Judgment
1HER HONOUR : On 22 July 2011, I published my reasons for judgment ([2011] NSWSC 857) on applications that had been made by the liquidators of Clarecastle Pty Limited (in liq) and ACN 050 070 463 Pty Limited (in liq) (formerly Ladycare Services Pty Ltd) (Ladycare), for leave pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) extending up to 5 October 2011 the time in which to bring applications under s 588FF(1) of the Act in relation to any voidable transactions concerning Clarecastle and Ladycare, respectively, in respect of which proceedings had not yet been commenced.
2The particular applications which were then before me were in two separate sets of proceedings (81756 of 2010 and 81786 of 2010) (to which I referred respectively as the Clarecastle and Ladycare Leave proceedings) in which the only relief sought in those proceedings was the extension of time for the bringing of applications under s 588FF(1) of the Act.
3However, there were (and are) also on foot in this Court three other sets of proceedings commenced by the liquidators relating to claims in respect of specific transactions involving one or other of the two companies, in which the prayers for relief contained in the respective Originating Processes include orders under s 588FF(3)(b) extending the time within which any further claims (i.e. claims other than the specific claims already the subject of those proceedings) must be made in respect of transactions made by the relevant company in liquidation involving the defendant(s) to those particular proceedings.
4As noted at [6] of my earlier reasons, the perceived overlap between the relief sought in the three specific proceedings and that in the two more general applications was the subject of complaint in the hearing before me (and was the basis for a submission that the latter applications are an abuse of process). Without dissent from the parties, I proceeded (and Senior Counsel for the Jasmic parties, in light of this, did not press the submission as to abuse of process) on the basis that the applications for relief under s 588FF(3)(b) in the Clarecastle and Ladycare Leave proceedings would resolve the similar applications made under s 588FF(3)(b) in each of the three specific proceedings.
5Ultimately, I formed the view that the applications for extension of time to commence voidable transaction proceedings in both the Clarecastle and Ladycare Leave proceedings should be dismissed (at least, I interpose to add, in relation to the Jasmic parties) other than in relation to a claim foreshadowed against Jasmic Nominees Pty Ltd (the sole shareholder of Clarecastle) in paragraphs [57] and [58] of a draft Statement of Claim annexed to an affidavit filed in Court during the hearing of the extension applications.
6In accordance with the basis on which I had heard the general extension applications, it therefore follows that there should be no extension of time granted for the similar extension applications in the three other proceedings (subject, relevantly, to the qualification that I expressed at [224] in relation to the position of parties other than the Jasmic parties who had not been represented on the hearing before me). Where an issue has arisen on the orders that should be made to reflect my reasons is that I also adverted (at [224]) to the possibility that an extension of time in relation to particular transactions (involving the Jasmic parties) might be sought in the context of an application for amendment of those proceedings.
7I indicated (at [225] of my judgment) the orders that I proposed to make and stood the matter over to hear submissions as to costs and the form of the proposed orders at an appropriate time. Those submissions were heard on 6 September 2011. On that occasion I made orders by consent in the Clarecastle Leave proceedings in relation to the costs as between the liquidators and others who had intervened as interested parties. The matters left in dispute were as between the liquidators and the Jasmic parties (namely, Jasmic, Mr James Shea and Mrs Jan Shea) and the dispute was both as to the form of the orders to be made dismissing the various applications for extension of time and as to the costs of the applications. I reserved my decision on those aspects. Further submissions have been made as to one aspect of the orders. I have considered those and now publish my reasons.
8In summary, I am of the view that orders should be made broadly in accordance with the orders suggested by the Jasmic parties (but with a carve-out to which I refer below) and that costs orders should reflect the mixed outcome of the Ladycare Leave proceedings and the dismissal of the Clarecastle Leave proceedings.
9I turn then to the reasons for my decision on the two issues before me. The background to the extension applications is set out in my earlier judgment and I do not repeat it here. For convenience, I have adopted the same definitions as used in that judgment.
(i) Form of orders
10There is no dispute between the liquidators and the Jasmic parties as to the terms of the order to be made granting the limited extension of time I indicated I was prepared to grant in the Ladycare Leave proceedings (81786 of 2010). Nor is there any dispute as to the making of an order that, save for that extension, the applications for an extension of time pursuant to s 588FF(3)(b) of the Act in the Clarecastle and Ladycare Leave proceedings should be dismissed. Those orders can therefore be made by consent.
11What is, however, the subject of dispute is the submission by the Jasmic parties that orders should be made in each of the three specific proceedings dismissing (otherwise than as to a claim the subject of the leave granted in the Ladycare Leave proceedings insofar as that be applicable in the respective specific proceedings) the applications for an extension of time in the identified prayers for relief in those proceedings (those being prayer 14 of the Originating Process in 81810 of 2010 (the Jasmic proceedings); prayer 9 in 81785 of 2010 (the LCIS IT proceedings) and prayer 11 in 81774 of 2010 (the Clarecastle Windsor Village proceedings)).
