FEDERAL COURT OF AUSTRALIA

Strazdins v DNPW Pty Ltd (No 2) [2014] FCA 199

THE COURT ORDERS THAT:

(1)    The plaintiffs have leave to amend their originating process filed on 9 May 2013 in accordance with the form of amended originating process attached to draft orders dated 3 February 2014, save that the reference to the date upon which the originating process was amended and the date of the Court order pursuant to which that was done is to be the date of this order.

(2)    Subject to order 3 below, any further compliance by the plaintiffs with the notice procedure specified in r 9.2 of the Federal Court (Corporations) Rules 2000 (Cth) is dispensed with.

(3)    The plaintiffs serve the amended originating process on Hoggies Darwin Pty Ltd (trading as Hoggs Breath Cafe Darwin), Merit Partners Pty Ltd, Jalouise Pty Ltd and Dunstruck Pty Ltd within seven days.

(4)    The interlocutory process dated 8 July 2013 be dismissed.

(5)    There be no order as to costs as between the plaintiffs, on the one hand, and NT Pubco Pty Ltd, DMTL Management Pty Ltd, Garrihy Pty Ltd and Australia and New Zealand Banking Group Limited, on the other, of the plaintiffs’ originating process filed on 9 May 2013, between 9 May 2013 and the date of this order.

(6)    The defendant company, NT Pubco Pty Ltd, DMTL Management Pty Ltd and Garrihy Pty Ltd pay 50% of the plaintiffs’ costs of their attendance at the hearings on 30 July 2013 and 13 August 2013, but otherwise there be no order as to the costs of the interlocutory process dated 8 July 2013.

(7)    The plaintiffs’ application for the determination of their remuneration be referred to a Registrar of the Court for hearing and determination.

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

REASONS FOR JUDGMENT

1    These reasons deal with the final orders which should be made in this proceeding and they should be read with my earlier reasons (Strazdins v DNPW Pty Ltd [2013] FCA 1368).

2    The first order which the plaintiffs seek is that they have leave to amend their originating process filed on 9 May 2013 in the form attached to draft orders dated 3 February 2014. If allowed, the amendments to the originating process will result in the plaintiffs seeking an order under s 449E(1)(c) and s 449E(1A)(c) of the Corporations Act 2001 (Cth) (“the Act”) for the determination of their remuneration by the Court, rather than the orders previously sought which are set out in my earlier reasons at [4], [5] and [14]. The defendant company and NT Pubco Pty Ltd, Garrihy Pty Ltd and DMTL Management Pty Ltd (“the NT Pubco objectors”) oppose the application to amend the originating process. They submit that the originating process should be dismissed, leaving the plaintiffs to re-engage the process or procedure in r 9.2 of the Federal Court (Corporations) Rules 2000 (Cth) (“the Rules”), and then to issue another application. For the reasons set out below, I am satisfied on the evidence that the plaintiffs have substantially complied with the notice procedure specified in r 9.2 of the Rules and that it is appropriate to dispense with any further compliance. In those circumstances, I will grant leave to the plaintiffs to amend the originating process.

3    The order I will make is as follows:

(1)    The plaintiffs have leave to amend their originating process filed on 9 May 2013 in accordance with the form of amended originating process attached to draft orders dated 3 February 2014, save that the reference to the date upon which the originating process was amended and the date of the order of the Court pursuant to which that was done is to be the date of this order.

4    The second order which the plaintiffs seek is an order that the Court dispense with any requirement on them to issue a further or separate notice pursuant to r 9.2(2) of the Rules.

5    The evidence is that the plaintiffs have complied with r 9.2(2) of the Rules. As a result of doing that, they received a number of objections and then purported to comply with r 9.2(5) of the Rules. The originating process does not, in terms, seek an order under s 449E(1)(c) or (1A)(c) of the Act, and arguably, there has not been compliance with r 9.2(5). That has been of no consequence as far as the objectors who appeared before the Court are concerned. As far as the other objectors are concerned, I will make an order that they be served with the amended originating process within seven days.

6    The orders I will make are as follows:

(2)    Subject to order 3 below, any further compliance by the plaintiffs with the notice procedure specified in r 9.2 of the Federal Court (Corporations) Rules 2000 (Cth) is dispensed with.

