Shanks, E. v David Trevor Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3595 of 1994
  )
GENERAL DIVISION                 )

BETWEEN:EILEEN SHANKS

Applicant

AND:DAVID TREVOR PTY LIMITED

Respondent

28 April 1995

REASONS FOR JUDGMENT
LOCKHART J.
This is an application to wind up a company. The applicant is Eileen Shanks and the company is David Trevor Pty Limited. The dispute that underlies the matter arising under the Corporations Law concerns claims by former employees of the company for past wages and other emoluments. There are five of those former employees.

The notice of demand which is the foundation of the application to wind up from Mrs Shanks particularises the amount of her claim as having five ingredients which total some $9,228.63.

Following the filing and serving of the notice of demand, correspondence ensued between the solicitors for the company and the applicant, and there were conversations between the solicitors which are referred to in their respective affidavits which I have read.

The solicitors on behalf of their clients settled the substantive disputes between the company and all five former employees by the payment by the company of the sum of $20,000 in full satisfaction of their respective claims. No reference was made in any relevant discussions or correspondence to the questions of costs of the application to wind up the company by Mrs Shanks. It is submitted on behalf of Mrs Shanks that in all the circumstances costs were not considered by the solicitors in the discussions or by their respective clients and that the assumption is that, having agreed upon a global figure of $20,000, it says nothing as to costs, and costs should now follow the event.

The solicitor for the company says that, although no reference was made to the question of costs in the relevant correspondence or discussions, the inference should be drawn that the solicitors, and therefore the parties, assumed that the figure of $20,000 was to be inclusive of all liabilities of the company to the five people concerned including a liability that might otherwise flow from costs, if the proceeding were to go ahead and be contested.

Having perused the correspondence and read the affidavits, there is some degree of conflict in the evidence between the solicitors as to what was said, but nothing of any substance, it seems to me. In my opinion, the discussions between the solicitors which resulted in a sensible resolution of the matter were discussions in which neither solicitor adverted to the question of costs, and the assumption one gleans from the material is that the payment of the sum of $20,000 was to have no element of costs at all so that if costs were not subsequently agreed, then they would follow the event by order of the court. I do not therefore regard the settlement as inclusive of any question of costs.

It is agreed that the application should be dismissed. Accordingly, the court orders that the application be dismissed and that the company, David Trevor Proprietary Limited, pay the costs of Mrs Shanks of the application, including reserved costs, if any.

I order also that the costs of the application will include the costs of the notice of motion of 20 March 1995.

I certify that this and the preceding two (2) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart.

Associate

Dated: 28 April 1995

Solicitors for the Applicants : W G McNally & Co

Solicitors for the Respondent : Paul Etherington & Associates

Date of Hearing : 28 April 1995
Date of Judgment : 28 April 1995

This case involves Eileen Shanks as the applicant seeking to wind up David Trevor Pty Limited, a company, based on claims for unpaid wages and other emoluments by former employees. The Federal Court of Australia was asked to decide whether the company should be wound up and, if so, what the financial implications were, including any costs associated with the proceedings.

The primary legal issue before the court was whether the settlement of the substantive claims by the former employees, which amounted to $20,000, included any provision for the costs of the winding-up application. The applicant argued that the settlement did not cover costs, which should therefore be awarded to her. Conversely, the company's solicitor contended that the settlement amount was meant to cover all liabilities, including potential costs.

Justice Lockhart reviewed the correspondence and affidavits from both parties and found that there was no explicit mention of costs in the settlement discussions. The court concluded that the settlement was intended to be without any costs component and that if costs were not agreed upon separately, they should follow the event, meaning they would be awarded to the applicant. Consequently, the court dismissed the winding-up application and ordered that the company pay the applicant's costs of the application, including any reserved costs, and the costs of the notice of motion.

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