12Senior Counsel for the Jasmic parties (Mr Pritchard) places weight in this regard on the importance of the concession made at the outset of the hearing before me (which had led to the abuse of process argument not being run) and submitted that the orders now made should not permit the possibility of some further s 588FF extension application being made against his clients. He notes that there was no argument against the possibility that some form of amendment application might be made under the Uniform Civil Procedure Rules 2005 (NSW). (He also indicates that he would not argue against a 'carve-out' from the dismissal orders sought by the Jasmic parties in respect of a s 588FF application that the liquidators might seek to pursue in the three specific proceedings against any parties other than the Jasmic parties, though he does not suggest that this would be the appropriate course.)
13Counsel for the liquidators (Mr Condon) submits that the dismissal of the prayers seeking relief by way of an extension of time in the three specific proceedings is not warranted, since I had not precluded the grant of such relief in those proceedings. Reliance is placed on what I had said at [224] of my reasons. For convenience I reproduce below in full that, and the preceding, paragraph of my earlier judgment, highlighting the sentence on which reliance is placed by Mr Condon:
[223] Balancing the various considerations referred to above, my conclusion is that the applications for extension of time to commence voidable transaction proceedings in both the Clarecastle and Ladycare Leave proceedings should be dismissed other than in relation to the claim foreshadowed against Jasmic in paragraph [57] and [58] of the draft Statement of Claim (since I consider that the issues raised by it will be issues of the kind already raised in the proceedings on foot or which could be brought without leave).
[224] I note that this still leaves the liquidators in the position where there remain claims in relation to the conduct of the respective companies' affairs and it may well be that an extension of time in relation to particular transactions can be sought in the context of an application for amendment to the existing proceedings. Further, insofar as the applications for an extension of time in the 3 specific proceedings involve parties other than the Jasmic parties (who were not represented on this occasion) it seems to me that the findings above would not preclude an application for amendment of the existing proceedings to include claims against those parties and an extension of time in that regard (particularly since different issues relevant to the weighing of the delay and prejudice considerations might well arise in relation to those other parties).
14In that context, I note that I had earlier adverted to the possibility of an amendment application in the three specific proceedings at paragraph [6] of my reasons for judgment, when I added (after the passage referred to above where I outlined the basis on which I was proceeding, in effect, to hear the extension applications in all five sets of proceedings) the following parenthetical observation:
[6] ...(I should note, however, that I do not consider that this would preclude an application in the three specific proceedings for amendment of the process to encompass other claims arising out of the same or substantially the same facts as the subject of those proceedings, and which might raise claims for which leave under s 588FF(3)(b) is required, at least where those claims are against parties to whom notice of the present applications was not given.)
15Some or all of the Jasmic parties are the defendants in the three specific proceedings (in the Jasmic proceedings, the only defendants are the Jasmic parties; in the LCS IT proceedings, Mr and Mrs Shea are defendants and also LCS IT Pty Limited (the sole shareholder of Ladycare), which was not represented on the hearing before me; and in the Clarecastle Windsor Village proceedings, Jasmic and Mr Shea, but not Mrs Shea, have been joined as defendants).
16The claim in respect of which I granted an extension of time was a claim relating to a payment by Ladycare on 3 August 2006 of $623,252 to Jasmic (said to be a voidable transaction because it was entered into during the two years ending on the relation-back day), that was an uncommercial transaction and an insolvent transaction (as pleaded in [57] of the draft statement of claim) or (as pleaded in [58]) was voidable pursuant to s 588FF(4) or (5) or one that was entered into with intent to defraud creditors.
17At [89] of my reasons I said:
[89] As pointed out by Mr Pritchard, insofar as the draft pleading includes claims otherwise than voidable transactions with a standard 6 year limitation period (such as the claims under s 37A of the Conveyancing Act and directors' duty claims), no leave is required or, at the most, leave is required to amend in respect of pleadings already on foot in accordance with orthodox principles. In that regard, it has been said that s 588FF(1) operates to the exclusion of the general power in s 1322(4)(d) of the Corporations Act but does not exclude the operation of court rules which would allow the amendment of proceedings to include additional transactions ( Rodgers v Commissioner of Taxation (1998) 88 FCR 61; Davies v Chicago Boot Co Pty Ltd (No 2) (2007) 96 SASR 164).
18The submission put by the liquidators, as I understand it, in relation to the dismissal orders sought by the Jasmic parties is that where there are proceedings that are already on foot (namely, the three specific proceedings), in which (as is the case) an application for leave to extend time to bring claims has already been made within time, and it would be open to the liquidators (rather than seeking an extension of time under s 588FF to make an application in relation to a voidable transaction claim) to seek leave to amend the existing originating process to include another voidable transaction claim (and such an amendment might affect the Jasmic parties) then the liquidators should not be precluded from so doing. The concern, as I understood it, was that it might be necessary for the particular prayers seeking relief pursuant to s 588FF to remain in the originating process in order to preclude the later dismissal of an application for amendment on the basis that there was no leave sought to extend the time for the making of such a claim.
19Mr Pritchard confirmed that the Jasmic parties' position was that a general application for leave to amend might be made at any time under the Rules but that the liquidators should not be permitted to bring any further s 588FF extension application against them, those applications having now been determined (and he further confirmed that the Jasmic parties' position was that if any claim for which the liquidators might seek leave to amend required leave under s 588FF then they should not be permitted to raise it). As noted, Mr Pritchard emphasised that he said nothing against the liquidators' ability to seek leave to amend under Part 19 of the Uniform Civil Procedure Rules (although he also made clear that the Jasmic parties reserved their position in relation to any objection that might thereto be made).
20White J in New Cap Reinsurance Corp v Reaseguros Alianza SA [2004] NSWSC 787; (2004) 186 FLR 175, considering various issues in relation to the operation of s 588FF(3)(b) of the Act, addressed the question whether that section permitted the introduction of an otherwise statute barred claim by way of amendment to the pleadings under the Rules. (His Honour noted that, having regard to his findings on other issues, that question would only arise if he were of the view (which his Honour ultimately was not) that an extension of time for making an application under s 588FF(1) should not be granted.)
21The parties before his Honour had accepted that the discretionary considerations which arise under an application under s 588FF(3)(b) for an extension of time would be substantially if not wholly the same as those arising on an application for leave to amend. Nevertheless, his Honour noted that it was necessary to identify the source of the power to grant leave to amend which the plaintiff could invoke. In effect, a similar question arises in an hypothetical context in the present case, when considering whether, for the purposes of a later amendment application in the three specific proceedings, it would be necessary for the liquidators (as they fear might be the case) to rely upon the fact that an application for leave under s 588FF(3) had been made within the three-year time period.
22White J noted, at [41], the submission made by the defendant that unless an extension of time were granted under s 588FF(3)(b), no new application for an order under s 588FF(1) could be made by way of amendment to the statement of claim. His Honour rejected that submission and considered that he should follow the consistent body of authority (found in Rodgers v Federal Commissioner of Taxation (1998) 158 ALR 220; 29 ACSR 270; Star v National Australia Bank Limited [1999] NSWSC 305; (1999) 30 ACSR 583; Rambaldi v Dallbrook Pty Limited [2003] VSC 163; (2003) 21 ACLC 1190) to the effect that the proper meaning of the words "an application under subs (1)" where they appear in s 588FF(3) is "on the application by the liquidator for orders under the section" (not "on the filing of proceedings"). While his Honour considered that either construction of the words would have been open, he was not satisfied that the construction placed on the section by an intermediate appellate court (in Rodgers ) was plainly wrong and he therefore considered that he was bound to follow it, having regard to the principles espoused in Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at [492].
23At [49], White J concluded that:
The consequence is that the amendment powers in Pt 20, Supreme Court Rules have a different sphere of operation from s 588FF(3). (See Airlink Pty Ltd v Patterson (2003) 58 NSWLR 388 at 423-425; Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286; Rodgers v Federal Commissioner of Taxation (1998) 158 ALR 220 at 226-227).
24On the basis of his Honour's reasoning, the maintenance in the liquidators' originating process of a claim for relief under s 588FF(3) would not be determinative of an amendment application brought under the Rules (and hence the liquidators' concern in that regard would seem to be unfounded, at least in relation to any further claim that might be sought to be brought against the Jasmic parties). In other words, the line of authority reviewed by White J would suggest that the absence of leave (or an application for leave) under s 588FF(3) of itself would not preclude an amendment under the Rules to introduce a new claim in relation to a voidable transaction. This was made clear by Rolfe J in Star at [86], in the passage extracted by White J at [45] of his Honour's judgment in New Cap :
I have come to the view that the legislation and rules under which amendments are permitted in this Court are such that an application to amend a proceeding brought in compliance with s 588FF(3) may be granted, and that it is proper for me to follow the Full Court's construction of s 588FF(3) to the effect that it is not concerned with that topic, but only with the bringing of an original application. Far from being satisfied that it is wrong, I consider that it is correct and gives full rein to the extensive powers of amendment. The amendment provisions clearly have work to do, and they are unfettered by the restraints of s 588FF(3) places on the commencement of an original application. There is, accordingly, no inconsistency between s 588FF(3) and the amendment provisions of this Court.
25It was further made clear by White J's rejection (at [40]) of the proposition that the plaintiff in the proceedings before him could rely upon subsection 588FF(3)(b) as an independent source of power for the making of the proposed amendments.
26In that regard, I accept that the first sentence of paragraph [224] of my earlier reasons was infelicitously worded insofar as it suggested that an extension of time in relation to particular transactions might be sought in the context of an application for amendment to the existing proceedings. Rather, the position (following the decision in Rodgers and the reasoning in New Cap , and assuming for present purposes the correctness and applicability of those decisions) is that the fact that leave had not been sought under s 588FF(3) would not preclude the grant of leave to amend the existing proceedings to include another voidable transaction claim at least against an existing party to the proceeding (if the court on that occasion were to be satisfied that it was appropriate to grant leave to amend) even though the voidable transaction claim would otherwise be out of time.
27Mr Condon, however, submits that the reasoning of White J (echoed in other cases, including Davies v Chicago Boot Co Pty Ltd (No 2) [2007] SASC 12; (2007) 61 ASCR 289 per Gray J (with whom Sulan and Anderson JJ agreed) at [300] - [301]; and consistent with that of the High Court in Gordon v Tolcher [2006] HCA 62; (2006) 231 CLR 334 at [40]) does not mean that the particular prayers for relief under s 588FF(3) in the three specific proceedings are now otiose.
28It is submitted that relief under s 588FF(3) may still be of relevance in the event that the liquidators wish to join additional respondents to the proceedings, since in those circumstances the relation-back provisions in the Rules would have no role to play (referring to Rules 6.28 and 19.2(4)).
29Mr Condon refers to the recognition given by Gray J in Davies (and by Williams and Jerrard JJA in Greig v Stramit Corporation Pty Limited [2004] Qd R 17; [2003] QCA 298) to the distinction between an application to amend an existing cause of action (that had been commenced within the time limit prescribed by s 588FF(3)(a)) in order to add a new cause of action against an existing defendant (being the situation considered in Rodgers and Star and the situation that would arise potentially with the Jasmic parties) and an application for an extension of time to add a new party outside the three-year time limit. In Greig , in a passage cited by Gray J in Davies , Jerrard JA said (at [126]):
As Williams JA notes, there is authority for the proposition that an amendment can be made to a proceeding brought pursuant to s 588FF(1) within time, although the amendment is made after the expiry of the time limitations provided for by s 588FF(3). However, that authority distinguishes between amendment to a proceeding commenced within time, and the addition of a new defendant. In Rodgers the Full Federal Court cited with apparent approval the remarks of Clarke JA in Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 733, to the effect that there is a clear distinction between a case in which a defendant is added and a case in which an additional cause of action is raised against an existing defendant. ...
30Mr Condon submits that the need to join an additional party in the existing proceedings (by which I understand him to be referring to the three specific proceedings) may arise in at least two circumstances: first, where the liquidators may wish to join (and pursue claims against) additional parties; and, secondly, where the liquidators may need to join third parties whose interests may be affected if relief were to be granted (say, under s 588FF) in respect of impugned transactions. It is submitted that the need to join other parties may only become apparent at a later stage (such as, for example, on discovery and the exchange of affidavits). Thus, it is submitted, the relevant prayers of relief remain of utility and should not be dismissed.
31Mr Condon also notes that insofar as s 65(3) of the Civil Procedure Act 2005 (NSW) provides that an amendment made under that section (which deals with amendment, after expiry of a limitation period, to an originating process in proceedings commenced before the expiry of a relevant limitation period) takes effect as from the date on which the proceedings were commenced, it only operates unless the court otherwise orders. Hence, it is said that there remains a possibility that the Jasmic parties (or any additional proposed party) (once joined) might seek an alternative order in respect of the date from which the amendment should take effect and in that event, relief under s 588FF might be necessary (i.e. to allow the liquidators to seek an extension of time in circumstances where s 65(3) might not operate). Mr Condon notes that this concern would remain in relation to third parties even if the Jasmic parties were (which, having regard to Mr Pritchard's submissions, they emphatically do not) to undertake not to raise such an issue in the context of a later amendment application.
32The liquidators' position is that the dismissal of the relevant prayers for relief at this stage might preclude the liquidators from later seeking an extension of time under s 588FF(3) were that to be necessary in light of an order that otherwise precluded the operation of the relation-back provisions of the Civil Procedure Act .
33To the extent that it may be relevant, Mr Pritchard submits that the approach of White J is arguably incorrect and submits that in the present purposes this Court would not have power pursuant to ss 64 and/or 65 of the Civil Procedure Act to amend the three specific proceedings in order to raise a cause of action pursuant to s 588FF of the Corporations Act .
34Reference in that context is made to Rule 2.2 of the Uniform Civil Procedure Rules (which in its terms refers to an application not made in a proceeding already commenced by the filing of an originating process, thereby treating the "application" as something other than the originating process) and to the decision in Mephistopheles Debt Collection Service (a Firm) v Lotay [1994] 1 WLR 1064 at [1067] where it was said that any step taken in civil proceedings which amounts to a request to the court for some form of relief, interlocutory or final, is an 'application' in those proceedings for the purposes of an order that precluded any application in any civil proceedings by a person the subject of a "civil proceedings order". (To similar effect, albeit in a different context, is the judgment of Hodgson J, as his Honour then was, in Leue v Reynolds (1986) 4 NSWLR 590, where his Honour considered that references in s 41A(1) of the Wills Probate and Administration Act 1898 to the making of an application did not refer merely to the filing of the originating process but referred to "the whole process of making an application from the time of commencement of the proceedings up to the time of the making of a final order" (at p 597)).
35Mr Pritchard also submits that New Cap could be distinguished in this regard as it did not concern the current ss 64 and 65 of the Civil Procedure Act and nor did it concern circumstances where a "blanket" extension application had already been made and substantially failed.
36Both parties agree that any issue as to the correctness of the approach of White J in New Cap , such as that adverted to above, should not be determined hypothetically and should be left for the court hearing any later application for leave to amend in the three specific proceedings, should the issue there arise.
37I accept that the question whether the amendment power under the Rules permits the amendment of pleadings in order to allow a claim for which leave would otherwise have been necessary under s 588FF(3) had it been the subject of a fresh proceeding is one that should be left to the determination of the judge hearing any such application (in the evidentiary context and with the benefit of submissions in light of the provisions as they then stand) and I therefore do not express any view on that issue. However, in determining what orders should be made on the proceedings currently before me, I consider that the dismissal of the extension applications in relation to the Jasmic parties should not have the unintended effect of precluding the liquidators from later making an amendment application of the second of the two kinds considered in Davies (and having the issue there determined in a considered context and in light of the relevant facts in connection with the particular application then at hand).
38That said, as regards the Jasmic parties, who are existing parties to the three specific proceedings and in respect of whom an issue estoppel would surely arise on the extension applications as heard by me in the circumstances set out above, I consider that the orders for dismissal of those applications should be made. If there were to be an amendment application in those proceedings to add a new voidable transaction cause of action against one or more of the Jasmic parties, then it will be for the judge hearing that matter to determine, among other things, whether the determination of the extension application in the Jasmic parties' favour precludes any such amendment made under the rules. However, as between the liquidators and the Jasmic parties, there has been a finding on the extension applications in each of the five sets of proceedings and the orders now made should reflect that.
39Accordingly, I will make the dismissal orders as sought by the Jasmic parties but with amendment to make clear that this does not prejudice the ability of the liquidators to press for the relief contained in the respective prayers for relief against other potential defendants. (Otherwise I do no more than observe that, if the reasoning in New Cap is correct, this would not seem to prejudice the liquidators' ability to seek to invoke the Court's power to amend the existing proceedings in order to bring new voidable transaction claims against the Jasmic parties - though the Jasmic parties may in due course on any such amendment application seek to persuade the court that the reasoning in New Cap should not be followed or that for other reasons the amendment should not be permitted).
(ii) Costs
40The second issue in dispute was as to the costs orders to be made.
41There is a broad discretion in relation to the award of costs ( Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72). However, the general rule is that costs will follow the event. That requires a determination as to what is in fact the 'event'.
42In Windsurfing International Incorporated v Petit (1987) AIPC 90-441 , Waddell J, though referring with general approval to decisions to the effect that in recent years the approach had been that a successful party should have the whole costs of the proceeding, including the costs of an issue on which it has failed, unless in respect of that issue the successful party has "unfairly, improperly, or unnecessarily increased the costs" (at p 37,861-37,862), said:
It is, I think, probably generally accepted that the words 'follow the event' refer to the event of the claim or counter claim. However, it may be noted that in other contexts similar words have been held to refer to the event of distinct issues with the result that the general costs went to the party who on the whole succeeded in the action but that the other party got the costs of separate issues on which he succeeded.
43The decision of Waddell J in Windsurfing has been taken to be that in an appropriate case a costs order may be moulded to reflect the degree of success on distinct issues (see for example Lavender View Regency Pty Limited v North Sydney Council (No 2) [1999] NSWSC 775 per Rolfe J; Uniline Australia Limited (ACN 010 752 057) v Sbriggs Pty Limited (ACN 007 415 518) and Another (No 2 ) [2009] FCA 920 ; ( 2009) 82 IPR 56 per Greenwood J; Leallee v Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518 per Price J; Sahab Holdings Pty Limited v Registrar-General and Anor (No 3) [2010] NSWSC 403 per Slattery J at [36]).
44However, it is still necessary as a first step to determine what is the relevant event, as was made clear by Bergin CJ in Eq in Owners Strata Plan No 64970 v Austruc Constructions Limited (No 5) [2010] NSWSC 586, where her Honour (at [22]) recognised that in some cases there may be a number of events to be taken into account:
As can be seen from each of the judgments there were multi-parties and multi-issues and it is not a simple matter to identify the "event" that the authorities say costs should normally follow - Lenning v Alexander Proudfoot Co World Headquarters [1991] NSWCA 172; Hooker v Grilling (No 2) [2007] NSWCA 214, at 215. There were in this case a number of "events". However, it is necessary in making a costs order to take into account the principles enunciated in those cases that costs should follow the event but in cases where there are a number of events, it is necessary to take those events into account.
45The English Court of Appeal in Roache v News Group Newspapers Limited [1992] TLR 551 as cited by the Queensland Court of Appeal in Timms v Clift [1998] 2 Qd R 100 posed the question as to who is to be seen as the successful party "in the event" as being a question as to "[w]ho, as a matter of substance and reality, had won? Had the plaintiff won anything of value or anything he could not have won without fighting the action through to a finish? Had the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?"
46In Fexuto Pty Limited v Bosnjak Holdings Pty Limited (No 3) (1998) 30 ACSR 20, Young J (as his Honour then was), having noted that where there were multiple issues it may be appropriate for the court to assess the costs on each issue or make a reduction in the costs which the successful party obtains because of that party's losses on separate issues, said (at 22), in an approach cited by Barrett J in Golding v Vella (No 2) [2001] NSWSC 731 at [8]:
The cases, however, show that it is unwise to be too technical about what is meant by 'event' or 'issue' in this context. The judgment of Thomas J in Colburt v Beard (1992) 2 QD R 67 gives abundant examples which establish this point. In particular one does not look at issues as if they were pleaders' issues but approaches the matter with a broad brush . (my emphasis)
47In this regard, Mr Condon submits that the liquidators' costs of the extension application in the Ladycare Leave proceedings (or a large part thereof) should be borne by the Jasmic parties on the basis that the liquidators had enjoyed a measure of success in obtaining leave to pursue the claims foreshadowed in paragraphs [57] and [58] of the draft statement of claim, in which payment of a substantial sum (of $623,252) to Jasmic is in issue. He accepts that the applicants had failed in the Ladycare Leave proceedings to secure an extension in relation to other proceedings but submits that their success in relation to the claims for which leave had been granted was substantial and had been opposed by the Jasmic parties.
48It was submitted that since all of the matters advanced by the Jasmic parties were raised in opposition to the (successful) claim for an extension of time to bring the claim in relation to the payment of $623,252, they would necessarily have had to be considered in any event and hence no court time was wasted.
49It was also noted that the Jasmic parties were unsuccessful in both the Clarecastle and Ladycare Leave proceedings in their contention that the Court lacked power to grant an extension of time in relation to voidable transactions in general terms (i.e. without identification of the particular transactions or the particular defendants). This raised issues as to the ratio decidendi of BP Australia Limited v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322. On that preliminary issue, I accepted that Brown is authority (binding on me) for the proposition that there is power to make the orders as had been sought. (I also accepted that, insofar as the liquidators had identified the claims proposed to be made in relation to Ladycare, there was some comfort that this is not a 'shelf' application as such.)
50In that regard, although I accept that a not insubstantial part of the reasons for judgment [91] - [125] dealt with this issue, I do not recall that this occupied much of the hearing time (Mr Pritchard having dealt with this comprehensively in his written submissions and it being submitted by Mr Harper SC, broadly accepted by Mr Pritchard, that I was bound to follow Brown .) Therefore, while I accept that this was a discrete component of the controversy before the Court, I do not regard it as having been of sufficient temporal or evidentiary significance in the conduct of the hearing before me as to warrant it being separately taken into consideration, having regard to the broad brush approach advocated in Fexuto at [22] to which I have referred above.
51In relation to the Clarecastle Leave proceedings, Mr Condon submits that consideration should be given to the reserved costs of the appearance before Palmer J on 7 October 2010 (when his Honour acceded to an application for an adjournment of the hearing before him that had been made by Mr McCarthy, against whom an examination summons had issued, on the basis that it should await the then forthcoming committal hearing). Mr Condon submits that there should be no order for costs of that day, having regard to the fact that no fault could be directed towards the liquidators in that regard. (As appears from the transcript on that occasion, to which I was taken, the position of the Jasmic parties was that they neither opposed nor consented to the adjournment application). On this issue, Mr Pritchard's position is that costs should follow the usual practice as provided for under Part 42 Rule 7 in relation to reserved costs.
52In summary, therefore, the liquidators submit that they should have their costs (or a large proportion thereof) of the Ladycare Leave proceedings and should pay the Jasmic parties' costs of the Clarecastle Leave proceedings (in either case, with no order as to costs of the hearing on 7 October 2010) or, alternatively, that there be no order as to the costs of the claims.
53As to the costs issue generally, Mr Pritchard submits that the leave ultimately obtained was in respect of a claim in a draft statement of claim served on the morning of the second day of the hearing (the hearing having already been adjourned once due to the late service of affidavit material by the liquidator). It was submitted that Mr Pritchard, having only then received the statement of claim, was deprived of the opportunity to say, at an earlier time, that leave under s 588FF was not necessary (whether because of the ability to seek leave to amend under the Rules or otherwise).
54In that regard, the only claim for which leave under s 588FF was granted on the application made in the Ladycare Leave proceeding was (as noted above) the claim made in Part H of the draft pleading in relation to the recording of a journal entry in the books of the company for payment to Jasmic of $623,252. That was one of a number of journal entries in the period from June 2006, culminating in the allocation of transactions (including the $623,252 entry) to the loan account of Jasmic and the transfer of a much larger amount by Ladycare in purported discharge of its liability to Jasmic on 31 December 2006. To the extent that this is a claim that could have been brought in the Jasmic proceedings (in which issues as to the payment to Jasmic in June 2006 have been raised) then consistently with New Cap , that should arguably have been dealt with by an amendment application in those proceedings. The effect of the extension application in the Ladycare Leave proceedings was to permit the bringing (before October 2011) of a fresh application in relation to that claim.
55As I apprehend it, the substance of the complaint by the Jasmic parties is that the only matter on which the liquidators succeeded is one that could (or perhaps should) have been dealt with in the context of an amendment application in the Jasmic proceedings and that the liquidators in substance failed on the broad application that they made for a general extension of time in both the Ladycare and Clarecastle Leave proceedings. That said, I am not satisfied that this alters the fact that the liquidators have had a measure of success on the application made in the Ladycare Leave proceedings or that the costs so incurred have been so unreasonably incurred as to warrant refusal of an order for costs that might otherwise follow in the normal course.
56Mr Pritchard also submits that the evidence is that it is now a fully funded administration by the primary creditors interested in the outcome of the case so that no concern about making of the orders in an insolvent administration arises.
57It does not seem to me that this is a case where there were separate issues as such (of a kind, say, as was the case in LMI Australasia Pty Limited v Baulderstone Hornibrook Pty Ltd (No 2) [2002] NSWSC 72, where Barrett J considered the dominance of the respective issues and the extent to which the evidence overlapped as between those issues). Rather, leaving aside the Brown issue, the applications for leave to amend (both in the general and the specific proceedings) involved the consideration of the exercise of the discretion to extend time having regard to the factors outlined in New Cap (at [52]).
58A consideration of those factors led me to conclude that there had been a commercial decision by the liquidators not to progress at an earlier stage the investigations into the companies' affairs and that any (thereby self-inflicted) prejudice to the liquidators did not outweigh the presumptive prejudice to the Jasmic parties arising from the delay. The only exception to that was that I considered that there was not likely to be any real prejudice suffered by reason of the delay where the further voidable transaction claim arose out of the restructuring of Ladycare which was already the subject of existing claims (see [224]) and as to which evidence would presumably need to be given by the Jasmic parties in relation to those other claims.
59The relevant 'event' for the purposes of the costs application is the outcome of the application to extend time. The liquidators sought that grant in general terms. In that, they were unsuccessful. They did, however, obtain a limited grant. They thus succeeded albeit in a limited measure (in much the same way as a party seeking relief in a particular amount may be said to have success if it obtains an order for a lesser amount). I accept that, although the one 'event', there was a measure of success on both sides (and, as a matter of impression, I think it fair to say that there was a much greater success on the Jasmic parties' side of the ledger than on the part of the liquidators' side).
60I note that in Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 , Toohey J said:
It seems to me that the only basis on which it would be appropriate to depart from the general rule that costs follow the event, by reason of the circumstance that the appellant lost of what might be regarded as the dominant issue, is that the judgment is made that, had that issue been excluded then, although the dominant issue was not clearly separable, the costs incurred on the appeal would be likely to have been substantially less, perhaps because there was less at stake.
61I also note that it has been said that the discretion to apportion costs is one to be exercised only in the most exceptional of circumstances ( Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213).
62In Bowen Investments Pty Limited v Tabcorp Holdings Limited (No 2) [2008] FCAFC 107, Finkelstein and Gordon JJ nevertheless emphasised that (at [5]):
Costs are in the court's discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied.
citing also Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272 and Standard Commodities Pty Limited v Societe Socinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496.
63In Dodds Family Investments Pty Limited (formerly Solar Tint Pty Limited) v Lane Industries Pty Limited (1993) 26 IPR 261, also cited by the Court of Appeal in James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 (at [36]), Gummow, French and Hill JJ said (at [272]):
Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.
64Here, there is very much a mixed outcome (though I do not accept that this is a case where there were separate issues as such). The liquidators sought but did not obtain the extent of the relief that they sought. They did, however, obtain in the Ladycare Leave proceedings a limited grant of leave. What then would be a fair reflection of the overall outcome of the application, having in mind the criticisms made of the conduct by the liquidators of the proceedings (and, in particular, the lateness with which materials were served)? As far as the latter is concerned, the lateness of service of the affidavits in May led to the adjournment of the hearing of the Ladycare Leave application in May and, to some extent, costs thrown away thereby (although the Court time was employed in considering another application in relation to other parties in relation to Clarecastle). As to the fact that the liquidators succeeded ultimately on a claim only articulated on the resumption of the hearing, this might have been relevant if there was reason to believe that, had it been articulated earlier, a different position would have been taken by the Jasmic parties on the application before me, but it does not seem to me that I can assume that would have been the case.
65Balancing the above, and noting that in Bostik Australia Pty Limited v Liddiard (No 2) [2009] NSWCA 304, the Court of Appeal, referring to Dodds Family Investments at [272] and James at [36], again recognised that where there is a mixed outcome in proceedings the question of apportionment is very much a matter of impression depending upon "matters of impression and evaluation", I am of the view that on a broad brush basis the fair outcome would be that the liquidators pay the costs of the Jasmic parties of the Clarecastle Leave proceedings (without any carve-out for the reserved costs of the appearance before Palmer J) and that the Jasmic parties pay 40% of the liquidators' costs of the Ladycare Leave proceedings (not including any time for the 6 May listing) (and again without any carve-out for the costs of the 7 October 2010 appearance before Palmer J). I will so order.
66I note that the orders as proposed by Mr Pritchard sought that the costs be assessable and payable forthwith. The basis on which such orders will be made was considered by Einstein J in Idoport Pty Limited v National Australia Bank Limited and Ors, Idoport Pty Limited v Donald Robert Argus [2007] NSWSC 23. Here, the applications for extension are discrete applications and the hearing of the substantive matters may be some time hence. Therefore, I consider that it would not be inappropriate to make such an order and the same reasoning would apply in both the Leave proceedings.
67Finally, I would have preferred (in order to avoid further cost and expense on the part of the respective parties) to make an overall costs order in effect off-setting the costs in the respective Leave proceedings but as I have had no submissions as to what might be the appropriate set-off having regard to the ultimate costs orders in each, and there may be differences in the costs referable to each (noting that the Clarecastle Leave proceeding commenced on 6 May 2011 but the Ladycare Leave proceeding was not ultimately proceeded with until 29 May 2011). If the parties are able to reach agreement as to an appropriate set-off and wish to seek an amendment to the orders to give effect to that, then I will give liberty for them to approach my Associate within 14 days for an amendment of the costs orders by consent in that regard.
Orders
68For the reasons set out above, I make the following orders:
In proceedings 81786 of 2010 (the Ladycare Leave proceedings)
- Order, pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth), that the time for the bringing of a voidable transaction claim of the kind identified in paragraphs [57] and [58] of the draft Statement of Claim annexed to the affidavit sworn 29 June 2011 of Mr Charly Tannous in proceedings 81786 of 2010, against (inter alios) Jasmic Nominees Pty Limited, be extended to 5 October 2011.
- Save as above, the application for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) be dismissed.
- Order the Jasmic parties (as defined in these reasons) to pay 40% of the plaintiffs' costs of the application for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) (including, for the avoidance of doubt, the reserved costs of the attendance on 7 October 2010 before Palmer J) but not including any costs of the listing before me on 6 May 2011 in this matter, such costs to be as agreed or assessed and to be assessed and payable forthwith.
In proceedings 81756 of 2010 (the Clarecastle Leave proceedings)
- Dismiss the application for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth).
- Order the plaintiffs to pay the costs of the Jasmic parties (as defined in these reasons) of these proceedings (including, for the avoidance of doubt, the reserved costs of the attendance on 7 October 2010 before Palmer J), as agreed or assessed, such costs to be assessed and payable forthwith.
In proceedings 81810 of 2010 (the Jasmic proceedings)
- Dismiss, with no order as to costs, the plaintiffs' application in prayer 14 of the Originating Process filed on 1 April 2010 in these proceedings (insofar as it applies to a claim against the existing defendants but not otherwise) for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) within which any further claims must be made in respect of transactions made by the second plaintiff that involve the first defendant.
- For the avoidance of doubt, note this does not affect the leave granted in proceedings 81786 of 2010.
In proceedings 81795 of 2010 (the LCS IT proceedings)
- Dismiss, with no order as to costs, the plaintiffs' application in prayer 9 of the Originating Process filed on 1 April 2010 in these proceedings (insofar as it applies to a claim against either the second or third existing defendants but not otherwise), for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) within which any further claims must be made in respect of transactions made by the second plaintiff that involve the defendants.
- For the avoidance of doubt, note this does not affect the leave granted in proceedings 81786 of 2010.
In proceedings 81774 of 2010 (the Clarecastle Windsor Village proceedings)
- Dismiss, with no order as to costs, the plaintiffs' application in prayer 11 of the Originating Process filed on 1 April 2010 in these proceedings (insofar as it applies to a claim against the existing defendants but not otherwise) for an extension of time pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) within which any further claims must be made in respect of transactions made by the second plaintiff that involve the defendants.