Federal Court of Australia

Newman (Trustee), in the matter of Vlahos, a bankrupt [2021] FCA 122

ORDERS

THE COURT DECLARES THAT:

1.    The applicant is justified in the proper exercise of his discretion in the administration of the Bankrupt Estate of William Stephen Vlahos:

(a)    in retaining Law In Order to consult and process the documents from the Police Hard Drive (as defined in the Affidavit of Philip Newman affirmed 3 September 2020); and

(b)    in providing the Police Hard Drive to Law In Order for those purposes.

THE COURT ORDERS THAT:

2.    The applicant has leave, now for then, to file the proposed amended application, circulated on or about 25 January 2021.

3.    The applicant pay the costs of Sam Davidson incurred up to and including 26 October 2020 on the issue as to whether the applicant should be released from the Harman undertaking in respect of the documents filed in Federal Circuit Court proceedings MLG 319 of 2020, such costs to be paid on a party/party basis and taxed in default of agreement.

4.    The applicant pay the costs of Boris Janezic incurred up to and including 26 October 2020 on the issue as to whether the applicant should be released from the Harman undertaking in respect of the documents filed in Federal Circuit Court proceedings MLG 315 of 2020, such costs to be paid on a party/party basis and taxed in default of agreement.

5.    The applications for costs of Sam Davidson and Boris Janezic otherwise be dismissed.

6.    There otherwise be no order as to costs.

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

REASONS FOR JUDGMENT

DAVIES J:

Introduction

1    The applicant, Mr Philip Newman (the trustee), is the trustee of the bankrupt estate of William Stephen Vlahos (the bankrupt). There are a number of ongoing proceedings before this Court and the Federal Circuit Court (FCC) involving the trustee and people who invested in a scheme operated by the bankrupt, which the trustee considers was a “Ponzi” scheme (investor proceedings). The trustee has approached the Court seeking judicial advice as to the administration of the bankrupt’s estate in the context of the investor proceedings. Specifically, the trustee seeks an order that he is justified in engaging an external service provider to assist in processing a large volume of documents for the purposes of meeting his discovery obligations, and that he is justified in providing those documents to the external service provider.

2    The trustee filed an application for judicial advice on 9 September 2020 seeking orders in respect of a number of issues relating to discovery and evidence in the investor proceedings. Four interested parties who are litigants in various investor proceedings filed appearances in the proceeding, including Mr Dean Michael Shannon, who is the respondent and cross-claimant in proceeding VID 486 of 2019, and Mr Alex Ragogna, who is the applicant in proceeding VID 63 of 2020. Following the first case management hearing in October 2020, Mr Ragogna was appointed to act as contradictor in the judicial advice application, with an order that the trustee bear his costs. The remaining two interested parties who filed appearances in this proceeding are litigants involved in FCC proceedings (FCC interested parties) and ultimately they did not take a substantive role in the judicial advice proceeding. However, the FCC interested parties each made an application for the trustee to pay their costs of participating in the proceeding. Those applications were to be determined on the papers and are dealt with separately in these reasons.

3    The matter was listed for hearing on 20 November 2020. During the hearing procedural issues were raised requiring the trustee to reframe his application and the hearing was adjourned to 9 December 2020. That hearing date was subsequently vacated and the application was re-listed for hearing on 2 February 2021. At that hearing on 2 February 2021 the trustee sought to rely on an amended originating application, by which he sought only the order now in issue. In support of his application, the trustee relied on:

(a)    four affidavits affirmed by him on 3 September 2020, 26 October 2020, 2 November 2020 and 17 December 2020 respectively;

(b)    an affidavit sworn by his solicitor, Mr Kenneth Chai, on 8 October 2020 and filed in this proceeding; and

(c)    an affidavit sworn by Mr Chai on 1 February 2021 and filed in proceeding VID 486 of 2019.

