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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] ACTSC 233
Decision Date

CaseChat Overview and Summary

In the Supreme Court of the Australian Capital Territory, Mossop J delivered a decision on the costs associated with the interlocutory process in the case of Re Crafted Capitol Pty Ltd (In Liquidation) (No 2). The court was required to decide whether the costs should be included in the winding-up costs or if another party should bear them. The case involved Crafted Holdings Pty Ltd and Crafted Central Pty Ltd, the applicants, who sought to terminate the winding up of Crafted Capitol Pty Ltd. Bloc (ACT) Pty Ltd, the fourth respondent, initially sought costs on a party and party basis until 12 July 2021, and a solicitor and client basis thereafter, but later sought an order under s 482(4) of the Corporations Act 2001 (Cth) to include the costs as part of the winding-up costs. The applicants argued that there should be no order in favour of Bloc, and Bloc should bear its own costs.

The court considered the discretionary nature of an order under s 482(4) of the Corporations Act and the lack of explanation for Bloc's change of position. The court observed that it was 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. The court rejected the applicants' submission that Bloc was disentitled from a costs order because it chose to be joined as a party to the application. The court found that the offer of compromise, which proposed that the proceedings be dismissed and that there be no order as to costs, was of some significance. However, the court considered that the offer was the slenderest of compromises, targeted only at obtaining a cost advantage. The court also found that the proceedings involved the administration of a liquidation rather than proceedings over legal rights and that the positions taken by each of the relevant parties could be characterised as reasonable notwithstanding the ultimate outcome.

The court concluded that the appropriate order was that there be no order as 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. This order included the costs reserved by McWilliam AsJ on 5 August 2021.

Orders