Apostolou v VA Corporation of Aust Pty Ltd [2009] FCA 165 | Case summary

REASONS FOR JUDGMENT 1 There are presently three notices of motion before the Court filed on 1 and 14 October 2008 by Vasiliki Apostolou as the Trustee of the VA Unit Trust and the Vasiliou Family Trust in which leave is sought to appeal against three interlocutory orders of Finkelstein J made on 6 May 2008, 29 August 2008 and 7 October 2008. 2 On 18 November 2008, Finkelstein J made an order that Mr Andrew Vasiliou, (the husband of the applicant) in his capacity as Trustee of the VA Unit Trust, be added as an applicant in the principal proceeding and the title to the proceeding be amended accordingly. When the matter was called on for hearing this morning, Mr Andrew Vasiliou appeared before the Court and said that he appeared for the applicant in each motion. Mr Vasiliou is not a qualified legal practitioner entitled to appear before this Court, or to have an audience before this Court. Mr Vasiliou submitted that, as he had been added as an applicant in his capacity as Trustee of the VA Unit Trust in the principal proceeding by the order of Finkelstein J, he had the right to appear and there was no impediment to him appearing. 3 Mr Vasiliou's right to appear was objected to by counsel for the second and third respondents and counsel for the fourth and fifth respondents. I reserved, for further consideration, my decision on whether I would hear Mr Vasiliou and allow him to appear before the Court. In the interests of justice I heard submissions from him in support of the motions so that the matters, substantively raised by the notices of motion, could be dealt with once and for all, and not put off to a later date if I were to rule against Mr Vasiliou's right to appear before the Court and require the applicant on the motions to obtain legal representation. 4 As the motions are brought by Vasiliki Apostolou, albeit as Trustee of the VA Unit Trust and the Vasiliou Family Trust, Mr Vasiliou has no right to appear on those motions even in his capacity as Trustee of the VA Unit Trust. The notices of motion have been brought by Vasiliki Apostolou in respect of orders made at times when she was the only plaintiff in the principal proceeding. So in all the circumstances, I should not have given Mr Vasiliou leave to address me, and make submissions on the matters raised in the notices of motion. Nevertheless, I did so and I propose to determine the issues raised in the notices of motion, and made the subject of submissions by Mr Vasiliou notwithstanding that he did not have the right to appear before me. 5 The notices of motion arise in the context of the principal proceeding which is still pending before Finkelstein J. The principal proceeding relates, in very general terms, to a sale of a property on 6 March 2008, and to the disposition of the proceeds of that sale. The sale and disposition of the proceeds of sale are challenged by the plaintiff in the principal proceeding. The sale went ahead on 6 March 2008 so that it is a fait accompli. Such claims as the plaintiff has in the proceeding is now a claim which sounds, in money terms, against the liquidators of the company which sold the land and against the mortgagee and its manager. The claim, as presently proceeding, is a claim for money damages, the property having been sold, and the proceeds disbursed in accordance with the terms of the mortgage and orders made in the proceeding from time to time. 6 The first order, which is the subject of a notice of motion, was made on 6 May 2008, and it is in the following terms. "… 2. The fourth defendant pay into court the sum of $3,347.33 as soon as reasonably practicable after the receipt of the proceeds of sale of the St Kilda Road property following the settlement of that sale to be applied in payment of the taxed costs of the Commissioner of State Revenue as petitioning creditor in the winding up of the first defendant, with the balance (if any) to be paid to the first defendant, VA Corporation. 3. The fourth defendant pay into the court the sum of $470,000 as soon as is reasonably practicable after the receipt of the proceedings of sale of the St Kilda Rd property following the settlement of that sale, to be applied: (a) first, in discharge or partial discharge of the remuneration and expenses found to be owing to the second and third defendants; (b) second, in payment of any costs and expenses incurred or to be incurred by the second and third defendants in this proceeding and ordered to be paid by the applicant or first defendant; and (c) third, in payment of the balance (if any) to VA Corporation. 4. Nothing in this order shall prevent the fourth defendant from paying into court: (a) the sum of $41,300 being the sum which is claimed by John Matthies and Co to be owing by VA Corporation to it and secured by charge over the St Kilda Road property as detailed in caveat number AF734106A; and (b) any other sum or sums in respect of which any person or persons claim an entitlement as mortgagee or chargee pursuant to any registered mortgage or caveat, as soon as is reasonably practicable after the receipt of the proceeds of sale of the St Kilda Rd property. 