Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited

Background 2 On 14 November 2018, on the ex parte application of the plaintiff ("liquidator"), I made an order pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth), requiring Hugh Ramon Massie to provide the liquidator with 48 hours written notice of any intention to leave Australia and ancillary orders. In particular, I made an order that the liquidator's interlocutory process dated 14 November 2018 ("interlocutory process") be made returnable before the Commercial and Corporations Duty Judge the following day, 15 November 2018. 3 On 15 November 2018, I noted the undertaking of Hugh Hamon Robert Massie ("Mr Massie") to the Court that he would attend a public examination on 28 November 2018 until otherwise excused. 4 I also made orders varying the orders made on 14 November 2018, in particular, to correct the name of Mr Massie; an order that Mr Massie provide to the liquidator and the Court a residential address in the United States of America together with evidence of such residential address for the period between 15 and 28 November 2018. The liquidator's interlocutory process was adjourned to 11 December 2018 before me.

Dismissal of liquidator's interlocutory process 5 In the interim, the public examination of Mr Massie was conducted before a Registrar of this Court. Consequently, by 11 December 2018, the relief claimed in the interlocutory process was otiose. To the extent that it had not already been granted, the liquidator therefore no longer sought the relief claimed in the interlocutory process and, accordingly, I dismissed the interlocutory process and ordered that the liquidator's costs and expenses of the interlocutory process be costs and expenses in the winding up of the company.

Mr Massie's application for a costs order 6 Mr Massie sought an order that the liquidator pay his costs of the interlocutory process on the basis that he had substantial success in defending the interlocutory process "albeit by consent". I declined to make that order. When proceedings have been resolved by consent and there is no substantive determination on the merits, the Court will not ordinarily award costs between the parties because there has been no "event" by reference to which the order can be made: see Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 at [2] and [3]. 7 Further, contrary to Mr Massie's contention, he was not substantially successful in defending the interlocutory process. To the extent that the liquidator sought relief, it was granted by consent. Otherwise, the interlocutory process was not pursued because it was otiose after Mr Massie attended his public examination. That circumstance does not warrant an order for costs in Mr Massie's favour, where it is not obvious that the liquidator would not wish to seek further relief or that he would not be entitled to further relief. Those matters could not be known until Mr Massie attended the examination. 8 This is not a case in which the liquidator effectively "surrendered" to Mr Massie: cf One.Tel Limited v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 at [6]. Rather, he achieved the substantive outcome sought by the interlocutory process, namely, Mr Massie's attendance at the public examination after obtaining partial relief by consent. 9 Mr Massie also argued that the liquidator should pay his costs of the interlocutory process because the application, to the extent that it was made, was unnecessary and therefore wasteful. In written submissions, Mr Massie relied upon the following matters in support of this argument: (1) He had in fact stated to the liquidator's solicitor, after an appearance before Registrar Segal on the morning of 14 November 2018 and before the liquidator made his ex parte application, that he would return to Court for the 28 November 2018 examination. It was not "reasonable" for the liquidator to suggest that there was a risk Mr Massie might not attend the 28 November 2018 examination when he had "clearly communicated" to the liquidator that he would do so. (2) He was not asked to provide the information as to his Australian residence prior to the filing of the interlocutory process and would have provided that information on request. (3) Mr Massie was never relevantly in breach of the Corporations Act 2001 (Cth) or the Federal Court (Corporations) Rules 2000. There was no default by Mr Massie at the time that the interlocutory process was filed. (4) The undertaking given to the Court on 15 November 2018 by consent was unnecessary because it could have no more force than the order made by Registrar Segal on 14 November 2018 requiring his attendance on 28 November 2018. (5) Mr Massie's appearance at Court on 15 November 2018 was necessary in order to correct the misdescription of his name in the 14 November 2018 orders. (6) The liquidator was given an indulgence to adjourn the interlocutory process from 15 November 2018 to 5 December 2018. 10 There was a factual dispute between the parties as to whether Mr Massie told the liquidator's solicitor on the morning of 14 November 2018 that he would attend the 28 November 2018 examination. Mr Massie made an affidavit deposing to his version of events. One of the liquidator's solicitors gave a contrary version of events, in two affidavits, including a file note of the relevant conversation. As I indicated to the parties, I was reluctant to review the substantial volume of affidavit material filed in order to make a finding on this question for the purpose of addressing a dispute about costs because it did not appear to be an appropriate use of Court resources: cf Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303 at [57] and [59]; Nichols at [8]. Counsel for Mr Massie, Mr Olson, ultimately accepted that it was not necessary for the Court to resolve this factual dispute. His point was that there was no risk of Mr Massie's non-attendance by the time of the ex parte application. 11 As indicated by the fact that I made orders on that occasion, on 14 November 2018 I was satisfied that the liquidator reasonably considered that he might apply to the Court for orders of the kind contained in the interlocutory process on the basis of Mr Massie's previously stated unwillingness to attend the 28 November 2018 examination. 12 At the ex parte hearing on the afternoon of 14 November 2018, the liquidator tendered email correspondence between the parties following the appearance earlier that day before Registrar Segal. The correspondence records the following: (1) On the morning of 14 November 2018, Mr Massie had made an oral application that he be required for examination on dates other than 28, 29 and 30 November 2018, and the Registrar had asked Mr Massie's counsel to contact the duty judge to arrange a hearing of that application. (2) Mr Massie did not wish to press the application and had instructed his lawyer, Mr Spinks, that he would attend the adjourned examination on 28 November 2018 as required. (3) The understanding of the liquidator's lawyer (with which Mr Spinks did not necessarily agree) that on 13 November 2018, Mr Spinks had "indicated" that Mr Massie would not attend the adjourned examination on 28 November 2018 as required because he needed to be in the USA on that day. (4) The understanding of the liquidator's lawyer (with which Mr Spinks did not necessarily agree) that, before the Registrar, Mr Massie's counsel had stated that Mr Massie would not be available on 28, 29 and 30 November 2018 (that is, a different position from the position that Mr Massie would attend on 28 November 2018). (5) The liquidator's concern that, despite his recent statement that he would attend the examination, Mr Massie may leave the jurisdiction and not return to be examined on 28 November 2018. (6) A suggestion that the liquidator's concern may be alleviated if Mr Spinks gave an undertaking in writing on behalf of Mr Massie that he would attend the examinations on 28 November 2018, as well as evidence that a return ticket had been purchased to enable Mr Massie to attend the examination. (7) Mr Spinks stated that Mr Massie was prepared to undertake to the liquidator that he would attend the examination on 28 November 2018. Mr Massie also agreed to furnish an electronic copy of an airline ticket showing that he would arrive in Sydney before 28 November 2018. 13 Accordingly, I did not accept that the ex parte application or the steps that were subsequently taken pursuant to the interlocutory process were unnecessary or wasteful. Even if the matters set out in (1) to (4) above were accepted, in the light of the evidence tendered by the liquidator on the ex parte application, they would not detract from that conclusion. 14 Nor did I accept that Mr Massie's appearance at Court on 15 November 2018 was necessary in order to correct the misdescription of his name in the 14 November 2018 orders. That error could have been corrected if the liquidator tendered evidence of the correct name. 15 Finally, I did not accept that the liquidator was given an "indulgence" by not being required to pursue all relief in the interlocutory process on 15 November 2018. Rather, as a matter of sensible case management, the interlocutory process was adjourned to a date after the scheduled public examination so that it could be invoked if circumstances warranted but could otherwise be dismissed with any necessary hearing on questions of costs.

Liquidator's costs application 16 The liquidator sought his costs of Mr Massie's unsuccessful costs application, arguing that those costs should follow the event. Although I accepted that the Court's discretion could properly be exercised in the liquidator's favour, on the other hand, the hearing was necessitated by the adjournment of the interlocutory process and the costs question was a short one. In those circumstances, I was not satisfied that I should enable continued disputation between the parties by making a further costs order. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.