Shanmugathaas v Paramanirupan (No. 2)

[2019] NSWSC 1496

Supreme Court

New South Wales

Medium Neutral Citation:

Shanmugathaas & Anor v Paramanirupan & Ors (No. 2) [2019] NSWSC 1496

Hearing dates:

8 & 10 October 2019

Date of orders:

01 November 2019

Decision date:

01 November 2019

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Slip rule amendment made. Application to re-open refused. Approval given to a limited amount of receivers’ fees and disbursements incurred since the 19 September judgment.

Catchwords:

APPLICATION TO RE-OPEN – defendants seek to rely upon evidence adduced in a further hearing since the 19 September judgment and with that evidence to re-open the application for the approval of receivers’ fees decided in the 19 September judgment (“the 19 September judgment”) – whether any part of the 19 September judgment can now be re-opened.

 

RECEIVERS – Court appointed receivers – remuneration – previous application for approval by the Court of receivers’ remuneration – approvals given in the September 2019 judgment to most of the receivers claims for fees and disbursements up to 14 May 2019 – further application by receivers made for approval of receivers’ fees and disbursements incurred after 14 May 2019 – whether further fees and disbursements should be allowed, and if so, in what amount.

  SLIP RULE – Court’s calculation of approval of fees and disbursements under the slip rule is said to fail to bring to account a sum for legal costs which by reason of the mathematical logic of the Court’s decision should have been included in the calculation brought to account – whether the 19 September judgment should be amended under the slip rule.

Legislation Cited:

Uniform Civil Procedure Rules 2005, rr 36.15, 36.17

Cases Cited:

Arnold v Forsythe [2012] NSWCA 18
Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300
In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Re Barrell Enterprises [1972] 3 All ER 631
Shanmugathaas & Anor v Paramanirupan & Ors
[2019] NSWSC 1219
Shanmugathaas & Anor v Paramanirupan & Anor [2019] NSWSC 1306

Category:

Procedural and other rulings

Parties:

First Plaintiff: Sivapragasam Shanmugathaas
Second Plaintiff: Suganthiny Shanmugathaas
First Defendant: Sathyanparamatheva Paramanirupan
Second Defendant: Praveena Sathyanparamatheva
Receivers: Sean Wengel and Robert Whitton

Representation:

Counsel:
Plaintiffs: T. Cleary
Defendants: T. Flaherty
Receivers: D.K. Ratnam

  Solicitors:
Plaintiffs: Marcus McCarthy, Nexus Lawyers Pty Ltd
Defendants: Hannah Smith, Markham Geikie Farrugia
Receivers: Nick Kallipolitis, Coleman Greig Lawyers

File Number(s):

2016/310669

Publication restriction:

No

Judgment

1. This is my second judgment in these proceedings. In my first judgment given on 19 September 2019 (“the 19 September judgment”), I approved a claim for receivers’ fees and disbursements up to 14 May 2019 in a sum of $110,271.20, and a receivers’ claim for the legal costs in the sum of $33,423.10: Shanmugathaas & Anor v Paramanirupan & Ors [2019] NSWSC 1219. This judgment should be read with the Court’s first judgment. Events, matters and persons are referred to in both judgments in the same way.

2. As was contemplated in the first judgment, Meagher JA determined the remaining issues between the plaintiffs and the defendants and brought to finality all outstanding disputes apart from the question of determination of the receivers’ fees and disbursements: Shanmugathaas & Anor v Paramanirupan & Anor [2019] NSWSC 1306.

3. The three matters determined in these reasons all relate to the receivers’ fees and disbursements. They are: (1) the receivers’ application under the slip rule to amend the amount of the Court’s orders on 19 September 2019; (2) the defendants’ application to re-open the determinations of the 19 September judgment; and (3) the receivers’ claim for their fees and disbursements covering the period after the Court’s determination of 19 September 2019 in the first judgment.