5. The fourth defendant retain the amount found to be owing to it by the company on the taking of accounts (including the amount (if any) it is found to be entitled to on account of future legal costs) and thereafter pay the balance of the net proceeds (following customary adjustments) of the sale of the St Kilda Rd property to VA Corporation, such payment to be forwarded to its director, Vasiliki Apostolou, of 446 Kooyong Rd Caulfield South, and pending such taking of accounts (and the determination of the amount (if any) it is found to be entitled to retain on account of future legal costs), the fourth defendant retain the amount it alleges is owing to it by the company (including the sum of $850,000 on account of future legal costs) and pay the balance to VA Corporation, such payment to be forwarded to its director, Vasiliki Apostolou, of 446 Kooyong Rd Caulfield South. … 7. The application by the second and third defendants to retain a sum on account of the costs of this action and the application by the fourth defendant to retain $850,000 for future legal costs arising out of the mortgage be heard at 9.30am on Friday 23 May 2008." 7 The notice of motion filed in relation to that order was filed on 14 October 2008. It requires the leave of the Court in order for an appeal against that order to proceed because, firstly, the order was an interlocutory order, and secondly, the notice of motion was filed more than seven days after the date on which the order was pronounced. In accordance with O 52 r10(2A)(b) of the Federal Court Rules, the plaintiff has to obtain leave to file the notice of motion out of time. 8 The notice of motion is supported by an affidavit by Mr Andrew Vasiliou, and it sets out, in a narrative form, a number of complaints made on behalf of the applicant. In substance, the complaint made about the order is that it was unjust and unfair and had, what are called, other "intentions" behind them. The affidavit asserts error made by the judge. A draft notice of appeal has been filed in support of the notice of motion which identifies that the appeal is against all the orders made except orders 1 and 6. In particular, the first ground of appeal is that the Court erred in allowing the fourth and fifth respondents to retain $850,000 for future fees, but that, in fact, is not what the order says. 9 Finkelstein J gave a direction, numbered 4 in the order, that the accounts taken before the registrar, in accordance with paragraph 3, shall not include a determination of the fourth defendant's claim to retain $850,000 for future legal costs arising out of the mortgage. That question is to be reserved for determination by a judge. Before I consider the other grounds of appeal relied on, it is important to note that, because leave to appeal is sought against an interlocutory order and is sought out of time, there are a number of considerations which have to be taken into account. 10 The first is whether, in all the circumstances, the decision in respect of which leave is sought is attended by sufficient doubt to warrant its being reconsidered by the Full Court and secondly, whether substantial injustice would result if leave were refused supposing the decision to be wrong. Further because leave has to be granted to file the motion out of time, the cases make it clear that a relevant consideration to take into account, is the prospects of success on appeal. Mr Vasiliou repeated, in his oral submissions that the orders made were unjust and were wrong, and there was no basis for them, and that the judge made a premature order allowing the mortgagee to retain the $850,000. As I have noted earlier, that is not what the judge did. 11 Mr Vasiliou submitted also that there was vast collusion involving the liquidators, and that the mortgagee acted improperly and with criminal intent. There is absolutely no material before me that supports those submissions, and I reject them completely. There was also an objection by Mr Vasiliou to the first direction in the order about the registrar reviewing the remuneration to which the liquidators are properly entitled. It is curious that there was an objection to that, because the purpose of the direction was to review the remuneration which they were claiming, which remuneration has apparently been challenged by the applicant. The principal proceeding, insofar as it relates to the liquidators, is a claim for damages, and there is no basis upon which I can see that the judge erred in giving that direction as to the review of their remuneration. 12 The second ground of appeal raised in the draft notice of appeal is that the Court erred in allowing the mortgagee to retain future fees without an application or notice of motion being filed in Court. I am not sure what the rest of the ground means, but in any event, that ground is misconceived because the orders of 6 May do not allow the mortgagee to retain future fees, but adjourned that question for later hearing. 