Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [No 4]
[2014] WASC 405
•31 OCTOBER 2014
TECHNOMIN AUSTRALIA PTY LTD -v- XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD [No 4] [2014] WASC 405
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 405 | |
| Case No: | CIV:1514/2009 | 17 OCTOBER 2014 | |
| Coram: | ALLANSON J | 31/10/14 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | TECHNOMIN AUSTRALIA PTY LTD XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD XSTRATA NICKEL AUSTRALASIA PTY LTD |
Catchwords: | Practice and procedure Security for costs Payment out of court Application for special leave Plaintiff in administration |
Legislation: | Corporations Act 2001 (Cth), s 9, s 468, s 588FA(1), s 588FE, s 588FF, s 1335(1) Rules of the Supreme Court 1971 (WA), O 24 r 12, O 25 r 7, O 66 r 57, sch 3, item 3, item 6, item 11 |
Case References: | Beljajev v Director of Public Prosecutions [1991] HCA 16; (1991) 173 CLR 28 Duncan (as trustee for the bankrupt Estate of Garrett) v National Australia Bank Ltd [2006] SASC 239; (2006) 95 SASR 208 Dwight v Commissioner of Taxation [1992] FCA 178; (1992) 37 FCR 178 Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 Equuscorp Pty Ltd v Wilmoth, Field Warne (a firm) [2006] VSCA 123 Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118 Gunns Limited v Tasmanian Conservation Trust Inc [2012] TASSC 51 Michell Sillar McPhee (A Firm) v First Industries Corp [2006] WASCA 24; (2006) 32 WAR 1 MSPR Pty Ltd v Advanced Braking Technology Ltd (No 2) [2014] NSWCA 283 Pilmer v HIH Casualty & General Insurance Ltd (No 2) [2004] SASC 389; (2004) 90 SASR 465 WA Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] 1 QB 1038 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD
First Defendant
XSTRATA NICKEL AUSTRALASIA PTY LTD
Second Defendant
Catchwords:
Practice and procedure - Security for costs - Payment out of court - Application for special leave - Plaintiff in administration
Legislation:
Corporations Act 2001 (Cth), s 9, s 468, s 588FA(1), s 588FE, s 588FF, s 1335(1)
Rules of the Supreme Court 1971 (WA), O 24 r 12, O 25 r 7, O 66 r 57, sch 3, item 3, item 6, item 11
Result:
Application allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr J M Ireland QC
First Defendant : Mr C P K Russell
Second Defendant : Mr C P K Russell
Solicitors:
Plaintiff : Tottle Partners
First Defendant : King & Wood Mallesons
Second Defendant : King & Wood Mallesons
Case(s) referred to in judgment(s):
Beljajev v Director of Public Prosecutions [1991] HCA 16; (1991) 173 CLR 28
Duncan (as trustee for the bankrupt Estate of Garrett) v National Australia Bank Ltd [2006] SASC 239; (2006) 95 SASR 208
Dwight v Commissioner of Taxation [1992] FCA 178; (1992) 37 FCR 178
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Equuscorp Pty Ltd v Wilmoth, Field Warne (a firm) [2006] VSCA 123
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118
Gunns Limited v Tasmanian Conservation Trust Inc [2012] TASSC 51
Michell Sillar McPhee (A Firm) v First Industries Corp [2006] WASCA 24; (2006) 32 WAR 1
MSPR Pty Ltd v Advanced Braking Technology Ltd (No 2) [2014] NSWCA 283
Pilmer v HIH Casualty & General Insurance Ltd (No 2) [2004] SASC 389; (2004) 90 SASR 465
WA Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] 1 QB 1038
1 ALLANSON J: Technomin Australia Pty Ltd brought these proceedings against the defendants, claiming that it was entitled to royalties under a gross production royalty deed. It did not succeed. On 15 January 2013, judgment was entered for the defendants, with Technomin to pay the defendants' costs to be taxed.
2 Technomin appealed from that decision, and the appeal was dismissed. Technomin has applied to the High Court for special leave to appeal the decision of the Court of Appeal, and that application has not yet been heard.
3 The court had earlier ordered Technomin to give security for costs under s 1335(1) of the Corporations Act 2001 (Cth). Technomin paid the amount ordered into court.
