Re Crafted Capitol Pty Ltd (In Liquidation) (No 2)

[2021] ACTSC 233

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Re Crafted Capitol Pty Ltd (In Liquidation) (No 2)
Citation:	[2021] ACTSC 233
Hearing Date:	Determined on written submissions.
Decision Date:	27 September 2021
Before:	Mossop J
Decision:	See [9]
Catchwords:	PRACTICE AND PROCEDURE – COSTS – Interlocutory process – application to terminate the winding up of the first respondent – whether the court should exercise discretion to order that costs form part of the costs of winding up – where offer of compromise made – desirable to deal with costs in a way that finalises proceedings – no order as to costs
Legislation Cited:	Corporations Act 2001 (Cth), s 482(4) Court Procedure Rules 2006 (ACT), Pt 2.10, r 1012(2)
Cases Cited:	Re Crafted Capitol Pty Ltd (In Liquidation) [2021] ACTSC 190
Parties:	Crafted Holdings Pty Ltd (ACN 168 210 624) (First Applicant)
Crafted Central Pty Ltd (ACN 605 053 709) (Second Applicant) Crafted Capitol Pty Ltd (In Liquidation) (ACN 605 053 763) (First Respondent)
Henry Joseph Kazar in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (In Liquidation) (Second Respondent)
Lachlan MacArthur Abbot in his capacity as joint and several liquidator of Crafted Capitol Pty Ltd (In Liquidation) (Third Respondent)
Bloc (ACT) Pty Ltd (ACN 149 091 592) (Fourth Respondent)
Representation:	Counsel
K Petch (Applicants)
A Greinke (Fourth Respondent)
Solicitors
Terracon Legal (Applicants)
Mills Oakley (Fourth Respondent)
File Number:	SC 79 of 2021
MOSSOP J:
Introduction

1.       On 20 August 2021 I dismissed the application made by Crafted Holdings Pty Ltd (Holdings) and Crafted Central Pty Ltd (Central) to terminate the winding up of Crafted Capitol Pty Ltd (Capitol): Re Crafted Capitol Pty Ltd (In Liquidation) [2021] ACTSC 190. On 26 August 2021 I made further orders to finalise proceedings SC 79 of 2021, SC 88 of 2021 and ES 9 of 2020. The only outstanding issue was the costs of proceedings SC 79 of 2021.

2. Bloc (ACT) Pty Ltd (Bloc) initially relied upon an offer of compromise and sought that Central and Holdings pay its costs on a party and party basis until 12 July 2021 and then a solicitor and client basis thereafter. In submissions in reply, it changed position and sought a direction under s 482(4) of the Corporations Act 2001 (Cth) that the costs form

“part of the costs, charges and expenses of the winding up”. However, it also sought an

additional order that the question of any costs order against Central and Holdings be
reserved.

3. Central and Holdings submitted that there should be no order in favour of Bloc, with the result that it would bear its own costs. They submitted that the ordinary rule in relation to costs does not apply because of the operation of s 482 of the Corporations Act which permits costs to be met as part of the cost of the liquidation and that Bloc had voluntarily joined itself in the proceedings at a time when the applicants had tried to pay it the full amount owed to it by Capitol.

4. An order under s 482(4) of the Corporations Act is one which is available in the circumstances, but it is discretionary. The written submissions provided by Bloc do not explain the reason for its change of position. That change of position may be because it anticipates that any costs ordered to be paid under s 482(4) will fall within the obligation

created by the undertaking given to the court by Central to pay the liquidator’s fees and

disbursements. If that is the case, then the court would have been assisted by the submissions making that position express. The orders proposed by Bloc would reserve the question of costs against Central and Holdings, leaving it open to reopen the issue

of costs if it didn’t achieve satisfaction from the order under s 482(4). In my view it is

desirable to deal with the question of costs in a way that finalises the proceedings and
does not allow a party to subsequently open another front in the war.

5.       I do not accept the submission made by Holdings and Central that Bloc is disentitled from a costs order because it chose to be joined as a party to the application. It had an obvious interest in the application and the procedural decision by the applicants not to initially join it to the proceedings should not affect the substantive consideration of the question of costs.

6. The offer of compromise is of some significance. The offer proposed that the proceedings be dismissed and that there be no order as to costs. In substance it was an invitation to the applicants to capitulate. If it was sufficient to enliven the provisions of the rules (a question which I do not decide), it was, at best, the slenderest of compromises, targeted only at obtaining a cost advantage. If the rules in Pt 2.10 of the Court Procedures Rules 2006 (ACT) are engaged, then I would order otherwise under rule 1012(2). That is for the following reasons.

7.       First, the offer included only the slenderest of compromises, if any. Second, the proceedings involved the administration of a liquidation rather than proceedings over legal rights. Third, the positions taken by each of the relevant parties can be characterised as reasonable notwithstanding the ultimate outcome. Fourth, the ultimate result was determined not by the respective rights of the parties but rather for pragmatic reasons having regard to the progress made by the liquidator in quelling the controversies between the parties.

8.       In my view, for the above reasons, whether or not the rules relating to offers of compromise are engaged, the appropriate order is that as between Bloc, Central and Holdings there be no order as to the costs of the interlocutory process dated 1 June 2021. That will include the costs reserved by McWilliam AsJ on 5 August 2021.

Order
9.	The order of the court is:

1.       In relation to the costs of the interlocutory process dated 1 June 2021 as between Bloc (ACT) Pty Ltd, Crafted Central Pty Ltd and Crafted Holdings Pty Ltd, there is no order as to costs.

I certify that the preceding nine [9] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 27 September 2021