13 The third ground of appeal is that the Court erred in ordering the mortgagee to pay into Court $470,000 to start with, and the rest of that ground asserts error without identifying what the specific error was. The fourth ground specifies no particulars of legal error. The fifth ground relates to a subject matter that has no relevance to the orders, or connection with the orders made on 6 May 2008. I make the same observation in relation to the sixth ground. The final ground is that the Court erred in changing the original meaning and direction of the application. I do not understand that ground. But, in any event, it does not disclose an error by the judge. 14 Having regard to the matters raised in the affidavit in support of the notice of motion, the draft notice of appeal and the matters put to me by Mr Vasiliou this morning, I am not satisfied that the orders made by Finkelstein J on 6 May 2008 are attended by sufficient doubt, to warrant their reconsideration by the Full Court. I also do not consider that any substantial injustice would result if leave is refused supposing the Court's decision to be wrong because the principal proceeding is presently on foot, and the plaintiff is maintaining her action against the liquidators and the mortgagee and its manager. The plaintiff's claim against them is for damages. It will proceed in the usual way of proceedings in this Court. It will come on for trial in due course, and will be dealt with on the merits. I do not consider, in the circumstances to which I have referred, that there are any real prospects of any appeal against the order made on 6 May 2008 being successful. The application for leave to appeal against the order made on 6 May 2008 is refused and dismissed. I turn then to the next matter which is the subject of an application for leave to appeal. 15 The order made on 29 August 2008 was in the following terms: "1. From the funds presently held by the Court to the credit of this action, the sum of $376,000 be paid to the second and third defendants or at their direction on account of the fees, costs, and expenses of the second and third defendants described in paragraph (a) of the undertaking above. … 2. Paragraph 7 of the orders made on 1 August 2008 be recalled and in lieu thereof, the matter be listed for directions at not before 11.30am on 7 October 2008. 3. The plaintiff pay the second, third, fourth, and fifth defendants' costs of, and incidental to, this day." 16 The material in support of that notice of motion was an affidavit by Mr Andrew Vasiliou and a draft notice of appeal. At that hearing on 29 August 2008 the plaintiff was represented by a qualified legal practitioner, Mr George Vassis. As I understand the complaint set out in the affidavit, and in the submissions made by Mr Vasiliou, the order was made in relation to a disposition of a sum of $376,000 without prior notice being given to the plaintiff that an application for that order would be made at the hearing on 29 August 2008. 17 It is clear from the contents of Mr Vasiliou's affidavit and from the submissions made by Mr Vasiliou, that at the hearing, the subject matter of the orders which were proposed were made known to the plaintiff's legal advisor who had the opportunity to deal with that matter. There is nothing in the material before me or in the submissions that were made that show that the judge's reasoning and orders made are attended by sufficient doubt to warrant their being reconsidered by the Full Court or that substantial injustice would result and leave is refused supposing the decision to be wrong. 18 The subject matter of the principal proceeding is still on foot against the liquidators, and it was the liquidators who were concerned with the order made on 29 August 2008, not the mortgagee or its manager. Any claim against the liquidators for damages as a result of their conduct, or moneys they received, will be part of the claims made in the principal proceeding yet to come on for hearing. 19 Again, because the notice of motion for leave to appeal was filed out of time, it is a necessary matter for me to consider the prospects of success on any appeal. I consider there are no prospects of success on any appeal. Leave to appeal against the order made on 29 August 2008 is refused and dismissed. 20 The third order, which is the subject of a notice of motion for leave to appeal, is the order made on 7 October 2008. It is in the following terms: "1. Leave be granted to withdraw the application for substitution of applicant. 2. On or before 4.00pm on 25 February 2009 any affidavit upon which the applicant will seek to rely and any further amended statement of claim the applicant may wish to file shall be provided in copy form to the respondents and the Court. 