4 The defendants have now applied for payment out of court of the amount ordered as security. Technomin opposes the payment out of court.
The rules
5 Order 24 r 12 of the Rules of the Supreme Court 1971 (WA) provides:
The manner of payment into and out of court and the manner in which money in court shall be dealt with shall be subject to the regulations contained in Schedule 3.
6 Schedule 3 provides in items 3, 6 and 11:
3. Money paid into court shall be paid by the Accountant to the Treasurer, except when the money is to be invested by the Public Trustee, in which case it shall be transferred to the Public Trustee.
6. Where money is paid into court as security for costs, if after the cause or matter has been finally disposed of, the party who paid the money in is entitled to have the money paid out to him, the taxing officer shall on the taxation of costs give to such a party a certificate that he is so entitled. Upon production of such certificate to the Accountant, unless an order restraining the payment out has previously been lodged with the Accountant, the money mentioned in the certificate will, on request, be paid out to the party mentioned in the certificate as entitled thereto, or on his written authority to his solicitor. In all other cases money paid into court as security for costs will not be paid out except on production to the Accountant of an order of the Court or a judge.
11. Each sum paid into court shall, as regards its payment out of court, be deemed when the time for payment out arrives, to be money standing to the credit of the Supreme Court.
7 The payment out of money paid into court as security for costs is then provided for in O 25 r 7:
Where money has been paid into court as security for costs and the action has been finally disposed of, the amount of the security shall be paid out to the party for whose security it was furnished to the extent pro tanto that costs are due from the securer to such party, and the Principal Registrar shall pay out the security accordingly unless the Court has otherwise ordered, and the balance (if any) shall be refunded to the securer without the necessity for any special order.
Technomin's opposition to payment out of court
8 Technomin argues that the money should not be paid out of court on two grounds: that the court should await the outcome of the special leave application, and that the payment out may be a voidable transaction as Technomin is now in administration and likely to be insolvent.
9 As a preliminary issue, the defendants argued that there is no discretion to be exercised, and under O 25 r 7 they are entitled to payment out of court. I do not accept that submission. The rule provides for payment out unless the court has otherwise ordered. This would include an order for a stay, but is not expressly limited to such an order. There is no reason to imply such a limitation. The court may not order the payment of the money in a manner inconsistent with the order for security and the costs orders made in the action. But it may be called upon to exercise judgment about whether it is in the interests of justice to pay the money out immediately or retain it.
10 I do, however, accept that the defendants are entitled to have the money paid out of court unless Technomin establishes that the court should order otherwise.
The application for special leave
11 Order 25 r 7 operates by reference to when the action has been finally disposed of. Technomin submits that the proceedings have not been finally disposed of because it has applied for special leave and that application has not been heard. If special leave is granted and the appeal is successful, the current costs orders would almost certainly be set aside.
12 It is normally the case that on entry of judgment in an action, the action is regarded as finally disposed of. The fact that Technomin appealed would not alter whether the action had been disposed of by the judgment at first instance.
13 For the purposes of O 25 r 7, it may be that the action was not finally disposed of until the costs had been taxed and the certificate of taxation issued, because it is the certificate of taxation that is deemed to be the judgment of the court for the purpose of recovery of costs: see O 66 r 57. A certificate of taxation was issued on 15 August 2014.
14 The order requiring Technomin to pay costs has not been stayed. Even if I were to apply the principles applicable to the grant of a stay pending appeal (see, for example, Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9]; Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [2011] WASCA 118 [14] - [15]), Technomin has not satisfied me that the defendants should not now be entitled to the benefit of the judgment in their favour for these reasons:
1. The defendants have judgment in their favour, confirmed on appeal.
2. The costs have been taxed and a certificate issued in an amount more than the amount of the security.
3. There is no reason to believe that a stay is necessary to preserve the subject matter or integrity of the litigation, or that the refusal of a stay could create practical difficulties in respect of the relief Technomin could obtain should it succeed in the High Court.
4. While Technomin has applied for special leave, where special leave has not yet been obtained, exceptional circumstances must be demonstrated in order to obtain a stay: Beljajev v Director of Public Prosecutions [1991] HCA 16; (1991) 173 CLR 28 [7].
