FEDERAL COURT OF AUSTRALIA

Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited (No 2) [2024] FCA 955

ORDERS

THE COURT ORDERS THAT:

1.    Subject to Order 2 of these orders, the plaintiffs, in their capacity as receivers of the assets of the Freshwater Development Trust, are to pay the levies the subject of Order 3 of the orders made on 19 July 2024 (Receiver Responsible Levies) to the Building Management Committee of Deposited Plan 1233744 registered with the Registrar-General of New South Wales (BMC) within 7 days of the date of these orders, from the sum of $600,000 retained from the proceeds of the sale of lots 2 and 5 pursuant to a deed dated 28 June 2022 between the plaintiffs and the defendant (Retention Monies).

2.    In the event that there is a dispute between the plaintiffs and the BMC as to the correct calculation of the Receiver Responsible Levies:

(a)    the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust are to pay the Receiver Responsible Levies to the BMC which are not in dispute in accordance with Order 1 of these orders;

(b)    the proceedings be referred to a Registrar of this Court to inquire and determine the calculation of the Receiver Responsible Levies which are disputed;

(c)    in the event a Registrar determines that Receiver Responsible Levies remain owing to the BMC, they are to be paid by the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust, from the Retention Monies, within 7 days of the Registrar’s determination.

3.    The plaintiffs’ costs of and incidental to the proceeding form part of the costs of the liquidation of the Company, to be paid on an indemnity basis.

4.    Without prejudice to their right of indemnity from the assets of the Company or the Freshwater Development Trust, the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust are to pay the defendant’s costs of and incidental to the proceeding, as agreed or taxed.

5.    Without prejudice to their right of indemnity from the assets of the Company or the Freshwater Development Trust, the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust are to pay the intervener’s costs of and incidental to the proceeding, as agreed or taxed.

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

REASONS FOR JUDGMENT

HALLEY J:

A.    INTRODUCTION

1    On 19 July 2024, I made orders and declarations in these proceedings on the application by the plaintiffs for judicial advice pursuant to s 90-15 and s 90-20 of the Insolvency Practice Schedule (Corporations) (IPS) in Sch 2 to the Corporations Act 2001 (Cth) and s 21 of the Federal Court of Australia Act 1976 (Cth) and published my reasons for judgment: Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited [2024] FCA 789 (primary judgment or PJ).

2    I also made orders that the parties were to seek to reach agreement as to costs and any further orders or declarations necessary to give effect to my reasons for judgment, and in the absence of agreement, provided that the parties were to file submissions and any affidavit evidence in support of the orders and declarations that they sought. The order also provided that any outstanding issues would then be determined on the papers unless a party requested an oral hearing.

3    The substantive orders and declarations that I made on 19 July 2024 were as follows:

1.    Bradd William Morelli and Trent Andrew Devine (plaintiffs) as joint liquidators and receivers of FW Projects Pty Limited (ACN 160 553 515) (Company) are justified in proceeding on the basis that the levies issued in respect of lots 2 and 5 (Levies) by the Building Management Committee of Deposited Plan 1233744 registered with the Registrar-General of New South Wales (BMC), pursuant to a Strata Management Statement falling within s 105 of the Strata Development Act 2015 (NSW) and registered as SP96741 to which the Company was a party, prior to the appointment of the plaintiffs as liquidators of the Company on 18 April 2019, which remain unpaid, comprise an unsecured debt of the Company and should be treated as such by the plaintiffs.

2.    The plaintiffs are justified in proceeding on the basis that Levies issued by the BMC in the period between the appointment of the plaintiffs as liquidators and the entry by the plaintiffs into the deed of compromise and disclaimer with Karellas Investments Pty Limited ACN 008 547 911 on 30 October 2020 (Deed of Compromise and Disclaimer), comprise an unsecured debt of the Company and should be treated as such by the plaintiffs.

3.    The plaintiffs are justified in proceeding on the basis that Levies issued by the BMC after the plaintiffs’ entry into the Deed of Compromise and Disclaimer on 30 October 2020, comprise debts incurred by the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust and should be treated as such by the plaintiffs.