(1) The Receivers’ Slip Rule Application

4. The receivers apply under the slip rule (Uniform Civil Procedure Rules 2005 (“UCPR”), r 36.17) for an amendment to the Court’s 19 September orders which would have the effect of allowing them a further amount of $13,978.75 on account of the receivers’ legal fees incurred up to 14 May 2019 (excluding the legal fees for bringing the motion for approval). After considering the receivers’ submissions on the issue, the Court agrees that an amendment should be made under the slip rule.

5. The issue arises in the following way. In the 19 September judgment, the Court applied any reductions to the receivers’ claim for fees and disbursements. The Court dealt with the receivers’ fees and disbursements separately.

6. In the 19 September judgment, the Court first recognised (at [106]) that the receivers were claiming fees in the amount of $137,271.20. From these claimed receivers’ fees, the Court deducted three separate amounts of $15,000 (at [108]), $7,000 (at [111]), and $2,000 (at [115]). These deductions totalled $24,000. When deducted from the original claimed figure for receivers’ fees of $137,271.20, this would produce a net figure of $113,271.20 on account of the receivers’ fees (as distinct from disbursements in the form of legal costs), referred to here as “legal disbursements”.

7. In the 19 September judgment, the Court looked at the receivers’ legal disbursements of $16,978.75, as a separate category of costs (at [116]). When analysing the legal fees, the Court also reduced them, by the sum of $3,000. The total of recognised deductions (at [118]) on account of reduced receivers’ fees and reduced disbursements was therefore $27,000 in total (being $24,000 + $3,000.). The first judgment then explained how the Court reasoned to reach the Court’s final order of $110,271.20, as follows:

“118.   A total of $27,000 (being $15,000 + $7,000 + $2,000 + $3,000) should be deducted from the receivers’ claim for remuneration. The net amount of costs allowed is therefore $137,271.20 minus $27,000, which totals $110,271.20. This figure is appropriate in the circumstances, particularly because in March and April 2019 of this year the receivers responded rapidly to the Court’s directions to finish their Entitlements Report in circumstances where the Court was made aware that the $30,000 cap had been substantially exceeded.”

8. As the receivers have pointed out, the Court’s calculation in paragraph 118 includes a deduction from legal fees ($3,000). But the Court deducts that amount solely from the total figure for the receivers’ fees ($137,271.20). It is clearly not appropriate to deduct the figure for legal fees in this way without also bringing to account the claim for legal costs that was being made by the receivers of $16,978.75, from which the $3,000 was being deducted. Allowing the deduction of $3,000 implies the approval of legal disbursements other than this deduction. Under the slip rule, the Court will now bring to account, and otherwise include, the claim from which the $3,000 has been deducted. This means the receivers’ net legal disbursements of $13,978.75 must be included in the 19 September orders. The amending orders made below will reflect those changes.

9. There is an ancillary issue about the costs of this contest. On 4 October 2019, the receivers sought the parties’ consent to raise with the Court the basis for the slip rule application. The defendants did not give their consent to the issue being the subject of an email to the Court. The defendants claimed on 4 October that such communications were prejudicial and the matters should be brought to the Court’s attention on 8 October 2019, or by motion.

10. The receivers now say they were forced to incur costs in respect of their slip rule application. The plaintiffs attended Court on 8 October 2019 and informed the Court that they accepted the receivers’ slip rule amendments. The plaintiffs have consented to the 19 September orders being varied under the slip rule as proposed by the receivers.

11. But the defendants were entitled to have the slip rule issue brought to the Court by motion. The consideration of the 19 September judgment involved in the slip rule application was not a minor calculation error. It involved assessing what amounts should have been brought to account in the Court’s final calculation in accordance with the Court’s own logic. It is a not a matter that the Court would have dealt with in chambers, in any event. No additional costs have been incurred by reason of the matter being dealt with in open Court. No special costs order will be made about this issue.

