5 The arrangements for the isolation and retention of the balance of the sale proceeds were made in order to allow the sale to proceed despite the outstanding claim of York. This was reflected in a further order made on 24 July 2007 allowing each of ASIC, Macarthur and York to file an interlocutory process and affidavit in support of "an application as to the distribution of the moneys held by the solicitors" pursuant to the earlier order made on the same occasion.
6 It appears that Fincorp Developments Pty Ltd (a member of the group the affairs of which are the subject of the ASIC investigation said to attract the operation of s.1323) also claimed an interest in the Camden property. It maintained an entitlement to an equitable charge arising from expenditure by it in developing the Camden property. Fincorp Developments is now subject to creditors voluntary winding up as a sequel to Part 5.3A administration.
7 An interlocutory process of the kind contemplated by the further order of 24 July 2007 was filed by York on 7 August 2007. York sought an order varying the principal orders of 24 July 2007 to allow it to recover the balance of the proceeds of sale. The matter next came before the court on 13 August 2007. On that occasion, counsel for Fincorp Developments submitted that that company should be allowed to intervene in the proceedings. There were directions for the service of certain documents on Fincorp Developments and as to that company's progressing an application "to be added, unconditionally, as a defendant". Some of the orders made by the court on 13 August 2007 were:
"1. The Court orders that Fincorp Developments Pty Limited (in liquidation) be joined, conditionally, as a defendant to these proceedings for the purpose of these orders.
…
4. Any application by Fincorp Developments Pty Ltd (In Liquidation) to be added, unconditionally, as a Defendant and to participate in the hearing of the application by York Capital Limited is to be filed and served by 4pm on 17 August 2007.
5. Notwithstanding the conditional joinder effected by paragraph 1 hereof, Fincorp Developments Pty Limited (In Liquidation) is to be bound by and subject to the same obligations of confidence in respect of material served on it in accordance with these Orders as the parties to these proceedings.
6. In the event that no application is made in accordance with paragraph 4 hereof, Fincorp Developments Pty Limited (In Liquidation):
(i) shall cease to be a Party to these proceedings, and
(ii) is ordered to return, by 4pm on 24 August 2007 all material, and any copies thereof, served on it in accordance with these Orders.
7. Costs of the proceedings on 13 August in connection with the Interlocutory Process filed by York Capital Limited as well as the application by Fincorp Development Pty Limited (In Liquidation) be reserved."
8 In accordance with the directions made on 13 August 2007, Fincorp Developments filed on 17 August 2007 an interlocutory process seeking an order that it be joined as a defendant to the proceedings.
9 The regime created by the orders of 5 and 24 July 2007 with respect to the balance of the proceeds of the Camden sale held under the control of solicitors was further varied by orders made on 23 August 2007. As a result of the variation, that balance was, as to $300,000, to be held until 5pm on 24 September 2007 and then paid out to York "subject to any relevant application that may be made on 24 September 2007", and the residue of the balance was to pass to York immediately. The net result, therefore, was that only $300,000 was to remain under the control of the solicitors until 5pm on 24 September 2007, at which point that sum also would pass to York unless some new order then in force prevented that, (the 25 October 2007 date in the order of 5 July 2007 was thereby effectively superseded).
10 Another order made on 23 August 2007 caused Fincorp Developments' joinder application filed on 17 August 2007 to be returnable on 24 September 2007.
11 When the proceedings came before me on 24 September 2007, the position was that:
(a) York's interlocutory process by which it sought to establish an entitlement to the whole of the balance of the proceeds of sale (by then effectively the sum of $300,000 still held by the solicitors after the orders of 23 August 2007) was unresolved; and
(b) Fincorp Developments' application to be joined as a defendant (filed on 17 August 2007) so that it could pursue its claim to the residue was also unresolved; but
(c) in accordance with the then extant regime, the sum of $300,000 would pass automatically to York at 5pm on that day unless the court otherwise ordered in the meantime, thus achieving the result sought by York's interlocutory process.
