FEDERAL COURT OF AUSTRALIA

The Food Improvers Pty Ltd v BGR Corporation Pty Ltd (In Liq) (No 8)

[2008] FCA 326

THE FOOD IMPROVERS PTY LTD (ACN 003 474 280) AND ANOR v BGR CORPORATION PTY LTD (ACN 059 820 807) AND ORS)

NSD 1140 OF 2005

RARES J

29 FEBRUARY 2008

SYDNEY

THE COURT NOTES THAT:

1.                  The court notes that the only issue in dispute on the interlocutory process filed on 26 February 2008 is whether the first defendant should be repaid the whole of the sum of $486,540.17 which it paid or a sum net of GST in respect of order 1 made on 28 February 2007 representing 90% of all amounts paid by the first defendant for or in respect of the legal costs and disbursements of any of the defendants in the principal proceedings (the 90% costs order).

2.                  The second and third defendants agree that there is no defence to judgment being entered in the amount of $438,327.80 representing 90% of the legal costs and disbursements (excluding GST of $48,212.30) paid by the first defendant together with interest up to today which was the subject of the 90% costs order.

THE COURT ORDERS THAT:

3.                  Order 5 made on 22 February 2008 be varied so as to read:

Each defendant on the interlocutory process to file and serve written submissions on which it proposes to rely on or before 5 March 2008.

4.         Order 6 made on 22 February 2008 be varied so as to read:

The plaintiffs on the interlocutory process file and serve written submissions on which they propose to rely on or before 7 March 2008.

4.                  Pursuant to s 31A(1) of the Federal Court of Australia Act 1976 (Cth), there be judgment for BGR Corporation Pty Ltd (in liquidation) against the Triad Health Products Group of Companies Pty Ltd and Cordato Partners (Services) Pty Ltd in the amount of $438,327.80 representing the sum due pursuant to the 90% costs order together with interest up to and including today, less the sum of $48,212.30 being the amount of GST paid by the first defendant as part of the total of the costs it paid the subject of the 90% costs order.

5.                  The Triad Health Products Group of Companies Pty Ltd and Cordato Partners (Services) Pty Ltd pay the costs of BGR Corporation Pty Ltd (in liquidation) and its liquidator in relation to the interlocutory process filed on 26 February 2008, other than the costs of the issue concerning liability to repay the amount of GST, which costs are reserved.

6.                  The proceedings be listed for further directions at 9.30am on 6 March 2008.

THE COURT DIRECTS THAT:

7.                  In the event that any party wishes to apply to vacate the hearing, they do so, and support their application with an affidavit (unless the hearing is to be vacated by consent) filed and served on or before 5 March 2008.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1                     These proceedings were returned before me for directions this morning.  At that time counsel appeared for Cordato Partners (Services) Pty Limited.  He had been briefed yesterday.  He informed me that since he had been briefed he considered that there may be a reason why Cordato Partners (Services) and, as a result, another party, The Triad Health Products Group of Companies Pty Limited, were not liable to repay in full, together with interest, the money which had been paid in respect of their legal costs by BGR Corporation Pty Limited.  Those costs were the subject of Order 1 which I made on 28 February 2007 that Cordato Partner (Services) and Triad pay to BGR 90% of the costs.  BGR had paid for their legal costs of the proceedings which was part of the oppressive conduct in respect of which I granted final relief:  The Food Improvers Pty Ltd v BGR Corporation Pty Ltd (No 4) [2007] FCA 220.

2                     Today it was accepted that almost all of that sum, except the amount of Goods and Services Tax (GST) together with interest on it, should be the subject of a judgment enforceable by the liquidator and BGR for repayment.  However, Cordato Partners (Services) and Triad wish to argue that BGR should not receive back so much of its payment of their legal costs as was represented by GST.  This argument is made, apparently, on the basis that BGR got an input tax credit for the sum. The amount involved is $48,212.30, including interest, as at today.  I will order that the balance of the money payable be the subject of a judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) on the basis that the parties agree that that sum is now due and payable and there is no defence to its immediate recovery by BGR.

3                     The excised portion of the sum BGR paid for legal costs will be the subject, at present, of a hearing I have set down for 11 March 2008.  I am mindful that, because the argument was first identified this morning in court to legal representatives of the liquidator, on examination it may raise more problems than the simple hearing I thought would take place beforehand.  Until this morning, no issue had been identified as a substantive issue that might be arguable on that occasion on behalf of Cordato Partners (Services) and Triad.  In those circumstances, I will direct that if any party wishes to apply for an adjournment of that hearing they should do so by notice filed on 5 March and returned before me on 6 March next.   

4                     In the event that there is an adjournment, my present inclination is to order Triad and Cordato Partners (Services), as a condition of any adjournment and further hearing of this matter, to pay into court, or otherwise provide, security acceptable to the liquidator, and, in default of his agreement, acceptable to the Registrar, for the sum then due with interest so that there will be security for it pending a hearing.  I note that it is unfortunate that the parties are still unable to find a consensual way to resolve this dispute.  I would urge that they seek to do so particularly having regard to the size of the sum involved and the likelihood of substantial expense being incurred in disputing a sum that could properly be fought for, but for the possible complexity and difficulty of the issue, in the Local Court of New South Wales.

Associate:                                                        

Dated:  13 March 2008