Federal Court of Australia

Bad Wolf Purchasing Pty Ltd v Du Bray and Associates Pty Ltd (Costs) [2025] FCA 1075

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff must pay the costs of the first and second defendants of the proceeding to be taxed.

2.    The fourth defendant is to bear her own costs of the proceeding.

3.    The costs of the first and second defendants of the proceeding be costs in the winding up of Du Bray and Associates Pty Ltd (in liq).

4.    The interlocutory application of the second defendants for a non-party costs order against Lee Du Bray be adjourned to a date to be fixed.

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

REASONS FOR JUDGMENT

MCELWAINE J:

1    I published my reasons and made orders in this matter on 18 July 2025: Bad Wolf Purchasing Pty Ltd (as trustee for the Du Bray Property Trust) v Du Bray and Associates Pty Ltd [2025] FCA 814. I dismissed the plaintiff’s proceeding and made orders generally as sought by Richard Stone and Gregory Dudley as the Liquidators of Du Bray and Associates Pty Ltd (in liq) (DBA) who were named as the second defendant. I required any costs application to be made within 14 days and, if made, to be responded to within 14 days.

2    The Liquidators have made a costs application to which the plaintiff has responded. No submissions have been made by the fourth defendant, QRS.

3    In short, the Liquidators submit that the plaintiff should pay their costs of the proceeding, save for two discrete applications where they submit that QRS should pay their costs. The plaintiff submits that it should not suffer a costs order and, if it does, it should not be ordered to pay any costs incurred by the Liquidators in connection with the separate steps taken in response to the participation of QRS in the proceeding. In addition, the Liquidators have filed an interlocutory application that Lee Du Bray, a non-party, be ordered to pay their costs of the proceeding. These reasons do not address that discrete application.

4    The plaintiff was wholly unsuccessful. I found the plaintiff’s evidence, particularly as given by its director Mr Chen, was unsatisfactory. Despite the usual rule that costs should follow the event of a proceeding, the plaintiff submits it should not suffer that order primarily on the ground that it was compelled to commence the proceeding due to inaction by the Liquidators over a period of approximately 18 months prior to commencement. The submission goes so far as to contend that the plaintiff reluctantly commenced the proceeding “under protest”. This submission is further framed by a contention that the Liquidators ought to have been the moving party in order to resolve doubts about whether the money held in certain bank accounts was held on trust by DBA.

5    Whilst there is some merit in the history of the conduct of the Liquidators prior to commencement of the proceeding, as set out in the plaintiff’s written submission of 15 August 2025, I do not consider that the fact that the Liquidators did not commence a proceeding is sufficient to displace the usual costs order.

6    What must not be overlooked is that the plaintiff actively agitated the contention that, as the successor trustee to the Du Bray Property Trust, it was entitled to funds held in credit in an account with Westpac. Ordinarily, a former trustee as bare trustee will find it difficult to resist a demand from the successor trustee to hand over the assets of the trust, though sometimes subject to satisfaction of any right of exoneration or indemnity. However, the primary issue in the proceeding was concerned with an anterior question: had the plaintiff established that the funds in the Westpac account were held on the terms of the Trust?

7    The evidence that the plaintiff relied on was to the effect that Du Bray & Associates Ltd, a company incorporated in New Zealand (DBNZ) participated in a scheme instigated by Lee Du Bray for the purpose of avoiding his obligations to his former partner QRS pursuant to various property settlement orders made by courts in New Zealand. I set out the steps in the scheme in some detail in my primary reasons at [31] – [40] and there is no present utility in repeating its elements. The point for present purposes is that the two persons, Lee Du Bray and Michael Schwartz, who could have given evidence in support of the plaintiff’s claims did not, and no good reason was advanced for their non-attendance. Instead, the hapless Mr Chen undertook the task with the assistance of flimsy hearsay evidence. I did not accept his evidence. He gave some false evidence and otherwise was very careless in the selective manner in which he expressed himself in affidavits. The manner in which the plaintiff chose to prosecute its case was entirely unsatisfactory, and certainly not consistent with the overarching purpose at ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth).

8    Those matters coupled with the event of the proceeding in my view make it entirely appropriate that the plaintiff be ordered to pay the Liquidators costs of the proceeding (including any separate costs of DBA).

9    As I have noted, QRS does not make any application for costs. The appropriate order is that she must bear her own costs.

10    Dealing next with the costs application made by the Liquidators against QRS, it is put on the basis that her intervention, as a person claiming a priority interest to the funds in the Westpac account, caused the Liquidators unnecessary costs and she ultimately failed to obtain the relief that she sought. The additional costs are sketched in outline in the Liquidators submissions, but in my view, they do not warrant a separate costs order against QRS. There are very obvious reasons why she was most concerned to protect her identity and in particular her current place of residence and in consequence substantial redaction of documents was necessary. In the knowledge of the background of the bitter family law proceedings between her and Lee Du Bray, that is quite understandable. Her position was consistent with orders made by courts in New Zealand in her favour. In the scheme of this proceeding, those additional costs are in my view insignificant.

11    There is another matter in her favour. It was the cross-examination by her counsel of Mr Chen that exposed the false statements in his evidence, and which led to my conclusion that he was conducting the proceeding as the puppet of Lee Du Bray. Those findings significantly influenced my overall conclusion that I was not satisfied that the plaintiff had established that the funds in the Westpac account were the property of the Trust. No order for costs will therefore be made in respect of her intervention in the proceeding.

12    The Liquidators seek some consequential orders. The first is that the usual order be made that the costs incurred by the Liquidators be costs in the winding up of DBA. That order will be made. Second, that the costs ordered in their favour be determined on a lump sum basis pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). The discretion to make a lump sum order is informed by the Costs Practice Note (GPN-Costs). In my view, this is not a case for a lump sum order. This was a short proceeding, which resolved a discrete question on competing applications pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), Schedule 2 to the Corporations Act 2001 (Cth). This was not a large and complex proceeding where the making of a lump sum costs order is usually appropriate.

13    The third matter is that the Liquidators have filed an interlocutory application which seeks orders that Lee Du Bray be ordered to pay their costs of the proceeding. That application will be listed for case management after service has been effected.

Associate:

Dated:    5 September 2025

SCHEDULE OF PARTIES