IMF (Australia) Ltd v Meadow Springs Fairway Resort Ltd

Meadow Spring's and its liquidator's submissions 5 Meadow Springs and the Liquidator initially made submissions on 5 June 2009. These asserted that the Liquidator's entitlement to remuneration had been "overlooked". The submissions did not refer to any prayer for relief, claim of error by the primary judge or earlier submission made in the appeals by Meadow Springs or the Liquidator. There was no issue in the appeals about the claimed entitlement. 6 The solicitors for Meadow Springs and the Liquidator informed the solicitors for each of Balanced and Knightsbridge of the purpose for which they sought these orders. That was, to obtain payment of the Liquidator's remuneration and expenses in connection with its administration out of the fund during the period since the entry into the settlement of the Colliers Proceeding. Meadow Springs and the Liquidator contended that the Liquidator was entitled to be paid those sums (which would include the costs he incurred or caused Meadow Springs to incur or be liable for) pari passu with IMF. 7 Balanced objected to the raising of this new issue. Knightsbridge adopted Balanced's submissions. They contended that the primary judge had declined to make any order for the Liquidator to have priority over their secured debts. And they argued that no ground of appeal had been brought to seek orders giving the Liquidator such a priority.

Consideration 8 In his third judgment, the primary judge rejected the Liquidator's arguments that Meadow Springs had put justifying its claim to such a priority under s 512 of the Corporations Act 2001 (Cth). He found that the fund was not "the property of the company" because it was secured by the charges of both Balanced and Knightsbridge. (A similar argument in respect of the assertion that s 512 created a priority in favour of the Liquidator or Meadow Springs to enable him or it to pay IMF its fees had been rejected by his Honour in his principal judgment. That argument had also been rejected by the Full Court in the Principal Reasons: see IMF 253 ALR at 259 [83]). Meadow Springs also argued before the primary judge that the Liquidator was entitled to an equitable lien to support his right to retain sufficient from the fund to pay his legal expenses incurred in the conduct of the litigation. The primary judge rejected that argument on the basis that those expenses fell outside the Universal Distributing Principle because they did not benefit the secured creditors through the realisation of the fund. His Honour said that by challenging the validity of the secured creditors' entitlements to the fund, the Liquidator could not be seen to confer any benefit on them. Accordingly, the primary judge refused to make an order for Meadow Springs to be paid its legal costs in priority to Balanced and Knightsbridge: Meadow Springs Fairway Resort Ltd (In Liq) v Balanced Securities Ltd (No 3) [2008] FCA 861 at [4]-[19]. 9 The Liquidator was joined as a party in both the appeal and the proceedings below only after the Full Court suggested this course (IMF 253 ALR at 243 [6]). The issue of whether he or Meadow Springs could recover their legal expenses in priority to Balanced and Knightsbridge was a live one before the primary judge. But no appeal was brought from his Honour's refusal of Meadow Springs' and the Liquidator's claims to priority for legal expenses. Ordinarily, an appellate Court entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was error on the part of the primary judge when, as here, there has been no further evidence admitted in an appeal and no relevant change in the law: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [14] per Gleeson CJ, Gaudron and Hayne JJ. 10 In Metwally v University of Wollongong (1985) 60 ALR 68 at 71, Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ said: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so." 11 Meadow Springs and the Liquidator gave no explanation for their late raising of this new argument in the appeal. The Full Court did not "overlook" this argument. It had not been put in issue in the appeal. It is not a matter that clarifies or corrects any aspect of the orders made on 4 June 2009 on the basis of the appeals as conducted up to that time. This is not a case where the circumstances warrant the exercise of the Court's powers to permit Meadow Springs and the Liquidator to seek that the hearing be reopened or to justify any exercise of our discretion to vary the orders already made to provide for the Liquidator's remuneration to be payable as they now seek.

Balanced and Knightsbridge's Settlement of 10 June 2009 12 Balanced and Knightsbridge sought to vary Order 2 in WAD 134 of 2008 (requiring Balanced to repay to the Liquidator the moneys received by it under the primary judge's orders), to give effect to a conditional settlement they made on 10 June 2008. The settlement provided that Balanced would, first, pay Knightsbridge $90,000, secondly, agree the balance of the fund held by the Liquidator be paid to Knightsbridge and, thirdly, make no further claim on that fund. The settlement was conditional on the Full Court, first, vacating the Order 2 in WAD 134 of 2008 and, secondly, rejecting Meadow Springs' and the Liquidator's above claim for priority in respect of their legal costs. 13 Balanced's submissions explained the purpose of the settlement was to avoid both double handling of funds and "the inequitable result of" Balanced having to pay a large sum to the Liquidator where there was no dispute with Knightsbridge, the only other secured creditor entitled to the fund. Balanced also sought to have an adjournment of the argument as to the quantification of the sum to be repaid. 14 Before such an order could be made, it would be necessary to obtain submissions from IMF, Meadow Springs and the Liquidator to ascertain whether what Balanced and Knightsbridge seek has any adverse impact on them. That need not occur. The settlement can be given effect by agreement of all the parties after the orders of 4 June 2009 take effect. It is not a reason to justify any variation of the orders already announced.

Meadow Springs and the Liquidator's submissions of 11 June 2009 15 On 11 June 2009, the solicitors for Meadow Springs and the Liquidator filed further submissions without leave, but sought leave to do so. Leave should be refused. Parties are not at liberty to set their own course regardless of the orders that the Court makes for the conduct of proceedings. Some of those submissions responded to Balanced's and Knightsbridge's unforeshadowed application to vary Order 2 in WAD 134 of 2008. However, the bulk of the submissions expanded on the earlier claim for Meadow Springs and the Liquidator to obtain an order that they have priority for the costs and expenses of the litigation. 16 It is inappropriate, indeed impermissible, to file submissions without leave after the time set for doing so has expired: NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 159 [192] per McHugh A-CJ, Gummow, Callinan and Heydon JJ. The orders of 4 June 2009 contemplated that if the Court required to hear from the parties again it would act to fix a hearing or a time for further submissions.

Conclusion 17 The Court has quelled the controversy between the parties by the orders made on 4 June 2009. It is not appropriate to reopen or prolong it. The parties' applications to vary the orders made on 4 June 2009 are rejected. The parties have not made any submissions that the form of those orders was not apposite to give effect to the result arrived at in the principal reasons. Order 5 in WAD 124 of 2008 and Order 6 in WAD 134 of 2008 are now spent and the balance of those orders should now be entered. The new and groundless arguments raised by Meadow Springs, the Liquidator, Balanced and Knightsbridge were outside the limited scope of the orders made on 4 June 2009. They raised new cases that had formed no part of the appeals. No application was made in accordance with the rules for leave to reopen or for any further relief along the lines suggested by Meadow Springs, the Liquidator, Balanced or Knightsbridge, nor did any of those parties file a motion seeking any such relief. No party sought costs in respect of these matters. While the Court has dealt with the substance of the matters raised by the parties' submissions, it is not necessary to make any orders in relation to them. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices North, Emmett and Rares.

Associate: Dated: 17 June 2009 Solicitor for IMF: L Allison of Williams & Hughes

Solicitor for the Liquidator and Meadow Springs: Solomon Brothers

Solicitor for Balanced: F Vernon of Tottle Partners

Solicitor for Knightsbridge: L Christensen of Gadens Lawyers

Date of IMF's submissions 10 June 2009

Date of Balanced Submissions 10 June 2009

Date of Meadow Springs' and the Liquidator's Submissions 5, 11 and 12 June 2009

Date of Judgment 17 June 2009