12 With matters in this state, no application, except as to costs, was pressed on 24 September 2007. In particular, Fincorp Developments did not press its application to be joined, there was no need (in view of that circumstance and item (c) at paragraph [11] above) for York to press further its application to obtain the balance of the proceeds of sale and neither ASIC as plaintiff nor anyone else sought to forestall the result to be produced by (c) at paragraph [11] above. All interested persons thus allowed to be played out the regime under which the residue was to pass to York, with no attempt being made to take advantage of the aspects of the regime under which some other outcome might have been produced by an order of the court. In those circumstances, the outstanding interlocutory processes of York and Fincorp Developments were not pressed, there was no determination on the merits and each interlocutory process was dismissed.
13 There was then a significant argument about costs.
14 In relation to costs, York seeks orders as follows:
(a) an order that ASIC and Fincorp Developments pay York's costs of and incidental to York's interlocutory process filed on 7 August 2007;
(b) an order that Fincorp Developments pay York's costs of and incidental to Fincorp Developments' interlocutory process filed on 17 August 2007; and
(c) an order that the costs under the foregoing (a) and (b) above be assessed and payable forthwith.
15 ASIC opposes the making of order (a) (as well as order (c) as it relates to order (a)). Fincorp Developments opposes the making of order (a) (as well as order (c), insofar as it relates to order (a)) but does not oppose the making of order (b) (or order (c), as it relates to order (b)).
16 Macarthur seeks orders as follows:
(a) an order that ASIC and Fincorp Developments pay Macarthur's costs of and incidental to York's interlocutory process filed on 7 August 2007;
(b) an order that Fincorp Developments pay Macarthur's costs of and incidental to Fincorp Developments' interlocutory process filed on 17 August 2007; and
(c) an order that the costs under the foregoing (a) and (b) above be assessed and payable forthwith.
17 Again, ASIC opposes the making of order (a) (as well as order (c) as it relates to order (a)). Fincorp Developments opposes the making of order (a) (as well as order (c), as it relates to order (a)) but does not oppose the making of order (b) or, insofar as it relates to order (b), order (c).
18 Each of York and Macarthur further says that, if it is successful in obtaining an order for costs against Fincorp Developments, that order should be supplemented by a further order that the costs awarded to it "rank in priority to any liability to unsecured creditors". This claim stems from the circumstance that Fincorp Developments is now subject to winding up. The intention is that the relevant costs order, if made, should be accompanied by a further order by which the court purports to specify the ranking of the resultant liability for costs in the winding up of Fincorp Developments.
19 ASIC's position is that, in relation to each interlocutory process (and so far as ASIC itself is concerned), there should be no order as to costs, so that ASIC bears its own costs and is not required to bear the costs of any other person.
20 Leaving aside order (b) at paragraph [14] above and order (b) at paragraph [16] above, which deal with the issue of the costs of its interlocutory process filed 17 August 2007, and in relation to which no opposition is offered, Fincorp Developments' position is that there should be no order as to costs as between it, York and Macarthur, so that Fincorp Developments bears its own costs relating to that application and is not required to bear the costs of any other person. That attitude relates to York's interlocutory process filed on 7 August 2007.
21 All outstanding questions of a contested nature as to the imposition of liability for costs thus relate to York's interlocutory process filed on 7 August 2007. Those questions are whether:
(a) ASIC should pay York's costs;
(b) Fincorp Developments should pay York's costs;
(c) ASIC should pay Macarthur's costs; and
(d) Fincorp Developments should pay Macarthur's costs.
22 There is a threshhold question in relation to the making of any costs order against Fincorp Developments, namely, whether it is, for relevant purposes, properly regarded as a party to the proceedings. If Fincorp Developments is not a party, rule 42.3(1) of the Uniform Civil Procedure Rules 2005 is relevant:
"Subject to rule 42.27, the court may not, in the exercise of its powers and discretions under section 98 of the Civil Procedure Act 2005 , make any order for costs against a person who is not a party."
23 Rule 42.27 is irrelevant to this case, as are the provisions in rule 42.3(2) creating exceptions to the general rule in rule 42.3(1). And the effect of rule 42.3(1) will be to limit the power that would otherwise be available under s.98(1) of the Civil Procedure Act 2005 to order payment of costs by a non-party. This is because s.98(1) begins with the words, "Subject to rules of court …".