3. The matter be adjourned to a directions hearing on 6 March 2009 at 9.30am. 4. The applicant pay the respondents taxed costs of the day." 21 As I understood Mr Vasiliou's submissions, the only matter which is the subject on which he contended there was error by the judge was the judge's order in paragraph 4 that the applicant would pay the respondents' costs of the day. 22 The notice of motion for leave to appeal in respect of this order was filed within the period of seven days after the order was made, so I only have to consider whether the reasons of the judge are attended with sufficient doubt to warrant their reconsideration by the Full Court and whether substantial injustice would result if leave is refused supposing the decision to be wrong. The affidavit sworn in support of the notice of motion, as I understand it, raises the issue of the costs awarded against the applicant. It was submitted that the costs order was not appropriate for two reasons although only one reason was set out. 23 That reason was that the hearing was ordered by the judge himself, and so the costs should have been reserved because the applicant did not ask for the hearing to take place. The draft notice of appeal raises the grounds that the Court erred in not hearing another motion which had been lodged by the applicant, but that is not the subject matter of the order which the judge made. The grounds of the draft notice of appeal also raises the issue that the judge erred in awarding costs against the applicant where the hearing had already been scheduled by the judge on 29 August 2008 and that the judge erred in not allowing the applicant, without conditions attached to the applicant, to provide other material. That is a paraphrase of the third ground of appeal which is difficult to comprehend. 24 It is trite to say that decisions involving the exercise of discretion as to costs are very much for the discretion of the judge granting the order as to costs and in order to identify whether that discretion erred, it is necessary to establish some basis upon which the discretion miscarried consistently with the reasoning, in particular, of Dixon J in House v R (1936) 55 CLR 499 at 506. 25 There is no material before me, by way of evidence or submission, which demonstrates that the judge's order, and his exercise of discretion as to costs, was in error and miscarried. I do not consider that the order as to costs is attended with sufficient doubt to warrant reconsideration by a Full Court. Nor will any substantial injustice result if is refused supposing the decision is wrong. The order involves payment of a money sum by the applicant, but I do not regard that, in all the circumstances of this case, as a substantial injustice. 26 For these reasons, the application for leave to appeal against the order made on 7 October 2008, is refused and dismissed. 27 The respondents seek an order that the applicant pay their costs of the applications for leave to appeal. Mr Vasiliou has opposed the making of that order. The usual order for costs made in proceedings before this Court is that costs follow the event, that is to say, if a party brings a proceeding and fails in relation to the claim or relief he/she or it makes, that party should bear the costs of the other parties brought to the court. However, although that is the usual rule, costs are in the discretion of the Court. The matters raised by Mr Vasiliou relate rather to the substantive issues which are raised in the principal proceeding. The applications for leave to appeal against the orders of Finkelstein J have been dismissed and refused on the merits of those particular applications. 28 The matters to which Mr Vasiliou has referred to do not, in my view, bear upon the issue of whether costs should go one way or the other on these particular notices of motion. I consider in all the circumstances that the costs order should be that the applicant, Vasiliki Apostolou, pay the costs of the second and third respondents, and the fourth and fifth respondents, of and incidental to the motions for leave to appeal and the costs of the hearing this day including reserved costs. 29 The respondents have submitted that the contents of the affidavits sworn by Mr Vasiliou and filed in the three motions are scandalous and should be removed from the Court file. I am satisfied that material in the affidavits sworn by Mr Vasiliou comes within O 14 r8 of the Federal Court Rules but I do not propose to order that the affidavits be removed from the file. I propose to make an order that those affidavits remain on the file but not be open or available for inspection by anyone other than the parties to the proceeding without the order of a judge. The matters to which Mr Vasiliou has referred are presently part of the principal proceeding and will be dealt with in due course by the trial judge. In those circumstances I think it appropriate to make the order which I have proposed. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

Apostolou v VA Corporation of Aust Pty Ltd

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Judgment (29 paragraphs)

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