Sion interveners' arguments
3 First, the application made by the administrators of Sion and Sinai for orders under s 600H(1)(b) was interlocutory and accordingly the Court has power to vary or set aside the judgment after it has been entered under r 39.05(c) of the Federal Court Rules 2011 (Cth). That proposition is uncontentious as the judgment related to an interlocutory matter.
4 Second, while the administrators opposed an order for costs being made in favour of the Sion interveners in relation to the hearing on 12 April 2018, they consented to an order being made for the Sion interveners' costs of the hearing on 18 April 2018. The Sion interveners submitted that they were concerned that the Court might not have taken into account this consent in light of the language used at paragraphs [50] and [59]-[60] of the judgment. For convenience, set out below are paragraphs [50] and [57]-[60]:
50 At the hearings on 12 April and 18 April 2018, on behalf of the Sion interveners, Ms Rao sought an order for costs to be paid as costs of the administration of Sion. The administrators opposed costs being awarded in relation to Ms Rao's appearance on 12 April 2018, but did not oppose an order being made in relation to her submissions dated 18 April 2018 and her appearance later that day. Mr McEwan did not seek an order for costs on behalf of the interveners who are said to be shareholders of Sinai at either hearing.
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57 Mr Golledge opposed Ms Rao's application for costs on 12 April 2018 on the bases that the Sion interveners undertook limited exposure to liability for costs when they applied to intervene and the assets available to creditors in the administration should not be required to bear the Sion intervener's costs. He relied on the decision of Barrett J in Re Pan Pharmaceuticals; Selim v McGrath [2004] NSWSC 129 at [20]:
These considerations, coupled with the emphasis by members of the High Court in Knight's case [Knight v FP Special Assets Ltd (1992) 174 CLR 178] on the extraordinary nature of the aspect of the general costs power that involves orders against non-parties, lead me to think that some very special factor outside the ordinary and expected course of events and engendering a justifiable expectation of compensation in the mind of the non-party would have to be found before any relevant aspect of the comprehensive jurisdiction with respect to costs might be regarded as properly and regularly invoked in favour of a non-party as against a party. In other words, such an award, if ever appropriate, will be extraordinary and exceptional. Someone who seeks and is granted leave under r 2.13(1) chooses a course entailing the limited costs exposure described in r 2.13(2). Such a person can have very little expectation of being awarded costs.
58 On 12 April 2018, Ms Rao noted that Brereton J had allowed such costs in [In the matter of SurfStitch Group Limited [2018] NSWSC 164]. Ms Rao also drew to the Court's attention to correspondence between the lawyers for the administrators and the lawyers for those interveners on a range of matters. Ms Rao submitted that the application to intervene had been necessitated by the administrators' failure to respond with sufficient clarity to their requests for information and that the interveners' submissions had had an impact on the form of orders made.
59 I was not satisfied that it would be appropriate to make the order sought by Ms Rao in relation to the hearing on 12 April 2018 and decline to do so. I am not satisfied that the intervention was necessitated by the nature of the dealings between them and the administrators. I do not think that the perspective of the Sion interveners added materially to the Court's consideration of the application on 12 April 2018. The mere fact that the Sion interveners appeared in their own interest and their submissions had some impact on the form of the orders does not, in the circumstances of this matter, justify burdening the administration with their costs of the application and hearing on 12 April 2018. I am persuaded that Barrett J's reasoning in Re Pan Pharmaceuticals at [20] should be applied in the context, despite the fact that Brereton J made such an order in Surfstitch; I note that Brereton J gave no reasons for making that order despite the comprehensive way in which he dealt with other matters.
60 It is undoubtedly true that Ms Rao's submissions filed on 18 April 2018 were of assistance to the Court in addressing the concerns raised with the administrators and the interveners. However, even though Mr Golledge advised that the administrators did not resist the order sought by Ms Rao, I am not satisfied that the order sought should be made. Although there are undoubtedly difficulties in the interpretation of ss 563A and 600H and the submissions filed on 18 April 2018 were required to address gaps in the material put to the Court on 12 April 2018, I am not persuaded that such an order is justified. I therefore decline to make an order that the Sion interveners' costs be costs in the administration of Sion.
5 Dr Austin, counsel for the Sion interveners on this application, submitted that the following facts all raise relevant considerations: the administrators consented to a costs order being made in favour of the Sion interveners, the administrators acknowledged that the Sion interveners' submissions were of "some substantial assistance" and the submissions were invited by the administrators. This submission was based on Mr Golledge's contributions to the following extract from the transcript of the hearing on 18 April 2018 (emphasis added):
MR GOLLEDGE: Your Honour should, though - this is by agreement, at least between the administrators and [the Sion interveners]. Your Honour has reserved on the small item that we have about costs. However, the administrators accept that the contribution to today's argument is a substantive one of the type recognised by Barrett J in [Re Pan Pharmaceuticals] that I handed up. And, your Honour, at the time of resolving the matter on which your Honour has reserved, and regardless of how that's resolved, the administrators consent to an order that the costs of those persons for whom Ms Rao appears, as agreed or taxed, should be paid from the assets of Sinai and Sion as expenses in those administrations.
HER HONOUR: So costs of last Thursday as well as today or just today?
MR GOLLEDGE: No, it's just today, your Honour.
HER HONOUR: Okay.
MR GOLLEDGE: I maintain - - -
HER HONOUR: I just wanted to have it made clear.
MR GOLLEDGE: Yes. I maintain the argument about that, but there has plainly been some - and, indeed, we invited it - some substantial assistance of the type that Barrett J recognised brings it within the exceptional or extraordinary category of a non-party obtaining a costs order.
MS RAO: I'm grateful to my friend. I would simply press my application for costs of last week. In my submission, it would be very artificial to try and draw a distinction between what happened last week and today. I attempted to take your Honour to recent correspondence. The correspondence is very static in the affidavit, but when your Honour - - -
HER HONOUR: I don't want to go over last Thursday.
MS RAO: No, but when your Honour reads it, you will see, in my submission, that - and I don't wish to be critical of anyone, but there has been, perhaps, less precision in consideration of all of the matters that we have now addressed on the part of the administrators in their correspondence. And we would have been in a position to grapple with these issues, and to set out what our clients' positions were if we had had a more helpful dialogue with the administrators.
HER HONOUR: I understand. Thank you.
6 Third, Dr Austin then submitted that this case should be differentiated from Re Pan Pharmaceuticals on the basis that the intervener's submissions in Re Pan Pharmaceuticals were made in its own interests and there was no "value added" element. Dr Austin submitted that the Court's observations made at [60] indicate that there was "value added" from the submissions made by Ms Rao on 18 April 2018. He says that courts order costs in favour of a non-party in cases where the submissions are useful to the court, even where the submissions made reflect the interests of the intervener. He relied on the following authorities:
(1) In Re HIH Casualty and General Insurance Ltd (2006) 58 ASCR 1; NSWSC 504 (HIH scheme approval judgment), Barrett J was called upon to consider whether a scheme of arrangement should be approved with or without conditions. At [15] his Honour described the intervener's submissions as being "central to the identification of the class-creating and non-disclosure difficulties" and that in the absence of those submissions "the point would not have been appreciated and a scheme that suffered from defects might well have been approved by the court".
(2) In an earlier judgment, Re HIH Casualty and General Insurance Ltd [2006] NSWSC 6 (HIH costs judgment), Barrett J considered whether to make an order for costs in favour of non-party interveners who had interests in different aspects of the scheme having regard to s 562A of the Corporations Act and s 116 of the Insurance Act 1973 (Cth). Dr Austin drew the Court's attention in particular to paragraph [14] but it is instructive to look at the reasoning at paragraphs [12]-[14] as follows:
12 It is fair to say, I think, that there were, in submissions before the court in the earlier stages of the proceedings, differing approaches to the compliance questions involving s.562A and s.116. There were also inconsistencies between the stances taken on legal issues in the various submissions. The questions were complex. Some of the answers given may yet require revision following judgment in the appeal in AssetInsure Pty Ltd v New Cap Reinsurance Corporation Ltd [2005] HCATrans 990 and 991 heard by the High Court on 7 and 8 December 2005. The submissions of all who made them - including Amaca/Amaba and Hazelwood/Latrobe - were of considerable value to the court and contributed in a material way to the formulation of a proposal in respect of which the court was ultimately willing to make orders under s.411(1). I intend no disrespect to ASIC when I say that its submissions, valuable and helpful as they were, would not alone have produced the outcome that eventually emerged. Nor, I think, would the individual submissions of any other entity appearing by leave. The outcome was one reached with the very great assistance provided by all submissions.
13 The materiality of their participation is, in the submission of Amaca/Amaba and Hazelwood/Latrobe, something that sets them apart from the creditors who applied unsuccessfully for costs in Pan Pharmaceuticals. Two of those creditors (Faulding and the Guild), in contrast to those with which I am here concerned, appeared to support or reinforce positions for which parties contended on the basis of full argument. They did not, in essence, add any special dimension to the store of material on the basis of which the court reserved its decision. Amaca/Amaba and Hazelwood/Latrobe, by contrast, made independent and separate submissions that proved highly relevant to the task of the court in reaching its decision.
14 I have come to the conclusion that the particular circumstances of this case warrant a costs order in favour of creditors who appeared by leave under rule 2.13(1) and now seek costs. They played the part of vigorous contradictors and while, to some extent, their role paralleled that of ASIC, they also put before the court matters of importance (generated by their own particular interests) which it is quite possible would otherwise not have been available. The issues were novel and complex. The court required assistance in many areas. In some of them, the parties exercising leave under rule 2.13 (1) were the principal source of that assistance. I accept the submissions of Amaca/Amaba and Hazelwood/Latrobe in these respects and am satisfied that special and unusual circumstances warranting a costs order have been shown.
7 Dr Austin also referred to Fletcher and Barnet, in the matter of Octaviar Ltd (receivers and managers appointed) (in liq) and Octaviar Administration Pty Ltd (in liq) (No 4) [2012] FCA 344 at [12] (Octaviar). In that case, Emmett J commences by acknowledging the power of the Court under s 43 of the Federal Court of Australia Act 1976 (Cth) to order costs in favour of a non-party and ends that paragraph by recognising that a person who seeks and is granted leave under r 2.13 of the Federal Court (Corporations) Rules 2000 (Cth) can have little expectation of being awarded costs. Dr Austin emphasised that, at [21], Emmett J recognised that, but for the intervention, there would have been no contradictor. Dr Austin accepted that it would be inappropriate to characterise the Sion interveners as contradictors; they supported the orders sought by the administrators. However, he noted that the Sion interveners acted in response to the Court's request for submissions to clarify the meaning of s 563A of the Corporations Act to supplement submissions made on 12 April 2018 and the Court acknowledged that it found the submissions helpful.
8 In response to a query from the Court, Dr Austin advised that the Sion interveners' costs of 18 April 2018 were in the order of $10,000 and he submitted that there were some quite sophisticated and complex matters of research which needed to be addressed and both counsel and instructing solicitors were involved in it.