4    The parties were not able to reach an agreement on costs and each of the plaintiffs (the joint liquidators and receivers of FW Projects Pty Ltd (Company)), the defendant (White Hills) and the intervener (Owners Corporation) filed submissions seeking their costs of the proceedings and the Owners Corporation also filed an affidavit from their solicitor, John Vohralik, sworn on 1 August 2024, in support of the orders that they seek.

5    The plaintiffs seek orders that their costs be paid on an indemnity basis as part of the costs of the liquidation of the Company and that there be no order as to the costs of White Hills and the Owners Corporation.

6    White Hills seeks an order that the plaintiffs, in their capacity as the receivers of the assets of the Freshwater Development Trust, pay their costs and seeks further orders providing for the payment of the levies the subject of Order 3 of the orders made on 19 July 2024 (19 July 2024 orders) within seven days and providing for a mechanism to resolve any dispute as to the correct calculation of the amount of those levies (additional procedural orders).

7    The Owners Corporation seeks orders that, without prejudice to the plaintiffs’ right of indemnity from the assets of the Company or trust assets, the plaintiffs pay their costs of the proceeding as well as their costs of obtaining an order for their costs.

8    The proceeding was commenced by the plaintiffs by way of an originating process lodged for filing on 23 September 2022. The principal issue for determination in the proceeding was whether strata levies accruing after the appointment of the plaintiffs as liquidators and then receivers of the Company were incurred by the plaintiffs as receivers and therefore were to be treated as costs of the receivership. An amount of $600,000 had been specifically set aside in the plaintiffs’ solicitors’ trust account (Fund) pursuant to a deed between the plaintiffs, the Company and White Hills dated 28 June 2022 for payment of any strata levies that might be determined to be costs of the receivership (Strata Levies Deed).

9    On 9 December 2022, White Hills was joined to the proceedings as a defendant.

10    On the same day, the Owners Corporation was granted leave pursuant to r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth) (FCCR) to be heard in the proceedings without becoming a party.

11    For the following reasons, I have concluded that costs orders should be made in favour of each of the parties and the Owners Corporation and that the additional procedural orders sought by White Hills should also be made.

B.    LEGAL PRINCIPLES

12    In Farrow Finance Co Ltd (in liq) v ANZ Executors and Trustee Co Ltd (1997) 23 ACSR 521, Hansen J stated at 526 that in an application by a liquidator to a Court for judicial advice that has been brought because of the position taken by a particular creditor or creditors, acting only in their own interests, particularly when the issue was not complex, costs should generally follow the event. His Honour considered, on the other hand, if the issue was complex, or it involved a novel issue, the starting position is that the costs of all necessary parties are to be paid out of the assets of the company as costs in the liquidation: Farrow at 527, citing Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (receiver and manager appointed) (1994) 49 FCR 334 at 366 (Northrop J).

13    More recently, in BE Australia WD Pty Ltd v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414, Campbell JA (with whom McColl JA agreed) stated at [212]-[213]:

In my view, there is no occasion to make a costs order by reference to any principle other than that costs follow the event. In form, the litigation in the court below was an application by Ms Sutton appealing against the rejection of her proof of debt, or alternatively seeking an order under s 447A. Even though she ultimately did not press the appeal against rejection of her proof of debt, the question of whether she was a creditor was an integral part of considering whether it was appropriate to make an order under s 447A.

The form of the proceedings, as inter partes litigation, is not decisive of how the costs of that litigation should be dealt with. Courts exercising equity jurisdiction encounter a variety of situations where a fund is being administered subject to the control of the court, and a question arises about the proper manner in which that fund should be administered. Such a situation can arise concerning administration of deceased estates, concerning administration of trusts, concerning company liquidations, concerning administration of the estates of incapable people, and concerning DOCAs. In those situations, whether the costs of the court deciding the question that has arisen should be treated as costs of administration of the fund is significantly influenced by whether the proceedings are in substance adversarial ones. While where the costs should fall in litigation is always a matter of discretion, very commonly costs are paid from the fund for non-adversarial proceedings, and by the loser for adversarial proceedings.

(Citations omitted.)

14    His Honour stated at [214] that the principles stated by Hansen J in Farrow were “very shallowly rooted in principle and authority”.

15    Following a comprehensive review of the relevant authorities, including the statements referred to above in Farrow and BE Australia, Colvin J concluded in Preston, in the matter of Sandalwood Properties Ltd (No 2) [2018] FCA 816 at [20]-[23]:

Therefore, if a party’s participation is adversarial in the sense that it goes beyond that which is necessary in order to present the facts and address the issues so as to enable the court to provide advice for the purposes of the administration being conducted (in this case the receivership) then the approach to costs that applies to adversarial litigation should be applied. This is all the more so where the intervener participates to agitate a claim or position that has arisen from steps taken by the intervener.

On the other hand, if a party participates as a proper contradictor solely for the purpose of assisting the court in addressing the issues necessary to provide proper and appropriate judicial advice to the party seeking directions, then the approach to costs on applications concerning the administration of a trust, estate or fund should be applied. In such cases it is usual for all parties properly participating to be entitled to their costs on an indemnity basis paid out of the trust, estate or fund on the basis that they are costs of due administration.

Further, having regard to the views expressed by the Court of Appeal in BE Australia WD Pty Ltd v Sutton, the proper approach does not depend upon whether the issue raised is a complex one. Costs on an application for directions that raise complex matters that are dealt with in an adversarial way should be dealt with according to the principle that generally the discretion as to costs is to be exercised in favour of the successful party.

Also, in an appropriate case, where directions by way of judicial advice are sought and the matter is not complex, a party who appears to oppose the directions in a manner that is not adversarial may nevertheless be exposed to the risk of a costs order. This is because, in such a case, the proper administration of the receivership is not advanced by a party who intervenes where the issue is relatively simple, and the issue can be dealt with by the court without the assistance of a proper contradictor. I take this to be the thrust of the concern behind the general principles stated by Hansen J in Farrow Finance which I have quoted above.

16    In concluding that the proceeding in Preston was adversarial in nature, Colvin J characterised the proceeding as a contest between competing positions that arose from an assertion that the appointment of a manager under certain agreements had been terminated in the course of the receivership: Preston at [37]. His Honour stated at [38] that it was not a case in which:

all parties were each doing [their] bit to bring before the court an issue that had arisen in the course of the receivership and independently of the actions of the parties so that judicial advice might be provided to guide the administration.

17    In the circumstances, Colvin J found that the intervener must be viewed as an unsuccessful party and costs should follow the event. His Honour ultimately discounted the costs to be paid by the intervener to the receivers by 40%, by reference to the comparative costs incurred by the intervener, and a further 20% discount to reflect that the receivers were not wholly successful: Preston at [39]-[44].

18    Rule 2.13 of the FCCR relevantly provides:

(1)     The Court may grant leave to any person who is, or who claims to be:

(a)     a creditor, contributory or officer of a corporation; or

(b)     an officer of a creditor, or contributory, of a corporation; or

(c)     any other interested person;

to be heard in a proceeding without becoming a party to the proceeding.

(2)     If the Court considers that the attendance of a person to whom leave has been granted under subrule (1) has resulted in additional costs for any party, or the corporation, which should be borne by the person to whom leave was granted, the Court may:

(a)     direct that the person pay the costs; and

(b)     order that the person not be heard further in the proceeding until the costs are paid or secured to the Court’s satisfaction.

19    The starting point under r 2.13 has thus been stated to be that a person heard under that rule neither receives nor pays costs: In the matter of Ji Woo International Education Centre Pty Ltd [2019] NSWSC 338 at [9] (Black J).

20    In Re Pan Pharmaceuticals Ltd v McGrath (2004) 48 ACSR 681; [2004] NSWSC 129, Barrett J observed at [19]-[20]:

If r 2.13(2) were to be seen as a code as to the awarding of costs against a non-party granted leave under r 2.13(1) (except, perhaps, in some exceptional circumstance), it would be reasonable to think that the rule also reflects an expectation that costs should not be awarded in favour of the non-party. It would be an odd result if the awarding of costs against a non-party and in favour of a party was closely controlled by r 2.13(2) but the awarding of costs against a party and in favour of a non-party was intended to be entirely at large.

These considerations, coupled with the emphasis by members of the High Court in Knight’s case on the extraordinary nature of the aspect of the general costs power that involves orders against non-parties, lead me to think that some very special factor outside the ordinary and expected course of events and engendering a justifiable expectation of compensation in the mind of the non-party would have to be found before any relevant aspect of the comprehensive jurisdiction with respect to costs might be regarded as properly and regularly invoked in favour of a non-party as against a party. In other words, such an award, if ever appropriate, will be extraordinary and exceptional. Someone who seeks and is granted leave under r 2.13(1) chooses a course entailing the limited costs exposure described in r 2.13(2). Such a person can have very little expectation of being awarded costs.

21    Subsequently in Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 691, Barrett J stated at [6]:

A person who elects to participate in proceedings on the r 2.13 basis is not susceptible to a costs order in the ordinary course. Such a person could be ordered to pay costs only in the special circumstances (and to the limited extent) referred to in r 2.13(2) or by reference to the general principles concerning the award of costs against non parties. It is for this reason that an award of costs in favour of such a person is exceptional.

(Citations omitted.)

C.    COSTS OF WHITE HILLS

C.1.    White Hills’ submissions

22    White Hills advances the following submissions in support of its application for costs:

(a)    the parties litigated on the basis of cl 2 of the Strata Levies Deed providing for the retention of the amount of $600,000 in the Fund, in particular, cl 2.4 which contemplated that White Hills may seek a costs order;

(b)    the real position of the plaintiffs was that no priority was to be afforded for levies for any period and White Hills (and the Owners Corporation) acted as the contradictor;

(c)    it cross-examined one witness and made substantial written and oral submissions;

(d)    it did not dispute that levies issued prior to liquidation were an unsecured debt of the Company (as reflected in Order 1 of the 19 July 2024 orders);

(e)    while it was not wholly successful, it enjoyed success in respect of liability for a lesser period than it sought;

(f)    given the terms of PJ [4], White Hills was a necessary party and made a reasonable contribution as contradictor and if this alone is accepted, an award of costs would be reasonable to compensate White Hills for its participation; and

(g)    given $600,000 has been set aside in the Fund and the actual levies payable pursuant to Order 3 of the 19 July 2024 orders are understood to be $266,566 to the end of July 2024, there are sufficient funds set aside for the plaintiffs to obtain a complete indemnity for their costs (noting in addition that the net proceeds of sale received by the receivers from the land contract with the sale price being $10,035,000 (less the $600,000 retained)).

C.2.    Plaintiffs’ submissions

23    The plaintiffs submit that White Hills is in the position of an unsuccessful litigant because the Court did not accept its arguments but rather determined that the entry by the plaintiffs into the deed of compromise and disclaimer with Karellas Investments Pty Limited ACN 008 547 911 on 30 October 2020 (Deed of Compromise and Disclaimer) constituted an adoption by the plaintiffs of the Strata Management Statement.

24    The plaintiffs submit that (a) it is also relevant that they made clear to the Court, White Hills and the Owners Corporation at case management hearings that they were willing to present all arguments to the Court that either White Hills or the Owners Corporation wished to have raised for the Court’s consideration, and (b) there is no suggestion that they have in any way conducted themselves inappropriately by bringing the application for judicial advice or in facilitating the arguments put to the Court in relation to it.

25    They submit that participation in a proceeding alone to run arguments cannot be a proper basis to achieve an award of costs in a party’s favour particularly where, as is the case, the party took a partisan position and the arguments were not successful.

C.3.    Consideration

26    The proceeding raised for determination the proper administration of a fund subject to the control of the Court, in the sense that the parties have agreed, pursuant to the terms of the Strata Levies Deed, that funds be held in a solicitor’s trust account pending a determination of the Court. That issue was not straightforward and ultimately the position advanced by neither party nor the intervener was accepted by the Court. Rather, the final result could best be described as an amalgam of the various submissions made by the parties and the intervener to the Court. The proceeding raised novel issues arising from ongoing obligations of receivers appointed over trust assets of a company in liquidation to pay strata levies and most significantly the extent to which, if at all, the Lundy Granite principle had any relevant application.

27    The participation of White Hills in the proceeding fell somewhere between the dichotomy identified by Colvin J in Preston.

28    The submission made by White Hills went well beyond submissions made “solely for the purpose of assisting the Court in addressing the issues necessary to provide proper and appropriate advice to the party seeking directions”. White Hills had a vested interest that it vigorously pursued in seeking to persuade the Court that the strata levies payable after the appointment of the plaintiffs as receivers (Strata Levies) were debts incurred by the plaintiffs, that should be treated as costs of the receivership. If the debts were accepted as receivership debts, they would be paid in full out of the Fund. If they were not accepted to be receivership debts they could only be recoverable as unsecured debts in the liquidation of the Company with the necessary consequence that the shortfall would have to be made good by the members of the Strata Management Statement, including White Hills as the owner of the lots that it had purchased from the Company.

29    At the same time, however, the participation of White Hills in the proceeding did not materially go beyond “that which is necessary in order to present the facts and address the issues so as to enable the court to provide advice for the purposes of the administration”. The submissions made by White Hills were of considerable assistance in resolving the novel issues that arose for determination.

30    Two further matters, in the light of the above considerations, weigh in favour of an order that the costs of White Hills be paid by the plaintiffs, in their capacity as receivers of the Freshwater Development Trust.

31    First, as I observed in the primary judgment at [4], in both their written and oral submissions the plaintiffs advanced contentions that pointed to matters that might have led the Court to conclude that the Strata Levies should not be afforded any priority over other unsecured creditors of the Company. Those contentions were not accepted.

32    The arguments that the plaintiffs put to the Court, included references to the Lundy Granite principle but on the basis that it had no relevant application. Further, the plaintiffs’ submissions were advanced, at times explicitly, or otherwise implicitly, on the basis that other unsecured creditors would be prejudiced if the Strata Levies were found to have been debts incurred by the plaintiffs as liabilities of the receivership of the assets of the Freshwater Development Trust. In effect, the plaintiffs were adopting an adversarial position in order to protect what they perceived to be the interests of the other unsecured creditors of the Company.

33    It is possible that the plaintiffs may have taken a less adversarial position had White Hills (and the Owners Corporation) not participated in the proceeding as a party and intervener respectively to advance their self interests. The reality, however, is that each of the parties and the intervener advanced submissions in the proceeding in an adversarial manner. As I found at PJ [4], the plaintiffs in effect acted as a contradictor to the submissions advanced by White Hills (and the Owners Corporation). At the same time, it could equally be said that White Hills (and the Owners Corporation) acted as a contradictor to the submissions advanced by the plaintiffs in support of the position of the other unsecured creditors of the Company. Ultimately the position advanced by White Hills (and the Owners Corporation) was reflected much more closely in the conclusion that I reached, than the position advanced by the plaintiffs. I found that a significant proportion of the Strata Levies incurred after the appointment of the plaintiffs as receivers of the assets of the Freshwater Development Trust were debts incurred by the plaintiffs as receivers. In that sense, the position taken by White Hills (and the Owners Corporation) was substantially vindicated.

34    Second, it is also significant that in becoming a defendant, rather than seeking leave to appear as an intervener, White Hills exposed itself much more directly to an adverse costs order. Had the plaintiffs’ submissions been accepted, it would have found it difficult to resist an order that costs follow the event.

35    For the foregoing reasons, I am satisfied that the costs of White Hills should be paid by the plaintiffs in their capacity as receivers of the assets of the Freshwater Development Trust.

D.    COSTS OF THE OWNERS CORPORATION

D.1.     Owners Corporation’s submissions

36    The Owners Corporation submits that in substance these proceedings were concerned with an argument over a common fund and it has a prima facie entitlement to be paid its costs out of the Fund. It submits that it has been kept out of its money for three years and having assisted the Court and the parties with the proper preparation of the law, the documents and the issues, seeks an order that its costs be paid by the plaintiffs, as receivers, from the assets of the Freshwater Development Trust as an expense of the receivership.

37    The Owners Corporation submits that it has established an entitlement to part of the Fund that the plaintiffs have realised from the completion of the development and sale of various properties and it would be unjust and a windfall to other unsecured creditors if the Owners Corporation were required to bear its costs of agitating its rights in the proceedings.

38    Further, the Owners Corporation submits that if it were not awarded its costs on a common fund basis, the manner in which the plaintiffs have conducted these proceedings provides an independent basis for a costs order to be made against the plaintiffs. It submits that the plaintiffs have caused it and White Hills to incur additional expenses by reason of the following alleged matters that it submits could have been avoided if the plaintiffs had proceeded differently:

(a)    delays by the plaintiffs in producing documents relevant to the judicial advice that they sought including in disclosing that they had been appointed as receivers over the assets of the Freshwater Development Trust, including the Fund, leading to amendments to the originating process and the provision of a further affidavit from the plaintiffs confirming that certain steps had been taken by the plaintiffs in their capacity as receivers, not as liquidators;

(b)    the delay by the plaintiffs in bringing their application for judicial advice, in circumstances where the Owners Corporation first raised its claims for payment of the outstanding Strata Levies in July 2021 but it was not until 8 September 2022 that the plaintiffs commenced these proceedings and took a stance that no Strata Levies should be paid in priority to other unsecured creditors;

(c)    the “protracted prosecution” of the application for judicial advice, including failing to comply with five timetabling orders made by the Court between 9 December 2022 and 14 July 2023; and

(d)    a decision made by the plaintiffs to attempt to pursue the proceedings with arguably less than “the complete body of relevant evidence”, including the fact of the receivership.

39    The Owners Corporation submits that it could not be said that it did anything other than assist the Court, in circumstances where it drew out the “determinative issue”, being the application of the Lundy Granite principle. It submits that independently of the manner in which the plaintiffs conducted the proceedings, the plaintiffs should pay its costs because of their failure to respond adequately to the Owners Corporation’s solicitors’ letter dated 13 June 2022, where the applicability of the Lundy Granite principle was first raised by the Owners Corporation.

D.2.    Plaintiffs’ submissions

40    The plaintiffs submit that the submissions made by the Owners Corporation do not reflect the position taken by the plaintiffs, the nature of the application for judicial advice before the Court and the determination made by the Court.

41    The plaintiffs submit that (a) at all times they were concerned with the correct amount of the levies to be paid out, not with some predetermined proportion, (b) the period that the Court determined for the payment of levies out of the Fund commenced more than 18 months after the period demanded by the Owners Corporation, (c) the position taken by the Owners Corporation did not closely reflect the determination of the Court, (d) the plaintiffs expressly raised the potential application of the Lundy Granite principle in both their written and oral submissions, (e) it was the plaintiffs, not the Owners Corporation, who put the Deed of Compromise and Disclaimer into evidence.

42    The plaintiffs submit that delays in the procedural progression of the matter have already been addressed by the Court in its interlocutory orders and do not provide a basis for an intervener to be paid its costs of its participation in the proceedings. Further, they submit that the Owners Corporation will not be prejudiced by the delay in the receipt of the strata levies payable out of the Fund because they will receive a very high windfall amount of interest on the levies.

43    In summary, the plaintiffs submit that the hearing of their application for judicial advice proceeded in an orthodox manner and the plaintiffs sought fairly to put all reasonably arguable matters to the Court for its consideration.

D.3.    Consideration

44    The submissions advanced and the position taken by the Owners Corporation in the proceeding was not relevantly distinguishable from that advanced and taken by White Hills.

45    The only material difference from a costs’ perspective is that the Owners Corporation’s participation in the proceeding was as an intervener, rather than as a party, and therefore in the usual course it would be shielded from an adverse costs order if its submissions were not accepted, but not otherwise able to recover its costs if it were successful.

46    I accept that the starting position is therefore that the Owners Corporation is not entitled to a costs order in its favour.

47    In the present case, I am satisfied, however, that there are special circumstances that warrant an order that the costs of the Owners Corporation be paid by the plaintiffs, in their capacity as receivers of the Freshwater Development Trust.

48    First, as I note at [31]-[33] above, in both their written and oral submissions the plaintiffs advanced contentions in an adversarial manner that emphasised matters that might have led the Court to conclude that the Strata Levies should not be afforded any priority over other unsecured creditors of the Company. Those contentions were not accepted.

49    Second, as was the position with White Hills, I found the submissions and participation of the Owners Corporation to be of considerable assistance in resolving the novel and complex issues that arose for determination in this proceeding, in particular the application of the Lundy Granite principle.

50    In my view, it is the combination of complexity and the adversarial position taken by the plaintiffs, in the interests of the other unsecured creditors of the Company, that tips the scales in favour of a costs order in favour of the Owners Corporation. Complexity alone would not have been sufficient if the submissions made by the plaintiffs had been sufficient to enable the Court to deal with the issue raised by them without the assistance of a proper contradictor. The adversarial position taken by the plaintiffs in this case called for a proper contradictor, a role that was provided by the Owners Corporation (and White Hills). The plaintiffs might well have considered it was necessary to take a more adversarial position given the intervention of the Owners Corporation (and White Hills) to advance their self-interests but the reality, as I explain at [31]-[33] above, was that the proceeding was conducted in an adversarial manner, the submissions of the Owners Corporation (and White Hills) provided considerable assistance and the conclusions that I reached reflected much more closely the position they advanced than the position advanced by the plaintiffs.

51    The participation of the Owners Corporation (and White Hills), thereby, advanced the proper administration of the receivership, given the priority to be afforded to the Strata Levies, in particular, the extent to which they were to be paid out of the Fund, was necessarily an issue to be addressed in the receivership.

52    In concluding that the Owners Corporation should recover its costs, I have not placed any significant weight on the procedural complaints advanced by the Owners Corporation that I have summarised at [38] above or any alleged deficiency in their response to the Owners Corporation solicitors’ letter dated 13 June 2022. In my view, delays in proceeding with an application for judicial advice or failures to engage with an intervener that might have increased the costs incurred by an intervener, cannot independently enliven an entitlement to costs.

E.     ADDITIONAL ORDERS SOUGHT BY WHITE HILLS

53    White Hills seeks orders providing for a procedure to address any dispute that might arise between the plaintiffs and the building management committee of the Strata Management Statement.

54    The plaintiffs oppose the making of such orders on the basis that they do not relate to any aspect of the relief sought in the proceeding and there can be no proper suggestion that they will not pay the amount of the strata levies arising from the terms of the judgment.

55    In my view, it is appropriate that the additional procedural orders sought by White Hills should be made. Order 3 made by the Court on 19 July 2024 does not identify the specific sum to be paid and the orders sought by White Hills provide a mechanism to facilitate any dispute that might arise in determining that amount.

F.    DISPOSITION

56    Orders are to be made for costs, substantially in the form sought by each of the parties and the intervener and the additional procedural orders sought by White Hills are also to be made.

57    Although I ultimately determined that the Owners Corporation could recover its costs of the proceeding, the issue was finely balanced given the adversarial position taken by the Owners Corporation in the proceeding and that it appeared as an intervener not as a party. In those circumstances, combined with the general undesirability of disputes as to the costs of obtaining costs orders, I decline to make the additional order sought by the Owners Corporation that it also recover the costs of its application for its costs.

Associate:

Dated:    23 August 2024