Fewin Pty Limited v Prentice

MARKOVIC J: 1 There are two interlocutory applications before the Court for determination: (1) an application by the applicants, Fewin Pty Ltd (Fewin) and Ronald Michael Coshott (Mr Coshott), to file and serve a proposed amended statement of claim (Proposed Amended Statement of Claim) pursuant to r 16.51(4) of the Federal Court Rules 2011 (Cth) (Rules) or, alternatively, that Fewin and Mr Coshott have leave to file and serve the Proposed Amended Statement of Claim; and (2) an application by the respondent, Maxwell William Prentice, for a stay of the proceeding until costs of $189,888 (Costs Order) ordered in proceeding NSD1222/2015 (Proceeding NSD1222/2015) are paid or, in the alternative, that any leave that is granted to the applicants to file their Proposed Amended Statement of Claim be conditional on payment of the Costs Order into Court. 2 These applications were heard together. I address each of them in turn below.

background 3 Before turning to consider each of the interlocutory applications it is relevant to set out the following background information. 4 This proceeding arises out of the bankrupt estate (Estate) of Robert Gilbert Coshott (Robert Coshott). A sequestration order was made against Robert Coshott on 7 November 2008. There have been three different trustees of the Estate: the Official Trustee was trustee over two different periods; John Burke was trustee for a period of time; and Mr Prentice, the respondent to this proceeding, has been the trustee since 21 March 2013. Although Robert Coshott is now a discharged bankrupt, the administration of the Estate is ongoing. 5 On 30 March 2017 Fewin and Mr Coshott, who is a director of Fewin, commenced this proceeding by lodging an application in which they sought relief pursuant to ss 30, 178 and 179 of the Bankruptcy Act 1966 (Cth) (Act). Both Fewin and Mr Coshott are creditors of the Estate. Before proceeding further I note that, while s 178 and s 179 were repealed by the Insolvency Law Reform Act 2016 (Cth) Sch 1, Pt 2, item 54, the repeal and associated amendments did not come into effect until 1 September 2017 (see Insolvency Law Reform (Transitional Provisions) Regulation 2016 (Cth) reg 5(2)(p)). 6 On 27 April 2017 the Court ordered, among other things, that Fewin and Mr Coshott file an amended originating application and statement of claim. As Fewin and Mr Coshott failed to comply with that order, on 24 May 2017 a further order was made that they file and serve any amended originating application and statement of claim by 14 June 2017. 7 On 16 and 20 June 2017 Fewin and Mr Coshott respectively filed an amended originating application and statement of claim. In summary, in their amended originating application Fewin and Mr Coshott seek various orders and declarations in relation to Mr Prentice's conduct as trustee of the Estate including: (1) a declaration that Mr Prentice has failed to comply with s 64(1)(b) of the Act regarding the convening of a creditors' meeting and an order that he convene a creditors' meeting of the Estate, failing which he be removed as trustee of the Estate; (2) a declaration that Mr Prentice failed to comply with s 19(1)(d) and s 173(1) of the Act concerning provision of Estate accounts to Fewin and Mr Coshott and an order pursuant to s 178 of the Act that Mr Prentice provide or permit inspection of the Estate accounts to Fewin and Mr Coshott; (3) an order for inquiry into the conduct of Mr Prentice as trustee of the Estate pursuant to s 179 of the Act; (4) a declaration that the "withdrawal by [Mr Prentice] of his claim to remuneration on 20 January 2017 was irrevocable" or alternatively, if Mr Prentice revives his remuneration claim, an order that the process of taxation of Mr Prentice's remuneration be reinstated; (5) a declaration that the costs and disbursements charged to the Estate by Mr Prentice relating to legal proceedings were not incurred reasonably and for the purpose of the proper administration of the Estate; (6) a declaration that Mr Prentice should not be entitled to recourse to assets of the Estate for costs and disbursements relating to legal proceedings that were not incurred reasonably and for the purpose of proper administration of the Estate; and (7) an order that Mr Prentice personally pay the costs of the application on an indemnity basis without recourse to or indemnity by the estate. 8 On 24 July 2017 Mr Prentice filed his defence. 9 On 27 July 2017 the Court made orders, among others, for the filing and service of a reply and evidence by Fewin and Mr Coshott, and for the filing and service of evidence by Mr Prentice. 10 Since September 2017 Fewin and Mr Coshott foreshadowed an application to amend the statement of claim. On 19 October 2017 the Court made orders, among others, that Fewin and Mr Coshott file and serve any application for leave to amend their originating process and statement of claim by 26 October 2017 and on 30 November 2017 the Court made orders, among others, that Mr Prentice file and serve his application for a stay by 7 December 2017. Those interlocutory applications, which were subsequently filed, are described at [1] above.

Application to file the Proposed amended statement of claim 11 In support of their application to file the Proposed Amended Statement of Claim Fewin and Mr Coshott rely on an affidavit sworn by Robert Coshott on 21 November 2017. In that affidavit Mr Coshott gives evidence that in early September 2017 counsel for Fewin and Mr Coshott drew their attention to the decision in Young v Thomson [2017] FCAFC 140 (Young v Thomson) which was handed down on 1 September 2017 and that they then gave instructions to amend the statement of claim to include the additional duties of trustees in bankruptcy set out in that decision. 12 On 30 November 2017 Jim Lyons, the solicitor for Fewin, and Mr Coshott sent an email to Michelle Castle, counsel for Mr Prentice, and Nicholas Dale of Gillis Delaney, Mr Prentice's solicitors, attaching a copy of the Proposed Amended Statement of Claim which his clients sought leave to file. The Proposed Amended Statement of Claim is at pp 53-70 of exhibit ND1 to the affidavit of Mr Dale sworn on 7 December 2017. It supersedes the version annexed to Robert Coshott's affidavit. 13 Mr Prentice opposes the filing of the Proposed Amended Statement of Claim.

The Proposed Amended Statement of Claim 14 The Proposed Amended Statement of Claim is lengthy. I do not propose to set it out in full. There are numerous amendments throughout but at the heart of the amendments are [13A]-[13B], which are entirely new, and [14], which has been substantially amended, where Fewin and Mr Coshott set out the duties which they allege Mr Prentice owes. Those paragraphs provide: 13A. At all material times, the respondent had and has a duty to declare and distribute dividends of the estate amongst the creditors who have proved their debts with all convenient speed. Particulars Bankruptcy Act 1966, s 140(1) 13B. At all material times, the respondent had and has a duty, once all of the property of the bankrupt has been realised (or so much of it as can in his opinion be realised without needlessly protracting the trusteeship), to declare and distribute a final dividend. Particulars Bankruptcy Act 1966, s 145(1) 14. At al (sic) material times, the respondent owed and owes additional duties under the Bankruptcy Act 1966 (Act) or at general law: 14.1 to administer the estate as efficiently as possible and not to incur unnecessary expense to the estate; 14.2 to act diligently and prudently in the administration of the estate; 14.3 to not engage in litigation which was not for the benefit of the creditors or the estate; 14.4 not to take or distribute estate funds without approval or authority; 14.5 to maximise the dividend to creditors and the surplus of the estate; 14.6 to exercise his powers and perform his functions in a commercially sound manner; 14.7 to take an informed view of whether or not to exercise his discretion, including to either obtain the consent of majority of creditors under s177(1) of the Act or advice/directions from the Court under s134(4) of the Act before incurring significant liabilities or acting on a substantial matter affecting the interests of creditors; 14.8 to not act irresponsibly, capriciously or wantonly; 14.9 to take all reasonable and proper measures to obtain possession of the trust property, get in all debts and funds due to the trust estate, to preserve the trust estate and secure the trust estate from loss; 14.10 to execute the trust with fidelity and reasonable diligence; and 14.11 to conduct the affairs of the trust in the same manner as an ordinary prudent business person would conduct his or her own affairs. (original underlining)

Legal principles 15 A party may amend a pleading once without the leave of the Court at any time before the pleadings close. An amendment may also be made to plead a fact or matter that has occurred or arisen since the proceeding started: see r 16.51(1) and (4) of the Rules. Where the pleadings are closed, as is the case here, a party needs the Court's leave to amend: r 16.53. 16 The Court has a wide discretion to grant leave to amend which is to be exercised having regard to the overarching purpose set out in s 37M of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). In exercising this discretion, it is necessary to consider all of the circumstances of the case in order to achieve a just resolution of the proceeding: see University of Sydney v ResMed Limited (No 5) [2012] FCA 232 at [14]. 17 A relevant factor in considering whether to grant leave to amend is the desirability for the real issues between the parties to be properly identified and agitated: see Servcorp Ltd v Nuclei Ltd [2011] FCA 1229 at [11]. Other relevant considerations affecting the exercise of the discretion to grant leave to amend are: the explanation for any delay in making the amendment; the stage of the proceeding at which leave to amend is sought; the waste of public resources; and the potential for loss of public confidence in the legal system which arises if courts are seen to accede to applications made without adequate explanation or justification: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at [30] and [111]-[114]. 18 On an application for leave to amend considerations relevant to pleading requirements can arise. In Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66 at [21]-[22] Kenny J said that the Court "would not give leave to amend in respect of a pleading that was liable to be struck out" having regard to O 11 r 16, the predecessor to r 16.21 of the Rules. Order 11 r 16 provided that where a pleading had a tendency to cause prejudice, embarrassment or delay in the proceeding, the Court may order that the whole or any part of the pleading be struck out. Her Honour also observed that, while the Court had a wide discretion to allow amendments of a pleading in an appropriate case, if the matter that the amendment would raise was unlikely to succeed then leave would generally not be granted. 19 As to the purpose and standard of pleadings, in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287 Mason CJ and Gaudron J said: The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In liq.), per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. … (footnote omitted)

Parties' submissions 20 In support of their application to amend the statement of claim Fewin and Mr Coshott rely on the decision in Young v Thomson at [110]-[114] which they submitted expands the duties of trustees, including trustees in bankruptcy. They contended that those additional duties should be pleaded, that the Proposed Amended Statement of Claim pleads those duties and, relying on s 22 and s 37M of the Federal Court Act, that leave to amend should be given so that all matters in controversy between the parties may be completely and finally determined. 21 Fewin and Mr Coshott accepted that the amendment to [14.6] of the Proposed Amended Statement of Claim reflected the duty set out in s 19(1)(k) of the Act but submitted that the amendments at [14.7] and [14.9]-[14.11] referred to the duties identified in Young v Thomson. They said that the other amendments in the Proposed Amended Statement of Claim were a consequence of the pleading of the expanded duties and provide further detail. Fewin and Mr Coshott explained that: (1) the amendment by way of the addition of [45A] was a consequence of the amendment at [14.7] in that it was a way in which it was alleged that Mr Prentice failed to take an informed view of whether or not to exercise his discretion before incurring liabilities or acting on a substantial matter affecting the interests of creditors. The allegation in [45A] is that Mr Prentice breached the duty pleaded in [14.7] by commencing various proceedings without first obtaining the consent of creditors or directions from the Court; (2) the amendment by way of the addition of [54A]-[54K] appearing under the heading "Failing to administer the estate efficiently and promptly declare a dividend" is an allegation of a breach of the expanded duty of a trustee set out in [113] of Young v Thomson pleaded at [14.10]; and (3) the amendment by way of the addition of [59A]-[59B] appearing under the heading "Making substantial payment out of the estate without creditor or Court approval" is an allegation of a breach of the expanded duty of a trustee set out in [110] of Young v Thomson pleaded at [14.7] in that it is alleged that Mr Prentice incurred and paid certain expenses without first obtaining the consent of creditors or a direction from the Court. 22 There are also two other proposed amendments that fall outside the category of amendments said to be necessitated by the decision in Young v Thomson. They are: (1) the addition of [43A]-[43C] which Fewin and Mr Coshott submitted plead factual matters which have arisen since the commencement of the proceeding and in relation to which they rely on r 16.51(4) of the Rules; and (2) the deletion of [55]-[59] in relation to which no objection is taken. 23 Fewin and Mr Coshott submitted that it could not be said that Mr Prentice would suffer any prejudice by reason of the amendments. They noted that, rather than point to any prejudice, Mr Prentice seeks an order that if leave is granted to file the Proposed Amended Statement of Claim it be conditional on payment into Court of the Costs Order. They contended that, as a hearing date had not been allocated to the proceeding, any prejudice suffered by Mr Prentice would be limited to the need to file additional evidence to address the new allegations. 24 Fewin and Mr Coshott observed that, to the extent that Mr Prentice alleges that the Proposed Amended Statement of Claim in its current form is embarrassing, he had filed a defence and served a notice to admit facts and that, on the state of the current statement of claim, there was little left in contention between the parties. They also observed that, despite an order being made on 21 June 2017 permitting Mr Prentice to file any application he wished in relation to the statement of claim, he had not made any application to strike it out. 25 Mr Prentice submitted that the statement of claim in its current form is embarrassing and that the proposed amendments do not improve the pleading but make it worse. He submitted that leave to file the Proposed Amended Statement of Claim should be refused for the following reasons: (1) first, the statement of claim as filed and in its proposed amended form claims contradictory relief because in relation to the same subject matter it seeks an inquiry under s 179 of the Act and seeks declarations, damages and an account; (2) secondly, the proposed amendment to plead a duty to obtain the consent of creditors under s 177 of the Act (at [14.7], the heading above [45] and at [45A], [54K(h)], [59A]-[59B], [61.9.1] and [61.10.1]) has no basis in law and is hopeless and bound to fail. Mr Prentice submitted that, even if such a duty existed, Fewin and Mr Coshott would have to plead causation and damage which they have not done. He contended that there is no pleading which informs him of how it is said that the failure to obtain the consent of creditors led to damage and that, without pleading these matters, the pleading is embarrassing; (3) thirdly, again in relation to those paragraphs referred to at (2) above, the proposed amendment to plead a positive duty to approach the Court for directions under s 134 of the Act also has no foundation in law. Mr Prentice argued that s 134 is an enabling provision that allows the trustee to approach the Court and that neither the text of the section, nor any case law, give rise to the implication of a positive duty to approach the Court. Mr Prentice contended that, even if such a cause of action existed, Fewin and Mr Coshott would have to plead causation and damage, which they have not done, and that makes the proposed amendment embarrassing; (4) fourthly, proposed [13A] and [13B] plead a duty which does not exist at law as pleaded. Mr Prentice contended that the pleading fails to take into account s 140(2) of the Act which provides that the trustee's duty to declare a dividend is subject to "the retention of such sums as are necessary to meet the costs of administration to give effect to the provisions of [the] Act" and that, when that matter is taken into account, the claim is hopeless and bound to fail. Mr Prentice noted that this objection flows through to [54A]-[54K] and [61.4A]; (5) fifthly, at [61.11] and [62.12] orders are sought for the removal of Mr Prentice as trustee and for the appointment of Daniel Cvitanovic. Mr Prentice noted that, while a trustee can be removed for misconduct, the pleading does not inform him of the grounds of misconduct which are said to give rise to this relief. Mr Prentice contended that this is unfair, prejudicial and embarrassing and the amendment should not be permitted; and (6) sixthly, [61.14] is embarrassing in its scope and lack of particularity such that Mr Prentice does not know the case he is asked to meet and cannot properly plead to it or prepare appropriate evidence. Mr Prentice said that proposed [61.15] and [61.16] suffer from the same problem. As to [61.15] Mr Prentice said that the declaration sought relates to "all or some" of the legal fees and disbursements in 20 separate court proceedings, in which he was for the most part a respondent to proceedings commenced by the current applicants or members of the Coshott family. As to [61.16] it seeks an order that "some, or all" of monies paid in legal fees be reimbursed and does not particularise which monies it is said should be repaid and on what basis. Mr Prentice said that he is entitled to know so that he can prepare his defence in a sensible and rational way and so that he is afforded the fairness of knowing the case he has to meet. 26 Mr Prentice submitted that if leave to amend is refused then Fewin and Mr Coshott should not be given leave to attempt to re-plead because of their unacceptable delay and failure to prosecute the proceeding properly. If on the other hand the Court was minded to grant leave to Fewin and Mr Coshott to attempt to re-plead their case Mr Prentice would not object to the amendments he considers to be minor, being those at [11], [12], [13], [14] (chapeau), [14.1], [14.6], [14.8], [14.9], [14.10], [14.11] and [61.19]-[61.22].

Should the amendment be allowed? 27 Putting to one side [61] of the Proposed Amended Statement of Claim, the amendments sought by Fewin and Mr Coshott fall broadly into two categories: those at [14.7], the heading above [45], [14.9]-[14.11], [45A], [54K(h)] and [59A]-[59B] which rely on the decision in Young v Thomson and those at [11]-[13], [13A]-[13B], [14] (chapeau), [14.1], [14.6], [14.8], [43A]-[43C], [54A]-[54J], [54K(a)-(g), (i)-(l)] and the deletion of [55]-[59] which do not. I will deal with the two categories in turn. 28 At issue in Young v Thomson was entry into of a funding agreement by Louise Thomson, the former trustee of the property of the bankrupt, Leslie James Young. The appellant, Joanne Young, was the former wife of the bankrupt and was the most substantial creditor of his estate. Ms Young made an application under s 178 of the Act to set aside Ms Thomson's decision to enter into the funding agreement and under s 179 of the Act for an order that Ms Thomson be removed as trustee and for an inquiry into her conduct. That application was dismissed by the primary judge. On appeal a Full Court of this Court held that the primary judge erred and should have set aside the trustee's entry into the funding agreement. Fewin and Mr Coshott rely on [110]-[114] of the joint judgment of Siopis and Rares JJ where their Honours, after referring to the terms of s 178 of the Act and the nature of the discretion conferred on the Court by the section, said: 110 A trustee in bankruptcy is a trustee with all the fiduciary duties of a trustee under the general law, save to the extent that any such duty is modified or excluded by the Act: Re Fuller, a bankrupt; Fuller v Wily [1996] FCA 523 (Austlii MNC [1996] FCA 1593) at [58] per Sheppard, Spender and Hill JJ. Importantly, as their Honours explained, in reliance on Jacobs' Law of Trusts in Australia (Butterworths, 5th ed, 1986) at 375 [1609] (a passage repeated in the 7th edition at [1608]), because the trustee is exercising a fiduciary power, he or she has a duty to do so honestly (i.e. in good faith), to act upon genuine consideration, "that is to take an informed view of whether or not to exercise his [or her] discretion, and not to act irresponsibly capriciously or wantonly", and to exercise the relevant power with due consideration for the purpose for which it was conferred and not for some ulterior purpose. 111 A professional trustee should be particularly careful to act strictly within the line of the trustee's duty: Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149 at 165 per Starke, Dixon and Williams JJ. They held (at 164) that where a trustee had a statutory discretion to allow time for payment of a debt without being liable for any loss occasioned by doing so in good faith, the power: involves the exercise of an active discretion, not the mere passive attitude of leaving matters alone, and no relief is afforded where (as here) loss has arisen from carelessness or supineness: Re Greenwood; Greenwood v. Firth [(1911) 105 LT 509]; Godefroi on Trusts, 5th ed. (1927), p. 258. 112 Where a statutory trust exists, such as that created by the Bankruptcy Act, the trustee's powers and duties fall to be exercised in accordance with, or having regard to, the requirements of the legislation. And, that is a reason why the Court has the supervisory jurisdiction under s 178 over a trustee's acts, omissions or decisions. That jurisdiction exists so as to enable the Court to evaluate what order is just or equitable in the particular circumstances. In Adsett v Berlouis (1992) 37 FCR 201 at 208, Northrop, Wilcox and Cooper JJ held that a trustee in bankruptcy, who acts for remuneration, has a duty to bring reasonable skill to the performance of his or her duties. They said: The discharge of a public duty imposed by the Act is to be performed conformably with the requirements of that duty, but also conformably with the trustee's obligation to administer the estate in such a manner as to maximise the return from estate assets, and thereby to maximise satisfaction of the creditors' claims and any possible surplus for the bankrupt. (emphasis added) 113 Moreover, Northrop, Wilcox and Cooper JJ adopted (37 FCR at 209) the principles identified in Halsbury's Laws of England (Butterworths, 3rd ed) Vol 38, p 967, that a trustee must: • take all reasonable and proper measures to obtain possession of the trust property, get in all debts and funds due to the trust estate, to preserve it and secure it from loss; • take reasonable precautions to see the property is not stolen or lost by default; • execute the trust with fidelity and reasonable diligence; • conduct the affairs of the trust in the same manner as an ordinary prudent business person would conduct his or her own affairs. 114 In Frost [2009] FCAFC 20 at [8] Ryan, Mansfield and Jagot JJ said that, in exercising its jurisdiction under s 178: the Court will be slow to make orders which will have the effect of interfering in the day-to-day administration of a bankrupt's estate and, in cases involving an exercise of business or commercial judgment, will place considerable weight on the trustee's decision. Furthermore, a Court will not intervene under s 178 simply because the Judge forms a different view from that of the trustee. (emphasis added) (original emphasis) 29 Fewin and Mr Coshott also rely on [118] where their Honours said: For the reasons that follow, in our opinion, the primary judge erred in the exercise of her discretion to refuse to make an order under s 178(1) setting aside the funding agreement. Ms Thomson breached her duties under s 19(1)(d), (j) and (k) of the Act and her fiduciary duty to take an informed view of whether or not to exercise her discretion to enter into the funding agreement. She acted irresponsibly in doing so in circumstances where she had a conflict of interest and duty, having incurred liabilities in litigation of over $300,000 without directions, under s 177(1), from a meeting of creditors, or, under s 134(4), from the Court, that she should do so. Her evidence to the primary judge demonstrated that she had no grasp of the reasons why she had sought funding of over $100,000 in respect of the Brookfield proceedings or the issues in that litigation. Moreover, on the additional facts before the primary judge, Westpac was about to exercise its power of sale that would realise all the cash that Ms Thomson would require to conduct any litigation. 30 As submitted by Mr Prentice, there is nothing novel in these statements of principle. They draw together principles from long standing authorities. Fewin and Mr Coshott said that it was only upon publication of the reasons in Young v Thomson that they became aware of, and amended their claim to include, the additional duties now pleaded at [14.7]-[14.11] of the Proposed Amended Statement of Claim. However, the decision in Young v Thomson did not alter the position for trustees. It simply referred to and applied existing principles. It seems that it was not until the reasons of Siopis and Rares JJ in Young v Thomson drew together and applied those principles that the idea of the amendment germinated and Fewin and Mr Coshott took steps to amend the statement of claim. 31 The prospect of an amendment was notified approximately five months after commencement of the proceeding and the application to amend made a month after that. That was some considerable time after commencement of the proceeding but it was still at a relatively early stage in the proceeding given that Mr Prentice has not yet filed his evidence and the proceeding has not been set down for hearing. In those circumstances, it could not be said that Mr Prentice would suffer any significant prejudice by reason of the amendments other than the additional time that will inevitably be added to the proceeding by Mr Prentice's need to meet the amendment in terms of preparing an amended defence and any additional time required to prepare his evidence. 32 It is important and in the interests of the administration of justice that all claims relying on the same factual matrix be brought in one forum at one time. If that will be achieved by the proposed amendments then, subject to the substance and form of the pleading addressed below, it should be allowed. Fewin and Mr Coshott informed the Court that their evidence was complete and no further evidence would be required if the amendments were allowed, reinforcing the proposition that the amended claims arose out of the same facts that they relied on for the purpose of the statement of claim currently before the Court. I would infer that from their perspective the proposed amendments will not add to the length of time needed to prepare the matter for hearing. 33 The remaining question for the Court is whether, as Mr Prentice alleges, the amendments would not be allowed because they are bound to fail and/or are embarrassing. 34 Mr Prentice's principal complaint concerns the amendments at [14.7], the heading above [45], [45A], [54K(h)], [59A], [59B], [61.9.1] and [61.10.1] of the Proposed Amended Statement of Claim which he says distort s 177 of the Act by imposing an active duty on the trustee to seek consent and, as such, the claim is hopeless and bound to fail. He also contends that the amendments at [14.6] and [14.8]-[14.11] plead duties that existed before they were articulated in Young v Thomson and are not "new". Mr Prentice makes no other substantive complaint about these paragraphs. 35 At [14.7] of the Proposed Amended Statement of Claim (set out at [14] above) Fewin and Mr Coshott allege that Mr Prentice owed a duty to take an informed view of whether to exercise his discretion by seeking creditor approval or advice or directions from the Court before incurring significant liabilities or acting on a matter affecting the interests of creditors. 36 The circumstances which are said to give rise to an alleged breach of that duty are pleaded in two places. First, under the heading "Failing to obtain creditor or Court approval before acting on substantial matters affecting interests of creditors, and Inquiry into expenditure and conduct of trustee", it is alleged that each of the proceedings listed at [45] (of which there are 20) was of a substantial nature or involved substantial expenditure, such that Mr Prentice should have obtained creditor consent or sought direction from the Court before participating in them and that in each case he failed to do so, thereby breaching the alleged duty: at [45A]. Secondly, under the heading "Making substantial payments out of the estate without creditor or Court approval" at [59A]-[59B] it is alleged that Mr Prentice made certain payments to lawyers and to his firm which were of a substantial nature and in relation to which, before doing so, he ought to have, but did not, obtain creditor consent or directions from the Court. 37 As submitted by Mr Prentice s 177 of the Act does not in its terms impose a positive duty on a trustee to seek the consent of creditors. Rather, it imposes an obligation on the trustee to have regard to any lawful directions given by resolution of creditors at a creditors' meeting. Similarly, s 134(4) of the Act entitles a trustee to apply to the Court for directions in respect of a matter arising in connection with the administration of an estate - it does not impose an obligation on a trustee to do so. That said, the duty alleged at [14.7] is a duty to take an informed view of whether to exercise a discretion. At [118] of Young v Thomson Siopis and Rares JJ found that Ms Thomson had breached her fiduciary duty to take an informed view of whether or not to exercise her discretion to enter into, in that case, the funding agreement. The recourse by a trustee to s 177 and s 134(4) are ways in which he or she might come to an "informed view" in the exercise of their discretion. Accordingly, while I do not form a concluded view on the issue, in my opinion, the alleged duty at [14.7] is arguable. 38 Mr Prentice also alleges that those amendments are embarrassing because there is a failure to plead causation and damage. Fewin and Mr Coshott's response to this criticism of the Proposed Amended Statement of Claim was to suggest that Mr Prentice could seek particulars as required. I do not accept that submission. A party to a proceeding is entitled to know the case he or she has to answer. The Proposed Amended Statement of Claim does not plead causation, nor does it clearly indicate what relief is sought in relation to specific alleged breaches and the amount of their claim for damages. 39 I turn then to consider the amendments to [61] which sets out the relief sought. Putting to one side [61.5], [61.19]-[61.22] and [61.4A] which are addressed below, the amendments at: (1) [61.9.1]-[61.10.1] arise as a consequence of the amendments to [14.7] and [59A]-[59B]; and (2) [61.12]-[61.18] comprise declarations which in some cases lack any particularity, such that it is impossible to know or understand the precise nature of relief sought (e.g. [61.14]-[61.16]) and in other cases are difficult to reconcile with the alleged conduct which is said to breach the various duties owed (e.g. [61.12]-[61.13] and [61.17]-[61.18]). 40 Given the issues that arise concerning the lack of pleading of causation and damage I would not allow the amendment to [14.7], the heading above [45], [45A], [54K(h)], [59A]-[59B], [61.9.1] and [61.10.1]. Further, given the issues set out at [39(2)] above I will also not allow the amendments to [61.12]-[61.18] in their present form. However, I will grant leave to Fewin and Mr Coshott to amend the Proposed Amended Statement of Claim to address the issues raised. Fewin and Mr Coshott have not engaged in any conduct in relation to prosecution of the proceeding that would disentitle them from a grant of leave to amend. 41 I turn then to consider the amendments that do not rely on the decision in Young v Thomson. The first relevant amendments are at [13A]-[13B], [54A]-[54J] and [54K(a)-(g), (i)-(l)] and, in terms of relief, at [61.4A]. By those amendments Fewin and Mr Coshott allege that Mr Prentice has a duty to declare and distribute dividends and that he failed to perform this duty. The complaint made about that pleading is that it ignores the full effect of s 140 which permits a trustee to retain such sums as are necessary to meet the costs of the administration or give effect to the Act. As submitted by Mr Prentice that matter and the extent to which it applies in this case can be clarified by way of defence and in evidence. Accordingly, I will allow these amendments. 42 The next relevant amendments are at [43A]-[43C]. Those amendments are said to plead facts that have arisen since the commencement of the proceeding as permitted by r 16.51(4). No objection was taken to these amendments and I will allow them. 43 Finally, the amendments by way of deletion of [55]-[59] and at [61.5], in relation to which no objection is taken, and the minor amendments at [11]-[13], [14] (chapeau), [14.1], [14.6], [14.8]-[14.11] and [61.19]-[61.22] should be allowed. 44 For those reasons I will allow amendment of the statement of claim in part and grant leave to Fewin and Mr Coshott to re-plead to address the issues arising in relation to those amendments referred to at [40] above. 45 In oral submissions Fewin and Mr Coshott accepted that they would bear the cost of any amendment. Accordingly, I will make an order that they pay Mr Prentice's costs thrown away by reason of the filing and service of the Proposed Amended Statement of Claim in relation to the amendments which I have granted Fewin and Mr Coshott leave to re-plead and the amendments which I have allowed in their current form. Fewin and Mr Coshott should also pay Mr Prentice's costs of their application for leave to file and serve the Proposed Amended Statement of Claim.

application for a stay 46 Mr Prentice seeks a stay of this proceeding until such time as the Costs Order is paid or, in the alternative, an order that any leave granted to file the Proposed Amended Statement of Claim be conditional on payment of the Costs Order.

Proceeding NSD1222/2015 47 The Costs Order was obtained in Proceeding NSD1222/2015 which was commenced on 14 October 2015 by Fewin, Mr Coshott, Ljiljana Coshott (Mrs Coshott) and Robert Coshott (collectively, the Applicants) upon the filing of an originating application and statement of claim naming Mr Burke, the Official Trustee and Mr Prentice as respondents: see Fewin v Pty Ltd v Burke (No 3) [2017] FCA 693. 48 In the originating application the Applicants sought the following relief against Mr Prentice: (1) an inquiry into his conduct pursuant to s 179 of the Act; (2) that Mr Prentice not be entitled to remuneration or an indemnity for expenses from the Estate; and (3) that Mr Prentice compensate Robert Coshott and Mrs Coshott for loss and damage. 49 As the statement of claim was subsequently amended it is not necessary for me to set out its terms. 50 Proceeding NSD1222/2015 was set down for hearing for four days commencing on 5 September 2016 to address the question of whether there should be an inquiry pursuant to s 179 of the Act into the conduct of Mr Prentice (among others). On 16 August 2016 the Court made an order that the Applicants file and serve any application to amend their originating application and statement of claim by 30 August 2016 and that any such application be made returnable on 5 September 2016, the first day of the hearing. 51 On 6 September 2016, the second scheduled day of the hearing, the Court made orders, among others, dismissing the Applicants' claim for an inquiry pursuant to s 179 of the Act into the conduct of Mr Prentice; vacating the remainder of the hearing; granting leave to the Applicants to file and serve their amended statement of claim; and ordering the Applicants to pay Mr Prentice's costs of the application pursuant to s 179 of the Act on an indemnity basis, his costs thrown away by reason of the filing of the amended statement of claim and his costs of the Applicants' interlocutory application filed on 1 September 2016. 52 On 7 September 2016 the Applicants filed their amended statement of claim. At [20] of the amended statement of claim the Applicants alleged that Mr Prentice "owed duties, including duties pursuant to s 19 of the Act" to the creditors, the Estate and themselves to: aa. exercise reasonable care and skill; a. act diligently and prudently in the administration of the estate; b. maximise the dividend to creditors and the surplus to the bankrupt; bb. investigate and adjudicate proof of debt claims in a timely manner; c. avoid unnecessary expense to the estate and the applicants; d. act diligently and prudently in regard to offers for satisfaction of the admitted debts; e. not unreasonably obstruct or prevent an offer for satisfaction of the admitted debts being made; f. put any bona fide proposal for satisfaction of the admitted debts to the creditors for their consideration and approval; g. determine whether the estate includes property that can be realised to pay a dividend to creditors; h. determine whether the estate includes property that can be realised to pay a dividend to creditors; i. give information about the administration of the estate to a creditor who reasonably requests it; j. take appropriate steps to recover property for the benefit of the estate; k. take whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt's duties under the Act; I. administer the estate as efficiently as possible by avoiding unnecessary expense m. exercise powers and perform functions in a commercially sound way. (Trustee's Duties) (underlining omitted) 53 At [42a]-[42e] of the amended statement of claim the Applicants set out the conduct on the part of Mr Prentice by which they alleged he had breached the Trustee's Duties (as defined at [52] above) and their alleged loss and damage. 54 Proceeding NSD1222/2015 was set down for a five day hearing commencing on 12 December 2016. On the morning of 13 December 2016, the second day of the hearing, the Applicants sought and were granted leave to file an amended originating application and a further amended statement of claim. On the afternoon of 13 December 2016 the Applicants made an application for and were granted leave to discontinue the whole of Proceeding NSD1222/2015. The Court also made an order that the Applicants pay Mr Prentice's costs of the proceeding on an indemnity basis. 55 On 22 December 2016 the Applicants filed the further amended statement of claim in Proceeding 1222/2015 which removed Mrs Coshott as one of the Applicants and removed some of the claims made. The remaining Applicants (Fewin, Mr Coshott and Robert Coshott) alleged that Mr Prentice owed the duties set out at [20] of the further amended statement of claim (see [52] above) and then pleaded Mr Prentice's conduct, his alleged breaches and the loss attributable to those alleged breaches at [42a]-[42b], [42e]-[42f], [43e] and [45] as follows: CONDUCT OF [MR PRENTICE] 42a During his trusteeship of [Robert Coshott's] estate, [Mr Prentice] resisted and/or contested the assignment of debts owed by [Robert Coshott's] estate from [Fewin] to [Robert Coshott] in circumstances where: a. there was no discernible benefit to the estate; b. [Fewin] did not oppose the assignment or seek to assert any rights in relation to the assignment of debts; c. [Mr Prentice] did not discover [Fewin's] position in relation to the assignment of debts; and d. Had no reasonable basis to believe that the assignment of debts should be resisted and/or contested. PARTICULARS The judgment of Jagot J in Coshott v Prentice [2015] FCA 1224 of 2 November 2015. 42b During his trusteeship of [Robert Coshott's] estate, [Mr Prentice] failed to realise the Vardas Costs Order. PARTICULARS The Applicants repeat the particulars set out in paragraph 20(c) above. BREACHES BY [MR PRENTICE] 42e By reason of the matters pleaded in paragraphs 42(a), 42(b), [Mr Prentice] breached his Trustee's Duties. LOSS AND DAMAGE ATTRIBUTABLE TO [MR PRENTICE] 42f As a result of paragraph 42(a) above, [Mr Prentice] incurred significant and unnecessary costs, fees and disbursements. PARTICULARS Approximately $1.5m in legal fees as well as associated professional fees and disbursements were incurred by the estate arising out of and in relation to resisting and/or contesting the assignments including involvement in the following proceedings: a. Coshott v Prentice [2015] FCCA 241. b. Coshott v Prentice 2015 FCA 1224. c. Coshott v Prentice (No 2) [2015] FCCA 1670. d. Coshott v Coshott [2015] FCA 1284. 43e As a further result of the breaches of duty set out in paragraphs 42(b), by [Mr Prentice], [Mr Coshott's] Estate lost the chance of recovering the Vardas costs order. 45 In the premises, it is just and equitable that: a. [Mr Prentice] should not be entitled to remuneration and expense from the estate; b. [Mr Prentice] should make good the loss to the estate caused by his breaches of duty; and c. [Mr Prentice] should make good the loss and damage to the Applicants caused by his breaches of duty. (strike out and underlining omitted) 56 On 2 February 2017 the Applicants filed their notice of discontinuance pursuant to the leave granted on 13 December 2016. 57 On 23 June 2017, following a hearing which took place on 30 March 2017, the Court relevantly made the Costs Order, namely that, pursuant to r 40.02(b) of the Rules, Mr Prentice's costs, payable by the Applicants pursuant to Order 2 made on 13 December 2016, be fixed in the sum of $189,888. 58 By letter dated 27 June 2017 Gillis Delaney Lawyers, the solicitors for Mr Prentice, served a copy of the Costs Order on the solicitors for the Applicants. 59 On or about 11 July 2017 Mr Dale received a notice of appeal filed by Mr Coshott and Robert Coshott in which they appealed the Costs Order, among other things (Appeal Proceeding). Fewin and Mrs Coshott were named as fifth and sixth respondents respectively in the Appeal Proceeding. The hearing of the Appeal Proceeding took place on 22 November 2017. As at 18 December 2017, the date on which I heard the two applications in this proceeding, judgment was reserved in the Appeal Proceeding. 60 On 6 December 2017 Mr Lyons, the solicitor for Mr Coshott and Robert Coshott in the Appeal Proceeding, sent an email to the Court which stated: Dear associate • Please find attached Affidavit of Robert Coshott dated 6 December 2017. • We are unable to file the Affidavit at the moment as our scanner has a mind of its own and has converted the Affidavit from A4 to A3. • As we are unable to resolve our stay request amicably with the other parties satisfactorily, we ask that the matter be relisted before Justice Logan, but in the interim that a stay order be granted in chambers. 61 In response, the solicitors for Mr Prentice informed the Court, among other things, that Mr Prentice opposed any orders being made in chambers and wished to be heard when the application for a stay was listed for hearing. On 14 December 2017 Farrell J made an order dismissing Mr Coshott and Robert Coshott's application for a stay of the Costs Order. As at the date of the hearing of the applications before me, Mr Coshott and Robert Coshott had not obtained a stay of the Costs Order.

Legal principles 62 Mr Prentice's application for a stay of this proceeding until the Costs Order is paid is made on three alternate bases: (1) the Court's power under r 26.15 of the Rules; (2) the Court's general statutory powers in s 23 of the Federal Court Act and r 1.32 and r 1.33 of the Rules; or (3) to the extent necessary, the Court's implied power to control its own processes and prevent abuse of process. 63 Rule 26.15 of the Rules, the primary basis upon which Mr Prentice seeks a stay, gives the Court an express power to stay a proceeding for the non-payment of costs. It provides: An opposing party may apply to the Court for an order that a subsequent proceeding be stayed until the costs are paid if: (a) a party (the first party) discontinues a proceeding, whether in relation to the whole, or a part, of a claim for relief; and (b) the first party therefore becomes liable to pay the costs of an opposing party to the proceeding; and (c) before paying those costs, the first party starts another proceeding against the opposing party on the basis of the same, or substantially the same, cause of action as the cause of action on which the discontinued proceeding was based. 64 I was not taken to any decision of this Court in which the operation of r 26.15 of the Rules had been considered but some assistance is provided by decisions of the Supreme Court of New South Wales which have considered the operation of r 12.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) which is in similar terms to r 26.5. 65 In Hutchinson v Nominal Defendant (1972) 1 NSWLR 443 (Hutchinson) Isaacs J considered whether an order that stayed a proceeding on terms that the plaintiff pay the taxed costs of an earlier proceeding or provide security for those costs should be varied, suspended or discharged. In considering the application, his Honour noted at 450 that the making of an order staying a second action until the costs of the first have been paid "prevents the injustice to the defendant of being saddled twice with unpaid costs". The underlying policy for such an order referred to in Hutchinson was cited by Gleeson JA in Pi v Zhou [2016] NSWCA 148 at [17] (overturned in Pi v Zhou [2017] NSWCA 16 but not in relation to the statement cited) where his Honour considered an application for a stay pursuant to r 12.4 of the UCPR or s 67 of the Civil Procedure Act 2005 (NSW). 66 In CGU Insurance Ltd v Watson (as trustee of the deed of arrangement in respect of Greaves) [2007] NSWCA 301, the New South Wales Court of Appeal considered an appeal from an order dismissing an application pursuant to r 12.4 of the UCPR. The appellant had applied for a stay of the respondent trustee's proceeding until the costs of an earlier proceeding (in which costs had been awarded in the appellant's favour against Mr Greaves who discontinued the proceeding) were paid. The primary judge dismissed the application because the proceeding brought by the trustee was not based on the same or substantially the same cause of action as that on which Mr Greaves had brought his proceeding. 67 Giles JA (with whom Spigelman CJ and Basten JA agreed) considered the meaning of the term cause of action as used in r 12.4 of the UCPR. At [43]-[44] Giles JA said: 43 … In an application pursuant to r 12.4, however, the words of the rule must govern. Avoidance of abuse of process may underlie and inform the meaning and application of the rule, but it is necessary in the first instance to identify the causes of action in the two proceedings; then it must be asked whether they are the same or substantially the same; and then there is a discretion ("the court may stay … ") whether or not to stay the second proceedings until the costs of the first proceedings have been paid. 44 Use by r 12.4 of "cause of action" brings something of a mare's nest. Instead of the relatively flexible concept of abuse of process, consideration of a stay requires identification of causes of action; even the room allowed by "substantially the same" requires the identification. What is meant by cause of action is notoriously difficult. Further, proceedings for declaratory relief (as Mr Greaves' proceedings were in part) may not be proceedings on a cause of action as ordinarily understood. The rule can be difficult to apply, and it may not extend, or readily extend, to the full range of proceedings which can be brought. 68 His Honour then referred to the decision of the New South Wales Court of Appeal in Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 and, after summarising the facts of that case, said at [48]: The reasons of Clarke JA, with whom Priestley JA relevantly agreed, were extensive. I take from them in part the following - • there can be added to the forms of words those of Diplock LJ in Letang v Cooper (1965) 1 QB 232 at 243, referred to by Lord Goff in Republic of India v India Steamship Co (1993) AC 410 at 419, to the effect that a cause of action consists of the minimum facts which a plaintiff is required in law to plead and (if traversed) prove in order to obtain the relief he claims; this is similar to the statement by Williams J in Carter v Egg and Egg Pulp Marketing Board (Vic) (1942) 66 CLR 557 to which Brennan J referred in Port of Melbourne Authority v Anshun Pty Ltd (at 558); • a technical approach should not be taken; the doctrine of res judicata is concerned with substance not form, and where parties plead facts without identifying the cause of action "it is far more helpful to focus on the facts which are said in each instance to support the right of relief" (at 558-9); • as to the approach of focussing on the facts - That was the approach of Lord Goff in Republic of India v India Steamship Co and it seems to me to accord with the weight of authority. In that case both claims arose out of the single incident and it was said that different breaches of contract had been committed. Lord Goff acknowledged that there might have been more than one breach of contract but found against the plaintiff because 'the factual basis relied upon by the plaintiffs as giving rise to the two breaches is the same'. … What I think is necessary is an examination of the factual circumstances relied upon to establish the right to relief in each case in order to determine whether there is a sufficient identity between them to found the conclusion that the same cause of action was in question in both cases. One matter which may be of importance in contract cases is whether, in substance, both actions are based on breaches of a particular term in a single contract. This factor may be conclusive in some cases while in others it may not be. (at 559) 69 In Morgan v Banning (1999) 20 WAR 474 a Full Court of the Western Australian Supreme Court considered the meaning of the term "cause of action" in the context of considering limitation issues. Wheeler J (with whom Ipp J agreed) referred at 484 to the definition of cause of action formulated by Diplock LJ for limitation purposes in Letang v Cooper [1965] 1 QB 232 as follows: "A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the 'form of action' by which the remedy was obtained and the particular kind of factual situation which constituted the cause of action." His Lordship observed of the Judicature Act (at 243): "…it was convenient for lawyers and legislators to continue to use, to describe the various categories of factual situations which entitled one person to obtain from the court a remedy against another, the names of the various 'forms of action' by which formally the remedy appropriate to the particular category of factual situation was obtained." However, his Lordship warned that it must be remembered that the name of an old form of action could be considered to be no more than a convenient and succinct description of a particular category of factual situation; to forget this would, he said, "encourage the old forms of actions to rule us from their graves." 70 Her Honour continued at 484 noting that the Full Court of the Western Australian Supreme Court had recently considered "the question of what constituted a 'cause of action' for limitation purposes, in order to determine whether an action for a declaration could be considered a 'cause of action'". The Court had found that in the context of that case difficulty had arisen due to a confusion between the old forms of action and the concept of a "cause of action". Accordingly, her Honour said: … In order to avoid confusion so far as possible, I propose in what follows to use the expression "cause of action" in order to describe merely a factual situation which will entitle a person to approach the court for relief, and "form of action" to refer to the old categories of action, several of which might be capable of arising out of one factual situation. 71 Owen J also agreed with the reasons of Wheeler J but added his own comment. At 476 his Honour, referring to the issue that allowing an amendment would, in some cases, have the effect of subverting the limitation statute, said: This issue falls away if the phrase "cause of action" in O 21, r 5(5) is understood in a narrow sense as meaning the basket of facts which give rise to the right to approach the court for relief rather than as the description of the right to sue by reference to the old forms of action. 72 Mr Prentice's second alternate basis for the granting of a stay of this proceeding relies on s 23 of the Federal Court Act which gives the Court power in relation to matters in which it has jurisdiction to make orders of such kind, including interlocutory orders, and to issue or direct the issue of writs of such kind as the Court thinks appropriate. 73 Rule 1.32 of the Rules provides that the Court may make any order that it considers appropriate in the interests of justice and r 1.33 of the Rules provides that the Court may make any order subject to any conditions it considers appropriate.

Parties' submissions 74 As I have already noted, the primary basis upon which Mr Prentice applies for a stay of the proceeding is pursuant to r 26.15 of the Rules. Mr Prentice submitted that the Court has power under r 26.15 to grant a stay and that if it finds that the circumstances of this case meet the description in that rule, that is by satisfying the first, second and third limbs of r 26.15, then the Court's discretion is enlivened. The Court may then exercise the discretion taking into account any relevant factors. 75 Mr Prentice submitted that four questions arose for the Court's determination: (1) whether the fact that only two of the four applicants in Proceeding NSD1222/2015 are applicants in this proceeding has any consequence; (2) whether the fact that this proceeding, which was commenced on a narrow basis not involving the issues in Proceeding NSD1222/2015, meets the statutory description of "starts another proceeding against the opposing party"; (3) whether the current proceeding is brought "on the basis of the same, or substantially the same, cause of action" on which Proceeding NSD 1222/2015 was based; and (4) whether the fact that this proceeding seeks relief which was not sought in Proceeding NSD1222/2015 precludes an order being made under r 26.15. 76 Mr Prentice submitted that as r 26.15(a) refers in its terms to "a party" and "a cause of action", the Court should consider and analyse the matter according to each party and each cause of action. That is, it is not the case that, because Proceeding NSD1222/2015 involved four applicants and this proceeding was commenced by only two of those four applicants, the rule is not enlivened. Mr Prentice also submitted that Fewin and Mr Coshott each discontinued Proceeding NSD1222/2015 and, as a result, they each became liable, both jointly and severally, to pay Mr Prentice's costs thus satisfying r 26.15(b). 77 Mr Prentice submitted that the third limb, r 26.15(c), has three conditions that have to be satisfied: (1) he contended that the first condition is satisfied as the Costs Order has not been paid; (2) he submitted that the second condition is also satisfied because it did not matter that this proceeding was only against Mr Prentice while Proceeding NSD1222/2015 involved two additional respondents, Mr Burke and the Official Trustee; and (3) he observed that satisfying the third condition, which requires that the second proceeding be based on the same, or substantially the same, cause of action as the cause of action on which Proceeding NSD1222/2015 was based, raised a more difficult issue. That is, whether or not the Court finds it necessary for there to be complete commonality of causes of action upon which the two proceedings are based. 78 In relation to the third condition, Mr Prentice submitted that there was commonality of some but not all of the causes of action in each proceeding. He further submitted that, based on its text, subr (c) was not only intended to apply where there was one cause of action in the first proceeding and one cause of action in the second; nor was it intended that there be identity of causes of action between the two proceedings. Rather, Mr Prentice submitted that the wording of subr (c) gives rise to an analysis which is ad seriatim - that is, one considers whether an identified cause of action in the first proceeding has been re-pleaded as the same or substantially the same cause of action in the second proceeding. Mr Prentice said that in undertaking that exercise it may be that some of the causes of action in the first proceeding are not repeated in the second proceeding and that there may be additional causes of action in the second proceeding not pleaded in the first. Upon an analysis of Proceeding NSD1222/2015 and this proceeding, Mr Prentice submitted that r 26.15(c) was satisfied. 79 In relation to the exercise of the discretion, Mr Prentice further submitted that while as between Fewin and Mr Coshott, on the one hand, and himself, on the other, there are a number of costs orders, the balance is in his favour and there is no reason why the Court would not exercise its discretion to grant the stay. 80 Fewin and Mr Coshott did not take issue with Mr Prentice's interpretation of r 26.15. They focussed on r 26.15(c) and submitted that Proceeding NSD1222/2015 and the present proceeding are not substantially the same. They contended that: (1) the parties to Proceeding NSD1222/2015 are not the same as those in this proceeding; (2) the relief sought in Proceeding NSD1222/2015 does not match the relief sought in this proceeding; (3) the great majority of the statement of claim in Proceeding NSD1222/2015 was against respondents who are not parties to this proceeding; (4) there is a different factual matrix or basket of facts in Proceeding NSD1222/2015 and this proceeding. A significant part of Proceeding NSD1222/2015 was directed towards the former trustee, Mr Burke, and towards Mr Prentice in his early period as trustee; (5) this proceeding as amended relies on Young v Thomson which substantially expanded the duties imposed on trustees and raises new obligations not previously pleaded in Proceeding NSD1222/2015 as a new basket of facts or the same basket of facts but applied to new causes of action; and (6) there are causes of action pleaded in Proceeding NSD1222/2015 which are not pleaded in this proceeding and issues raised in this proceeding which were not raised in Proceeding NSD1222/2015. 81 Fewin and Mr Coshott submitted that the relief sought by Mr Prentice is discretionary. They noted that this proceeding was commenced on 30 March 2017, that in June 2017 they filed amended pleadings and that on 21 July 2017 the Court ordered Mr Prentice to file any application he intended to make in the proceeding having regard to the statement of claim by 24 July 2017 but that no application was filed. They also observed that the Costs Order was the subject of a reserved decision in the Appeal Proceeding and that Mr Prentice owes them costs from judgments totalling $172,647.71 as a result of the taxation of costs in proceedings NSD786/2015 and SYG2055/2013 in addition to their costs in NSD25/2016 which are yet to be quantified. 82 Fewin and Mr Coshott submitted that Mr Prentice refers to other costs orders against them which have not been paid, the amounts of which are not stated, and does not disclose the unpaid judgments against him, nor the substantial amount of the costs ordered against him in NSD25/2016. They contended, without providing any evidence, that Mr Prentice owes them an amount which exceeds the amount they owe Mr Prentice. Despite Fewin and Mr Coshott's written submissions filed on 15 December 2017 stating that the certificates of taxation issued in proceedings NSD786/2015 and SYG2055/2013 and an amended party and party bill of costs in NSD25/2016 were attached to their submissions, no attachment was filed.

Should this proceeding be stayed pending payment of the Costs Order? 83 There is no dispute between the parties as to the proper construction of r 26.15 and, to the extent they may disagree because the Applicants in Proceeding NSD1222/2015 are not the same as the applicants in this proceeding, I accept Mr Prentice's submissions as to the construction of r 26.15. 84 Rule 26.15 should be construed to apply separately to each party who brought the first proceeding. The rule uses singular language referring, for example, to "a party", "a claim for relief" and "an opposing party". That being so, the rule is not limited in its application to circumstances where there is one party to the first proceeding and that same party commences the second proceeding; nor is it limited to circumstances where there is a group of applicants that are treated as a party to the first proceeding, such that the same group of applicants must commence the second proceeding. To confine application of the rule to those circumstances would impose too narrow a construction on the rule. The rule can apply where there are multiple parties to the first proceeding provided that one of those parties is also a party to the second proceeding. The same construction would apply to the term "opposing party". 85 Applying that construction to the present circumstances: (1) first, the fact that only two of the Applicants to the first proceeding, Proceeding NSD1222/2015, are applicants in this proceeding does not take this proceeding beyond the ambit of r 26.15. Each of the Applicants to Proceeding NSD1222/2015 was a party to that proceeding; each of the Applicants to Proceeding NSD1222/2015 discontinued that proceeding; and each is to be considered separately. Thus, Fewin as a party to Proceeding NSD1222/2015 discontinued the whole of that proceeding and has commenced this proceeding as the first named applicant. Similarly, Mr Coshott as a party to Proceeding NSD1222/2015 discontinued the whole of that proceeding and has commenced this proceeding as the second named applicant; (2) secondly, the Applicants in Proceeding NSD1222/2015 are each jointly and severally liable for the Costs Order. Their liability arose on 13 December 2016 when an order was made that the Applicants pay Mr Prentice's costs of Proceeding NSD1222/2015 on an indemnity basis. The fact that those costs were later quantified, resulting in the Costs Order, does not alter the fact that the Applicants' liability arose on 13 December 2016. To the extent they are severally liable, both Fewin and Mr Coshott are each liable for the Costs Order as are each of the remaining applicants; and (3) thirdly, before satisfying the Costs Order, Fewin and Mr Coshott each commenced this proceeding. 86 Thus, the requirements of r 26.15(a) and (b) and the first and second conditions of subr (c) are satisfied. That is, Fewin and Mr Coshott, among others, discontinued Proceeding NSD1222/2015; they became liable to pay Mr Prentice's costs of Proceeding NSD1222/2015; and before paying those costs, they commenced this proceeding against Mr Prentice. 87 The issue between the parties concerns the third condition of subr (c) and whether Proceeding NSD1222/2015 and this proceeding raise the same or substantially the same causes of action. In addressing this question the parties' submissions focussed on a comparison between the further amended statement of claim in Proceeding NSD1222/2015 and the Proposed Amended Statement of Claim. Accordingly, below I consider whether Proceeding NSD1222/2015 and this proceeding raise the same or substantially the same causes of action by reference to those versions of the pleading in each proceeding. 88 Resolution of this issue requires consideration of the factual circumstances or the basket of facts relied upon to ground the relief sought against Mr Prentice in both Proceeding NSD1222/2015 and in this proceeding. I should say at the outset that, contrary to a submission made by Fewin and Mr Coshott, the fact that Proceeding NSD1222/2015 raised additional causes of action against other respondents does not affect the analysis. What is relevant is the causes of action pleaded against Mr Prentice in Proceeding NSD1222/2015. The question for the Court is whether the causes of action pleaded in this proceeding in the Proposed Amended Statement of Claim are the same or substantially the same as those pleaded in Proceeding NSD1222/2015. 89 In the course of argument counsel for Mr Prentice prepared a document which was marked MFI1 in which she identified those parts of the further amended statement of claim in Proceeding NSD1222/2015 and the Proposed Amended Statement of Claim in this proceeding which, in her submission, were similar or the same. With the assistance of MFI1 and based on my own analysis it is evident that: (1) Fewin and Mr Coshott are described in the same terms and are identified as creditors of the Estate and sue in that capacity in both proceedings; (2) the duties alleged to be owed by Mr Prentice pleaded at [20(a)]-[20(b)], [20(c)], [20(i)] and [20(l)] of the further amended statement of claim in Proceeding NSD1222/2015 are pleaded at [13], [14.1]-[14.2] and [14.5] of the Proposed Amended Statement of Claim in this proceeding as follows: Duties of respondent as trustee … 13. At all material times, [Mr Prentice] had and has a duty to give information about the administration of the estate to a creditor who reasonably requests it. Particulars Bankruptcy Act 1966, s 19(1)(d) 14. At al (sic) material times, [Mr Prentice] owed and owes additional duties under the Bankruptcy Act 1966 (Act) or at general law: 14.1 to administer the estate as efficiently as possible and not to incur unnecessary expense to the estate; 14.2 to act diligently and prudently in the administration of the estate; … 14 .5 to maximise the dividend to creditors and the surplus of the estate. (underlining omitted) (3) the duties alleged to be owed at [20(g)]-[20(h)] and [20(j)] of the further amended statement of claim in Proceeding NSD1222/2015 have the same effect as the duty alleged to be owed in [14.9] of the Proposed Amended Statement of Claim in this proceeding. At [14.9] of the Proposed Amended Statement of Claim, Fewin and Mr Coshott plead that Mr Prentice owed a duty to "take all reasonable and proper measures to obtain possession of the trust property, get in all debts and funds due to the trust estate, to preserve the trust estate and secure the trust estate from loss". Similarly at [20(g)]-[20(h)] and [20(j)] of Proceeding NSD1222/2015 it is alleged that Mr Prentice had a duty to "determine whether the estate includes property that can be realised to pay a dividend to creditors" and to "take appropriate steps to recover property for the benefit of the estate". That is, the effect of these parts of each pleading is to allege a duty to get in all debts and preserve and secure the Estate's property; (4) the duty alleged to be owed at [20(m)] of the further amended statement of claim in Proceeding NSD1222/2015 is pleaded at [14.6] of the Proposed Amended Statement of Claim in this proceeding; (5) at [42a] and [42e]-[42f] of the further amended statement of claim in Proceeding NSD1222/2015 (set out at [55] above) the Applicants allege that: Mr Prentice resisted and/or contested the assignment of debts owed by the Estate from Fewin to Robert Coshott in the circumstances set out therein and particularised by reference to Coshott v Prentice [2015] FCA 1224; by reason of, among other things, the matters pleaded at [42a], Mr Prentice breached the Trustee's Duties being the duties set out at [52] above; and as a result of [42a] Mr Prentice incurred significant and unnecessary costs, fees and disbursements. The particulars allege that approximately $1.5m in legal and other associated fees was incurred by the Estate in resisting and/or contesting the assignments of debt, including by its involvement in three specified court proceedings. Similarly at [45]-[45A] of the Proposed Amended Statement of Claim in this proceeding Frewin and Mr Coshott: repeat the allegations contained in [11]-[44] therein and set out 20 legal proceedings in which they say Mr Prentice has engaged and incurred adverse costs orders. That list includes the proceedings which are particularised at [42f] of the further amended statement of claim in Proceeding NSD1222/2015; allege that the proceedings listed at [45] were substantial in nature or involved substantial expenditure such that Mr Prentice should have obtained creditor consent or directions from the Court before engaging in them but did not do so; and at [27]-[29] of the Proposed Amended Statement of Claim, Fewin and Mr Coshott plead the facts in proceedings SYG2055/2013 and NSD786/2015 which concerned the question of the assignment of debts owed by the Estate. That is, those paragraphs raise the same underlying facts that are pleaded at [42a] and by way of particulars at [42f] of the further amended statement of claim in Proceeding NSD1222/2015; and (6) although not in the same terms, the effect of the relief sought at [45] of the further amended statement of claim in Proceeding NSD1222/2015 and that sought in [61.10.2] and [61.14]-[61.16] of the Proposed Amended Statement of Claim in this proceeding is substantially the same. 90 The allegation that Mr Prentice incurred legal and other associated fees in defending various proceedings is common to both proceedings. In Proceeding NSD1222/2015 the facts pleaded to underpin that allegation concern the challenge by Mr Prentice to the assignment of debts. Those facts are also pleaded in this proceeding as a foundation for the allegation that Mr Prentice has engaged in numerous legal proceedings and incurred significant costs in breach of his duty and for the relief sought insofar as it concerns the costs and disbursements that were incurred. But in this proceeding additional facts are pleaded as a foundation for the same allegation. There are also other breaches of duty alleged against Mr Prentice, arising out of an alleged failure to convene a creditor's meeting and an alleged failure to declare a dividend, which were not the subject of the further amended statement of claim in Proceeding NSD1222/2015. 91 The issue that arises is whether those matters mean that the cause of action in this proceeding is not the same or substantially the same as that in Proceeding NSD1222/2015. Despite the issues identified in the preceding paragraph, in my opinion, the cause of action in this proceeding concerning the allegation that Mr Prentice incurred legal and other associated fees in defending various proceedings is the same or substantially the same as the cause of action pleaded against Mr Prentice in Proceeding NSD1222/2015. The same basket of facts are pleaded in both proceedings, albeit, in the present proceeding those facts are said to give rise to breaches of more than one alleged duty. But that does not affect the fundamental issue that at the heart of each proceeding are the same or substantially the same pleaded facts that by engaging in various proceedings and incurring costs, either as applicant or respondent, it is alleged that Mr Prentice breached various duties owed to Fewin and Mr Coshott. Contrary to the submission made by Fewin and Mr Coshott, the fact that this proceeding being later in time bases the allegations of breach on additional events that have occurred in the administration of the Estate, e.g. particularises additional proceedings, does not change the conclusion I have reached. 92 It follows that the conditions in r 26.15 have been satisfied such that it falls to me to determine whether I should exercise my discretion in favour of Mr Prentice and stay this proceeding until the Costs Order is paid. Two matters were raised by Fewin and Mr Coshott as reasons why I would not exercise my discretion and grant a stay. 93 The first was that the Costs Order was subject to the Appeal Proceeding and that it would prejudice Fewin and Mr Coshott to pay money into Court when the Appeal Proceeding is not currently determined. Because of that, at the request of the parties, I reserved my decision until after the Full Court of this Court hearing the Appeal Proceeding handed down its decision. On 25 May 2018 the Full Court dismissed the appeal: see Coshott v Burke (No 2) [2018] FCAFC 81. Accordingly, that submission is rejected. There can be no prejudice to Fewin and Mr Coshott resulting from a stay in circumstances where they have been unsuccessful in the Appeal Proceeding. 94 The second reason was that there are a number of costs orders against Fewin and Mr Coshott on the one hand and Mr Prentice on the other. According to Fewin and Mr Coshott, upon an accounting as between them, Mr Prentice is indebted to them. However, a table provided by counsel for Mr Prentice which attempted to set out the various costs orders came to a different conclusion. There was no evidence upon which I could form a view about the status of the various costs orders between the parties. It is clear that many of those orders are yet to be quantified. Thus, the ultimate outcome is uncertain. 95 In those circumstances, I am not persuaded that because Fewin and/or Mr Coshott may have costs orders made in their favour against Mr Prentice I would not exercise my discretion and order a stay pursuant to r 26.15. There is no evidence to suggest that if the Costs Order is paid and it transpires that Mr Prentice is liable to Fewin or Mr Coshott as a result of other costs orders made in their favour, that Mr Prentice will be unable to meet any such liability. 96 In the circumstances, I am satisfied that an order should be made pursuant to r 26.15 of the Rules that this proceeding be stayed until Fewin and Mr Coshott pay the Costs Order. Given this finding, it is not necessary for me to consider the alternative bases upon which Mr Prentice seeks a stay of the proceeding. 97 As Mr Prentice has succeeded on his interlocutory application it follows that Fewin and Mr Coshott should pay his costs of that application. 98 In his interlocutory application Mr Prentice seeks an order that those costs be payable forthwith. The Court's discretion to make such an order should only be exercised where the interests of justice in the particular case require a departure from the usual rule which is included in r 40.13 of the Rules: see QS Holdings Sarl v Paul's Retail Pty Ltd (No 2) [2011] FCA 1038 (QS Holdings) at [33]. 99 No submissions were made about the nature of the costs order to be made or why an order should be made that costs be payable forthwith. There is no basis on which I could be satisfied that it is justified in the circumstances to order that Mr Prentice's costs of the interlocutory application be payable forthwith. Further, none of the circumstances in which the discretion might be exercised identified in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [14]-[20] in relation to O 62 r 3 of the previous Federal Court Rules is present here. Nor is it the case that this application has resolved a significant number of the issues in the proceeding nor was any submission put or evidence tendered that the final resolution of the proceeding is some time away, further matters which may be relevant to the exercise of the discretion: see QS Holdings at [38]-[39].

conclusion 100 I will make orders giving effect to these reasons. I certify that the preceding one hundred (100) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.