(3)    The plaintiffs serve the amended originating process on Hoggies Darwin Pty Ltd (trading as Hoggs Breath Cafe Darwin), Merit Partners Pty Ltd, Jalouise Pty Ltd and Dunstruck Pty Ltd within seven days.

7    The third order which the plaintiffs seek is an order that the NT Pubco objectors be joined to the proceeding as the second, third and fourth defendants respectively.

8    The defendant company and the NT Pubco objectors made an application by interlocutory process dated 8 July 2013 for various orders, including an order that the three NT Pubco objectors be joined to the proceedings as the second, third and fourth defendants respectively. However, after I published my earlier reasons, the defendant company and the NT Pubco objectors abandoned that application. The plaintiffs press their application for joinder on the basis that the NT Pubco objectors should be parties so that an order for costs can be made against them. Counsel representing the NT Pubco objectors did not argue that an order for costs could not be made against them unless they were joined as defendants. In other words, he accepted that I could make costs orders against them even though they are not parties. In those circumstances, I see no reason why the NT Pubco objectors should be joined as parties to the proceeding.

9    The fourth order which the plaintiffs seek is an order that the notices of objection of the NT Pubco objectors dated 20 December 2012 and of the Australia and New Zealand Banking Group Limited (“ANZ Bank”) dated 8 January 2013 be dismissed. The plaintiffs are unable to point to any legislative provision conferring power on the Court to make such an order and I am not satisfied that such an order should be made.

10    The fifth order which the plaintiffs seek is an order that the notices of objection of the NT Pubco objectors dated 19 April 2013 and of the ANZ Bank dated 16 April 2013 be dismissed. For the same reasons, I am not satisfied that such an order should be made.

11    The sixth order which the plaintiffs seek is an order that the interlocutory process dated 8 July 2013 issued by the defendant company and the NT Pubco objectors be dismissed. The substantive orders sought in that process are set out in [12] of my earlier reasons. I would not make any of those orders, and, in the circumstances, it is appropriate that the interlocutory process be dismissed.

12    The order I will make is as follows:

(4)    The interlocutory process dated 8 July 2013 be dismissed.

13    The seventh order which the plaintiffs seek is an order that the plaintiffs’ costs of the originating process filed on 9 May 2013 be paid as follows:

(1)    by ANZ Bank, so far as the costs in the proceeding have been occasioned by the ANZ Bank; and

(2)    by the defendant company and the NT Pubco objectors,

jointly and severally and certified fit for counsel.

14    They also seek, by way of an eighth order, an order that their costs of the objector application (i.e., the interlocutory process dated 8 July 2013) be paid as follows:

(1)    by ANZ Bank, so far as the costs in the proceeding have been occasioned by the ANZ Bank; and

(2)    by the defendant company and the NT Pubco objectors,

jointly and severally and certified fit for counsel.

15    I think the plaintiffs should bear their own costs of the originating process filed on 9 May 2013. In the end, they made an application which was unnecessary. They might have adopted the course that they did out of an abundance of caution, but it is not one for which others should pay. Furthermore, some of the legal work done has been necessary whether or not there were objections.

16    I will make the following order:

(5)    There be no order as to costs as between the plaintiffs, on the one hand, and NT Pubco Pty Ltd, DMTL Management Pty Ltd, Garrihy Pty Ltd and Australia and New Zealand Banking Group Limited, on the other, of the plaintiffs’ originating process filed on 9 May 2013, between 9 May 2013 and the date of this order.

17    I have excluded the defendant company from this order in case there is some order that might ordinarily be made against a company in its position at the end of this proceeding.

18    In my opinion, the important question in connection with the interlocutory process dated 8 July 2013 is whether the plaintiffs are entitled to an order for their costs. I do not think that the defendant company and the NT Pubco objectors are entitled to an order for costs as they were unsuccessful with respect to all of the arguments they presented. Nor do I think the ANZ Bank is entitled to an order for costs. It was successful as to one of its arguments, but unsuccessful as to a number of others.

19    In my opinion, the plaintiff should have some of their costs of the interlocutory process dated 8 July 2013. They were obliged to deal with a number of arguments, which, in the result, were unsuccessful. In terms of the quantum of costs to which the plaintiffs are entitled, I think the following matters are relevant:

(1)    the plaintiffs were unsuccessful in obtaining the orders they sought in the originating process (i.e., the orders under s 447A of the Act);

(2)    in his first affidavit sworn on 28 March 2013, Mr Strazdins claimed remuneration on behalf of the plaintiffs for the period from 1 August 2008 to 10 August 2011. That position did not change at the time Mr Strazdins swore his second affidavit on 7 May 2013. However, by the time he swore his third affidavit on 26 June 2013, Mr Strazdins indicated that the plaintiffs did not claim remuneration beyond 23 June 2010; and

(3)    as will be seen from my earlier reasons (at [53]), the administrators told the Court that, for the purposes of their application, they would not seek to challenge the findings of the Master of the Supreme Court of the Northern Territory. As far as I can see from the submissions, that position was only made clear immediately prior to the argument before me. I refer to paragraph 35 of the plaintiffs’ responding submissions filed on 29 July 2013.

20    In my opinion, the appropriate order is that the plaintiffs recover 50% of the costs of their attendance at the hearings which took place on 30 July 2013 and 13 August 2013, but that otherwise there be no order as to the costs of the interlocutory process dated 8 July 2013. The costs of attendance are just that and do not include the costs of preparation for those hearings.

21    In my opinion, those costs should be paid by the defendant company and the NT Pubco objectors. As I have said, they were unsuccessful with respect to all the arguments they put to the Court. After I delivered my earlier reasons, counsel for the defendant company and the NT Pubco objectors indicated that the NT Pubco objectors no longer sought to be made parties to the proceeding (assuming the proceeding remains on foot) and that the defendant company would not play a role in the proceeding.

22    In my opinion, the ANZ Bank stands in a different position. It was the only one to submit that the plaintiffs did not need an order under s 447A of the Corporations Act 2001 (Cth) and it did not seek an order that it be made a party to the proceeding (see generally, Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 691).

23    The order I will make is as follows:

(6)    The defendant company, NT Pubco Pty Ltd, DMTL Management Pty Ltd and Garrihy Pty Ltd pay 50% of the plaintiffs’ costs of their attendance at the hearings on 30 July 2013 and 13 August 2013, but otherwise there be no order as to the costs of the interlocutory process dated 8 July 2013.

24    The ninth order which the plaintiffs seek is an order that their application for the determination of their remuneration be referred to a Registrar of the Court for hearing and determination. A Registrar has the power to hear an application to determine the remuneration of an administrator and I think it is appropriate to make such an order (Federal Court of Australia Act 1976 (Cth) s 35A, Federal Court (Corporations) Rules 2000 (Cth) r 16.1 and Schedule 2 Item 46).

25    The orders I will make are as follows:

(1)    The plaintiffs have leave to amend their originating process filed on 9 May 2013 in accordance with the form of amended originating process attached to draft orders dated 3 February 2014, save that the reference to the date upon which the originating process was amended and the date of the Court order pursuant to which that was done is to be the date of this order.

(2)    Subject to order 3 below, any further compliance by the plaintiffs with the notice procedure specified in r 9.2 of the Federal Court (Corporations) Rules 2000 (Cth) is dispensed with.

(3)    The plaintiffs serve the amended originating process on Hoggies Darwin Pty Ltd (trading as Hoggs Breath Cafe Darwin), Merit Partners Pty Ltd, Jalouise Pty Ltd and Dunstruck Pty Ltd within seven days.

(4)    The interlocutory process dated 8 July 2013 be dismissed.

(5)    There be no order as to costs as between the plaintiffs, on the one hand, and NT Pubco Pty Ltd, DMTL Management Pty Ltd, Garrihy Pty Ltd and Australia and New Zealand Banking Group Limited, on the other, of the plaintiffs’ originating process filed on 9 May 2013, between 9 May 2013 and the date of this order.

(6)    The defendant company, NT Pubco Pty Ltd, DMTL Management Pty Ltd and Garrihy Pty Ltd pay 50% of the plaintiffs’ costs of their attendance at hearings on 30 July 2013 and 13 August 2013, but otherwise there be no order as to the costs of the interlocutory process dated 8 July 2013.

(7)    The plaintiffs’ application for the determination of their remuneration be referred to a Registrar of the Court for hearing and determination.

Associate:

Dated:    12 March 2014