FEDERAL COURT OF AUSTRALIA

Secatore, in the matter of Last Lap Pty Ltd (in liq) (No 2) [2020] FCA 735

ORDERS

THE COURT ORDERS THAT:

1.    The Plaintiff personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the First Interested Person’s costs of and incidental to the First Interested Person’s application made pursuant to section 596C(2) of the Corporations Act 2001 (Cth), to be taxed on a party and party basis and payable immediately (unless otherwise agreed).

2.    The Plaintiff personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the First Interested Person’s costs of and incidental to the case management hearing on 21 May 2020, to be taxed on an indemnity basis and payable immediately (unless otherwise agreed).

3.    The First Interested Person’s application for the discharge of the summonses for examination issued pursuant to sections 569A and 596B of the Corporations Act 2001 (Cth) (Summonses Application) be listed for hearing at 9:30am on 29 July 2020.

4.    By 4:00pm on 19 June 2020, the First Interested Person shall file and serve any further affidavit material on which he seeks to rely in respect of the Summonses Application.

5.    By 4:00pm on 26 June 2020, the Plaintiff shall file and serve any further affidavit material on which he seeks to rely in respect of the Summonses Application.

6.    By 4:00pm on 10 July 2020, First Interested Person shall file and serve any written submissions in respect of the Summonses Application.

7.    By 4:00pm on 17 July 2020, the Plaintiff shall file and serve any written submissions in respect of the Summonses Application.

8.    Liberty to apply.

9.    The costs of and incidental to the case management hearing on 28 May 2020 are reserved.

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

ORDERS

THE COURT ORDERS THAT:

1.    The Second Defendant personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the Plaintiff’s costs of and incidental to the Plaintiff’s Originating Process dated 24 September 2019, to be taxed on a party and party basis and payable immediately (unless otherwise agreed).

2.    The Second Defendant personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the Plaintiff’s costs of and incidental to the case management hearing on 21 May 2020, to be taxed on an indemnity basis and payable immediately (unless otherwise agreed).

3.    By 4:00pm on 28 May 2020, the Second Defendant send to the Plaintiff’s solicitors, HWL Ebsworth Lawyers, electronic copies of all documents responsive to paragraphs 1(b)(i) and 1(b)(ii) of the Order made on 14 May 2020, including, without limitation, those documents referred to in paragraph 14 of the affidavit sworn by Bruno Anthony Robert Secatore on 8 October 2019.

4.    Liberty to apply.

5.    The costs of and incidental to the case management hearing on 28 May 2020 are reserved.

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

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1    This decision relates to the costs of two applications that I determined in related proceedings on 14 May 2020 (Secatore, in the matter of Last Lap Pty Ltd (in liq) [2020] FCA 627 (Last Lap (No 1)), and a subsequent case management hearing in those proceedings on 21 May 2020. I adopt the terms defined in Last Lap (No 1) for the purposes of these reasons.

2    Yesterday, on 28 May 2020, I made orders to the effect that:

(a)    the Liquidator personally pay, without recourse to the assets of Last Lap, Rodney Jane’s costs of and incidental to that part of the Summonses Application determined in Last Lap (No 1) (596C Application), to be taxed on a party and party basis and payable immediately (unless otherwise agreed);

(b)    the Liquidator personally pay, without recourse to the assets of Last Lap, Bob Jane Corp’s costs of and incidental to the Funding Disclosure Application, to be taxed on a party and party basis and payable immediately (unless otherwise agreed); and

(c)    the Liquidator personally pay, without recourse to the assets of Last Lap, Rodney Jane and Bob Jane Corp’s costs of and incidental to the case management hearing on 21 May 2020, to be taxed on an indemnity basis and payable immediately (unless otherwise agreed).

3    In doing so, I rejected Rodney Jane and Bob Jane Corp’s submissions that, first, the costs of the Applications ought to be paid on an indemnity basis and, second, that the Liquidator’s solicitors, B2B Lawyers, and the Liquidator’s firm, Cor Cordis, also be liable for those costs.

4    I also ordered in the Funding Disclosure Proceeding that the Liquidator send to Bob Jane Corp’s solicitors electronic copies of certain documents responsive to my orders on 14 May 2020 in that proceeding.

5    These are my reasons for making those orders.

Background

Decision in Last Lap (No 1)

6    The background to the two applications determined in Last Lap (No 1), and a summary of the resolution of those applications, was summarised as follows in that judgment:

[1]     This decision involves two applications in related proceedings, namely proceeding VID 687 of 2019 (Examination Proceeding) and proceeding VID 1047 of 2019 (Funding Disclosure Proceeding). Both proceedings relate to the insolvency of Last Lap Pty Ltd (in liq) (Last Lap).

[2]     Last Lap has been in liquidation for nearly 28 years. The current liquidator of Last Lap, Mr Bruno Secatore (Liquidator), was appointed in April 2015 by order of the Supreme Court of Victoria on the application of Bob Jane Corporation Pty Ltd (Bob Jane Corp). Bob Jane Corp is one of the two unsecured creditors of Last Lap.

[3]     The Examination Proceeding was commenced by the Liquidator in June 2019. The Liquidator sought, and obtained from a Registrar of the Court, orders for the issuing of various summonses for examination (Summonses) pursuant to ss 596A and 596B of the Corporations Act 2001 (Cth) (Act). One of the summonses issued pursuant to s 596B was directed to Mr Rodney Bruce Jane (Rodney Jane).

[4]     Before the examinations pursuant to the Summonses were scheduled to occur, the Funding Disclosure Proceeding was commenced by Bob Jane Corp in September 2019. Bob Jane Corp sought orders that, broadly, the Liquidator disclose the identity of any person who had provided the Liquidator with funds to facilitate the examinations, and also disclose and produce any agreement between the Liquidator and any third party in relation to the funding of the examinations (Funding Disclosure Application).

[5]     Prior to the scheduled hearing of the Funding Disclosure Application, Rodney Jane filed an interlocutory application in the Examination Proceeding (Summonses Application) seeking disclosure of the Liquidator’s affidavit that was filed in support of the application for the issue of the Summonses (Secatore June 2019 Affidavit). The Summonses Application also seeks the discharge of each of the Summonses.

[6]     The Funding Disclosure Application and the Summonses Application (collectively, Applications) were referred by a Registrar for determination by a judge of the Court. I heard both of the Applications together on 7 April 2020. These reasons set out and explain my decision in relation to the Applications.

