issues. As the defendants were ultimately successful in their application to discharge the freezing order, they are entitled to their costs without apportionment.
Whether the costs, as taxed, should be payable forthwith
61 The District Court has a usual practice of ordering the payment of costs from interlocutory hearings to be payable 'in any event'. The practice in this court is not to make an order for payment of costs forthwith unless there is something out of the ordinary so as to warrant the making of such an order: see Dakin Farms Pty Ltd v Elite Grains Pty Ltd [52] (Commissioner Gething); Herbertson v Morton [2013] WADC 7 (S) [7] (Eaton DCJ); Mango Boulevard Pty Ltd v Whitton; in the matter of Spencer (Bankrupt) (No 2) [2011] FCA 845 [23] and [24] (Logan J).
62 The general rule that costs should be payable 'in any event', has been said to serve a number of purposes. It avoids multiple taxations. It avoids the apparent unfairness which may arise if, at an early stage in the proceedings, the party who is ultimately successful is required to pay costs to a party who is ultimately unsuccessful. It also prevents interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties: Mango Boulevard Pty Ltd v Whitton [23], applying Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; (2009) 257 ALR 503 [20] (Besanko J).
63 In support of their application to have costs paid forthwith, however, the defendants referred to the Supreme Courts Consolidated Practice Direction (CPD) 4.7.1 which provides that as a general rule, when an order for costs is to be made against a party in interlocutory proceedings, the costs will be ordered to be paid forthwith or by a particular date. It was submitted that while the CPD does not bind the District Court, and CPD 4.7.1 is also expressed as not fettering in any way the discretion as to costs, it does provide guidance as to how I should exercise my discretion on costs on this occasion. My attention has been drawn to the following considerations set out in the CPD [4] - [6]:
(a) As an action progresses, the parties have an interest in knowing the quantum of costs awarded to or against them, or the liability for which awaits the cause.
(b) The historical practice of ordering costs to be paid 'in any event' does not sufficiently serve the purpose of discouraging ill-considered or needless interlocutory applications. The overwhelming majority of actions settle and the orders are not enforced. The apparent benefit to parties in whose favour such orders are made is illusory.
(c) Where actions do proceed to judgment and an order for costs, the subsequent taxation would be simplified if the costs of interlocutory procedures had already been dealt with.
64 The reasons why the defendants argued that I should exercise my discretion and make an order that costs be payable forthwith include the fact that the interlocutory proceedings were difficult, complex and important and that the quantum of costs involved is substantial. Further, by their nature the interlocutory proceedings were of a type made very early in an action which is unlikely to resolve for some time and there is likely to be a long delay until the conclusion of the principal proceedings.
65 I have already dealt with the first two reasons put forward by the defendants as to why I should make an order in this case for payment of the costs forthwith. With the exception of the defendants' compliance with the ancillary orders, I have found that these interlocutory proceedings were not unusually difficult, complex or important. The limits of the Determination Item 10(a) will apply with one relatively small increase to cater for the defendants' costs of compliance with the ancillary orders.
66 There remains the third reason, which is the delay between these interlocutory proceedings and the conclusion of the main proceedings.
67 It is of some relevance that the current proceedings are unlikely to remain in the District Court. The parties have advised that an application will be made to transfer this matter to join other similar indemnity claims in Supreme Court proceedings which QBE has taken against the same defendants.
68 In my view, while this may be considered a factor which could be taken into account in the exercise of my discretion, having regard to all of the factors, the authorities and the parties' submissions, I have concluded that I should not depart from the usual practice in the District Court and that there is nothing which justifies the making of an order for costs payable forthwith.
69 I accept that the principles adopted by the Supreme Court in the CPD may be a guide to the exercise of my discretion in an appropriate case in this court. That has certainly been the view of at least one other judge of this court, who took into account that one of the reasons stated in the CPD for making it a general rule in the Supreme Court that costs orders in interlocutory proceedings be fixed and ordered to be paid forthwith is to discourage ill-considered or needless interlocutory applications: see Cristovao v Butcher Paull & Calder [2008] WADC 49 [48] – [50]. In that case, Keen DCJ exercised his discretion to make a costs order against a plaintiff with the costs to be taxed and paid forthwith, first in relation to summary judgment applications which were defective and fell within the category of applications that ought to be discouraged (see [56]), and secondly in relation to other applications which he considered were ill-considered or needless and ought to be discouraged (see [58]).
70 In this case I do not consider that QBE's application for a freezing order was ill-considered, or needless, or in the category of applications that ought to be discouraged. Indeed in my initial reasons [73] I concluded that there was sufficient evidence to justify the initial granting of the freezing order on a limited basis for a short period until the matter could be argued on notice to the defendants.
71 In my view there has been nothing in QBE's conduct which might be considered as unreasonable or reprehensible which, when coupled with a long delay between the interlocutory proceedings and the conclusion of the action, could justify making an order for costs to be paid forthwith: Mango Boulevard Pty Ltd v Whitton [24].
72 I do not consider that the first reason for the general rule in the Supreme Court as set out in the CPD, namely that the parties have an interest in knowing the quantum of costs awarded to or against them, is a significant factor when I am looking at the exercise of my discretion in this case. As the limits in item 10(a) of the Determination will apply with the one increase I have allowed for the costs of compliance with the ancillary orders, the parties will have a fair idea of the quantum of costs.
73 As to the last consideration set out in the CPD as raised by the defendants, that the subsequent taxation would be simplified if the costs of interlocutory proceedings had already been dealt with, this must be understood in the context of the CPD which provides that the usual rule in the Supreme Court is that costs will be fixed. There is no application by the defendants for the costs to be fixed, and the costs will have to be taxed, whether they are ordered to be payable forthwith or in any event. With that in mind, I consider that the common law considerations discussed in Mango Boulevard Pty Ltd v Whitton [23]have greater weight, in particular the avoidance of multiple taxations and the unfairness which may arise if QBE is ultimately successful and required to pay costs to the defendants at this early stage. Such an unfairness looms large in light of the obvious financial difficulties faced by each of these defendants, as I discussed in my initial reasons.
74 Finally, if I impose the usual orders in this court, that costs are payable in any event, there is no reason why taxation of the costs of these interlocutory proceedings could not take place in the Supreme Court, if this matter is transferred there, as the Determination also applies to the taxation of costs in the Supreme Court.
75 Accordingly, I am of the view that this is not a case where the usual order for costs made in the District Court should be departed from. The costs which I order to be taxed will be on the usual terms that they are payable in any event.
Orders which should be made in relation to costs
76 Subject to hearing from the parties, the orders I propose to make in relation to costs are as follows:
1. The plaintiff pay the first and third defendants' costs of the plaintiff's chamber summons for freezing order dated 23 July 2015 and the first and third defendants' chamber summons to set aside freezing order dated 20 August 2015, to be taxed if not agreed, in any event.
2. On taxation of the first and third defendants' costs of the plaintiff's chamber summons for freezing order dated 23 July 2015 the limits to time and total costs imposed under item 10(a) of Table B of the Legal Practitioners (Supreme Court) Contentious Business Determination 2004 (WA) be lifted from $11,550 to $14,520 to enable the taxation officer to make a reasonable allowance for the first and third defendants' compliance with orders 9 to 12 of the orders made by his Honour Judge Stone on 28 July 2015, as varied by his Honour Judge Eaton on 6 August 2015.
Whether a compensation order pursuant to the plaintiff's undertaking should be made
77 I move now from the question of costs to consider the defendants' application for compensation pursuant to QBE's undertaking given at the time of the making of the freezing order.
78 The undertaking given by QBE was as follows:
The Plaintiff undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
79 An undertaking is an obligation owed to the court, not to the parties, and thus the granting of compensation is a matter of discretion. A claimant for compensation under an undertaking must show, 'by evidence, or by inference from evidence, a prima facie case both that the grant of the injunction was a cause of his damage and that but for it he would not have suffered that damage': Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 (Air Express) (320) (Stephen J).
80 It will be just and equitable to award as compensation the damages which flow directly from the injunction (or, in this case, freezing order) and which could have been foreseen when the order was made: Air Express (266 - 267); European Bank Ltd v Evans (2010) 240 CLR 432 [10] - [18]. As the High Court explained in European Bank v Evans [29], the inquiry involves three questions:
(a) what is the loss that is now alleged?
(b) did that loss flow directly from the court's order?
(c) could a loss of the kind that was sustained have been foreseen at the time of the order?
81 It is important to distinguish between loss or damage sustained as a response to the litigation, as opposed to resulting from the imposition of the restraints by the freezing order. Only the latter is recoverable: see Air Express (311) (Barwick CJ), (312 - 313) (Gibbs J), (318, 320) (Stephen J), (324 - 325) (Mason J).
82 Having regard to the terms of the undertaking given by QBE, as I have set out in [78], the defendants' right to compensation will turn on whether their loss or damage arose because they were 'affected by the operation of the order' – in other words, the loss or damage resulted from the imposition of the restraints by the freezing order: see Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd[No 5] [2012] WASC 382 [109] - [110]; Frigger v Professional Services of Australia Pty Ltd (No 3) [2014] WASCA 69 [120] and [127] - [128].
83 The compensation claimed by the defendants pursuant to QBE's undertaking is as follows:
(a) costs sought by the NAB;
(b) the sum of $12,705, being fees charged by Acumen Advising and Accounting ('Acumen'), a firm in Queensland, to the first defendant, Mr Coffey;
(c) the sum of $14,520, being fees charged by Acumen to the Brown Street Trust. The third defendant JGQ Developments is the trustee of that Trust.
84 Some details of the claim by NAB and the services provided by Acumen are set out in an affidavit of Mr Coffey sworn 15 January 2016. What is set out in the affidavit is general and lacking in any meaningful details.
85 I will consider each of these claims separately.
Costs sought by the NAB
86 The background to the claim by NAB is important. When the orders which I mentioned in [26] above were made by consent on 4 September 2015, they included an order that QBE pay NAB's costs of the application fixed in the sum of $1,000. After the orders were made, however, NAB sought additional costs from the defendants' solicitors. By an email dated 9 October 2015 sent by Mr Wayne Rushton, a director of Ferrier Hodgson, to Mr Billington, the defendants' solicitor, the following professional costs were outlined:
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Please note that the above includes the $1,000 cost order already granted to King & Wood Mallesons.
87 This is a claim, therefore, for additional costs of $3,556 over and above the fixed costs of $1000 the subject of the order of 4 September 2015. I have been informed in the affidavit of Mr Coffey (par 8.5) that NAB has added the additional costs (said by Mr Coffey to be $2,556, which I consider is an error) 'to the loan facility and those costs will be repaid from realisations under its security, rather than deducted directly from [JGQ] Development's account'.
88 I have a difficulty with the NAB's claim for additional costs over and above the order made on 4 September 2015. In my view it renders nugatory the costs order made by the court with the consent of NAB. Leaving that aside, however, I am not satisfied that any of the additional costs can be said to be loss or damage which flows directly from the freezing order.
89 I have been provided with no explanation as to how the NAB's claimed additional costs are made up, in particular what the 'advisory' costs relate to. I do not know whether the costs are advisory to the freezing order, or whether they were advisory to the NAB's position following JGQ Development's default under the mortgage. A notice of default dated 14 August 2015 has been provided to me (Annexure A to Mr Coffey's affidavit) in which the default is the failure to comply with NAB's first demand dated 11 June 2015, a date well before QBE's application for the freezing order.
90 Assuming that the advisory costs relate to the freezing order, it appears that all of the additional costs said to have been incurred by NAB are in response to the proceedings for the freezing order, as opposed to being 'affected by the operation of the order'.
91 Applying the last two inquiries from European Bank v Evans at [29], I am not satisfied that NAB's additional costs flow directly from the court's order (as opposed to the proceedings for the freezing order). Further, the additional costs could not have been foreseen at the time when the freezing order was made nor, I would add, could they have been foreseen at the time the order was varied on 4 September 2015 to take into account NAB's interests, including the costs which were fixed in NAB's favour, and ordered to be paid by QBE.
Acumen's fees charged to the first defendant
92 Turning now to the Acumen accounting fees in the sum of $12,705 charged to Mr Coffey, his explanation (par 10.1 of his affidavit) was that he sought advice and assistance on the following matters:
10.1.1 The effect of the Freezing Orders on my joint interest with Emma in [Francis Street] and our impending sale of that property.
10.1.2 The effect of the Freezing Orders on the Brown Street Trust and how that affected me as a beneficiary of that trust.
10.1.3 The effect of the Freezing Orders on the Bellevue Trust and me as a beneficiary of that trust and matters relating to issues arising with Mr Basso-Brusa as a result of the Freezing Orders as against Commercial.
10.1.4 Complying with the Ancillary Orders and obtaining information required to comply with Ancillary Orders.
10.1.5 The effect of the Freezing Orders of the business structure in which I am involved.
10.1.6 The effect of the Freezing Orders on my ability to derive trust income and service liabilities.
93 The account from Acumen to Mr Coffey dated 6 October 2015 does not exactly reflect what is stated in Mr Coffey's affidavit and his explanation for seeking advice from Acumen. There is, for example, no item in the account from Acumen which refers to advising on or assisting Mr Coffey with complying with the ancillary orders. The itemisation in that account is as follows:
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Insolvency Consulting – Relating to the QBE Freezing Order over the property at [the Francis Street property] Insolvency Consulting – Relating to the QBE Freezing Order over the property owned by the Brown Street Trust and the effects on you as a beneficiary Insolvency Consulting – Relating to the QBE Freezing Order over the Property owned by JGQ Commercial Pty Ltd and the effects upon yourself as a beneficiary and advice into your partners insistance [sic] in transfering [sic] the property. Insolvency Consulting – Advice relating to resturcture [sic] of corporate entities in light of the impact of the QBE Freezing Order Urgency Charge 25% GST |
1,500.00 2,000.00 2,000.00 2,000.00 1,050.00 1,155.00 |
Paying by credit card will attract a 1.5% surcharge | |
94 There is no other detail provided as to the engagement of Acumen or the advices provided.
95 I am not satisfied that any of the matters set out in Mr Coffey's affidavit or the accounting fees as set out in the first account from Acumen, is loss or damage which flows directly from the freezing order. These costs are not loss or damage caused by the operation of the freezing order, but rather are costs relating to the proceedings for the freezing and ancillary orders: Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd (No 5); Frigger v Professional Services of Australia Pty Ltd (No 3).
96 Further, having reviewed each of the items in the first account from Acumen and applying the tests in European Bank v Evans, I find as follows.
97 In relation to the first amount of $3,000 this relates to advice on the impact of the freezing order 'on your overall position'. Given the limited operation of the freezing order, I am unable to accept that the costs of this advice is loss which flows directly from the making of the freezing order or that these costs could have been foreseen as a result of the making of the order.
98 The second amount of $1,500, the advice relating to the freezing order over the Francis Street property, appears to relate to costs incurred in response to the proceedings, as opposed to a loss resulting or flowing directly from the imposition of the restraints by the freezing order (as to which, see my observations in [36] above). I do not consider this to be a loss of the kind that could have been foreseen as a result of the making of the order.
99 As to the third amount of $2,000 relating to the Brown Street Trust and 'the effects on you as a beneficiary', I am unable to accept that this is loss or damage caused by the making of the freezing order. Again, this item does not flow directly from the restraints imposed by the freezing order, nor could a loss of the kind have been foreseen at the time of the order.
100 The next amount of $2,000, from my knowledge of this matter, relates to the freezing order against the third party, JQC Commercial Pty Ltd in relation to the Bellevue Terrace property, which was discharged on 4 September 2015. This is also addressed in par 10.1.3 of Mr Coffey's affidavit. It has not been explained what is meant by the reference in the Acumen account to 'your partner's insistence in transferring the property'. It may be that this refers to the issues which Mr Coffey had with Mr Basso-Brusa, given the matters in the evidence before me as discussed in my initial reasons, in particular [93] and [96]. In so far as Mr Coffey required advice on the effect of the freezing order on him 'as a beneficiary' of the Bellevue Trust (which is not a correct summary of the position), or matters relating to issues arising with Mr Basso-Brusa, I am not satisfied either that the costs flow directly from the restraints imposed by the freezing order or that those costs could have been foreseen at the time of the order.
101 Given the limited operation of the freezing order, I am not satisfied that the freezing order could have given rise to the need for advice relating to the 'restructure of corporate entities' which gives rise to the last item for $2,000. I have no information about these costs. Notwithstanding the lack of details, counsel for the defendants confirmed that I should proceed on the basis of this information before me and if the evidence does not satisfy the onus of proof, then the defendants fail (ts 340). I am not satisfied that this is something which could flow directly from the freezing order. It has not been satisfactorily explained to me how it could have been foreseen that the freezing order which was limited to specific properties would require the need to obtain advice on the restructure of corporate entities.
102 Finally, the 'urgency charge of 25%' is not a loss which flows directly from the making of the freezing order or which could have been foreseen at the time of the making of the order.
Acumen's fees charged to the third defendant
103 I turn now to the claim for the sum of $14,520, being fees charged by Acumen to the Brown Street Trust. Mr Coffey has explained he also sought advice from Acumen on the following (par 10.2 of his affidavit):
10.2.1 The effect of the Freezing Orders on the Brown Street Trust.
10.2.2 The financial effect of the Freezing Orders on the Brown Street Trust as regards completion of the [Villena Parade] Development and outstanding liabilities for that development.
10.2.3 The effect of the Freezing Orders on inter-entity loans involving Developments.
10.2.4 Consideration of possible implications of the Freezing Orders as regards liabilities to third parties.
10.2.5 Communication with the NAB to try and avoid it exercising its rights to appoint a receiver by reason of the Freezing Orders.
10.2.6 Exploring alternative funding options with a view to paying to out the NAB to avoid it appointing a receiver.
104 The itemisation in the second account from Acumen to the Brown Street Trust dated 6 October 2016 is as follows:
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Insolvency Consulting – Review of Financial Information relating to QBE Freezing Order and inter-company loans for JGQ Developments Pty Ltd ATF and their effect thereof. Preparation of 2014 Financial Reports persuant [sic] to the QBE Freezing Order for JGQ Developments Pty Ltd Insolvency Consulting – Advice relating to Assets and Liabilities for QBE Freezing Order for presentation to Court. Urgency Charge 25% GST |
2,000.00 6,000.00 1,000.00 1,200.00 1,320.00 |
Paying by credit card will attract a 1.5% surcharge | |
105 Once again, there is no other detail provided as to the engagement of Acumen or the advices provided. With this lack of evidence, I am not satisfied that the matters on which Mr Coffey sought advice as set out in his affidavit or that any of the accounting fees as set out in the second account from Acumen, is loss or damage which flows directly from the freezing order. The two matters set out in Mr Coffey's affidavit par 10.2.5 and 10.2.6 appear to me to relate to JGQ Development's default under its mortgage with NAB which, as I have already noted at [89] above, occurred before QBE's application for the freezing order.
106 Further, having reviewed each of the items in the second account from Acumen to the Brown Street Trust and applying the tests in European Bank v Evans, I find as follows.
107 Because of the limited operation of the freezing order and in the absence of any adequate evidence about why this was required, I am not satisfied that the first item of $3,000 is compensable pursuant to the undertaking. The description of this item as 'insolvency consulting' indicates that these costs are not loss or damage caused by the operation of the freezing order. I am not satisfied that this item flows directly from the restraints imposed by the freezing order, or that a loss of this kind could have been foreseen at the time of the order.
108 The second item for the amount of $2,000 relates to two distinct matters. The first part of this item refers to the 'review of financial information' relating to the freezing order, but there is also second part which refers to advice given about 'inter-company loans'. The first part of this item appears to relate to compliance with the ancillary orders. In my view these were costs incurred in response to the proceedings for the freezing order, as opposed to anything resulting from the imposition of the restraints by the freezing order, and thus I am not satisfied that this was loss or damage which flows directly from the freezing order. However, if the costs relate to compliance with the ancillary orders, those costs may be claimed on taxation as a disbursement pursuant to Item 34 of the Determination.
109 As to the second part of the item for $2,000, because of the limited operation of the freezing order, I am not satisfied that costs of advice relating to 'inter company loans' was caused by the making of the order. It is not something which could flow directly from the restraints imposed by the freezing order or which could have been foreseen.
110 I am not satisfied that the amount of $6,000 for the 'preparation of 2014 financial reports' for JGQ Developments Pty Ltd is recoverable by the defendants. These costs appear to relate to compliance with the ancillary orders. In my view these were costs incurred in response to the proceedings for the freezing order, as opposed to anything resulting from the imposition of the restraints by the freezing order, and thus I am not satisfied that this was loss or damage which flows directly from the freezing order. However, if these costs relate to compliance with the ancillary orders, they may be claimed on taxation as a disbursement pursuant to Item 34 of the Determination
111 The following amount of $1,000 for advice relating to assets and liabilities 'for QBE Freezing Order for presentation to court', may relate to complying with the ancillary orders even though this is preceded by the words 'Insolvency Consulting'. If so, these costs may also be claimed on taxation as a disbursement pursuant to Item 34 of the Determination. These costs are not recoverable as compensation because they were incurred in response to the proceedings for the freezing order, as opposed to resulting from the imposition of the restraints by the freezing order.
112 For the same reasons I have given in relation to the first account from Acumen to Mr Coffey, the urgency surcharge of 25% is not recoverable as compensation.
Conclusions and orders on defendants' application for compensation
113 For these reasons, I dismiss the defendants' application for compensation pursuant to the undertaking.
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