FEDERAL COURT OF AUSTRALIA

Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 8) [2011] FCA 1073

THE COURT ORDERS THAT:

1.    Mr Jorge de Moya is taken to have been served with the Interlocutory Application filed 18 August 2011 and supporting material thereto.

2.    The set off amount for the purpose of paragraph 1(b) of the orders made in the proceedings on 17 June 2011 is $100,000.

3.    The net amount payable by the applicant to the respondent under paragraph 1 of the orders made in these proceedings on 17 June 2011 is $1,002,500.

4.    Olivaylle Pty Ltd (Subject to Deed of Company Arrangement) (ACN 080 670 640) and Jorge de Moya jointly and severally pay costs in the amount of $1,002,500 to Flottweg AG (formerly Flottweg GMBH & CO KGAA) (ABN 95 101 547 424).

5.    Olivaylle Pty Ltd (Subject to Deed of Company Arrangement) (ACN 080 670 640) and Jorge de Moya jointly and severally pay costs in the amount of $8,500 to Flottweg AG (formerly Flottweg GMBH & CO KGAA) (ABN 95 101 574 424) in respect of the Notice of Motion dated 19 May 2011.

6.    Olivaylle Pty Ltd (Subject to Deed of Company Arrangement) (ACN 080 670 640) and Jorge de Moya jointly and severally pay costs fixed in the amount of $12,657 to Flottweg AG (formerly Flottweg GMBH & CO KGAA) (ABN 95 101 547 424) in respect of the Interlocutory Application dated 18 August 2011.

7.    These orders to take effect forthwith.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    The present interlocutory application is a sequel to orders which I made on 17 June 2011 in relation to costs in these proceedings. At that time, for reasons which I published, I made orders providing for the fixing in gross of costs awarded in favour of Flottweg AG (formerly Flottweg GMBH & Co KGAA) (Flottweg). I also separately ordered that Mr de Moya be jointly and severally liable in respect of those costs: see, respectively, Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 6) [2011] FCA 688 (Olivaylle v Flottweg (No 6)), and Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 7) [2011] FCA 689 (Olivaylle v Flottweg (No 7)).

2    In respect of the orders made against Olivaylle Pty Ltd (Olivaylle), I further provided in those orders that the costs as fixed were subject to the set off provided for by an order made on 28 May 2009 in respect of costs ordered in its favour. Related to that, and in respect of Mr de Moya, I ordered that recovery of the costs by Flottweg from Mr de Moya be stayed pending the determination by taxation, agreement, or fixing in gross, of the amount of the set off referred to in paragraph 2 of the order made on 28 May 2009 and paragraph 1(b) of the order made on 17 June 2011, or further earlier order.

3    These reasons for judgment must be read in conjunction with the reasons for judgment in Olivaylle v Flottweg (No 6) and Olivaylle v Flottweg (No 7), together with the reasons for judgment in respect of the trial, and also in respect of the original awarding of costs: see Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 4) (2009) 255 ALR 632 and Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 5) [2009] FCA 571 respectively. Against that background, Flottweg seeks today the following orders:

1.    The set off amount for the purpose of paragraph 1(b) of the orders made on 17 June 2011 is $100,000;

2.    The net amount payable by Olivaylle to Flottweg under paragraph 1 of the orders made on 17 June 2011 is $1,002,500;

3.    Olivaylle Pty Ltd (Subject to Deed of Company Arrangement) (ACN 080 670 640), and Jorge de Moya, jointly and severally pay costs in the amount of $1,002,500 to Flottweg AG (formerly Flottweg GMBH & Co KGAA) (ABN 95 101 547 424);

4.    Olivaylle Pty Ltd (Subject to Deed of Company Arrangement) (ACN 080 670 640) and Jorge de Moya, jointly and severally pay costs in the amount of $8,500 to Flottweg AG (formerly Flottweg GMBH & Co KGAA)(ABN 95 101 547 424);

5.    The orders in paragraphs 1 to 4 be entered forthwith.

4    When the interlocutory application was called on today there was no appearance by or on behalf of Mr de Moya. As a courtesy to the Court, the solicitors for those who had formerly been the administrators attended to inform the Court that they had finished their duties as administrators on the basis of the entering into by Olivaylle of a deed of company arrangement. I am satisfied, having regard to the affidavit evidence of Mr Nicholas Linke and Mr Paul Forbes, that a copy of the interlocutory application together with supporting affidavit materials has been left at Mr de Moya’s Australian address which is the premises of Olivaylle.

5    The records of the Australian Securities and Investment Commission disclose that to be his Australian address. The evidence discloses further that Mr de Moya may presently be in the United States. I am quite satisfied though that the leaving of the interlocutory application and supporting materials is inherently likely to have come to Mr de Moya’s attention. Indeed, there has been communication between the company and those acting for Flottweg in relation to an agreement made between the company, via the administrators when they were in office, and Flottweg in relation to the set off amount the subject of the orders. That communication by Olivaylle has been via its Australian manager. The ASIC record discloses that Mr de Moya remains the managing director of Olivaylle.

6    I well recall from the evidence, which was led at trial, Mr de Moya’s American connection. That evidence, of course, forms part of the background to today’s application. It was also evident from that evidence at trial that Mr de Moya was accustomed to using emails. He was also, to say the least, a very sophisticated businessman. Having regard to all of these matters, it does seem, as I have observed, inherently likely that he has had notice of today’s application. I therefore deem the steps taken by Flottweg to be sufficient service of that application.

7    I have referred to an agreement between the administrators on behalf of the company and Flottweg in relation to the amount of the set off referred to in the orders which I made and, in turn, referred to in the earlier orders made in favour of Olivaylle. That agreement was made at a time when the administrators were in control of the company. It binds Olivaylle. The agreed amount of set off is $100,000.

8    That agreement, axiomatically, did not and does not bind Mr de Moya. He has a separate right to contest the amount that should be fixed in respect of the set off and, indeed, to contest whether the Court should proceed to fix an amount as opposed to letting that issue go to taxation.

9    Today was the day fixed for him to avail himself of an opportunity to be heard on such subjects. That he has not availed himself of that opportunity does not mean that I should unequivocally accept as reasonable the agreed amount of the set off as between Olivaylle and Flottweg. That has been anticipated correctly by those acting on behalf of Flottweg. I have the benefit, as a result of that, of a further opinion from Mr Ross Nicholas, a solicitor with very particular experience indeed of the law and practice in relation to the taxing and assessing of costs. It is apparent from the instructions given to Mr Nicholas, which are in evidence, that his attention has been drawn expressly to the obligations which, according to the practice of this Court, attend those giving expert evidence.

10    Mr Nicholas has considered the amounts which might be allowed in favour of Olivaylle were the matter to proceed to taxation in respect of various orders made in its favour. He annexes to his opinion, which he has verified by affidavit, the following:

5 February 2007 order

Solicitor’s costs calculated in accordance with

Federal Court Sch 2 scale including general care and conduct    $2916.00

Junior counsel’s fees by reference to National guide to counsel’s fees    $4700.00

Total    $7616.00

30 November 2007 order

Solicitor’s costs calculated in accordance with Federal Court Sch 2

Scale including general care and conduct    $1960.80

Junior counsel’s fees by reference to National guide to counsel’s fees    $3500.00

Total    $5406.80

3 April 2008 order

Solicitor’s costs calculated at $675 (less 20%) for partner and $400

(less 20%) for solicitor    $27,520.00

Senior and junior counsel’s fees by reference to

National guide to counsel’s fees    $17,600.00

Total    $45,120.00

Total set-off costs    $58,142.80

11    I canvassed in earlier judgments the principles which attend whether to fix costs, and, if so, the approach to take in fixing costs in gross. I shall not repeat what I there stated. Suffice it to say, in the application of those principles I am firmly of the opinion that it is in the interests of justice that the costs of the set off be fixed. Further, the amounts which Mr Nicholas attributes to the various orders made in Olivaylle’s favour seem to me, having regard to the approach to the fixing of costs in gross particularly, inherently reasonable if not conservative.

12    In making those observations I am in no way critical of the administrators in relation to the agreement struck as between the company when under their administration and Flottweg. I make that observation because the administrators did not have the benefit of Mr Nicholas’ views and indeed, it may well have been an unwarranted expense in the circumstances of an administration for them to attempt to secure such an opinion. The administrators were separately advised by solicitors who themselves, one might apprehend and infer, had the ability to advise in relation to matters of costs in this Court’s South Australian jurisdiction. Further, the amount the subject of Mr Nicholas’ opinion does not take into account additional costs which would be incurred in the event that the matter were to proceed to taxation.

13    For present purposes, what I take from Mr Nicholas’ opinion is that, insofar as Mr de Moya’s separate interests are concerned, there is no injustice to him in my fixing the amount of costs in respect of the set off in the sum of $100,000, quite the reverse.

14    A further question which should be addressed overtly, especially given Mr de Moya’s absence today, is whether there is anything flowing in his favour from the entering into by Olivaylle of the deed of company arrangement. My attention has helpfully been drawn by senior counsel on behalf of Flottweg to s 444H of the Corporations Act 2001 (Cth). That provides for the extent of release of a company’s debts:

s 444H    A deed of company arrangement releases the company from a debt only insofar as:

(a)    the deed provides for the release; and

(b)    the creditor concerned is bound by the deed.

15    So far as Mr de Moya is concerned, his liability pursuant to the earlier orders of the court is joint and several, not merely joint. Thus, whatever provision may be in the deed in respect of a release and whatever impact that may have in respect of a liability, were it only joint, it does not, in my opinion, and could not, operate as a release in respect of Mr de Moya’s separate several liability in respect of costs.

16    The interlocutory application seeks the fixing of costs in respect of the earlier interlocutory application in the sum of $8,500. Having regard to the opinions which I have had from Mr Nicholas both today and earlier, as well as the costs scale at the time as provided for in this Court’s rules and the National Guide to Counsel’s Fees as applicable from time to time, it seems to me inherently reasonable to fix costs in that amount. Further, it seems to me that it is apt to proceed to fix costs in gross in that sum.

17    There remains a question in respect of the costs of today. The position is that Flottweg was obliged either to seek to tax Olivaylle’s costs, agree them or seek to have them fixed in gross, if it wished to proceed to recover in the face of the stay. Self-evidently, there has been no agreement with Mr de Moya. To require Flottweg to proceed to a taxation of the amounts allowable in favour of Olivaylle would, in my opinion, be an unnecessary burden. It would be a like burden to require Flottweg to proceed to have the costs of today taxed. It is appropriate to fix those as well. Again, I draw upon the opinions to which I have already referred in terms of prevailing amounts which might be allowed were the matter to proceed to taxation, but I remind myself that the process of fixing costs in gross is a robust one.

18    On that basis, and in respect of the costs of today, I fix those costs in the sum of $12,657. That comprises the following:

    fees to counsel $4,000;

    solicitor’s fees $4,000;

    outlay in respect of expert advice (Mr Nicholas) $,3000;

    service fees $1,000;

    filing fee $657.

Associate:

Dated:    19 September 2011