[7]     In summary, my conclusion in relation to Bob Jane Corp’s Funding Disclosure Application is that it was not unreasonable for the Liquidator to comply with Bob Jane Corp’s request for the documents regarding the funding of the examinations. As such, the Funding Disclosure Application is granted, and I order that the Liquidator provide the relevant information and documents to Bob Jane Corp.

[8]     In relation to Rodney Jane’s Summonses Application, my view is that Rodney Jane has established an arguable case that the issue of the summons directed to him exceeded the power of this Court under s 596B of the Act, and that access to the Secatore June 2019 Affidavit is likely to assist in determining the correctness of that challenge. As there is no other sufficient reason to prohibit disclosure, I accordingly order that the Liquidator make the Secatore June 2019 Affidavit available for inspection by Rodney Jane and his representatives.

[9]     Rodney Jane’s application for the discharge of the Summonses will be adjourned for future determination.

7    As a result, I made the following orders in the Examination Proceeding:

1.    Pursuant to subsection 596C(2) of the Corporations Act 2001 (Cth), the affidavit of Bruno Anthony Robert Secatore sworn on 19 June 2019 and filed in this proceeding on 25 June 2019 be made available for inspection by the Interested Person and his legal advisors.

2.    Until further order, the Interested Person must keep the Secatore June 2019 Affidavit confidential and not disclose it, or its contents, to any person other than his legal advisors.

3.    The costs of the Interested Person’s interlocutory application dated 7 October 2019 be reserved.

8    I also made the following orders in the Funding Disclosure Proceeding:

1.    Pursuant to subsection 70-90(3) of the Insolvency Practice Schedule (Corporations), the Second Defendant:

(a)    disclose to the Plaintiff in writing the identity of any person who has provided the Second Defendant with funds to enable the examination of various persons pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) (Examinations) in Federal Court of Australia Proceeding No. VID687/2019 in relation to the First Defendant; and

  (b)    produce to the Plaintiff:

(i)    any agreement made between the Second Defendant and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations; and

(ii)    any correspondence between the Second Defendant (or his solicitors on his behalf) and any third party in relation to the funding of the Examinations or any potential proceeding arising in connection with the subject of the Examinations.

2.    Until further order, the Plaintiff must maintain the confidentiality of the information and documents disclosed to it in accordance with paragraph 1 of this Order and must not disclose such information and documents to any third party, save for its legal advisors.

 3.    The costs of the Plaintiff’s application is reserved.

9    The orders set out in [7]–[8] above are referred to below as my “14 May Orders”.

10    At the end of my judgment in Last Lap (No 1), I expressed the following:

[112]    As can be seen from the orders, I have reserved the question of costs in relation to this decision. I will list a case management hearing in both proceedings for the parties to address me on any argument as to costs (unless the parties reach agreement in the interim). The case management hearing will also be an opportunity for the parties to address me on the manner in which Rodney Jane’s challenge to the Summonses in the Examination Proceeding is to proceed.

11    After delivering judgment, and further discussion with the parties, I announced that I would list a case management hearing in the proceedings (for the purposes specified in [112] of Last Lap (No 1)) on 21 May 2020.

Subsequent correspondence

12    The following correspondence was exchanged between the parties in the week following the delivery of judgment in Last Lap (No 1) on Thursday, 14 May 2020.

13    On Friday, 15 May 2020, the solicitors for Bob Jane Corp and Rodney Jane emailed the solicitors for the Liquidator and requested that the Liquidator comply with my 14 May Orders, and further provide a copy of the Secatore October 2019 Affidavit. In respect of that latter affidavit, my reasons in Last Lap (No 1) had expressed the following:

[109]    … my view is that no confidentiality order should be made in respect of the Secatore October 2019 Affidavit. First, as I have determined above that the entirety of the Secatore June 2019 Affidavit ought to be disclosed to Rodney Jane and his representatives, it follows that no confidentiality order should be made in respect of the description of annexure “BARS-6” to the table of contents or annexure “BARS-6” to the Secatore October 2019 Affidavit. Similarly, no confidentiality order should be made in respect of the balance of the redacted parts of the Secatore October 2019 Affidavit, namely parts of paras 10 and 13 and the entirety of paras 14–16. As a broad statement, while disclosure of these aspects of the affidavit may reveal part of the Liquidator’s motivations in the proceedings, my view is that the disclosure will not threaten the opportunity for effective examinations pursuant to the Summonses.

14    On Monday, 18 May 2020, the solicitors for the Liquidator emailed a letter to the solicitors for Bob Jane Corp and Rodney Jane, which relevantly expressed the following:

Pursuant to order 1 of the orders of Anderson J dated 14 May 2020 made in proceeding VID1047/2019, we are instructed to confirm the following:

1.    No third party has provided the Second Defendant with funds to enable the examination of various persons pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) in Federal Court Proceeding No. VID 687/2019 in relation to the First Defendant; and

2.    In those circumstances, there are no documents in existence that fit the description set out in order 1(b)(i) and (ii) to produce.

Further, we confirm that in accordance with order 1 of the orders of Anderson J dated 14 May 2020 made in proceeding VID687/2019, the affidavit of Bruno Anthony Robert Secatore sworn 19 June 2019 is available for inspection at our offices by prior appointment. The space allocated for the inspection is entirely separated from the office’s workspaces for COVID-19 related safety purposes.

15    Later that day, the solicitors for Bob Jane Corp and Rodney Jane responded by letter as follows:

Proceeding VID687/2019

For the following reasons, our client requires you to send us by 6:00pm today an unredacted electronic copy of the affidavit of Bruno Anthony Robert Secatore sworn on 19 June 2019 (Unredacted June Affidavit).

First, the Orders made on 14 May 2020 in proceeding VID687/2019 clearly contemplate that your client will give our client a copy of the Unredacted June Affidavit. In particular, we draw your attention to paragraph 2 of the Orders which said that:

‘the Interested Person must keep the Secatore June 2019 Affidavit confidential and not disclose it, or its contents, to any person other than his legal advisors (emphasis added).’

There is no utility in the Court ordering our client not to disclose the Unredacted June Affidavit to any person other than his legal advisors if your client was not required to give our client a copy of the document.

Secondly, requiring our client and each of his legal representatives to physically attend your offices to inspect the Unredacted June Affidavit will frustrate our ability to properly prepare for, and participate in, the case management hearing on Thursday, 21 May 2020. In the current COVID-19 environment, where people are required to work from home if they have the ability to do so, it is simply not practical for our client and all of his legal representatives to physically inspect the document at your offices before Thursday.