12. The Court will therefore amend the 19 September orders. The clearer course in applying the slip rule here is to vacate the Court’s 19 September orders and substitute orders, that separate out the receivers’ fees and legal disbursements. The amended orders will be as follows:

1. allow the receivers’ fees up to 14 May 2019 in the sum of $113,271.20;

2. allow the receivers’ disbursements up to 14 May 2019 in the sum of $13,978.75; and

3. allow the receivers’ legal costs on the motion up to 14 August 2019 in the sum of $33,423.10.

(2) Defendants’ Application to Re-open

13. The defendants seek leave to reopen the 19 September decision approving the receivers’ claim for fees and disbursements.

14. On 8 October 2019, when this matter first returned to Court after Meagher JA’s judgment, the defendants foreshadowed their application to re-open the 19 September judgment. To focus the application the Court directed the defendants to provide:

“….an itemised list of the additional findings in addition to those made in my judgment [Slattery J] of 19 September 2019 for which the defendants contend based upon the transcript of the proceedings before Meagher JA on 23 and 24 September and a calculation of the precise manner in which those findings, if made, would affect the calculation of the receiver’s remuneration and costs made in my judgment of 19 September.”

15. The defendants provided written submissions on 9 October 2019 that did not well satisfy that direction. The Court said on 8 October 2019, that if these orders were not complied with, then the defendants’ application would not be heard. The receivers contend that the defendants’ failure to comply with this direction means that their application to re-open should be rejected. But on review of the defendants’ submissions, the Court accepts that precise quantification of the effects of the receivers’ evidence before Meagher JA may be difficult. So the Court will examine the application further.

The Power to Re-Open

16. The defendants submit that the orders made in the 19 September judgment are not final but are interlocutory. They submit that the receivers’ further application for fees shows that the receivers’ remuneration has not been finally determined. They submit the 19 September orders allowed fees and disbursements up to 14 May 2019 and also granted liberty to apply for the approval of future fees, an indication the orders were interlocutory.

17. Alternatively, the defendants argue that if the orders are final, UCPR, r 36.15 enables the orders to be set aside. They submit the Court was not informed by the receivers of the actual work they had performed and the inadequacies and deficiencies of the work, rather than simply its cost, and the orders were “irregularly” made.

18. If leave is granted for a re-opening, the defendants seek an order for the receivers’ motion for approval of their costs to be dismissed. In its place, the defendants seek an order that the receivers pay the defendants’ costs of the motion.

19. The receivers respond, contending the 19 September orders are final, not interlocutory. They submit the orders are a determination following adjudication of costs for a distinct a period up to 14 May 2019. The only remaining issues are the undetermined costs for a later distinct period. They contend the defendants are bound by the findings in the 19 September judgment, and the only way those findings can now be overturned is on appeal.

20. The receivers further contend that UCPR, r 36.15 will not support the defendants’ application to re-open, citing Re Barrell Enterprises [1972] 3 All ER 631; [1973] 1 WLR 19, submitting that a judgment cannot be challenged on the basis of fresh evidence, as the correct approach is to mount the challenge on appeal.

21. The defendants contend that the 19 September order was made “irregularly”. The receivers submit that the present case does not demonstrate the usual features of an “irregularly” obtained judgment. Such features ordinarily include matters such as the following (see Arnold v Forsythe [2012] NSWCA 18): (i) non-compliance with a material requirement of the rules; (ii) entry of judgment for an amount, more than is due; or (iii) the absence of proper notice to the judgment debtor. The receivers submit none of these features apply here.

22. The receivers finally contend that the defendants’ re-opening application is mostly an attempt to re-agitate matters that have previously been ventilated. They submit this is a course that is not permitted, even in the Court’s exercise of exceptional and limited jurisdiction to revisit its previous rulings. They cite Autodesk Inc v Dyason(No. 2) (1993) 176 CLR 300 at 302-303; (1993) 111 ALR 385; [1993] HCA 6, in which Mason CJ stated:

“[4]   These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.”

23. In my view, the receivers’ arguments are persuasive on this issue for the reasons they advance. The Court’s determinations are final in respect of the periods already covered. They cannot now be revisited except on appeal for the reasons the receivers’ advanced. There is no irregularity in the entry of the 19 September 2019 judgment, the orders for which were made after full argument where both sides were represented. Moreover, many of the topics which the defendants now seek to agitate were argued before the 19 September 2019 judgment, although some of the allegations are new and arise from the hearing before Meagher JA.

The Evidentiary Basis for Re-Opening

24. The defendants oppose the receivers being allowed any further fees and disbursements after 14 May, on the same grounds as they seek to re-open the 19 September judgment. So this aspect of the application to re-open still needs to be considered, even though the Court has concluded that the Court lacks power to re-open the 19 September judgment.

25. The defendants’ submissions cover eight subjects of complaint: (1) the receivers’ failure to prepare accounts; (2) the loss of primary documents; (3) the lack of evidence of payment for 40 per cent of the transactions; (4) issues concerning Poomi Developments and Mahendren; (5) issues concerning Lotus Constructions; (6) the receivers’ construction time line; (7) the receivers’ speculation as to cash; and (8) the receivers’ alleged breach of the Court’s orders.

26. The receivers say that these topics are a bid to slander and discredit the receivers, and that none of the Court’s judgments so far reflects any criticism of or adverse findings against the receivers. The receivers submit Meagher JA’s judgment considered the approach undertaken by Mr Wengel in respect of expenses (see Meagher JA’s judgment, at [40] to [42]), and made no criticism or adverse findings.

27. Moreover, the receivers submit, Meagher JA also accepted the receivers Second Addendum save for a few calculations (see Meagher JA’s judgment, at [54]). The receivers answer the defendants’ submission that the report prepared by the receivers had no value by pointing out. Meagher JA adopted the report by referencing the tables cited: see paragraphs [57] to [62] of Meagher JA’s judgment. The receivers argue that the fact that their report may require amendment does not invalidate the report, or make it redundant.

28. (1) The Receivers’ Failure to Prepare Accounts. The defendants first contend the receivers have not performed the work they were ordered to perform by order 5 of Parker J’s 10 July 2018 orders. They contend order 5 sequentially directed the receivers to prepare accounts (including tax returns), to lodge any tax returns of the partnership, and to retain a valuation for the remaining duplex. And only then was the receiver to provide a report as to the parties’ respective “entitlements” by way of income and realisation of the partnership property.

29. The defendants submit that without the proper preparation of the accounts, able to be submitted to the ATO, the receivers’ report was of little assistance. Instead the receivers produced a report that merely summarised the plaintiffs’ assertions as to the expenses they had incurred. The defendants submit that the hearing before Meagher JA revealed for the first time that the receivers blindly adopted almost all the plaintiffs’ spread sheet summary of expenses, without any proper verification.

30. The defendants submit that as the receivers failed to comply with Orders 5 of the July 10 Orders, and have failed to demonstrate any cogent basis for their report and no further remuneration beyond the initial $30,000 fee cap should be approved.

31. This contention was put to the Court before the 19 September 2019 judgment. It is not new. There is no basis to re-open the 19 September judgment based upon this contention.

32. (2) The Loss of the Primary Documents. The defendants next contend the receivers have still not explained how they lost the parties’ primary documents. They argue the loss of the parties’ source documents, would have created further work and complicated the receivers’ task. And the receiver has failed to identify the further costs attributable to their own fault.

33. The defendants submit the receivers were entrusted with these documents and have failed to take proper care of them, resulting in further uncertainty about the assumptions in the receivers’ report, leading in turn to the parties incurring higher costs.

34. This contention is not new. The loss of the documents was agitated before the 19 September 2019 judgment. The defendants are in no better a position to pursue it now than they were before 19 September. There is no basis for a re-opening grounded on this material.

