Federal Court of Australia

5G Developments Pty Ltd (in liq) v Massie, in the matter of 5G Developments Pty Ltd (in liq) (No 2) [2021] FCA 887

ORDERS

THE COURT ORDERS THAT:

1.    On the interlocutory application filed on 24 February 2020, the applicants pay the respondents’ costs on a party and party basis as agreed or assessed.

2.    The first respondent’s costs (i.e., Mr Livingstone’s costs) be taxed forthwith and paid within 28 days of being agreed or assessed.

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

REASONS FOR JUDGMENT

STEWART J:

1    This judgment deals with the costs of the application brought by way of interlocutory process filed on 24 February 2020 that I dismissed on 13 July 2021 for the reasons given in Re 5G Developments Pty Ltd (in liq) [2021] FCA 791. These reasons assume familiarity with those reasons and they adopt the same abbreviations.

2    The applicants to the application are Mr Massie, 5G Capital Investments Pty Ltd, 5G Capital SPV27 Pty Ltd and SPV28 Pty Ltd. The respondents, Mr Livingstone and Mr Hayes, submit that the costs should follow the event, which is to say that the applicants should pay their costs as taxed or agreed.

3    Mr Massie submits on behalf of the applicants that the costs of the application should be costs in the cause of what he refers to as the “substantive main proceedings”. That is the “main proceeding” referred to in paragraph 1 of the principal judgment. That is a convenient course for Mr Massie to take since he is not personally a party to the main proceeding. Be that as it may, the applicants bear the burden to persuade me to depart from the usual rule that costs follow the event. In respect of interlocutory applications, that rule finds expression in r 40.04(a) of the Federal Court Rules 2011 (Cth) which provides that if no order for costs is made on an interlocutory application or hearing in which an order is made in favour of a party, the costs of the application or hearing should follow the event.

4    Mr Massie’s principal submission is that the interlocutory application was not “a final hearing by which an amount is due and payable by the defendants.” Also, he submits that there are many significant and complex legal and evidentiary hurdles that Mr Hayes has yet to overcome before he can succeed in the significant claims made against the defendants. Finally, he submits that he acted reasonably in bringing the interlocutory application to challenge Mr Livingstone’s determination because of the lack of information available to him at the time and his consequent inability to independently determine whether the amount found by Mr Livingstone to be owing by DW to DC was indeed correct.

5    The purpose of the appointment of the special purpose liquidator, namely Mr Livingstone, was to adjudicate on DC’s proof of debt in the DW liquidation. Mr Livingstone undertook that adjudication and he made a determination which was accepted by DW’s liquidator, Mr Hayes. Absent the applicants’ challenge to that determination it would have stood such that the determined debt by DW to DC would have been “final”.

6    The applicants elected to challenge the determination. They failed. The consequence is that the determination is final. In that sense, the application resulted in the final determination of that debt. The issues to be determined in the main proceeding will not revisit that determination. Whilst it is true that the interlocutory application did not determine the liability of the defendants to DW in the main proceeding, that is not relevant to the consideration of costs on the interlocutory application.

7    Similarly, it is not to the point that Mr Hayes is still a long way from succeeding in the main proceeding, or that the applicants acted reasonably (as Mr Massie submits) in bringing the interlocutory application. The principal case has had to await the outcome of the applicants’ challenge to Mr Livingstone’s determination for reasons explained in Mr Massie’s submissions, but the interlocutory application retained an essentially separate existence. Whether or not it was reasonable to bring the interlocutory application need not be decided because it is no answer to a costs claim to say that one acted reasonably. If it was found that the application been brought unreasonably that may have been grounds for a punitive costs order, but no one seeks that.

8    In the circumstances, on the interlocutory application the applicants should pay the respondents’ costs.

9    Insofar as Mr Livingstone’s costs are concerned, he submits that he did not take the position of a contradictor; he fulfilled his obligations to the Court as an officer of the Court by filing an affidavit and making submissions to assist the Court, and beyond that he had to be present through counsel because the applicants had made an attack on his conduct in the adjudication, not only on the outcome as expressed in the determination itself. I accept those submissions.

10    Since Mr Livingstone is not a party to the main case, he submits that there should be an order that his costs are payable within 28 days so that he does not have to wait until the outcome of the main proceeding before being paid. That is in effect as an exception to the general rule, as expressed in r 40.13, that a costs order on an interlocutory application should not be taxed until the proceeding in which the order is made is finished. Mr Massie disputes that on the basis that, on his submission, Mr Livingstone is indemnified by Mr Hayes with respect to his costs so he is not out-of-pocket in the meanwhile.

11    It is not clear to me on the evidence before me that Mr Livingstone is indemnified by Mr Hayes with regard to Mr Livingstone’s costs on the interlocutory application. But assuming that he is, I am not persuaded that that is a factor sufficient to deprive Mr Livingstone of his costs at this stage. It is his determination that was challenged, including by making criticisms of his conduct, and the role that he played in response to that challenge was limited and appropriate. Moreover, the rationale for the general rule that costs on an interlocutory application are not taxed and hence not payable until the determination of the principal case does not apply to Mr Livingstone as a non-party to the principal case. That rationale recognises that by the end of the principal case there may be different costs orders, including as to the principal case itself, to be set off. It seeks to avoid the need for multiple taxations in a proceeding and the unfairness that would result if a party is unable to set off an order for costs in its favour against an earlier liability to pay costs. See Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 at [15] per Kenny J, and the cases cited there.

12    In my view, justice in the case requires that Mr Livingstone should be able to have his costs taxed and paid now and not have to wait.

13    In the circumstances, I will make orders on the interlocutory application filed on 24 February 2020 that:

(1)    The applicants pay the respondents’ costs on a party and party basis as agreed or assessed.

(2)    The first respondent’s costs (i.e., Mr Livingstone’s costs) be taxed forthwith and paid within 28 days of being agreed or assessed.

Associate:

Dated:    2 August 2021

SCHEDULE OF PARTIES