In the matter of Banksia Securities Limited (in liq) (recs and mgrs apptd)

Legislation Cited: - Civil Procedure Act 2005 (NSW), s 98
- Civil Procedure Act 2010 (Vic), s 29
- Corporations Act 2001 (Cth), s 283HB, Pt 9.7

Cases Cited: - Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25
- Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
- Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2025] NSWSC 697
- Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2025] NSWSC 1217
- Re Hermitage Engadine Pty Ltd [2025] NSWSC 414
- Re Kerry (No 2) [2012] NSWCA 194
- Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111
- Wilderness Society Inc v Turnbull (2007) FCA 1863

Category: Consequential orders

Parties: John Lindholm (Special Purpose Receiver)
Wendy Botsman and Others (Victorian Applicants)

Representation: Counsel:
J Redwood SC / M Grady (Special Purpose Receiver)
B Orow (Victorian Applicants)
Solicitors:
Maddocks (Special Purpose Receiver)
Hartwell Legal (Victorian Applicants)

File Number(s): 2015/252832

JUDGMENT

Background and distribution orders

1. By my judgment delivered on 2 July 2025 (Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2025] NSWSC 697) (“July Judgment”), I made several directions sought by Mr Lindholm in his capacity as special purpose receiver (“SPR”) of Banksia Securities Ltd (recs and mgrs apptd) (in liq) (“BSL”). By my further judgment delivered on 17 October 2025 (Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2025] NSWSC 1217) (“October Judgment”), I declined leave to Mrs Botsman and 28 other persons (“Victorian Applicants”) to bring proceedings (“Section 29 Proceedings”) against the SPR in the Supreme Court of Victoria and made several further orders.

2. The SPR now asks that I note that he will (presumably subject to the payment of proper expenses) distribute the sums received by him pursuant to the Elliott Settlement Deed, the Zita Settlement Deed, and the Symons Settlement Deed (as noted in earlier judgments) to all debenture-holders of Banksia pari passu. That is consistent with the purpose of the SPR’s appointment and the approach contemplated in earlier judgments and I note that matter. I also order that the costs incurred by the SPR in respect of the distribution are costs incurred in the special purpose receivership.

3. The SPR also seeks a direction that he would be justified in acting on the basis that, six months after the date of the distribution noted above, any unpresented payments be paid by the Special Purpose Receiver to the Australian Securities and Investment Commission (“ASIC”), in such a manner as required by ASIC to be dealt with under Part 9.7 of the Corporations Act 2001 (Cth) (“Act”). That direction is properly made where it reflects the conclusion reached in the July Judgment that:

“I am satisfied that the SPR has power to seek a direction as to how those monies should be paid, as he has done, for the reasons set out in my judgments in [Re Banksia Securities Ltd (in liq) (recs and mgrs apptd) [2016] NSWSC 357] at [17]–[18] and [Re Banksia Securities Ltd (in liq) (recs and mgrs apptd) (2018) 336 FLR 97; [2018] NSWSC 629] at [16]ff , and I will direct that they be paid into ASIC’s unclaimed monies fund under Pt 9.7 of the Act. I consider that is the preferable course here, where it is consistent with the right of each debenture holder in the funds due to it, and the fact that the Unpresented Payments may ultimately not be claimed is not a sufficiently good reason not to preserve the entitlements of those who have rights to them. Where the Court has power to make that direction under s 283HB(1)(g) of the Act and makes that direction, then ASIC has power to receive and deal with those funds under Pt 9.7 of the Act as “unclaimed property” within the definition of that term in s 9 of the Act, notwithstanding that there is no specific statutory provision in the Act that provides for payment of that money to ASIC: Australian Securities and Investments Commission v Piggott Wood & Baker (a firm) (No 7) (2023) 166 ACSR 17; [2023] FCA 193 at [18]. This approach is consistent with that which ASIC has supported in correspondence; the Contradictor also accepts that it is consistent with the statutory structure and open in the circumstances; and ASIC is aware that such orders are likely to be made and has raised no difficulty with them. The SPR and Contradictor each fairly indicated they do not oppose this approach.”

Costs in respect of the Victorian Applicants

4. In the October Judgment, I directed the parties to file submissions in respect of costs in respect of that application and relisted the matter for further directions and as to costs before me on 16 December 2025. The SPR and the Victorian Applicants subsequently made written submissions as to costs and indicated that they were both content to have the question of costs determined on the papers. A contradictor (“Contradictor”) appointed by the Court in respect of earlier applications was excused from attendance in respect of this application.

