Royal v El Ali (No 3)

Case [2016] FCA 1573

FEDERAL COURT OF AUSTRALIA

Royal v El Ali (No 3) [2016] FCA 1573

File numbers: NSD 1731 of 2013
NSD 771 of 2014
Judge: DAVIES J
Date of judgment: 22 December 2016
Catchwords: COSTS – application for costs fixed in lump-sum – whether appropriate and practicable to make lump-sum costs order – whether apportionment methodology as between the two proceedings was fair and reasonable – whether there can be a reduction in the amount of inter‑partes costs for failure to comply with requirements of the Legal Profession Act 2004 (NSW) – application of indemnity principle – whether there are costs to be indemnified – whether a joint and several costs order should not be made
Legislation:

Federal Court (Bankruptcy) Rules 2016 (Cth), r 13.01

Federal Court of Australia Act 1976 (Cth), s 43(3)(d)

Federal Court Rules 2011 (Cth), r 40.02(b)

Legal Profession Act 2004 (NSW), ss 309, 310, 317, 323, 324, 327
Cases cited:

Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) (No 2) [2015] FCA 527; (2015) 106 ACSR 302

Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119

Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506; (2012) 290 ALR 288

Catto v Hampton Australia (in liq) [2008] SASC 231

Central Queensland Development Corporation Pty Ltd v Sunstruct Pty Ltd [2015] FCAFC 63; (2015) 106 ACSR 127

Fitzpatrick v Keelty (No 2) [2008] FCA 742

LM Investment Management Limited (Administrators Appointed) v The Members of the LM Managed Performance Fund [2014] QSC 54

Mainieri & Anor v Cirillo [2014] VSCA 227; (2014) 47 VR 127

Mourik v VonMarburg [2016] VSC 601

Perigo v Workers Compensation Nominal Insurer & Anor (No 3) [2013] NSWSC 6

Selliah v Minister for Immigration and Multicultural Affairs [1998] FCA 469

Shaw v Yarranova Pty Ltd & Anor [2010] VSC 567

Sunland Waterfront (BVI) Limited v Prudentia Investments Pty Ltd (No 4) [2013] VSC 669

Tomasetti v Brailey [2012] NSWSC 120

Ventouris Enterprises Pty Ltd v DIB Group Pty Ltd (No 4) [2011] NSWSC 720

Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474
Date of hearing: 11 November 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 56
Counsel for the Applicants: C Birch SC with P Thew
Solicitors for the Applicants: Watson Mangioni Lawyers Pty Limited
Counsel for the First Respondent: R Carey
Solicitor for the First Respondent: D Massey
Counsel for the Second and Third Respondents in NSD 1731 of 2013 and the Second Respondent in NSD 771 of 2014: D Barlin
Solicitors for the Second and Third Respondents in NSD 1731 of 2013 and the Second Respondent in NSD 771 of 2014: Bartier Perry
Solicitor for the liquidator of the Fifth Respondent in NSD 1731 of 2013: S McKenzie of Colin Biggers & Paisley Lawyers
Counsel for the Sixth Respondent in NSD…

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Details
AGLC
Royal v El Ali (No 3) [2016] FCA 1573
Case
[2016] FCA 1573
Decision Date

CaseChat Overview and Summary

The case of Royal v El Ali (No 3) was heard in a NSW court and involved a dispute over costs related to two separate proceedings brought by the applicants against the respondents. The applicants sought a lump-sum costs order for the two proceedings, while the respondents contested the fairness and appropriateness of such an order. Additionally, the applicants argued for an indemnity principle to apply, and the respondents raised concerns about the apportionment methodology between the two proceedings.

The court needed to determine whether it was appropriate and practicable to make a lump-sum costs order in this case, and if so, what the appropriate apportionment between the two proceedings should be. The court also had to consider whether there could be a reduction in the amount of inter-partes costs for the respondents' failure to comply with the Legal Profession Act 2004 (NSW). Furthermore, the court needed to decide whether there were costs to be indemnified, and if a joint and several costs order should be made.

The court concluded that, despite the separate and distinct nature of the transactions, there was a significant commonality of evidence, issues, and facts concerning the impugned transfers of shares and properties. As such, the court found it appropriate to make a joint and several costs order as between the various respondents. The court fixed the costs that the respondents are liable to pay the applicants in the sum of $212,166 for the 2014 proceedings and $442,668 for the 2013 proceedings, which will be payable on a joint and several basis. The respondents' payment of the applicants' costs was stayed until 2 February 2017 or until further order.

The court made the following orders: (1) the respondents pay the applicants' costs fixed in the sum of $212,166, and (2) Order 1 be stayed until 2 February 2017 or until further order. Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Orders

Orders of the court

1. The respondents pay the applicants’ costs fixed in the sum of $212,166.

2. Order 1 be stayed until 2 February 2017 or until further order.

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

First, contrary to the respondents’ submissions, although each of the transactions which the applicants sought to be impugned was separate and distinct in the sense that the relevant issue for determination was whether that particular transaction was a voidable transaction under s 37A of the Conveyancing Act 1919 (NSW) and/or s 121 of the Bankruptcy Act 1966 (Cth), there was a significant commonality of evidence, issues and in the substratum of facts concerning the impugned transfers of shares and properties, particularly given that each of the individual respondents (excluding Mr Stojanovski) were directors of one or more of the respondent companies at various times, and borne out by the fact that the evidence of the individual respondents, including Mr Stojanovski, traverse not only the particular transactions involving them, but also the other transactions the subject matter of the proceeding. It is also noteworthy that the respondents did not conduct separate and distinct defences not attributable to joint conduct of the respondents in defending the claims against them. Furthermore, the applicants were successful against all of the respondents. In the circumstances, I am not persuaded that costs should not be joint and several as between the various respondents.CONCLUSION In each proceeding there will be an order fixing the costs that the respondents are liable to pay the applicants, such costs to be payable on a joint and several basis, as follows:(a)in respect of the 2013 proceedings (67.6%): the sum of $442,668;(b)in respect of the 2014 proceedings (32.4%): the sum of $212,166.

Ratio Decidendi

Legal Principle Established

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