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Re Windy Dropdown Pty Ltd

Re Windy Dropdown Pty Ltd

Case [2010] NSWSC 1099 27 August 2010

Administrators’ Disbursements

Costs

Interlocutory Orders

Corporate Law & Governance

Civil Litigation & Procedure

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CITATION: In the Matter of Windy Dropdown Pty Limited (Subject to a Deed of Company Arrangement) ACN 080 130 114; Green v Equititrust Limited ACN 061 383 944 (Formerly Equitiloan Limited) [2010] NSWSC 1099

HEARING DATE(S): 27 August 2010

JUDGMENT DATE :
27 August 2010

JURISDICTION: Equity

JUDGMENT OF: White J

EX TEMPORE JUDGMENT DATE: 27 August 2010

DECISION: Refer to paras 56-58 of judgment.

CATCHWORDS: CORPORATIONS – application by administrators of deed of company arrangement for directions in respect of giving effect to costs orders made against company – whether amount for which company liable under costs orders is “Administrators’ Disbursements” under deed of company arrangement – where claim not defended by deed administrators but by third party pursuant to leave under Corporations Act 2001 (Cth), s 237 with deed administrators’ consent – defending claim part of deed administrators’ duties in implementing deed – company’s liability to costs order arose from deed administrators’ decision as how claim should be defended – deed administrators’ lack of control over and involvement in litigation not relevant – costs incurred by company considered costs incurred by deed administrators – no basis for apportioning costs incurred before appointment of administrators - PRACTICE AND PROCEDURE – whether court has power to make lump sum costs order under Civil Procedure Act 2005 (NSW), s 98 after costs order already made – appropriate in circumstances to make lump sum costs order – costs not yet referred for assessment – court’s power to make lump sum costs order not spent – whether Civil Procedure Act precludes another judge from making lump sum costs order such that trial judge should make order

LEGISLATION CITED: Corporations Act 2001 (Cth)
Civil Procedure Act 2005 (NSW)
Legal Profession Act 2004 (NSW)

CATEGORY: Procedural and other rulings

CASES CITED: Re Lofthouse; Riverside Nursing Care Pty Ltd (subject to deed of company arrangement) [2004] FCA 93; (2004) 22 ACLC 215
Re Mendarma Pty Ltd (in liquidation) (No 2) [2007] NSWSC 99; (2007) 61 ACSR 601
McCluskey v Pasminco Ltd [2002] FCA 231; (2002) 120 FCR 326
Foots v Southern Cross Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52

PARTIES: Martin John Green and Peter Paul Krejci (Joint Deed Administrators) v Equititrust Limited ACN 061 383 944 (Formerly Equitiloan Limited)

FILE NUMBER(S): SC 2010/87512

COUNSEL: Plaintiff: J T Johnson
Defendant: J A Hogan-Doran with B D Kaplan

SOLICITORS: Plaintiff: Watson Mangioni Lawyers
Defendant: Tucker & Cowen, Solicitors

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Friday, 27 August 2010

Martin John Green and Peter Paul Krejci (Joint Deed Administrators) v Equititrust Limited ACN 061 383 944 (Formerly Equitiloan Limited)

JUDGMENT

1 HIS HONOUR: The plaintiffs are the administrators of a deed of company arrangement executed by Windy Dropdown Pty Limited (subject to deed of company arrangement) ("the company") on 26 August 2004. They seek directions under s 447D of the Corporations Act 2001 (Cth) as to how they should give effect to…

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.

Continue reading Re Windy Dropdown Pty Ltd

Details

AGLC: In the Matter of Windy Dropdown Pty Limited (Subject to a Deed of Company Arrangement) ACN 080 130 114; Green v Equititrust Limited ACN 061 383 944 (Formerly Equitiloan Limited) [2010] NSWSC 1099
Case: [2010] NSWSC 1099
Decision Date: 27 August 2010

CaseChat Overview and Summary

The administrators of a deed of company arrangement brought an application against Windy Dropdown Pty Ltd, seeking directions on how to give effect to costs orders made against the company. The central issue was whether the costs for which the company was liable were to be considered "Administrators' Disbursements" under the deed of company arrangement. This determination hinged on whether the deed administrators had effectively defended the claim and, by extension, whether they were responsible for the costs incurred by the company. The claim was not defended by the deed administrators but by a third party with the consent of the deed administrators under section 237 of the Corporations Act 2001 (Cth). However, the court held that the deed administrators' lack of direct control over and involvement in the litigation did not absolve them of responsibility for the costs, as the decision on how to defend the claim was part of their duties in implementing the deed. The court ruled that the costs incurred by the company were indeed costs incurred by the deed administrators, and there was no basis for apportioning costs incurred before the administrators' appointment.

Further, the court considered whether it had the power to make a lump sum costs order under section 98 of the Civil Procedure Act 2005 (NSW) after an initial costs order had already been made. The court found that it did have the authority to make such an order where appropriate and noted that the costs had not yet been referred for assessment, meaning the power to make a lump sum costs order had not been exhausted. The court also addressed whether the Civil Procedure Act precluded another judge from making a lump sum costs order, concluding that the trial judge should not be precluded from doing so unless there was a compelling reason to the contrary. This ruling clarified the court's discretion in managing costs orders and the implications for future litigation involving company administrators and costs.

Orders