4    The contradictor filed an affidavit and written submissions and counsel appeared on his behalf at the hearings on 20 November 2020 and 2 February 2021. Mr Shannon and the FCC interested parties filed written submissions ahead of the 20 November 2020 hearing, however those submissions are not relevant to the trustee’s application as it is now framed.

Trustee’s judicial advice application

Principles

5    The Court has the power to make any order it thinks fit in relation to the administration of a regulated debtor’s estate: s 90-15(1) of the Insolvency Practice Schedule, Sch 2 to the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) (Insolvency Practice Schedule). The Court may exercise this power on its own initiative or on application under s 90-20 of the Insolvency Practice Schedule (s 90-15(2) of the Insolvency Practice Schedule), and the types of order the Court may make include “an order determining any question arising in the administration of the estate”: s 90-15(3)(a) of the Insolvency Practice Schedule. Under s 90-20 of the Insolvency Practice Schedule, a person with a financial interest in the administration of the regulated debtor’s estate may apply for an order under s 90-15. A “regulated debtor” includes a bankrupt person: s 5-15 of the Insolvency Practice Schedule. By s 5-30(a)(iii) of the Insolvency Practice Schedule, the trustee is a person with a financial interest in the administration of the bankrupt’s estate.

6    The power to make an order under s 90-15 of the Insolvency Practice Schedule is discretionary. The proper subject of directions made under s 90-15 is the manner in which a trustee should discharge his or her functions so as to protect the trustee from liability to a creditor for breach of duty: Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111 at [10] and the authorities there cited; Unal v Cetinkaya [2015] FCA 270 at [65] (both concerning the predecessor provision to s 90-15 of the Insolvency Practice Schedule, s 134 of the Bankruptcy Act).

Background

7    Prior to his bankruptcy, the bankrupt operated a gambling scheme known as “the Edge” by which he collected funds from investors ostensibly for the purpose of placing bets on horse races. He distributed purported returns to the investors from time to time. As a result of his investigations, the trustee takes the view that the gambling scheme operated by the bankrupt was a “Ponzi” scheme. The trustee has initiated a number of proceedings under s 120 of the Bankruptcy Act in the FCC and in this Court and has procured the Official Receiver to issue notices under s 139ZQ of the Bankruptcy Act (s 139ZQ notices) to recover payments made to investors in the gambling scheme as voidable transactions so that they can be rateably distributed amongst the bankrupt’s creditors. Some of the recipients of s 139ZQ notices, including Mr Ragogna, have commenced proceedings against the Official Receiver and the trustee seeking orders setting aside the s 139ZQ notice issued to them.

8    As part of his investigations into the scheme operated by the bankrupt, the trustee sought to identify the source of deposits made into accounts controlled by the bankrupt. The trustee deposed that, following an application to the Official Receiver to serve a notice pursuant to s 77C of the Bankruptcy Act on Victoria Police, in mid-February 2016 he received a hard drive containing documents that Victoria Police collated for the purposes of prosecuting the bankrupt (police hard drive). According to the trustee, the police hard drive comprises:

(a)    155GB in total size; and

(b)    1,325 separate folders containing a total of 1,981,991 files.

The trustee annexed some examples of material from the police hard drive to his affidavit of 3 September 2020. In the trustee’s assessment, a number of documents on the police hard drive are relevant to the ongoing investor proceedings. This is because the defences of various respondents to the proceedings brought by the trustee under s 120 of the Bankruptcy Act, including Mr Shannon, include claims that the funds paid to them by the bankrupt were held on trust by the bankrupt and were not paid from funds to which he was beneficially entitled, thus falling within the exemption in s 116(2)(a) of the Bankruptcy Act.

9    To meet his discovery obligations in the investor proceedings, and given the volume of documents involved, the trustee wishes to retain the external service provider Law In Order to consult and process the documents from the police hard drive so that only documents relevant to each proceeding are provided by way of discovery. However, given the expense the bankrupt estate will incur, the trustee is concerned to ensure that he is justified in engaging Law In Order in the proper administration of the estate. The police hard drive also contains private information and the trustee is concerned to ensure he does not breach the Privacy Act 1988 (Cth) (Privacy Act), specifically Australian Privacy Principle 6 – use or disclosure of personal information (APP6), contained in Sch 1 to the Privacy Act, which relevantly provides:

Use or disclosure

6.1     If an APP entity holds personal information about an individual that was collected for a particular purpose (the primary purpose), the entity must not use or disclose the information for another purpose (the secondary purpose) unless:

(a)     the individual has consented to the use or disclosure of the information; or

(b)     subclause 6.2 or 6.3 applies in relation to the use or disclosure of the information.

…

6.2     This subclause applies in relation to the use or disclosure of personal information about an individual if:

…

(b)     the use or disclosure of the information is required or authorised by or under an Australian law or a court/tribunal order; or

…

10    The contradictor did not oppose the direction sought by the trustee, but questioned its necessity. In the contradictor’s submission, establishing the proposed database is a matter within the trustee’s discretion and there is no suggestion that the trustee will be criticised for incurring the costs involved or for providing the police hard drive to the external service provider. The contradictor also proposed some changes to the form of order sought by the trustee. Following the hearing, the trustee and the contradictor conferred and provided a revised form of order by agreement.

Consideration

11    Based on the trustee’s submissions and supporting material, I am satisfied that the police hard drive may contain material which will be discoverable in some or all of the investor proceedings. I am also satisfied that is appropriate to make the direction sought. The direction goes to the manner in which the trustee is to discharge his functions because it relates to the fulfilment of his discovery obligations in proceedings concerning the recovery of funds for the purpose of administering the bankrupt estate. The trustee prudently seeks the protection of a court order affirming the proposed course of action before incurring the substantial cost of engaging an external service provider to assist with discovery processing.

12    As to the privacy concerns raised by the trustee, sub-cl 6.2 of Sch 1 to the Privacy Act appears to exclude material which is discoverable in proceedings before a court: Esso Australia Pty Ltd v Australian Workers’ Union (No 2) [2018] FCA 2089 at [52]. This is particularly so in circumstances where discovery in this Court is only to be made where there is an order for discovery (r 20.12(1) of the Federal Court Rules 2011 (Cth) (Federal Court Rules). Given that the external service provider that the trustee proposes to engage would be acting effectively as the trustee’s agent in processing the documents for discovery so that only documents relevant to each respective proceeding are produced, I consider that the trustee would likely be exempt from complying with APP6 in providing the police hard drive to the external service provider. Nonetheless, to put the position beyond doubt, I will direct that the trustee is justified in providing the materials to the external service provider for the purpose of consulting and processing the documents.

Conclusion

13    Orders will be made in substantially the form sought by the trustee.

FCC interested parties’ applications for costs

Background

14    The FCC interested parties, Mr Sam Davidson and Mr Boris Janezic, are parties to separate proceedings involving the trustee in the FCC. They each filed appearances in the judicial advice proceeding before this Court on the basis that the orders sought by the trustee may affect their own proceedings in the FCC. In particular, by his application as originally framed, the trustee sought (amongst other orders) release from the Harman obligation in respect of documents filed by litigants involved in the investor proceedings for the purposes of making use of those affidavits for his “own evidential purposes” and providing discovery of those documents pursuant to relevant requests for discovery in the various proceedings. Those documents included the affidavits of Mr Davidson and Mr Janezic filed in their respective proceedings. Counsel appeared for each of the FCC interested parties at the first case management hearing on 9 October 2020. On 16 October 2020, Mr Ragogna (another investor who is also a party to proceedings brought by him against the trustee) was appointed as contradictor to the trustee’s judicial advice application. An order was also made providing for the contradictor and interested parties to file written submissions by 6 November 2020, with the hearing to take place on 20 November 2020. Each of the FCC interested parties filed written submissions ahead of the hearing on 20 November 2020 and an affidavit was filed on behalf of Mr Janezic. The FCC interested parties were also both represented at the hearing on 20 November 2020, which was adjourned following a discussion between counsel and the Court about the procedure for seeking the relief sought and the form of relief. At that hearing, counsel for the trustee confirmed that the trustee did not seek any release from the Harman undertaking in respect of the affidavits that Mr Davidson and Mr Janezic had respectively filed in their FCC proceedings and the FCC interested parties have taken no further active role in the substantive judicial advice proceeding.

15    Counsel for each of the FCC interested parties raised the question of costs at the hearing on 20 November 2020, and on 16 December 2020 leave was granted to the FCC interested parties to apply for an order that the applicant pay their costs of the application filed on 7 September 2020, including the reserved costs of the hearings on 9 October and 20 November 2020 to be taxed in default of agreement. Each of the FCC interested parties filed submissions on costs and affidavits supporting their respective applications. The trustee opposes any order that he pay the FCC interested parties’ costs and has filed submissions and an affidavit in opposition. An order was made on 16 December 2020 that the FCC interested parties’ applications for costs be determined on the papers.

Mr Davidson’s application

16    Mr Davidson is an applicant in FCC proceeding MLG 319 of 2020 (Davidson proceeding). In that proceeding, Mr Davidson seeks to set aside the s 139ZQ notice issued to him. Mr Davidson filed an affidavit in the Davidson proceeding on 31 January 2020 (Davidson affidavit).

17    In the trustee’s affidavit of 3 September 2020 filed in the judicial advice proceeding, the trustee listed a number of FCC and Federal Court of Australia (FCA) proceedings involving the trustee and arising from the same factual background. The Davidson proceeding was listed as one of those proceedings. By his original originating application filed on 9 September 2020, the trustee sought orders in respect of those proceedings in the context of his proposed use of “documents provided by other litigants”. On 7 October 2020, having been notified of the application, Mr Davidson filed a notice of acting in the judicial advice proceeding and counsel appeared for Mr Davidson at the case management hearing on 9 October 2020. In the trustee’s further affidavit of 26 October 2020, the Davidson affidavit was included as one of a number of affidavits filed in FCC and FCA proceedings upon which the trustee intended to rely in order to identify deposits and withdrawals from bank accounts controlled by the bankrupt and to prove facts and circumstances giving rise to the relevant transactions. The trustee’s affidavit specified that only affidavits filed in the FCA proceedings were relevant to the application. Nonetheless, Mr Davidson filed written submissions on 6 November 2020 and was represented by counsel at the hearing on 20 November 2020. Mr Davidson now seeks an order that the trustee pay his costs of the application in the judicial advice proceedings. Mr Davidson’s application for costs was supported by an affidavit sworn on 17 December 2020 by his solicitor, Mr Charles Leonidas, summarising and annexing correspondence between Mr Davidson’s solicitors and the trustee’s solicitors.

18    Mr Davidson submitted that even though the trustee’s affidavit of 26 October 2020 stated that orders were only sought in respect of the FCA proceedings, this was inconsistent with the position expressed in the trustee’s written submissions filed before the hearing on 20 November 2020. In Mr Davidson’s submission, the way that the “proceedings” were defined in the trustee’s submissions indicated that the trustee sought to use the Davidson affidavit in other proceedings. Mr Davidson’s written submissions on costs stated that he raised this claimed inconsistency in his written submissions filed on 6 November 2020. In Mr Davidson’s submission, the trustee’s change in approach to the judicial advice proceedings following the hearing on 20 November 2020 indicated that the trustee had “accepted that it was inappropriate to apply to this Honourable Court and to seek orders in the terms of the draft orders that had been circulated” and, as a consequence of the “misconceived” application for judicial advice – to which Mr Davidson was, it was submitted, entitled to respond – he has incurred costs unnecessarily. Mr Davidson submitted that the position in the present case is analogous to an applicant discontinuing a proceeding against a respondent, and the general rule in such circumstances is that the applicant should pay the costs of the respondent, citing r 26.12(7) of the Federal Court Rules.

19    The trustee opposed Mr Davidson’s application. The trustee’s position was supported by an affidavit of his solicitor, Mr Kenneth Chai, sworn on 29 January 2021. The trustee submitted that the FCC interested parties had not properly sought leave to appear in accordance with r 2.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules). The trustee further submitted that, in any case, the FCC interested parties had not demonstrated any extraordinary or exceptional circumstances to justify an order that the trustee pay their costs. Given that the FCC interested parties had been informed on 26 October 2020 that their affidavits would not be the subject of the hearing on 20 November 2020, and given that there was a contradictor appointed to represent their interests, the FCC interested parties, in the trustee’s submission, had no “justifiable expectation of compensation”. The trustee relied on Emmett J’s comments in Fletcher and Barnet, in the matter of Octaviar Ltd (Receivers and Managers Appointed) (In Liq) and Octaviar Administration Pty Ltd (In Liq) (No 4) [2012] FCA 344 (Fletcher) at [12], in relation to the interplay between s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and the cognate rule to r 2.03 of the Bankruptcy Rules in the Federal Court (Corporations) Rules 2000 (Cth) (r 2.13):

There is no doubt that the Court has power to order costs in favour of a non-party. Section 43 of the Federal Court of Australia Act 1976 (Cth) is cast in sufficiently wide terms to enable the Court to make an order for costs in the proceeding for the benefit of a non-party. Nevertheless, the making of an order for costs in favour of a non-party will be exceptional and any application for such an order must be treated with considerable caution. Regard must be had in each case to the particular circumstances and the requirements of reason and justice, and the nature of the relationship between the non-party and the litigation will be relevant in that regard (see O’Keeffe v Hayes Knight GTO Pty Limited [2005] FCA 1559 at [24]). In general, a special factor outside the ordinary and expected course of events, engendering a justifiable expectation, in the mind of a non-party, of compensation for costs, must exist before an order will be made for costs in favour of a non-party against a party. In general, a person who seeks, and is granted, leave under rule 2.13 of the Corporations Rules to appear and be heard, thereby limiting exposure to an order for costs, can have little expectation of being awarded costs (see Re Pan Pharmaceuticals Limited; Selim v McGrath (2004) 48 ACSR 681 at [20]).

The trustee also pointed to Barrett J’s observations in Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; 48 ACSR 681 at [17]–[20] in relation to the interplay between the cost provisions in the Supreme Court Act 1970 (NSW) (s 76) and r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW), which is a cognate provision of r 2.03 of the Bankruptcy Rules.

20    In his reply submissions, Mr Davidson submitted that he did not dispute the principles set out by the trustee. He argued that he applied for costs on the basis that he was a party to the application, rather than a non-party. This was based on the description of Mr Davidson as an “interested party” by the trustee when he was served with the application. Mr Davidson further submitted that his interests were not protected by the contradictor’s role because the contradictor was not required to review the files maintained by the solicitors for all interested parties, and nor was he required to consult with them. In Mr Davidson’s submission, the matter proceeded “on the basis that the interested parties would be represented alongside the contradictor”.

Mr Janezic’s application

21    Like Mr Davidson, Mr Janezic is an applicant in FCC proceedings in which he seeks to set aside the s 139ZQ notice issued to him: MLG 315 of 2020 (Janezic proceeding). Mr Janezic filed an affidavit in the Janezic proceeding on 30 January 2020 (Janezic affidavit). As with the Davidson proceeding, the Janezic proceeding was included in the list of investor proceedings contained in the trustee’s affidavit of 3 September 2020, and the Janezic affidavit was also identified in the trustee’s affidavit of 26 October 2020 as one of a number of affidavits filed in investor proceedings upon which the trustee intended to rely.

22    Mr Janezic seeks an order in the following form:

The applicant is to pay Boris Janezic’s costs of the application filed 7 September 2020, including the reserved costs of the hearings held on 9 October 2020 and 20 November 2020, and the adjournment of the hearing on 9 December 2020, to be taxed failing agreement.

Mr Janezic’s application for costs was supported by an affidavit sworn on 17 December 2020 by his solicitor, Mr Peter Brown, summarising and annexing correspondence between Mr Janezic’s solicitors and the trustee’s solicitors. That correspondence reveals that the trustee’s solicitors advised on 26 and 27 October 2020 that no advice or directions were sought in the judicial advice proceeding in relation to the Janezic affidavit. In his submissions, Mr Janezic accepted that the trustee had by this stage “clearly indicated that no advice or directions would be sought in relation to [the Janezic affidavit]”. However, in Mr Janezic’s submission, the balance of the matters relating to the police hard drive and transaction traces provided to the trustee by National Australia Bank pursuant to notices served under ss 77C and 77A of the Bankruptcy Act remained relevant to the outcome of the Janezic proceeding. Mr Janezic’s submissions filed in advance of the 20 November 2020 hearing were directed to these matters. In this regard, Mr Janezic submitted that up until counsel for the trustee informed the Court towards the end of the hearing on 20 November 2020 that orders affecting Mr Janezic would no longer be sought, many of the proposed orders being sought by the trustee did affect Mr Janezic’s interests. In his reply submissions, Mr Janezic emphasised this point, submitting that he had a right to be heard because the judicial advice being sought – in the way the application was framed at the commencement of the hearing on 20 November 2020 – affected his interests. Mr Janezic submitted that he had a justifiable expectation that he would be compensated for costs in the judicial advice proceeding, which had, it was submitted, a commonality with the Janezic proceeding, where the trustee “is actively pursuing Mr Janezic for a significant amount of money”.

23    Mr Janezic claims that the applicant should pay his costs thrown away by reason of the trustee’s change in position, including the costs of preparing for the adjourned hearing scheduled for 9 December 2020, which was further adjourned to February 2021. In Mr Janezic’s submission, the actions taken by the trustee, first in notifying Mr Janezic that the Janezic affidavit would no longer be the subject of any order being sought by the trustee and secondly by informing the Court through senior counsel that orders affecting Mr Janezic were no longer being sought were “tantamount to an informal discontinuance” and a costs order in Mr Janezic’s favour should be made on an analogous basis.

24    The trustee opposed Mr Janezic’s application for the same reasons set out above in respect of Mr Davidson’s application.

25    In his reply submissions, Mr Janezic submitted that the trustee belatedly raised the issue of compliance with r 2.03 of the Bankruptcy Rules and that, in any case, he had filed an appearance under r 2.04 of the Bankruptcy Rules, which, he submitted, was the more appropriate course since the trustee had invited Mr Davidson to inform the trustee’s solicitors as to whether he objected to the application for judicial advice or wished to be heard. If r 2.03 of the Bankruptcy Rules did apply, Mr Janezic submitted:

(1)    That the applicant is estopped from relying on the interested party’s failure to comply with Rule 2.03 on the grounds:

(a)    that the applicant did not so object at or before the hearing held on 9 October 2020 or at or before the further hearing held on 20 November 2020;

(b)    that the applicant consented to the order made on 16 December 2020 that the costs application be determined on the papers; and

(c)    that the applicant did not raise the non-compliance until the service of his submissions on 29 January 2021.

(2)    Alternatively, to (1), under Rule 1.34 of the Federal Court Rules 2011 (which applies to this proceeding) an order that compliance by Mr Janezic with Rule 2.03 of the Federal Court (Bankruptcy) Rules 2016 be dispensed with despite the fact that the time for compliance has passed.

26    Mr Janezic also raised in his reply submissions a further “fresh significant basis” for the award of costs in his favour because of the proposed amended originating application sought to be relied upon by the trustee, in which the orders sought were “a much watered-down version of what was initially included in the application, so that much of the submissions developed by the various participants in the meantime have become redundant”.

Consideration

27    I reject the submissions of the FCC interested parties that the Court should make the costs orders that they seek. First, I reject the analogy with the discontinuance of a proceeding. Mr Davidson and Mr Janezic were not parties to the judicial advice proceeding and whilst Mr Janezic filed a notice of appearance in accordance with r 2.04 of the Bankruptcy Rules and Mr Davidson filed a notice of acting – appointment of lawyer, the filing of those notices did not make them parties to the proceeding. They had an interest in the orders originally sought by the trustee to the extent that such orders may have affected them but the mere fact they chose to appear and that orders were made on 16 October 2020 entitling the FCC interested parties to file written submissions is not justification in itself for making an award for their costs. It does not follow as a matter of course that because a non-party is heard in a proceeding that the non-party is entitled to their costs. The Court does have power to make an order for costs in favour of a non-party under s 43 of the FCA Act, but generally such an order is made only in exceptional circumstances, such as where the non-party’s participation was necessary to protect an interest not common with the parties to the proceeding: Life Therapeutics Ltd v Bell IXL Investments Ltd (No 2) [2008] FCAFC 158; 170 FCR 595 at 599–600 [18]–[24]. From 16 October 2020, with the appointment of a contradictor to the judicial advice proceedings, the FCC interested parties’ participation was unnecessary other than in relation to the question of the Harman undertaking as it applied to their affidavits and any other documents they may have provided to the trustee in the course of their respective FCC proceedings. Significantly, both of the FCC interested parties were put on notice by the trustee’s affidavit of 26 October 2020 and covering correspondence that the trustee no longer sought that relief in the judicial advice proceeding, and was therefore no longer seeking any relief directly affecting their interests which would not be represented by the contradictor. Secondly, the submissions put by the FCC interested parties in relation to the remaining matters in respect of which the trustee was seeking judicial advice were not required to fill any gap in the submissions put by the contradictor. I do not accept that there was any need or justification for the further involvement of the FCC interested parties after 26 October 2020, let alone for attending the hearing on 20 November 2020. While the FCC interested parties were given the opportunity to put on written submissions and evidence, those orders were made before they had been put on notice that the trustee was no longer seeking release from the Harman undertaking in relation to their respective affidavits and had there been any legitimate concern that the trustee was still seeking orders affecting the FCC interested parties which would not be represented by the contradictor, the position ought to have been clarified with the trustee. It was not. Thirdly, the submissions the FCC interested parties filed added nothing to the submissions put by the contradictor. Mr Janezic’s argument, raised in his reply submissions, that the trustee’s reliance on an amended application rendered much of the participants’ submissions redundant and thus provided a further basis for him to recover his costs is without merit as this change in position occurred after he was on notice that the trustee was not seeking orders affecting his interests which would not be represented by the contradictor.

28    The position is different in respect of the FCC interested parties’ involvement in so far as the relief initially sought concerned release from the Harman undertaking in relation to “documents provided by other litigants”. I consider that an order should be made that the trustee pay the costs of the FCC interested parties of and incidental to this issue up to 26 October 2020, including their appearance at the first case management hearing on 9 October 2020. That costs order is justified because on the face of the originating application and supporting affidavit as they then stood, the FCC interested parties’ rights were directly affected by the inclusion of the Davidson proceedings and the Janezic proceedings in the list of proceedings in respect of which the trustee sought release from the Harman undertaking. Moreover, as the trustee sought the FCC interested parties’ attitude on the proposed orders, they were effectively “drawn in” to the proceeding and it was appropriate for them to participate in the proceeding to that extent.

Conclusion

29    Orders will be made that the trustee pay each of the FCC interested parties’ costs of and incidental to the application by the trustee for his release from the Harman undertaking with respect to documents filed in their respective FCC proceedings up to and including 26 October 2020. The FCC interested parties’ respective applications for costs are otherwise dismissed.

Associate:

Dated:    24 February 2021