Thirdly, given the unprecedented circumstances caused by the COVID-19 pandemic, the directions given by the Victorian Government in relation to people working from home and the approach adopted by the Courts to limit physical attendances for hearings, it is remarkable that you appear to insist on our physical presence to inspect the Unredacted June Affidavit at your offices.

Fourthly, in any regime for the inspection of documents, whether it be by discovery or under section 247A of the Corporations Act 2001 (Cth), there is a corresponding right to obtain a copy of the document.

Fifthly, pursuant to section 37N(1) of the Federal Court of Australia Act 1976 (Cth) (Act) your client is required to conduct these proceedings in a way which is consistent with the overarching purpose in section 37M(1) of the Act. Requiring our client and each of his legal representatives (including Senior Counsel and Junior Counsel) to physically attend your offices to inspect the Unredacted June Affidavit does not facilitate the just resolution of this dispute as quickly, inexpensively and efficiently as possible.

Proceeding VID1047/2019

Your letter does not respond to our request for an unredacted copy of the Secatore October 2019 Affidavit. It is clear from paragraph 109 of his Honour’s Reasons that the contents of this affidavit are not confidential and your client ought to provide us with an unredacted copy of it. Accordingly, we require you to send to us an unredacted electronic copy of the Secatore October 2019 Affidavit by 6:00pm today.

If your client does not send to us an electronic copy of the Unredacted June Affidavit and an unredacted electronic copy of the Secatore October 2019 Affidavit by 6:00pm today, we intend to raise this matter with his Honour at the case management hearing on Thursday, 21 May 2020.

Finally, Bob Jane Corporation Pty Ltd reserves all of its rights against your client in relation to his purported compliance with paragraphs 1(a) and 1(b) of the Orders made on 14 May 2020 in proceeding VID1047/2019, including in relation to the issue of your client personally paying its costs of and incidental to the application on an indemnity basis.

16    Then, later on the same day, the Liquidator’s solicitors responded by email as follows:

We note from the outset the orders of Anderson J are clear. We presume you agree – which is why the relevant part of the orders are not transcribed in your letter.

Our client is required to make the affidavit available for inspection. That is what our client has done, having first taken a reasonable (and brief) period of time to consider his position.

We had understood the orders were specifically made in this manner by the Court so as to ensure, to the best of the Court’s ability, that the affidavit would remain confidential – save and insofar as required to enable your client to inspect the affidavit – noting the affidavit ought otherwise remain confidential.

In this regard, we are surprised by the position adopted by your client and note that no objection was made by your office (or on behalf of your client generally) when the orders were circulated in the current proposed format prior to being formally made. Had this occurred, we would have sought that the orders remain in the current format for the reasons articulated above.

The affidavit is and remains available for inspection. We reiterate that steps have been taken to ensure that inspection can and will occur safely within the current environment.

Accordingly, we look forward to receiving confirmation regarding your client’s proposed inspection time.

Finally, and for the avoidance of doubt, whilst we note the orders did not require our client to make the Secatore October 2019 Affidavit available for inspection, it is apparent from His Honour’s reasons that this is what was intended. Accordingly, we confirm Secatore October 2019 Affidavit will also be available for inspection at any prearranged inspection time.

17    On Tuesday, 19 May 2020, the solicitors for Bob Jane Corp and Rodney Jane responded by letter as follows:

For the reasons set out in [our previous letter], our clients and their legal representatives will not physically attend your offices.

We asked you to send us an unredacted electronic copy of the two affidavits so that we can make submissions at the case management hearing on Thursday, 21 May 2020, in relation to the issue of costs and the future conduct of proceeding VID687/2019.

Given your refusal to cooperate in this regard, we will not be able to do so or give his Honour proposed orders in relation to the future conduct of proceeding VID687/2019. Instead, we intend to send a copy of the recent correspondence to the Court together with the attached proposed orders.

We reserve our clients’ right to seek indemnity costs against your client personally, including in relation to the hearing on Thursday, 21 May 2020.

18    The parties provided me with copies of the above correspondence prior to the case management hearing on 21 May 2020.

Last week’s case management hearing

19    The central issue addressed at last week’s case management hearing on Thursday, 21 May 2020 was the Liquidator’s compliance with my 14 May Orders. Counsel for the Liquidator submitted that the Liquidator had complied with the terms of those orders by making the Secatore June 2019 Affidavit available for physical inspection at the Liquidator’s solicitor’s offices (and the Liquidator offered to provide access to the Secatore October 2019 Affidavit by the same means). In the Liquidator’s submission, the confidentiality order in respect of the Secatore June 2019 Affidavit (see paragraph 2 of my order dated 14 May 2020 in the Examination Proceeding extracted above at [7]) would still have work to do where Rodney Jane, or his representatives, were to physically inspect the Secatore June 2019 Affidavit at the identified premises.

20    I was unpleased with the Liquidator’s refusal to provide Bob Jane Corp or Rodney Jane (as relevant) with electronic copies of the Secatore June 2019 Affidavit and the Secatore October 2019 Affidavit. The intention of my reasons and decision in Last Lap (No 1) was for the Liquidator to be able to obtain electronic copies of the affidavits. In particular, in respect of the Secatore June 2019 Affidavit, I had agreed to the Liquidator’s request after the delivery of judgment for the inclusion of an order that maintained confidentiality over that affidavit (except for Rodney Jane and his legal advisors). This additional order was implicitly directed to protecting the wider confidentiality of the affidavit beyond the distribution of the affidavit from the Liquidator to Rodney Jane and his representatives. I did not expect that the form of the 14 May Orders would lead to further dispute.

21    To start, although the power of the Court under s 596C(2) of the Act is not accompanied with an express ancillary statutory power for the inspector of the supporting affidavit to make copies of the affidavit (cf, for example, s 247A(6) of the Act), my view is that a right to inspect the supporting affidavit pursuant to the order of a Court under that statutory provision at least carries by implication a right to take copies of the affidavit.

22    The same conclusion was reached by Kitto J and Windeyer J in Downey v Pryor (1960) 103 CLR 353 (Downey) in relation to s 215 of the Local Government Act 1919 (NSW), which then provided that “[a]ny elector may at the council’s office inspect the books of account and the report of the auditor or of the inspector of local government accounts without fee as prescribed”. The appellant relevantly argued that the power to “inspect” in this provision did not include the taking of notes. Kinsela J, in the Supreme Court of New South Wales, held that a right to take notes was incidental to the statutory right to inspect. Kitto J and Windeyer J separately agreed with Kinsela J in this respect (McTiernan J did not address the issue), although the High Court allowed the appeal on another ground.

