REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)
1 This is an interlocutory process brought by the liquidator of BGR Corporation Pty Limited (in liq) seeking that I quantify the amount the subject of Order 1 which I made on 28 February 2007 after a fully contested trial and subsequent argument as to the percentage or measure to be used for quantification of those costs. That order was:
'The second and third defendants pay to the first defendant 90% of all amounts paid by the first defendant for or in respect of the legal costs and disbursements of any of the defendants in the proceedings.'
2 As I recorded in my reasons (Food Improvers Pty Limited v BGR Corporation Pty Limited (No 4) [2007] FCA 220 at [1]) which I gave following the earlier delivery of reasons for granting principal relief to the plaintiffs in Food Improvers Pty Limited v BGR Corporation Pty Limited (No 3) [2007] FCA 97, I heard argument on 14 and 19 February 2007 on matters about which I had directed there be further submissions. On 19 February 2007, I made final orders on all but two of those matters. The first outstanding matter was to determine the proportion of costs that the second defendant (Triad HealthProducts Group of Companies Pty Limited) and the third defendant (Cordato Partners (Services) Pty Limited) should repay to BGR. During the proceedings, BGR had paid a large amount in respect of the costs of all the defendants.
3 In my reasons of 28 February 2007, I addressed that question: Food Improvers [2007] FCA 220 at [22]-[24]. I referred there to what I had been told was an agreement between Triad and Cordato Partners (Services) relating to the proportions of the costs of the defence each of them was to bear to the extent that they were costs that I would apportion between the parties. I found that that agreement did not prevent the liquidator of BGR seeking to recover all of the costs of the defence previously paid by BGR which it should not have paid. I also found that each of Triad and Cordato Partners (Services) was jointly and severally liable to restore to BGR 90% of those costs. To that end I formulated the terms of Order 1 made on 28 February 2007 (the 90% costs order).
4 During the course of the liquidation there was a dispute between the parties about the quantification of the costs actually paid by BGR for the defence of the proceedings. After considerable dealings between the liquidator, Triad and Cordato Partners (Services) those parties ultimately agreed the total amount paid by BGR which fell within the description in Order 1 of 'all amounts paid by the first defendant for or in respect of the legal costs and disbursements of any of the defendants in the proceedings'. They have agreed that 90% of that sum together with interest up to 29 February 2008, was $486,540.17.
5 As I noted in my reasons given on 29 February 2008 (Food Improvers Pty Limited v BGR Corporation Pty Limited (In Liq) (No 8) [2008] FCA 326 the only matter now in dispute is whether or not Triad and Cordato Partners (Services) are entitled to resist payment of so much of that sum as represents the goods and services tax (GST) component in those costs paid by BGR. Triad has submitted to any order which might be made on this application. It is only contested by Cordato Partners (Services). Cordato Partners (Services) argued that the terms of the 90% costs order are capable of being read in a way which would allow it to raise this argument. Alternatively it argued that there was an accidental omission which should be cured by the Court's exercise of its powers under the slip rule, O 35 r 7, or the inherent jurisdiction so as to permit the argument to be raised.
6 I am of opinion that there is no substance in the contention made by Cordato Partners (Services). The terms of Order 1 were clear. They required payment of a sum certain, once quantified, being 90% of the actual payment by BGR for or in respect of the legal costs and disbursements of any of the defendants in the proceedings. From the point of view of BGR the payment of an amount for or in respect of legal costs and disbursements had to include the amount of goods and services tax because the GST formed part of the price in the tax invoice rendered for those costs or disbursements: Keen v Telstra Corporation Limited (2006) 230 ALR 313 at 321 [43]. Triad and Cordato Partners (Services) had obtained the benefit of payment by BGR of the tax invoices of the respective firms of solicitors. If each of Triad and Cordato Partners (Services) had paid themselves that 90% of the legal fees which they caused BGR to pay for their benefit, they would have had to pay the same amount as BGR had paid, which included GST.
7 The Order that I made required repayment of the money BGR had paid to the solicitors, which included, of course, GST. If there were some argument open to be addressed as to whether or not an adjustment of the 90% costs order ought be made because of the effect within BGR's accounting treatment of the restoration of the GST, together with the balance of the legal costs repaid, that was a matter that could and should have been argued, if it were to be pursued, prior to the grant of final relief and the making of the orders on 28 February 2007. It is too late now, a year later, for Cordato Partners (Services) to raise this belated argument so as to be allowed to reopen, in effect, the final order which I made after had a fully contested hearing on the ultimate form of relief which was granted.
8 Had any submissions been addressed on the GST issue at the time of the argument in February 2007 and I made an error, then there would have been a right of appeal. If there were no such argument raised, I decided the issue the parties had ventilated. On either view it is in the interests of justice that there be finality in this litigation. Parties are not entitled interminably to return to the court to re-ventilate or reopen issues that have been finally disposed of and passed into judgment.
9 I am also mindful that the potential for injustice in refusing any application to reopen is minimised in the present case because the two parties seeking to benefit from the payment of legal fees by BGR at the time were shareholders in BGR. The restoration to BGR of the 90% of the legal costs, inclusive of GST, will provide it with monies available to be distributed to the shareholders in their shareholding proportions during the course of the liquidation, in the event that there are surplus moneys to be distributed, as I understand it is hoped there will be.
10 In any event, I do not see any basis to argue that there is any lack of clarity in Order 1 made on 28 February 2007. It is not arguable on the face of Order 1 that the quantification of 90% of all amounts paid by BGR 'for or in respect of legal costs and disbursements' can be anything other than a reference to the sum actually paid over by BGR. The terms of the order do not include any reference to BGR's internal taxation position or the way in which it might adjust, if it did or will adjust, any sums re-paid to it in respect of GST. In an article entitled The Court's Tax and Commercial Litigation (November 2007) 81 ALJ 866 at 879 Gzell J expressed the personal view that the Goods and Services Tax legislation contained its own mechanism for adjustment events. He observed that where a court order affected an earlier taxable supply, adjustment events would occur and the taxable supplies and creditable acquisitions of the parties would be modified. He opined that there was no need for the court to make any adjustment. Whether that is necessarily applicable in circumstances such as the present is not a matter I need to decide. This is because I will not allow the earlier order to be reopened. Its effect is clear.
11 For these reasons I will make the orders sought by the liquidator in the interlocutory process filed on 26 February 2008.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.