24 It is to be noted that an order of 13 August 2007 joined Fincorp Developments "conditionally" as a defendant "for the purposes of these orders" - that is the whole of the orders made on that day. Another of those orders provided that Fincorp Developments should "cease to be a party to these proceedings" if it did not, by 4pm on 17 August 2007, file and serve an application "to be added, unconditionally, as a defendant and to participate in the hearing of the application by York Capital Limited". Such an application was filed and served within that deadline.
25 It follows, it seems to me, that Fincorp Developments has been, since 13 August 2007, a defendant "conditionally … for the purpose of" the orders of that date and that that status did not come to an end by operation of the aspect of those orders providing for cessation if no relevant application was filed and served by 4pm on 17 August 2007.
26 The orders of 13 August 2007 do not identify explicitly any condition upon or subject to which Fincorp Capital was "conditionally" made a party. I do not doubt that an order for joinder may be made subject to conditions: see, for example, Friends of Hinchinbrook Society Inc v Minister for Environment (1996) 45 ALD 532, where a party was joined on condition that it meet all its own costs as a party. In the present case and in the absence of any expressly stated condition of joinder, it seems to me that the relevant condition was twofold: first, the condition that status as a party would terminate if the foreshadowed application for joinder "unconditionally" was not filed and served by the specified deadline; and, second, that the status as a party should extend only to pursuit of that application.
27 Because of the position just outlined, I am satisfied that Fincorp Developments should be regarded as a "party", for the purposes of rule 42.3(1). Alternatively or in addition, the fact that Fincorp Developments, with the concurrence of the others involved, participated in the way it did is sufficient to warrant its being regarded as a "party" for those purposes: Law Society of New South Wales v Jackson [1981] 1 NSWLR 730.
28 I therefore proceed on that basis that a costs order can be made against Fincorp Developments.
29 As I have said, the contentious costs questions relate exclusively to York's interlocutory process filed on 7 August 2007. York's application was for variation of the principal orders of 24 July 2007 (obtained on the application of ASIC) to allow York to recover the whole of the balance of the proceeds of sale. The result that emerged, upon the hearing of that application on 23 August 2007, was, in substance, the result that York sought - but with a rider or proviso preserving the possibility that some other result might be substituted on 24 September 2007, which possibility in fact never eventuated.
30 In these circumstances, it seems to me correct to regard York having succeeded in the claims made by its interlocutory process of 7 August 2007. On that basis, York should have an order for costs in accordance with rule 42.1. In other words, costs should follow the event. But there is then a question as to the nature of the "event" or, more immediately, against whom the costs order should be made.
31 On this, the reality of the situation, as it seems to me, is that both ASIC and Fincorp Developments initially offered opposition to York's claim that it should be allowed to have the whole of the balance of the proceeds of sale - ASIC because of its contention that the assets of Macarthur generally should be frozen except to the extent necessary to allow sale of the Camden property to Peroxy Pty Limited and pay-out of the first mortgage held by St George Bank; and Fincorp Developments because of its alleged entitlement as equitable mortgagee, which entitlement it must have regarded, for some time at least, as superior to that of York. For that reason, there should be an order for costs in favour of York and against both ASIC and Fincorp Developments in respect of York's interlocutory process of 7 August 2007.
32 I should add, however, that it was submitted by ASIC that no costs order should be made against it because it is a public authority performing statutory functions for public purposes. My attention was drawn to the decision of Marks J in Peeke v The Medical Board of Victoria (unreported, VSC, Marks J, 19 January 1994). His Honour said in relation to costs:
"I think it must be borne in mind that the Medical Board is a statutory board performing an important public function. A costs order against it, I think, can have effects which are detrimental to the performance of its functions. It is a disciplinary matter and the ordinary rule as to costs in civil cases does not, in my opinion, automatically apply to a proceeding of this kind. In those circumstances, and in the particular circumstances of this case, I make no order as to costs."