15 It is unnecessary in the circumstances to consider the prospects of success on appeal, should Technomin be granted special leave. I am obviously reluctant to do so when there has been a unanimous decision of the Court of Appeal in favour of the defendants. Technomin would suffer no prejudice from the funds being released, and the interests of justice do not call for the funds to remain in court pending appeal.
16 Accordingly, I am not satisfied that the application to the High Court is a sufficient basis to postpone payment out of court.
The effect of administration
17 The second, and Technomin says the more significant ground, is that Technomin entered administration on 1 October 2014. The administration is based upon present or likely insolvency. The relation back period, should Technomin go into liquidation, would have commenced on 1 April 2014. Technomin submits that an order now made for release of the security would be a transaction, or an act done for the purpose of giving effect to a transaction, that is voidable as an unfair preference under s 588FE of the Corporations Act in the event of the company being wound up.
18 A transaction is an unfair preference even if it is given effect to because of an order of a court: Corporations Act s 588FA(1). There is, however, a threshold question: is payment out of court a transaction as defined in s 9 of the Corporations Act.
19 The authorities on the effect of payment into court were extensively reviewed by Mullighan J in Pilmer v HIH Casualty & General Insurance Ltd (No 2) [2004] SASC 389; (2004) 90 SASR 465 [62] - [115]. That case concerned a payment into court of the incontestable part of a judgment, as a condition of pursuing an appeal. Mullighan J held that the party who made the payment into court did not retain any legal or equitable interest in the money, and it was not property of the company for the purposes of s 468 of the Corporations Act. His Honour followed the English Court of Appeal in WA Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] 1 QB 1038.
20 In Michell Sillar McPhee (A Firm) v First Industries Corp [2006] WASCA 24; (2006) 32 WAR 1 [67], Pullin JA (Steytler P and Wheeler JA agreeing) referred with approval to both Sherratt and Pilmer. The court was not, however, concerned with a payment made as security for costs.
21 In Duncan (as trustee for the bankrupt Estate of Garrett) v National Australia Bank Ltd [2006] SASC 239; (2006) 95 SASR 208, decided some months after Michell Sillar Mcphee, the South Australian Full Court disagreed with Pilmer as to the breadth of the proposition that a person paying money into court may never have an equitable interest in the money until the order for payment out is made. White JA, with whom Vanstone and Layton JJ agreed, gave the example of a person providing security for costs as a circumstance where the person paying money into court does retain an interest in it [46].
22 I have also had regard to sch 3 of the Rules and the provision that the money is deemed to be money standing to the credit of the court: item 11. That does not, in my opinion, preclude the party who paid it into court from retaining an equitable interest. I accept that, on the authorities, a person paying money into court retains an interest in it.
23 It seems to be settled that the party paying money into court appropriates that money to meet the other party's claim, if that claim is made good. The party paying in gives security in the form of a charge over that money in favour of the other party: see MSPR Pty Ltd v Advanced Braking Technology Ltd (No 2) [2014] NSWCA 283 [10]; Gunns Limited v Tasmanian Conservation Trust Inc [2012] TASSC 51 [28]; Equuscorp Pty Ltd v Wilmoth, Field Warne (a firm) [2006] VSCA 123 [22]; Dwight v Commissioner of Taxation [1992] FCA 178; (1992) 37 FCR 178.
24 The result, in my opinion, is that on the entry of judgment in January 2013, at the latest, the money in court was charged in favour of the defendants. Technomin had an interest that the money should be held and paid out only in accordance with the orders made by the court. But it had no right to the money itself, and could not call for it to be paid to it or at its direction. I doubt that, in those circumstances, the money could be regarded as the property of the company so that payment out would be a transfer or other disposition of its property, or would be a payment made by it.
25 I need not go into the other questions which arise from the definition of unfair preference in s 588FA of the Corporations Act and the extent to which the defendants were secured creditors. I am concerned only to determine where the interests of justice now lie. I am not satisfied that Technomin's case that it retains an interest in the money is sufficiently strong to justify an order that the money not be paid out in accordance with the orders in favour of the defendants.
26 I also take into account that should Technomin go into liquidation and the liquidator claim the payment is an unfair preference, there is no reason to believe that an order that the money held as security be paid to the defendants would prejudice proceedings that might be brought by a liquidator under s 588FF of the Corporations Act.
27 In the circumstances, I will order the payment out of court to the defendants of the sums held as security for costs.
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