23    In respect of incidental power to take notes of the relevant documents in Downey, Kitto J expressed the following at 361:

… Kinsella J. held that a right to take notes of the contents of the books of account was incidental to the right of inspection, and he referred to the judgment of Lindley L.J. in Mutter v. Eastern and Midlands Railway Co. [(1888) 38 Ch D 92 at 105]. Accordingly if there had been no other point in the case his Honour would have allowed the appeal. I entirely agree in his Honour’s view, and I see no advantage in elaborating the point.

24    Windeyer J likewise expressed the following at 366–367:

I agree with Kinsella J. that a right of inspection carries by implication a right to take copies or extracts. This is established by the judgment of the Court of Appeal in Mutter v. Eastern and Midland Railway Co. [(1888) 38 Ch D 92]. [Counsel for the respondents in each appeal] suggested that that decision could be distinguished because of the contrast made in one passage in Lord Lindley’s judgment, between a section that there imposed a penalty and one that did not. The same argument was addressed to Stirling J. in Nelson v. Angw-American Land Mortgage Agency Company [(1897) 1 Ch 130] and decisively rejected—I respectfully think rightly. A right to take copies does not accompany a right of inspection if it be impliedly excluded by express provisions in the statute enabling copies to be had on payment: In re Balaghat Gold Mining Company [(1901) 2 KB 665]. But that is not the case here. A right of inspection need not ordinarily be exercised personally. A person having the right may ordinarily appoint an agent, such as an accountant, to make the inspection for him: Norey v. Keep [(1909) 1 Ch 561]; Dodd v. Amalgamated Marine Workers' Union [(1924) 1 Ch 116]; R. v. Bedwellty U. D. C.; Ex parle Price [(1934) 1 KB 333]; Edman v. Ross [(1922) 22 SR (NSW) 351; 39 WN 86].

25    This aspect of Downey has been applied on subsequent occasions in different contexts. For instance, in Copyright Agency Ltd v Haines [1982] 1 NSWLR 182, McLelland J held at 199–200 that the right of inspection then conferred by s 203E(5) of the Copyright Act 1968 (Cth) carried with it the incidental right to record the contents thereof. And in Austen v Ansett Transport (unreported, FCA, 26 August 1993), Burchett J applied Downey in relation to an authorisation given by the applicant for one party “to supply details of my medical history” to another party. His Honour concluded that “[i]f a mere right of inspection carries such an implication, I think a right to the supply of details should, in the present context, be understood as involving a right to take copies”.

26    There is no statutory indication that the power to inspect under s 596C(2) of the Act is to be limited to mere physical inspection. Indeed, the ability for an applicant to make, or obtain, copies of the supporting affidavit, where permitted by the Court, is consistent with the underlying purpose of that provision, which is to, where appropriate, provide a person with the supporting affidavit to enable that person to form a view as to the validity of the relevant summons for examination: Last Lap (No 1) at [70]–[76]. Moreover, there are historical examples of a successful applicant for disclosure being entitled to receive copies of the supporting affidavit (and not merely physically inspect it) pursuant to orders made under s 596C(2): see, for example, Re Kaso (in their capacities as joint and several liquidators of Dalstonville Pty Ltd (in liq) and Don Leunig Pty Ltd (in liq) [2018] VSC 774; 133 ACSR 473 at [79] per Hetyey JR (as his Honour then was). Moreover, in light of the practicalities of modern technology and litigation, my view is that the right under s 596C(2) to inspect the supporting affidavit carries by implication a right to obtain an electronic copy of the affidavit.

27    Furthermore, even if we assume that the Liquidator complied with the terms of the 14 May Orders, for the Liquidator to refuse to provide an electronic copy of the Secatore June 2019 Affidavit to Rodney Jane was, in my view, in non-compliance of the Liquidator’s statutory obligation to conduct this proceeding in a way that is consistent with the overarching purpose of the civil practice and procedure provisions, which relevantly includes to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible: ss 37M(1)(b) and 37N(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The result of the Liquidator and his representatives failing to provide Rodney Jane with an electronic copy of the Secatore June 2019 Affidavit (in circumstances where Rodney Jane had the entitlement to inspect the affidavit pursuant to the Court’s order) was to unnecessarily delay the progress of the Examination Proceeding, and in particular the determination as to the merits of Rodney Jane’s challenge to the validity of the Summonses. It should additionally be noted that the Liquidator’s demand for Rodney Jane’s representatives to personally attend the premises of the Liquidator’s solicitors is particularly unimpressive in light of recent directions given by the Victorian Government (and also the general approach adopted by this Court) to limit physical attendances as a result of the COVID-19 pandemic.

28    As a result of these matters, at the finalisation of the case management hearing on 21 May 2020, I made the following order in the Examination Proceeding:

By 12 noon on 21 May 2020 the Plaintiff is to send to HWL Ebsworth Lawyers an unredacted electronic copy of the affidavit of Bruno Anthony Robert Secatore sworn on 19 June 2019 and filed in this proceeding on 25 June 2019, together with the exhibits referred to therein.

And the following order in the Funding Disclosure Proceeding:

By 12 noon on 21 May 2020 the Second Defendant is to send to HWL Ebsworth Lawyers an unredacted electronic copy of the affidavit of Bruno Anthony Robert Secatore sworn on 8 October 2019, together with the exhibits referred to therein.

29    Having made these orders, I granted Bob Jane Corp and Rodney Jane’s request for a one week adjournment for those parties to receive and consider the Secatore June 2019 Affidavit and Secatore October 2019 Affidavit prior to me receiving any submissions as to the costs of the Applications.

Yesterday’s case management hearing

30    In the past week, the Liquidator filed a further affidavit sworn by the Liquidator on 25 May 2020 and a further affidavit sworn by Reid Bettridge, solicitor for the Liquidator, on 26 May 2020. In addition, the parties filed written submissions in relation to the costs of the Applications and the case management hearing on 21 May 2020. I also received further oral submissions at yesterday’s case management hearing.

31    Bob Jane Corp and Rodney Jane argue that they were wholly successful in the Funding Disclosure Application and the 596C Application respectively, and that costs in respect of those applications ought to follow the event. In particular, Bob Jane Corp and Rodney Jane contend that the Liquidator, the Liquidator’s firm (Cor Cordis) and the Liquidator’s solicitors (B2B Lawyers) should personally pay, without recourse to the assets of Last Lap:

(a)    Bob Jane Corp’s costs of and incidental to the Funding Disclosure Application, including the case management hearing on 21 May 2020, to be taxed on an indemnity basis unless otherwise agreed; and

(b)    Rodney Jane’s costs of and incidental to the 596C Application, including the case management hearing on 21 May 2020, to be taxed on an indemnity basis unless otherwise agreed.

32    Beyond the dispute as to costs, Bob Jane Corp also sought a further order of the Court in the following form:

By 4:00pm on 28 May 2020 the Second Defendant shall send to HWL Ebsworth Lawyers electronic copies of all documents responsive to paragraphs 1(b)(i) and 1(b)(ii) of the Orders made on 14 May 2020 including, without limitation, those documents referred to in paragraph 14 of the affidavit sworn by Bruno Anthony Robert Secatore on 8 October 2020.

33    The Liquidator does not oppose a costs order, on a standard basis (or, in the language of this Court’s Federal Court Rules 2011 (Cth) (Rules), “costs as between party and party”), following the event for the Funding Disclosure Application. However, the Liquidator opposes any suggestion that those costs ought to be paid by the Liquidator personally, or by his solicitors. In the Liquidator’s submission, a costs order may only be made against a liquidator personally in exceptional circumstances, and there was no serious dereliction of duty or a conscious disregard of prospects of success by the Liquidator in defending the Funding Disclosure Application. In respect of the Summonses Proceeding, the Liquidator argues that the costs of the 596C Application ought to be reserved until the determination of the substantive application by Rodney Jane to set aside the Summonses. And, finally, in respect of conduct after my 14 May Orders, the Liquidator submits that he was acting reasonably when he declined to provide a copy of the Secatore June 2019 Affidavit to Rodney Jane (and instead require personal attendance at the premises of the Liquidator’s solicitors). As such, in the Liquidator’s submission, no costs orders should be made against him in respect of the case management hearing on 21 May 2020.

34    The parties also addressed me on timetabling orders for the hearing of Rodney Jane’s application for the discharge of the Summonses. After hearing the parties, I made the orders set out below at [68]–[69].

Relevant principles

Discretion as to costs

35    The award of costs is in the discretion of the Court: s 43(2) of the FCA Act; Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 at [3] per Nicholas, Beach and Burley JJ; Umoona Tjutagku Health Service Aboriginal Corp v Walsh [2019] FCAFC 32 (Walsh) at [41] per White, Perry and Banks-Smith JJ. That discretion is broad, and takes into account a broad evaluative judgment of what justice requires: Gray v Richards (No 2) [2014] HCA 47; 89 ALJR 113; 315 ALR 1 (Gray) at [2] per French CJ, Hayne, Bell, Gageler and Keane JJ. The discretion must be exercised judicially, that is, not arbitrarily or capriciously: Walsh at [41] per White, Perry and Banks-Smith JJ, citing Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [22] per Gaudron and Gummow JJ. Ordinarily, costs will be awarded to the successful party, although other factors may influence the Court’s discretion: Gray at [2], citing Stewart v Atco Controls Pty Ltd (In liq) (No 2) [2014] HCA 31; 252 CLR 331 at [4] per Crennan, Kiefel, Bell, Gageler and Keane JJ; see also Walsh at [42].

Indemnity costs

36    “Costs on an indemnity basis” are defined in Sch 1 to the Rules as meaning “costs as a complete indemnity against the costs incurred by the party in the proceeding, provided that they do not include any amount shown by the party liable to pay them to have been incurred unreasonably in the interests of the party incurring them”. In Seven Network Ltd v News Ltd [2009] FCAFC 166; 182 FCR 160, Dowsett and Lander JJ expressed the following at [1102] regarding the appropriateness of an indemnity costs order:

Usually costs are ordered on a party and party basis but if there is “some special or unusual feature in the case to justify the Court exercising its discretion” costs may be ordered on some other basis: Preston v Preston [1982] 1 All ER 41 at 58. There must, however, be some justification to depart from the ordinary rule. The discretion to depart from an order for party and party costs will not be exercised unless there is some special or unusual feature or the justice of the case so requires: Re Wilcox; Ex parte Venture Industries Pty Ltd [1996] FCA 1942; (1996) 141 ALR 727. The categories of case in which it might be appropriate to do so are not closed: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225. An applicant who should have known that his or her proceeding was foredoomed to failure could be obliged to pay costs on an indemnity basis: Smolle v Australia and New Zealand Banking Group Ltd (No 2) [2007] FCA 1967. A clearly hopeless proceeding may mean that the unsuccessful applicant should be subjected to an order for indemnity costs. An applicant who persists in prosecuting a proceeding without regard to the evidentiary difficulties in the case may be called upon to pay costs on some basis other than the usual basis: Yates Property Corporation Pty Ltd v Boland (No 2) [1997] FCA 760; (1997) 147 ALR 685. Specific examples of cases which might attract the exercise of the discretion to award indemnity costs were given by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited 46 FCR at 233.

(This passage was quoted in Bellamy’s Australia Limited v Basil (No 2) [2019] FCAFC 169 at [5] per Murphy, Gleeson and Lee JJ.)

37    The categories of circumstances in which the Court may award indemnity costs are not closed. However, as noted in the final sentence of the extract in the preceding paragraph, Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 described at 233–234 the following specific examples of circumstances that ordinarily warrant such an order:

… the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)).

See also Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5] per Jagot, Yates and Murphy JJ.

Costs order against a liquidator personally

38    Bob Jane Corp and Rodney Jane seek costs orders against the Liquidator personally, and without recourse to the assets of Last Lap. This raises two questions: first, whether a costs order should be made personally against the Liquidator (rather than Last Lap) and, second, whether the Liquidator is entitled to be indemnified from the assets of Last Lap for any such order. These questions are related, but conceptually distinct: see Adsett v Berlouis (1992) 37 FCR 201 (Adsett) at 210 per Northrop, Wilcox and Cooper JJ and Re Lonnex Pty Ltd (in liq) (No 2) [2019] VSCA 62; 57 VR 238 at [24] per Whelan, McLeish and Hargrave JJA

39    The relevant principles in respect of these two questions were summarised as follows by Robson J in Re Australia’s Residential Builder Pty Ltd (in liq) (No 2) [2019] VSC 389 (ARB (No 2)) (with the extensive citations omitted):

[39]     … A registered liquidator exercises public functions beyond an ordinary private litigant. The existence and nature of these additional responsibilities are relevant to the principles governing costs awards for matters involving the participation of liquidators. Where a liquidator acts in the name of the liquidated company, he or she will ordinarily not have any personal liability in respect of an adverse costs order; the costs liability will instead be met by the company’s assets.

…

[41]     In exceptional circumstances, however, the court may order that the liquidator, as a non-party, satisfy a costs order personally. But such an order will typically require a characterisation of the liquidator as the effective litigant to the proceedings, and for the liquidator to have engaged in some form of unreasonableness or impropriety, such that justice dictates that costs should be awarded against him or her personally.

(Citations omitted.)

40    The facts of ARB (No 2) involved an unsuccessful appeal initiated by a liquidator. However, Robson J noted that the above principles remain largely similar where the liquidator is a defendant to proceedings: ARB (No 2) at [42], fn 28; see also Re Wilson Lovatt & Sons Ltd [1977] 1 All ER 274 at 285 per Oliver J and Silvia v Brodyn [2007] NSWCA 55; 25 ACLC 385 (Silvia v Brodyn) at [52] per Hodgson JA. Robson J then continued as follows in ARB (No 2):

Proceedings instituted in the liquidator’s own name

[42]     The principles differ, however, where the liquidator initiates proceedings in his or her own name. Where this occurs, the ordinary policy reasons behind the protection of liquidators from costs orders dissipate. Consequently, a liquidator brings proceedings at his or her own risk and will be liable to any adverse costs order. …

…

Liquidator’s right to indemnification from the assets of company

[46]     Once the appropriate order as to the costs has been determined, a related, but distinct, question may be addressed. Where a liquidator has personally expended costs in undertaking legal proceedings — both his or her own costs and those costs of another party that the liquidator is ordered to pay — the ensuing question is whether he or she is then entitled to be indemnified from the assets of the company for those costs.

[47]     As a general rule, a liquidator is entitled to be indemnified for his or her costs where that expenditure was properly incurred, in the sense of reasonably and honestly incurred. …

[49]     It is not possible to exhaustively specify the characteristics of improperly incurred costs in the course of undertaking litigation, however the authorities reveal a series of guiding principles. To start, impropriety in this context does not require a degree of personal misconduct or wilful recklessness. But it will include the costs that may be characterised as ‘unreasonable’, ‘unnecessary’, ‘extravagant’, ‘negligent’, a ‘mistake’, ‘misconduct’ or otherwise incurred in the course of litigation that was ‘obviously misconceived’. It is also crucial that the liquidator is acting in the course of his or her office in undertaking litigation, and not doing so to advance his or her own interests.

(Citations omitted.)

41    In respect of personal costs orders against liquidators, regard should also be given to the recent discussion of the relevant principles by Rees J in In the matter of Azmac Pty Limited (in liquidation) (No 2) [2020] NSWSC 363 (Azmac (No 2)) at [3]–[20].

Costs against non-parties

42    This Court has power under s 43 of the FCA Act to make costs awards against non-parties: Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; 200 FCR 154 (Dunghutti) at [84] per Keane CJ, Lander and Foster JJ. An order for costs should be made against a non-party if the interests of justice require that it be made: Selig v Weathsure [2015] HCA 18; 255 CLR 661 at [43] per French CJ, Kiefel, Bell and Keane JJ, citing Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178 at 193 per Mason CJ and Deane J.

43    In FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [210], Basten JA (with whom Beazley JA agreed), in a passage quoted by Keane CJ, Lander and Foster JJ in Dunghutti at [83], expressed that

… [w]hat is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria:

(a)    the unsuccessful party to the proceedings was the moving party and not the defendant;

  (b)    the source of funds for the litigation was the non-party or its principal;

  (c)    the conduct of the litigation was unreasonable or improper;

(d)    the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest; and

(e)    the unsuccessful party was insolvent or could otherwise be described as a person of straw.

44    Where applicable, the Court is empowered not only to award costs against a non-party to proceedings, but to award indemnity costs against a non-party: Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [29] per Siopis, Collier and Katzmann JJ.

Consideration

Funding Disclosure Application

45    The Liquidator correctly concedes that the costs of Bob Jane Corp’s successful Funding Disclosure Application ought to follow the event. The issue is the basis on which those costs should be paid, and who should pay them.

46    Contrary to Bob Jane Corp’s submission, my view is that it is not appropriate for the costs of the Funding Disclosure Application to be payable on an indemnity basis. While Bob Jane Corp did have good reason to seek an order under s 70-90(3) of the IPS, and I disagreed with the Liquidator’s contentions in respect of the application of r 70-15(2) of the IPR (see Last Lap (No 1) at [46]–[50]), I do not view that the Liquidator’s opposition to Bob Jane Corp’s application for the relevant information and documents as involving a wilful disregard of the known facts and clearly established law. I accept that the relevant provisions of the IPS and IPR had received minimal judicial attention since their introduction. The appropriate basis for the costs order is instead party and party costs.

47    For reasons addressed further below, my view is that the Liquidator should pay these costs without recourse to the assets of Last Lap.

596C Application

48    The Liquidator submits that the costs of the 596C Application ought to be reserved until the final determination of Rodney Jane’s application to discharge the Summonses. Although I acknowledge there are similar occasions where this has occurred (see Re Moage Ltd (in liq); Sheahan v Pitterino (1997) 77 FCR 81 at 99 per Mansfield J), I do not view that as the appropriate order in the circumstances of the present case.

49    An application by a person under s 596C(2) of the Act for access to an affidavit in support of the issue of a summons for examination is related to, but materially distinct from, a substantive application by that person to set aside the summons: see Last Lap (No 1) at [76]. In the former application, the question for the Court is whether it is in the interests of justice to permit inspection of the affidavit (with ancillary entitlements), in particular by reference to whether the applicant has a requisite arguable case: see ibid at [71]–[75]. The focus of the latter application will likely proceed from that arguable case, but it will extend beyond the question of disclosure of the affidavit to consider whether the issue of the summons was in excess of statutory power, or whether the examination otherwise constitutes an abuse of power.

50    In my view, the two forms of application are discrete, and the costs of those applications should ordinarily be treated accordingly. In the present case, the Liquidator contested Rodney Jane’s application for access to the Secatore June 2019 Affidavit, and the Liquidator lost. Even if the Liquidator is ultimately successful in defending the validity of the Summonses, my view is that, as Rodney Jane was successful in establishing an arguable case, and obtaining access to that affidavit, Rodney Jane is entitled to recover his costs in relation to that preliminary and discrete success.

51    For similar reasons as those outlined above in relation to the Funding Disclosure Application, I do not view that it is appropriate the costs of the 596C Application to be payable on an indemnity basis, as contended for by Rodney Jane. Although the Liquidator’s resistance to an order awarding access to the Secatore June 2019 Affidavit may have been misplaced, that resistance was not so foredoomed to failure, or otherwise in wilful disregard of known facts or clearly established law, such as to warrant an award of indemnity costs. The mere fact that a case is found to lack merit is not a basis for a special costs order. And, as is evident from my reasons in Last Lap (No 1), the challenge to the validity of the Summonses involves real and substantive factual disputes which are yet to be determined. As such, the appropriate basis for this costs order is, once again, party and party costs.

52    For reasons addressed further below, my view is that the Liquidator should pay these costs without recourse to the assets of Last Lap.

Case management hearing on 21 May 2020

53    My view as to the Liquidator’s conduct leading up to the case management hearing on 21 May 2020 has been addressed above. As noted above at [20], the intention of my reasons and decision in Last Lap (No 1) was for the Liquidator to be able to obtain an electronic copy of the Secatore June 2019 Affidavit. As explained above at [21]–[26], my view is that a right to inspect a supporting affidavit pursuant to an order of the Court under s 596C(2) of the Act is not limited to physical inspection of that affidavit and extends to obtaining an electronic copy of the affidavit. And, as explained above at [27], even assuming the Liquidator complied with the terms of the 14 May Orders, the refusal to provide Rodney Jane and his solicitors with an electronic copy of the Secatore June 2019 Affidavit constituted a breach by the Liquidator of his overarching obligations under the FCA Act. I am required to take this into account in exercising my discretion to award costs: s 37N(4) of the FCA Act.

54    As Rodney Jane and Bob Jane Corp submit, the case management hearing on 21 May 2020 was a wasteful exercise. A central purpose of that hearing was for the parties to address me on the costs of the Applications: Last Lap (No 1) at [112]. However, Rodney Jane and Bob Jane Corp were not in a position to advance submissions as to costs without the benefit of the Secatore June 2019 Affidavit and the Secatore October 2019 Affidavit. They were consequently not in a proper position to address the future progress of the proceedings.

55    Given the loss of time to the Court, and to Bob Jane Corp and Rodney Jane, as a result of the Liquidator’s conduct, my view is that it is appropriate to make an indemnity costs order in respect of the case management hearing on 21 May 2020: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, FCA, French J, 3 May 1991). For the reasons now addressed, my view is that the Liquidator should pay these costs without recourse to the assets of Last Lap.

Who should pay the costs?

Liquidator’s solicitors and Liquidator’s firm

56    Contrary to the submission of Rodney Jane and Bob Jane Corp, it is not appropriate for a costs order to be made against either the Liquidator’s solicitors, B2B Lawyers, or the Liquidator’s firm, Cor Cordis. As a first matter, given that the prospect of a costs order being sought against those non-parties was only first raised in the written submissions filed on behalf of Rodney Jane and Bob Jane Corp on the afternoon of 26 May 2020 (less than 48 hours’ prior to yesterday’s case management hearing), it is questionable whether those non-parties were given sufficient notice of that claim for costs: see Mitry Lawyers v Barnden [2014] FCA 918 at [43] per Wigney J. Indeed, in Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300 at [145], McColl JA (with the agreement of Hodgson and Ipp JJA) even expressed, in respect of an application for a costs order against a solicitor or barrister under s 198M of the Legal Profession Act 1987 (NSW), that such an application should be made by notice of motion supported by an affidavit.

57    In any event, even assuming B2B Lawyers and Cor Cordis were provided sufficient notice of the claim, I am not satisfied in the circumstances of the present case that the interests of justice require that an order be made against those non-parties. Notwithstanding it was the obstructive letter addressed from B2B Lawyers that warrants an indemnity costs order in respect of the case management hearing on 21 May 2020, I am not in a position to definitively conclude that there has been a “serious dereliction of duty” by B2B Lawyers (Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 at 712 per French J) such that the blame for that conduct should fall on B2B Lawyers, rather than its client. Moreover, and importantly, although the evidence (as now disclosed to Rodney Jane and Bob Jane Corp) indicates that both B2B Lawyers and Cor Cordis each provided the Liquidator with some form of financial accommodation in relation to the Applications, it was not as if these non-parties were manipulating a straw man party to the proceedings to advance their own interests. Instead, the driving force behind the defence of Rodney Jane’s 596C Application, the defence of Bob Jane Corp’s Funding Disclosure Application, and the conduct leading up to the case management hearing on 21 May 2020 was a party to both proceedings—the Liquidator.

Personal costs order against the Liquidator

58    The Liquidator (albeit in his capacity as liquidator of Last Lap) is personally a party to both the Examination Proceeding and the Funding Disclosure Proceeding. He, and not Last Lap, commenced the Examination Proceeding, and he (along with Last Lap) was made a respondent to the Funding Disclosure Proceeding. It was in his capacity as a party to those proceedings that he defended both the 596C Application and Funding Disclosure Application.

59    In respect of the 596C Application, as Last Lap is not a party to the Examination Proceeding, it is plainly the Liquidator (and not Last Lap) against whom the costs order is to be made. The question is whether the Liquidator is entitled to be indemnified from the assets of Last Lap for those costs. That is discussed further below.

60    Additional analysis is necessary for the Funding Disclosure Application, where both Last Lap and the Liquidator were respondents. A liquidator, in defending an application such as the Funding Disclosure Application, is, as a starting proposition, protected from a costs order against him or her personally: Silvia v Brodyn at [52]. However, a costs order may be made against the liquidator personally where the liquidator’s opposition to the relief sought was, in the circumstances, unreasonable, unnecessary or dishonest: Azmac (No 2), citing Mead v Watson as Liquidator for Hypec Electronics [2005] NSWCA 133; 23 ACLC 718 (Mead) at [16] per Sheller, Ipp and Tobias JJA. And, for the purposes of establishing whether the liquidator’s opposition was unreasonable or unnecessary, “[a] degree of personal misconduct or wilful recklessness on the part of the liquidator [is] not required: mere negligence or mistake or the incurring of costs unreasonably or unnecessarily [is] sufficient to constitute the relevant degree of impropriety to justify an order that the costs be paid by the liquidator personally”: Mead at [14], reflecting on In re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 562 per Bowen LJ.

61    In my view, the present case is one in which the Liquidator provoked the Funding Disclosure Application such that, for the purposes of assessing the appropriate order as to costs, he should be regarded as the party that initiated the litigation, and thereby not entitled to the protection afforded by the need of Rodney Jane and Bob Jane Corp to show exceptional circumstances to warrant a costs order against the Liquidator personally: Azmac (No 2) at [8]. However, in any event, the Liquidator’s conduct in defending the Funding Disclosure Application was, in my view, unreasonable and unnecessary in the sense described above. A personal costs order against the Liquidator follows.

62    My reasons for dismissing the Liquidator’s defence of the Funding Disclosure Application is set out in Last Lap (No 1) at [26]–[55]. I add the following matter. One of the bases for the Liquidator contending that Bob Jane Corp’s request for information and documents was unreasonable was that the information and documents would be subject to legal professional privilege (see r 70-15(2)(b) of the IPR). That contention was not substantiated, and was dismissed: Last Lap (No 1) at [48]. Now that the Liquidator has responded to my 14 May Orders, it turns out that there was no legally privileged information or documents. At yesterday’s hearing, counsel for the Liquidator explained, in short, that she had originally advanced those submissions based on a mistaken belief as to the the existence of privileged material. I do not have reason to doubt that. But the ultimate absence of privileged material underlines the unreasonableness and lack of necessity of the Liquidator’s defence of the Funding Disclosure Application.

63    Beyond consideration of the Liquidator’s conduct in defending the Funding Disclosure Application, it should also be recalled that, according to the Liquidator’s own estimate (see Last Lap (No 1) at [12]), the total realisation of Last Lap’s assets would be $10. The Liquidator submits that, after his further investigation, Last Lap may successfully run a valuable claim that would bolster the company’s assets. That prospect cannot be ruled out, but it remains sufficiently remote as at today’s date such that, in the circumstances, a costs order against Last Lap (and not the Liquidator) by the Court would be an empty gesture.

64    As for the case management hearing on 21 May 2020, it should be evident from the discussion above, which leads to an indemnity costs order in respect of that hearing, that the Liquidator’s conduct leading up to that hearing was unreasonable and unnecessary. The Liquidator should pay those costs personally.

Indemnification from assets of Last Lap?

65    The final question is whether the Liquidator is entitled to an indemnification from the assets of Last Lap for the costs orders in respect of the 596C Application, Funding Disclosure Application and the case management hearing on 21 May 2020. In Adsett, Northrop, Wilcox and Cooper JJ, in the context of a trustee in bankruptcy’s claim for reimbursement of litigation costs, expressed the following at 212:

If the expense is one prudently and reasonably incurred in the discharge of the trustee’s proper duties, there is a right under the general law to be indemnified out of the trust estate. If the expense is not so incurred or is unreasonable or unnecessary, there is no right under the general law to indemnity because the expense is not ‘properly incurred’. The position is no different with a trustee in bankruptcy. Where the line is drawn, between an expense properly incurred and one not properly incurred, is to be determined on the facts of the particular case and in the exercise of judgment.

See also the discussion in ARB (No 2) at [47]–[49], as partly extracted above at [40].

66    For similar reasons as expressed above in relation to each costs order, my view is that the Liquidator’s conduct was such that the Liquidator’s obligation to pay those costs was not properly incurred in the relevant sense. It is accordingly appropriate that the costs orders against the Liquidator be framed such that he is not entitled to have recourse to the assets of Last Lap in relation to those expenses.

Timing of taxing and payment

67    In respect of costs of the interlocutory aspects of the two proceedings, the default position, subject to any order of the Court, is that those costs must not be taxed until the completion of the proceedings: r 40.13 of the Rules. However, given the discrete nature of the 596C Application (see Australian Flight Test Services Pty Ltd v Minister for Industry, Science & Technology (unreported, FCA, O’Loughlin J, 26 April 1996)), and the unreasonableness of the Liquidator leading up to the case management hearing on 21 May 2020 (see Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; 55 NSWLR 1 at [12] per Barrett J), my view is that it is appropriate in the circumstances to specify that these costs be taxed and payable immediately by the Liquidator.

Orders

68    For the reasons expressed above, I made the following orders in the Examination Proceeding:

1.    The Plaintiff personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the First Interested Person’s costs of and incidental to the First Interested Person’s application made pursuant to section 596C(2) of the Corporations Act 2001 (Cth), to be taxed on a party and party basis and payable immediately (unless otherwise agreed).

2.    The Plaintiff personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the First Interested Person’s costs of and incidental to the case management hearing on 21 May 2020, to be taxed on an indemnity basis and payable immediately (unless otherwise agreed).

3.    The First Interested Person’s application for the discharge of the summonses for examination issued pursuant to sections 569A and 596B of the Corporations Act 2001 (Cth) (Summonses Application) be listed for hearing at 9:30am on 29 July 2020.

4.    By 4:00pm on 19 June 2020, the First Interested Person shall file and serve any further affidavit material on which he seeks to rely in respect of the Summonses Application.

5.    By 4:00pm on 26 June 2020, the Plaintiff shall file and serve any further affidavit material on which he seeks to rely in respect of the Summonses Application.

6.    By 4:00pm on 10 July 2020, First Interested Person shall file and serve any written submissions in respect of the Summonses Application.

7.    By 4:00pm on 17 July 2020, the Plaintiff shall file and serve any written submissions in respect of the Summonses Application.

 8.    Liberty to apply.

9.    The costs of and incidental to the case management hearing on 28 May 2020 are reserved.

69    I also made the following orders in the Funding Disclosure Proceeding:

1.    The Second Defendant personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the Plaintiff’s costs of and incidental to the Plaintiff’s Originating Process dated 24 September 2019, to be taxed on a party and party basis and payable immediately (unless otherwise agreed).

2.    The Second Defendant personally pay, without recourse to the assets of Last Lap Pty Ltd (In Liquidation) (ACN 004 532 030), the Plaintiff’s costs of and incidental to the case management hearing on 21 May 2020, to be taxed on an indemnity basis and payable immediately (unless otherwise agreed).

3.    By 4:00pm on 28 May 2020, the Second Defendant send to the Plaintiff’s solicitors, HWL Ebsworth Lawyers, electronic copies of all documents responsive to paragraphs 1(b)(i) and 1(b)(ii) of the Order made on 14 May 2020, including, without limitation, those documents referred to in paragraph 14 of the affidavit sworn by Bruno Anthony Robert Secatore on 8 October 2019.

 4.    Liberty to apply.

5.    The costs of and incidental to the case management hearing on 28 May 2020 are reserved.

Associate:

Dated:        29 May 2020

SCHEDULE OF PARTIES