35. (3) No Evidence of Payment for 40% of the Transactions. The defendants next submit that Mr Wengel gave evidence for the receivers before Meagher JA that, upon his visual assessment of the plaintiff’s bank statements, only approximately 60% of the plaintiff’s alleged transactions were evidenced in the bank statements. The defendants point out that the receivers make no mention of this lack of underlying substantiation in their report. The defendants submit that therefore 40% of the alleged expenses incurred by the plaintiff are not supported by a corresponding debit or transfer for the amount being claimed. But the defendants submit that for no apparent reason, other than the plaintiff has told them the expenses were incurred, they are included in the receivers’ report.

24. The defendants submit this shows the receivers must have failed to perform any due diligence or enquiries into these claimed expenses and accepted them nevertheless.

25. The receivers’ contend in response that this work was done. That is correct as far as it goes. It was not necessary for Meagher JA’s judgment to be critical of the receivers’ work in this respect. But in my view the receivers’ own admissions are sufficient to infer it fell well short of the kind of accounting assessment that the Court expected from the receivers.

26. (4) Poomi Developments and Mahendren. The defendants next submit that in evidence before Meagher JA, Mr Wengel conceded that he was not satisfied that either Poomi Developments Pty Ltd or Mr Mahendran had been paid by the plaintiff. But the receivers’ report includes these amounts for the above two entities as expenses or contributions made by the plaintiff.

27. The defendants submit it is clear that the receivers failed to make any enquiries with the recipient of these alleged amounts or to confirm Mr Mahendren exists. The defendants therefore submit the receivers have failed to properly perform the task of producing an independent expert opinion with a foundation, rather than speculating or just adopting the plaintiff’s claims.

28. The defendants again point out that Meagher JA did not criticise-them on this issue. But Meagher JA did make different findings from the receivers’ assessments of these expenses. His Honour did not have to criticise the receivers. In my view, the admitted failure to verify some of these quite substantial expenses on the receivers’ part was nevertheless sub-optimal and something which the Court would ordinarily assume the receivers would have done.

29. (5) Lotus Constructions. The defendants further contend that an amount of $44,000.00 was claimed by the plaintiff and allowed by the receivers in their report in respect of Lotus Constructions. The defendants submit the Lotus constructions invoice was a handwritten single page document and the receivers did not validate this significant expense, even by contacting the third party.

30. The receivers failed to make any proper enquiries as to whether the claim was genuine. The defendants submit this is remarkable, in light of the receivers’ costs to date, provides not wishing to incur costs as a reason for failing to make any enquiries of this claim.

31. Exactly the same can be made about these expenses, as were made above in respect of the Poomi Developments and Mahendren expenses.

32. (6) The Receivers’ Construction Time Line. The defendants next submit that the receivers’ evidence before Meagher JA revealed that absent objective evidence of payment, the receivers were prepared to be satisfied that certain expenses had been incurred, as they correlated with the receivers’ anticipated construction time line for the project.

33. But the defendants point out that the receivers did not have support from any industry expert to make this timeline usable as a reliable analytical tool. Mr Wengel did not have the necessary expert knowledge to verify a reasonable chronology of expected costings for the project. Using the timeline was through no proper basis for assessing project expenses, it is submitted.

34. The receivers cannot be criticised here. Yes, they adopted a rudimentary method of testing reasonableness but it was probably a justifiable method in the circumstances.

35. (7) Speculation About Cash. Next the defendants submit the receivers gave evidence before Meagher JA that in their opinion a number of the plaintiffs’ claimed expenses were payments made in cash. But the receivers took no action to verify (with the alleged recipient) that these payments had actually been made.

36. The defendants submit that the receivers have not carried out basic verification procedures on cash expenses, especially those paid to entities related to the plaintiffs.

37. The receivers did concede before Meagher JA that to prepare tax returns or accounts, they did not have grounds to be satisfied these cash payments had actually been made, without seeking and gaining further information about them.

38. In my view, there were a sufficiently material number and quantum of cash payments involved that better verification should have been done than the receivers undertook. Notwithstanding, that Meagher JA did not criticise the receivers for this, in my view, failures such as this led in part to a protraction of the contests between these parties.