33 I was also referred to Australian Fruit Distributors Pty Ltd v Sydney Farm Produce Authority (unreported, NSWSC, Powell J, 23 June 1987). After referring to the discretion to depart from the rule that costs follow the event and referring to instances in which such a course is sometimes taken, Powell J said:
"Mr Graves now seeks to submit that, as the Defendant is a public authority, charged with the performance of a public function, and dependent upon the rentals, fees, dues and amounts charged, and received, by it in order to provide the costs of establishing and maintaining its markets and sustaining its operations, and as the Defendant, bona fide, albeit that I have found erroneously, believed itself entitled to levy the charge with which I have been concerned to deal in these proceedings, there are special circumstances in the present case. While I recognise the force of those submissions, it seems to me, with respect, that they are not such as constitute special circumstances taking the present case outside the ambit of the general principle. I, therefore, confirm the indication which I have previously given that the Plaintiffs are entitled to costs in the proceedings."
34 It is true that a prosecutor does not recover costs or suffer an adverse costs order in criminal proceedings. But these are not criminal proceedings; nor does the jurisdiction to which ASIC has resorted exist to assist criminal proceedings. Section 1323 is designed to ensure property remains available to meet lawful claims upon it that might in due course be proved in civil proceedings. Where ASIC resorts to civil proceedings made available by the Corporations Act, the general expectation is that rules and principles applicable to civil proceedings will be applied, except to such extent as the privilege against self-exposure to a civil penalty may indicate otherwise. In relation to costs, the civil principle that costs follow the event has been applied in civil penalty proceedings brought by ASIC: see, for example, Australian Securities and Investments Commission v Plymin (No 2) [2003] VSC 230; (2003) 21 ACLC 1237 at [116]; Australian Securities and Investments Commission v Edwards [2006] NSWSC 498 at [3].
35 In the present case, I see no special circumstances warranting departure from the rule that costs should follow the event. The fact that the particular party is a public authority performing statutory functions for public purposes cannot, of itself, be sufficient. Nor, as I have said, does the nature of the proceedings, of itself, represent sufficient reason.
36 There is then the question of Macarthur's costs of York's interlocutory process of 7 August 2007. Macarthur was the owner of the property and the mortgagor under both the first mortgage to St George and the unregistered second mortgage to York. Its position in relation to the sale was that, as vendor (and naturally enough), it wished the sale to proceed, with the proceeds being applied to obtain discharges of the mortgages. On the hearing on 23 August 2007, Macarthur supported the proposition that York should have the balance of the sale proceeds. It took that position in order to facilitate its sale.
37 The fact remains that Macarthur was not an applicant for the relief that York sought; nor did it oppose the grant of that relief. I do not think that Macarthur is entitled to a costs order on the basis of rule 42.1. Nor am I persuaded that any other basis exists for requiring ASIC or Fincorp Developments or either of them to meet Macarthur's costs in connection with York's interlocutory process of 7 August 2007. There will be no order as to costs in respect of that interlocutory process so far as Macarthur's costs are concerned.
38 I turn now to the costs of Fincorp Developments' interlocutory process filed on 17 August 2007. As I have said, Fincorp Developments does not oppose orders that it pay the costs of York and Macarthur in this respect. Such orders will be made.
39 The next question is whether all costs - that is, the costs awarded to York and against ASIC and Fincorp Developments in respect of York's interlocutory process of 7 August 2007 and the costs awarded to York and Macarthur and against Fincorp Developments in respect of Fincorp Developments' interlocutory process of 17 August 2007 - should be ordered to be assessed and payable forthwith.
40 I am of the opinion that such an order is warranted. In the first place, the matters that initially became the subject of the orders on 5 July 2007 and were affected by the ongoing regime were, as regards York and Macarthur, discrete matters arising in the context of ASIC's more wide-ranging moves to secure property by orders under s.1323. The resolution that emerged on 24 September 2007 marked, in a real sense, completion of that discrete aspect. Second, York has no further part to play in ASIC's ongoing proceedings. Third, I am not at all persuaded that, in the context of proceedings brought by ASIC under s.1323, it is meaningful or helpful to regard individual freezing orders as being of some interlocutory kind.
41 To summarise the position as enunciated to this point, the substantive outcome on costs is as follows: