FEDERAL COURT OF AUSTRALIA

Elan, in the matter of Guild Enterprises Australasia Pty Ltd v Cohen (No 2) [2020] FCA 854

ORDERS

THE COURT ORDERS THAT:

1.    There be no order for costs on the application filed 16 October 2019.

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

REASONS FOR JUDGMENT

REEVES J:

1    Earlier this year Mr Guy Elan successfully applied for leave under s 206G(1) of the Corporations Act 2001 (Cth) to manage the affairs of Guild Enterprises Australasia Pty Ltd – of which he is the sole director – notwithstanding that he is presently a bankrupt (see [2020] FCA 79). That leave was granted for the primary purpose of allowing Guild Enterprises to continue to conduct proceedings in the Supreme Court of Queensland in which it is the plaintiff.

2    Mr Yoram Cohen and his fellow defendants in that proceeding intervened in, and opposed, Mr Elan’s application for leave.

3    Mr Elan has now sought an order for costs against them. However, in recognition of the principle that he was seeking an indulgence from the Court and would not, therefore, ordinarily be entitled to seek costs, he has confined his application to 25% of the costs of his leave application. He has done so claiming that, by their involvement, Mr Cohen and his fellow defendants “unnecessarily lengthened the proceeding”. He advanced the following five matters in support of that claim:

(a)    the defendants did not give any warning of their intention to apply to be joined to the application prior to appearing at the first case management hearing on 21 November 2019;

(b)    none of the matters raised in the affidavit of the first defendant filed 18 December 2019 detracted from the principal conclusions reached by the Court, which found that: “it is difficult to see how these matters pose any risk to the public if Mr Elan were given leave to manage Guild Enterprises for the limited purpose of conducting the Supreme Court proceeding”;

(c)    most of the time spent at the hearing of the application on 20 December 2019 was spent making submissions in relation to the matters raised by the defendants, none of which were found to be influential in the exercise of the Court’s discretion;

(d)    the defendants were late in filing their affidavit material – having been ordered to file material by 3 December 2019, they filed three affidavits on 18 December 2019, just two days prior to the hearing; and

(e)    the defendants’ affidavit material included an affidavit from one Mr Alon Yadin, which (in addition to being filed late) contained scandalous allegations of fraud of which no notice had been given and which were abandoned by the time of the hearing.

4    Mr Cohen and his fellow defendants have opposed Mr Elan’s application, citing a number of judgments, including that of Debelle J in City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65 at 67–68. In particular, they denied having caused Mr Elan to incur any additional costs in his application.

5    There is no reason not to apply the principle in this matter that a person seeking an indulgence from a Court is not ordinarily entitled to the costs of the application concerned. That is to say, I do not consider there is any merit in Mr Elan’s claim that Mr Cohen and his fellow defendants unnecessarily lengthened this proceeding. The lack of warning ([3(a)] above); the late filing of affidavits ([3(d)] above); and the initial inclusion and later retraction of certain statements in one of those affidavits ([3(e)] above) did not, in my view, cause any lengthening to the proceeding. Nor do I consider any significant lengthening occurred as a result of the arguments Mr Cohen and his fellow defendants unsuccessfully put to the Court ([3(b)] and [3(c)] above). In my view, those arguments went to issues that would have had to be considered in Mr Elan’s application even if Mr Cohen and his fellow defendants had not been present.

6    For these reasons, Mr Elan’s application is rejected. Accordingly, there will be no order for costs on his application for leave filed 16 October 2019.

Associate:    

Dated:    17 June 2020