FEDERAL COURT OF AUSTRALIA

Bowesco Pty Ltd (Receiver and Manager Appointed) v Fraser [2006] FCA 1828

BOWESCO PTY LTD (RECEIVER AND MANAGER APPOINTED) (ACN 008 915 357) v SHAUN ROBERT FRASER AND JOHN PATRICK CRONIN AS RECEIVERS AND MANAGERS OF LANEPOINT ENTERPRISES PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 111 693 251)

WAD 328 OF 2006

SIOPIS J

17 NOVEMBER 2006

SYDNEY

THE COURT ORDERS THAT:

1.                  The heading of the application be amended by substituting ‘Oren Zohar, David Winterbottom and Mark Korda (Receivers and Managers of Westpoint Corporation Pty Ltd and of an Option Held by Bowesco Pty Ltd)’ as respondents with ‘Shaun Robert Fraser and John Patrick Cronin as Receivers and Managers of Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) (ACN 111 693 251)’ as respondents.

2.                  The respondents do pay to Hammond Worthington, as solicitors for Bowesco Pty Ltd (Receiver and Manager Appointed) by 4 pm (Western Standard Time) on Wednesday, 22 November 2006:

2.1              Counsel’s fees in the sum of $7000;

2.2              Federal Court filing fee in the sum of $1762 payable on the filing of the appeal by Bowesco Pty Ltd (Receiver and Manager Appointed);

2.3              The filing fee for the application pursuant to s 1321 of the Corporations Act 2001 (Cth) appealing against the refusal by the respondents to make provision for Bowesco’s legal expenses;

2.4              Photocopying expenses of $2000;

2.5              Hammond Worthington’s fees of $8000;

3.                  The respondents do pay the costs of this application.

4.                  There be liberty to apply

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application which is made pursuant to s 1321 of the Corporations Act 2001 (Cth).  French J required this application to be made pursuant to O 2 of the orders that he made on 10 November 2006, in Australian Securities & Investments Commission; In the Matter of Lanepoint Enterprises Pty Ltd ACN 110 693 251 v Lanepoint Enterprises Pty Ltd ACN 110 693 251 [2006] FCA 1493 when he ordered that:

‘Upon the filing and service by Bowesco Pty Ltd (Receiver and Manager Appointed) of an application seeking an order pursuant to s 1321 of the Corporations Act 2001 (Cth) appealing against the refusal by the receivers and managers of the respondent to make provision for Bowesco's legal expenses in connection with proceedings relating to an option assigned to Bowesco by Westpoint Corporation Pty Ltd, the receivers and managers of the respondent make provision for the payment of Bowesco’s reasonable legal expenses in connection with the prosecution of an application for leave to appeal and any consequent appeal from the decision of this Court in Australian Securities & Investments Commission, In the Matter of Richstar Enterprises Pty Ltd v Carey (No 9) [2006] FCA 1425 to a maximum of $50,000, the sum to be paid to be taxed by a Registrar of the Court if not agreed.’

2                     By this application the applicant seeks to enforce the orders of French J.  The applicant seeks orders that the respondents make an interim payment in respect of various items of legal costs associated with the application made to French J, and an application for leave to appeal and, to appeal, against the decision of this Court in Australian Securities and Investments Commission, In the Matter of Richstar Enterprises Pty Ltd v Carey (No 9) [2006] FCA 1425. The application for leave to appeal and, any consequent appeal, is due to be heard on 23 November 2006.

3                     The respondents submitted that the effect of French J’s orders referred to above, is that there is no obligation on them to make any payment in respect of the applicant’s costs, until such time as its application for leave to appeal and, any consequent appeal, has concluded, and the costs have been taxed ‑ in which case there would be an indemnity from the respondents in respect of those taxed costs.

4                     In my respectful view, that is a misapprehension of French J’s order.  French J did not anticipate that the obligation to make any payment by way of the provision for legal costs would arise, only at the end of the appeal, by way of an indemnity for taxed costs.  That is apparent from the language French J used in the order ‑ in the sense that he ordered the respondents to ‘make provision’ for the payment of reasonable costs to a maximum of $50 000.  French J stated that the maximum sum to be paid was $50 000, but French J did not defer the obligation to make any payment by way of the required ‘provision’, until the taxation of the total costs.  French J provided a permissive power to the respondents to make interim payments from time to time.  No doubt he anticipated that it would not be necessary for an application to be made to the Court, in relation to the order, because there would be co‑operation between the applicant and the respondents as to the means whereby the provision for the applicant’s legal costs would be made.

5                     Regrettably, the respondents have not instructed their senior counsel today to advise the Court that they would be prepared to co‑operate in the making of interim payments.  Instead, the respondents have submitted that there is no power in the Court to make any order for the making of any provisional payments, and have submitted that, whether any such payment is made, is in the grace on the part of the respondents.

6                     As already stated, in my view, French J intended that there would be provision made by way of payments up to a maximum amount of $50 000 taxed costs, without thereby limiting the time as to when the first such payment should be made, to the event of taxation.  In my view, French J did not intend that the order should only operate as, an indemnity, once all the expenses had already been incurred, but intended that it have effect prior to that time.

7                     I now turn to the application which has been made by the applicant for the payment of costs.  I note that counsel's fees in the sum of $25 000 is claimed.  In my view, there should be no payment made in respect of counsel's fees, save for the payment of one day's getting up and the hearing of the appeal, both of which would be recoverable on taxation.  I would, accordingly, reduce counsel's fees to the sum of $7000.

8                     The Federal Court filing fee, in relation to the appeal, is recoverable on taxation, and I would allow that.  Likewise, in relation to the filing fee in respect of this application.  There is also a claim for photocopying expenses of $5000.  That seems to me to be excessive for the photocopying of what will be fairly small appeal books.  I will only allow $2000.

9                     As to Hammond Worthington's fees, I will allow them on the same basis as for the fees for counsel, bearing in mind that Hammond Worthington and counsel were involved in the original application.  I will allow $8000 in relation to Hammond Worthington's fees.

Associate:

Dated:         22 December 2006