39. (8) Breach of the Court’s Orders. The defendants submit the receivers, as officers of the Court, should have informed the parties, and the Court, at the first available opportunity: that the records provided by the plaintiffs were inadequate to enable the preparation of the accounts; and that their expert report would at best be a record of the parties’ alleged contributions.

40. The defendants submit that the result of this failure was that the report was not based upon the specialised knowledge of the receivers, as they failed to properly verify or produce accounts in accordance with their specialised training. Thus the parties did not have the benefit of any independent expert report to assist the Court as to the financial position of the partnership and the report would not ordinarily even be admissible in evidence: see Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; (2001) 25 NSWCCR 218; [2001] NSWCA 305.

41. The defendants also point to various mistakes made by the receivers. But these are already encompassed within the defendants’ foregoing submissions.

42. In its 19 September 2019 judgment the Court took up some of this criticism to the extent that the receivers delayed bringing the matter back to Court, after it became obvious that the cap would be exceeded. That has some implications, as will be seen below, in respect of costs after 14 May 2019. But these criticisms have otherwise already been taken into account in the 19 September 2019 judgment.

(3) The Receivers’ Further Claimed Fees and Disbursements

55. The receivers provided a final claim for itemised fees and disbursements on 8 October 2019. The receivers now claim fees and disbursements incurred from 15 May to 8 October 2019, after the period covered by the 19 September judgment. The fees and disbursements for this additional period were said to be in the sum of $79,111.63.

56. But although the receivers say they have incurred $79,111.63, on 9 October, they voluntarily limited their claim to $48,083.35. In response, the plaintiffs indicated that they were not prepared to accept the sum of $48,083.35 for receivers’ fees and disbursements post 14 May 2019. The plaintiffs communicated on 9 October that they would nevertheless consent to the receivers’ having an order for the approval of their claim for fees and disbursements for the period 15 May 2019 to 8 October 2019 in the sum of $22,000; and that they did not wish to take part in the defendants’ applications on 11 October to re-open the Court’s determination on 19 September, and oppose the receivers’ present claim for further fees and disbursements. The plaintiffs thereby sought to shift the risk as to costs of any contest after 8 October onto the defendants and the receivers.

57. The receivers decided to agree with the plaintiffs to reduce the costs and disbursements claimed and to be approved to the amount of $22,000, the figure the plaintiffs had suggested. The receivers now seek approval for their costs and disbursements for the period 15 May 2019 to 8 October 2019 in the sum of $22,000. This is a substantial reduction (of $57,111.63) from the amount said to have been incurred in this period.

58. The receivers also claim their fees and disbursements for the two days from 9 to 10 October 2019, only against the defendants. This claim is directed only to the defendants as they were the only party left contesting the receivers’ claims at the hearing on those days, and on 11 October 2019.

59. The defendants submit the claimed fees from 15 May to 8 October are unreasonable and disproportionate. The defendants submit the receivers are seeking reimbursement from the parties for their own failures to comply with Court orders and for a report that lacks specialised knowledge or skill.

60. The defendants submit the Court should disallow any future fees as they fail the tests of reasonableness and proportionality stated in In the matter ofSay Enterprises Pty Ltd [2018] NSWSC 396, (at [6] and [7]). The work they did it is submitted, lacked the necessary quality, was disproportionate to the complexity of the task and to the amount in dispute, and no more fees on disbursements should now be allowed.

61. The evidence establishes that the receivers have incurred fees and legal disbursements of $79,111.63 between 15 May and 8 October 2019. But in conformity with their agreement with the plaintiffs, the receivers have reduced their claims to a total claimed sum of $22,000, which can be broken down into receivers’ fees of $5,000 and solicitors and counsel's fees of $17,000. As the receivers’ final submissions made clear, "the $22,000 is sought as a global write-down, rather than a line by line assessment of each item claimed". The receivers are not conceding that the work was not performed but have put this figure forward to achieve a commercial outcome.

