FEDERAL COURT OF AUSTRALIA

Marsden (Liq) v CVS Lane PV Pty Limited, in the matter of Pentridge Village Pty Limited (In Liquidation) (Receiver and Manager Appointed) (Controller Appointed) (No 2) [2018] FCA 921

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed 16 October 2017 be dismissed.

2.    Lambros Sioris and Andrew Vasarelli pay the liquidator’s costs of the interlocutory application.

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

ORDERS

THE COURT ORDERS THAT:

1.     CVS Lane pay the liquidator’s additional costs of the application for an extension of time to commence proceedings.

2.    Otherwise, the liquidator’s costs of NSD1243/2017 be costs in the liquidation of the plaintiff.

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

REASONS FOR JUDGMENT

GLEESON J:

1    On 2 February 2018, in proceeding NSD1243/2017, I made an order extending time for the plaintiff (“liquidator”) to commence proceedings under s 588FF of the Corporations Act 2001 (Cth), and on 16 February 2018, I refused the liquidator’s application for reinstatement of the second defendant: Marsden (liquidator) v CVS Lane PV Pty Limited, in the matter of Pentridge Village Pty Limited (in liq) (receiver and manager appointed) (controller appointed) [2018] FCA 102.

2    After delivery of the judgment, the parties made submissions concerning costs orders consequent the disposition of NSD1243/2017 as well as what, if any order should be made in relation to an interlocutory application to set aside examination summonses, filed by Lambros Sioros and Andrew Vasarelli (“directors”) on 16 October 2017 in NSD1121/2017 (“interlocutory application”), that would no longer be pressed.

Costs of NSD1243/2017

3    The liquidator seeks an order that the first defendant (“CVS Lane”) pay the liquidator’s additional costs of proceedings NSD1243/2017 occasioned by CVS Lane’s opposition to be taxed if not agreed.

4    In written submissions entitled “First and second defendants’ outline of submissions on costs”, it was submitted that the costs of the extension of time application should be costs in the liquidation, with no other order as to costs. To the extent that the Court is minded to make a particular costs order adverse to the first and second defendants, it was submitted that they should be awarded their costs of the reinstatement application.

5    In my first reasons, I noted that the liquidator’s extension of time application was opposed by CVS Lane and the second defendant (“CVS Mezz”) and also that Mr Hyde appeared for those two parties. CVS Mezz is a deregistered company and I am therefore doubtful that these details are correct. The transcript of the hearing show that Mr Hyde announced his appearance for the CVS Lane only.

6    In a notice of appearance dated 24 August 2017, former directors of the second defendant, being the directors and Lee Centra, gave notice of their intention to appear. In written submissions entitled “Second defendant’s supplementary submissions on costs”, it was submitted that the notice of appearance stated that CVS Mezz appeared by its former directors, and that these directors should have their costs of defending the reinstatement application. The notice of appearance states relevantly:

Notice is given that Andrew James Vasarelli, Lee Matthew Centra and Lambros Sioros, former directors of CVS Lane PV Mezz Pty Limited (deregistered) (ACN 154 856 890)…, Second Defendant intend to appear before the Court at the hearing of the application … and, if applicable, to oppose the application.

7    Section 43 of the Federal Court of Australia Act 1976 (Cth) (“FCA Act”) confers a broad discretion on the Court to award costs which is “not to be read down otherwise than by judicial principle conformable with the amplitude of the power”: DSE (Holdings) Pty Ltd v InterTAN Inc (2004) [2004] FCA 1251; 51 ACSR 555 at [14] (per Allsop J, as his Honour then was). In the absence of special circumstances, the general rule is that costs follow the event: see, for example, Qantas Airways Ltd v Lustig (No 2) [2015] FCA 782 at [7] and the cases referred to therein.

8    For the purpose of determining costs, the “event” is the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (special leave refused: [2015] HCASL 15). In Re Clarecastle Pty Ltd (in liq) — Kassem (as liquidators of Clarecastle Pty Ltd (in liq)) [2011] NSWSC 1081; (2011) 86 ACSR 145, Ward J considered that the outcome of the application to extend time under s 588FF was the relevant “event” for the purposes of an application for costs. Her Honour noted that the liquidators were unsuccessful in seeking a grant in general terms, but they obtained a limited grant. Her Honour concluded at [59] “that, although the one “event”, there was a measure of success on both sides (and, as a matter of impression, I think it fair to say that there was a much greater success on the Jasmic parties’ side of the ledger than on the part of the liquidators’ side)”.

9    Where there are multiple issues in a case, the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No 2) [2014] NSWCA 425 at [27], citing Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]. See also Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24].

10    In McCann v Mawson Restructures and Workouts Pty Ltd, in the matter of Walton Construction (Qld) Pty Ltd (In Liq) [2016] FCA 1152, Edelman J made an order of the kind proposed by the liquidator, after expressing the preliminary view (at [69] of his Honour’s reasons) that the liquidators were entirely successful in an extension of time application which had been opposed.

11    In In the Matter of Waterfront Investments Group Pty Ltd (in liq) [2013] NSWSC 1999, Black J made an order that the liquidator’s costs of his originating process seeking an extension of time under s 588FF be costs in the winding up of the company. His Honour noted (at [19] of his Honour’s reasons) that such an order was properly made, since the application was a necessary application in the conduct of the winding up of the company. The liquidator’s application was unopposed.

12    In Arnautovic v Nichola [2009] NSWSC 831, on an unsuccessfully opposed application for an extension of time that involved cross-examination of one of the liquidators, Macready AsJ ordered the liquidators’ costs be costs in the winding up of the company with no orders as to the opponent’s costs.

Consideration

13    In my view, the relevant “event” is the outcome of the whole proceeding in which the liquidator was substantially (albeit not entirely) successful. The reinstatement application was a separate application but it involved a very short point and it would not be conducive to the quick, inexpensive and efficient resolution of the disputes in the proceeding to make a separate costs order in relation to that application: see FCA Act s 37M. Accordingly, it is unnecessary to consider whether the directors of CVS Mezz are entitled to the costs order sought on their behalf.

14    As CVS Lane opposed the extension of time application, it should pay the additional costs of NSD1243/2017 occasioned by that opposition.

Costs of NSD1121/2017

15    At the hearing on 16 February 2018, Mr Hyde, who also appeared for the directors, agreed that the interlocutory application should be dismissed.

16    The liquidator sought an order that the directors pay the liquidator’s costs of the interlocutory application. The liquidator argued that the proposed order was consistent with the usual position that a defendant is required to pay the applicant’s costs where it discontinues or withdraws proceedings, as reflected in r 26.12(7) of the Federal Court Rules 2011.

17    I accept that submission, and will make the order sought by the liquidator. In reaching this decision, I note that this is not a case where the further prosecution of the application became futile (cf Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 625 per McHugh J). Additionally, I do not accept the directors’ submission that had no extension of time been granted, no proceedings could have been commenced in relation to the impugned transactions such that the proposed examinations in relation to those transactions would have been oppressive and lacking utility without the extension of time. In these circumstances, there is no good reason to depart from the usual position identified above.

Conclusion

18    I will make costs orders in accordance with the orders sought by the liquidator.

Associate:

Dated:    22 June 2018