5. Mr Redwood, with whom Mr Grady appears for the SPR, draws attention to the general rule that costs follow the event and to then applicable case law. The SPR addresses the costs of aspects of the applications which were the subject of the October Judgment, namely the release application which was sought at paragraphs 13C-13E of his Third Further Amended Interlocutory Process dated 3 October 2025 and the Victorian Applicants’ Notice of Motion filed 5 September 2025 seeking leave to bring the Section 29 Proceedings (“Relevant Matters”). The SPR submits that the Victorian Applicants should be ordered to pay 80% of the SPR’s costs of the Relevant Matters on an indemnity basis and the Contradictor’s costs of those matters on an indemnity basis.

6. I bear in mind that s 98 of the Civil Procedure Act 2005 (NSW) provides that costs are in the discretion of the Court. That section confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid; costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). A successful party in proceedings has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [134] (“Oshlack”). The principle that costs should follow the event is the “guiding principle” with respect to costs, and the onus is on the losing party to establish the basis for a departure from the usual costs rule in U CPR r 42.1: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]; Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]–[25].

7. I also bear in mind the applicable principles in respect of an order for indemnity costs, which I summarised in Re Hermitage Engadine Pty Ltd [2025] NSWSC 414 at [18] as follows:

“The applicable principles as to an order for indemnity costs are also well-established. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party’s conduct in proceedings is plainly unreasonable or involves an element of delinquency, and by Bell CJ in Brown v Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902. [Counsel] also refers to my summary of the principles applicable to an award of indemnity costs in Re Allscope Concrete & Pumping Pty Ltd (in liq) [2024] NSWSC 1680 at [5], in substantially the terms that I have set out above.”

8. Mr Redwood points out that the Victorian applicants were unsuccessful and the SPR obtained orders for his release and discharge, which were opposed by the Victorian Applicants, and that their application for leave to bring the Victorian proceedings were dismissed. Mr Redwood also points out that the Victorian Applicants were successful in several aspects of the application, including their contention that leave was not required to proceed against a Court-appointed receiver; that such leave was not required in respect of a proceeding under s 29 of the Civil Procedure Act 2010 (Vic) and that the Court did not possess the power to release the SPR under s 283HB of the Act. Mr Redwood points out that the Victorian Applicants were also unsuccessful in obtaining leave to commence or continue the Section 29 Proceedings where I found that the proceeding was out of time and possessed little prospect of success as against the SPR. Mr Redwood submits, and I accept, that the Victorian Applicants should pay the SPR’s costs of the relevant matters where they were wholly unsuccessful in the proceedings.

9. Mr Redwood also submits that the proposed apportionment of the costs of the application reflects, on a broad brush approach, the fact that the SPR would have been required to make an application for his discharge and release in any event, although the costs of that application would have been substantially less and the application would have been made earlier, but for the opposition of the Victorian Applicants.

10. By his submissions dated 10 November 2025, Dr Orow, who appears for the Victorian Applicants, submits there should be no order as to costs as to their application. He submits that:

“Although their applications for leave were unsuccessful, they were brought in good faith, raised novel questions of public importance, and were conducted at all times responsibly for the benefit of all debenture holders – not only the Applicants.”

11. This proposition has the difficulty that the questions raised in the application, so far as they were directed to the requirement for leave to bring proceedings against a Court-appointed receiver, do not raise any novel question and were plainly not for the benefit of debenture holders generally, where they imposed significant additional costs on debenture holders generally and significantly delayed a final distribution that could otherwise have been made to debenture holders.

12. Dr Orow also submits that the Victorian Applicants had here taken up “invitations” from Parliament and the Supreme Court of Victoria in earlier proceedings to “hold certain participants in the Banksia proceedings to account”. The difficulty with that proposition, so far as the SPR was concerned, is that (as I noted in the October Judgment), the earlier proceedings did not identify any wrongdoing for which the SPR could reasonably be held to account.

13. Dr Orow also submits that:

“While the general rule is that costs follow the event, that rule yields where an unsuccessful party, acting reasonably and in good faith, has pursued questions of genuine public importance without seeking any personal or financial gain.”

14. This proposition has the difficulty that, at least so far as the Section 29 Proceedings sought compensation for Mrs Botsman and potentially for other Victorian Applicants, they were brought for the purposes of obtaining personal or financial gain, in the nature of compensation for loss for those persons which would not be available to debenture holders generally.

15. Dr Orow also identified several cases in which Courts have declined to award costs against unsuccessful public interest litigants, and I accept that such cases exist, although it does not seem to me that this application falls within their scope. Dr Orow otherwise expands, at some length, upon the asserted public purposes served by the application and submits that an order for costs against the Victorian Applicants would be inconsistent with those public purposes. I bear that proposition in mind but I also recognise that, unless an order for costs is made against the Victorian Applicants in respect of their unsuccessful application, other debenture holders would be left to bear the significant costs of that application.

16. Mr Redwood responds, and I accept, that the fact that the proceedings involve a public interest does not, in itself, warrant departure from the general rule that costs follow the event: Oshlack at [90]; Re Kerry (No 2) [2012] NSWCA 194 at [13], [15]; