Federal Court of Australia

Connelly (liquidator) v Papadopoulos, in the matter of TSK QLD Pty Ltd (in liq) (Costs) [2024] FCA 959

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), the first defendant pay interest to the plaintiffs on the sum $7,293,814.09 in the amount of $1,468,441.10.

2.    Pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), the third defendant pay interest to the plaintiffs:

(a)    on the sum $5,527,190.35 in the amount of $1,193,603.81; and

(b)    on the sum $3,853,281.44 in the amount of $503,908.92.

3.    Pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), the tenth and eleventh defendants pay interest to the plaintiffs on the sum $7,293.814.09 in the amount of $1,506,818.55.

4.    Pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), the seventh defendant pay interest to the plaintiffs:

(a)    on the sum $930,000 in the amount of $177,459.29; and

(b)    on the sum $4,597,190.35 in the amount of $1,016,144.52.

5.    The seventh, tenth and eleventh defendants pay the plaintiffs’ costs of the proceeding save for costs incurred in relation to Part H of the Further Amended Statement of Claim, to be agreed or, failing agreement, to be taxed.

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

REASONS FOR JUDGMENT

DOWNES J:

1    This decision concerns the final orders which are to be made following delivery of my decision in Connelly (liquidator) v Papadopoulos, in the matter of TSK QLD Pty Ltd (in liq) [2024] FCA 888 (J or judgment). This decision assumes familiarity with the judgment, and I will adopt the defined terms in the judgment.

2    It is appropriate to deliver short form reasons because the issues which arise in relation to the final orders concern the application of established principles to uncontentious facts, there is no disputed question of law to be determined and the matters at stake do not justify detailed reasons. In these circumstances, I consider that delivery of short form reasons is consistent with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth); in particular, the quick and efficient resolution of disputes.

Orders against the First and Third Defendants

3    As outlined in the judgment, Mr Papadopoulos and Leopho failed to appear at trial and default judgment was entered against them. Neither they nor the trustee in bankruptcy appointed to the estate of Mr Papadopoulos have consented to, or otherwise provided submissions concerning, the payment of interest on the amounts awarded against them. Nevertheless, the plaintiffs have provided calculations in support of the quantum of interest which they seek, and I am satisfied that these calculations are correct and that the orders sought are appropriate and should be made.

Orders against the Whitehouse defendants

4    The quantum of interest proposed as being payable by the Whitehouse defendants was the subject of agreement between the plaintiffs and Whitehouse defendants, and was supported by calculations provided by the plaintiffs. As such, those orders will be made.

5    The plaintiffs and Whitehouse defendants dispute the costs order to be made against the Whitehouse defendants. It is to this issue that I now turn.

6    The Whitehouse defendants submit that costs should be apportioned relative to their involvement in the proceedings as against the other defendants, with costs excluded in relation to:

(1)    the plaintiffs’ application of 21 September 2023 for ancillary orders against Torquejobs and Mr Lopez;

(2)    Federal Court proceeding QUD402/2022, which was brought against Mr Papadopoulos and later consolidated with these proceedings; and

(3)    Part H of the Further Amended Statement of Claim, which concerned a debt claim against Leopho for recovery of a shareholder loan.

7    The Whitehouse defendants submit that they were powerless to prevent the incurring of costs by the plaintiffs in respect of the matters in (1) and (2), and that, as they were not the subject of the application for ancillary orders or the proceeding against Mr Papadopoulos, those costs should be excluded from their liability as to costs. However, as the plaintiffs submit, the application for ancillary orders and the proceeding against Mr Papadopoulos are procedural features of this proceeding and should be included in the award of costs in the usual way. This is especially as Mr Whitehouse was the architect of the scheme (as found at J [5]) and it was the transfer of property between entities controlled by Mr Papadopoulos and Mr Lopez which prompted the application for ancillary orders and the proceeding against Mr Papadopoulos. Further, the matters in (1) and (2) do not constitute special or unusual circumstances which would justify the plaintiffs being deprived of their costs.

8    As to (3), that part of the claim lacks the same degree of commonality of facts and evidence as the other claims in the proceeding, and so, for that reason, I agree that the costs associated with that aspect of the plaintiffs’ claim should not form part of the costs order against the Whitehouse defendants.

9    The Whitehouse defendants also rely on the fact that substantial parts of the Further Amended Statement of Claim were struck-out to reflect the discontinuance of the proceedings against certain defendants. They submit that, by the time the claims were settled against those defendants on or about 22 December 2023, the majority of the plaintiffs’ evidence had been prepared. The Whitehouse defendants urge the Court to infer from these matters that costs were incurred by the plaintiffs prior to 22 December 2023 which may have been solely or mainly referable to the defendants against whom the plaintiffs settled and which were unnecessary to be incurred in respect of the Whitehouse defendants. They also submit that the plaintiffs tendered an affidavit of Mr Connelly dated 17 August 2023 of some 8,618 pages and which exhibited roughly 650 documents, but relied on substantially fewer documents at trial.

10    However, as the plaintiffs have enjoyed complete success against the Whitehouse defendants, I am not persuaded that (subject to the one exception referred to above) costs should not follow the event, being the general rule.

11    Further, the matters referred to by the Whitehouse defendants do not, in my view, constitute special or unusual circumstances which would justify the plaintiffs being deprived of a costs order in their favour.

Conclusion

12    The orders sought by the plaintiffs in relation to interest will be made. In relation to costs, I will order that the Whitehouse defendants pay the plaintiffs’ costs of the proceeding, save for the costs incurred in relation to Part H of the Further Amended Statement of Claim, to be agreed or, failing agreement, to be taxed.

Associate:

Dated:    27 August 2024

SCHEDULE OF PARTIES