62. The approach taken by the receivers is helpful in one respect: it is an invitation to approach the present assessment globally. But the consideration at this point is once again for the Court to look at the receivers’ claims made since 14 May 2019 in light of the guiding authorities set out by this Court in the 19 September judgment, (at [95]). Proportionality must be considered and the Court must scrutinise claims to ensure that they are reasonable and properly payable: In the matter ofSay Enterprises Pty Ltd [2018] NSWSC 396.

63. The contest before Meagher JA, discussed above, has revealed deficiencies in the work of the receivers that cannot be ignored when considering the balance of their claims for fees and legal disbursements. The discussion above of the additional evidence that emerged before Meagher JA undermines the Court’s confidence in approving much more by way of fees and legal disbursements to the receivers. The Court has decided to take the approach of simply allowing a sum which would cover some necessary disbursements of the receivers but otherwise declining to allow any further fees or legal disbursements.

64. The reasons for the Court taking this course are the following. First, much of the receivers’ recent time has been occupied with defending and explaining their conduct and report, which in my view can be inferred were unsatisfactory in the ways indicated.

65. Secondly, the observations that the Court made in its 19 September judgment that the receivers should have gone back to Court as soon as they realised their $30,000 cap was likely to be exceeded, are of even more weight when considering the additional costs incurred after 14 May 2019. In my view, much of the contest before Meagher JA and much of the recent correspondence between the parties and appearances before the Court would have been avoided if the receivers had taken the course of going back to Court before the end of 2018, and sought proper directions for the future conduct of their receivership. Much of the complexity of the present debate was a direct consequence of the Court not being given an opportunity to take early control of the receivers’ costs blowout in this matter. The Court has placed the blame for that already with the receivers. The receivers’ failure to do that has led to a geometric increase in the quantum of procedural costs incurred in recent times.

66. Thirdly, in its earlier judgment, the Court was prepared to give the receivers the benefit of the doubt in relation to some aspects of their work in fixing appropriate discounts on their fees. Although the Court will not revisit its 19 September decision, it is not prepared to give the receivers the same latitude at this time, when most of the costs recently incurred relate to defending the report and recovering costs.

67. Fourthly, proportionality of costs in this case must be assessed in part by reference to the original cap of $30,000, which has been well and truly exceeded. The Court is not prepared to allow the receivers any more fees and disbursements than the sum of $5,000 which should cover necessary Court-related expenses incurred from 15 May 2019.

Conclusion and Orders

68. The receivers have approval for far less than what they claimed from 15 May. They have not been successful. But they have had to come to Court to gain approval of some costs. It is important to avoid further time in costs disputes in this matter. So in these circumstances, the Court will make no order as to costs on the receivers’ present application.

69. The parties must now approach Meagher JA’s chambers with appropriate short minutes of order within 3 working days in conformity with his Honour’s order ([65](2)). This judgment should permit complete and final short minutes to be given to Meagher JA. If any implementation issue arises, liberty to apply is granted.

70. Accordingly, the Court makes the following orders and directions:

1. Vacate the Court’s orders made on 19 September 2019 and substitute for those orders the orders set out in Schedule A to these orders.

2. Dismiss the defendants’ application to re-open the Court’s orders of 19 September 2019.

3. Allow the sum of $5,000 only on account of the receivers’ costs incurred from 15 May to 8 October 2019 and no other costs after 14 May 2019.

4. Order each party to bear its own costs of the receivers’ applications for approval of fees and disbursements incurred between 15 May and 8 October 2019.

5. Liberty to apply.

Schedule A

1. Allow the receivers’ fees up to 14 May 2019 in the sum of $113,271.20;

2. Allow the receivers’ disbursements up to 14 May 2019 in the sum of $13,978.75; and

3. Allow the receivers’ legal costs on the motion up to 14 August 2019 in the sum of $33,423.10.

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Decision last updated: 01 November 2019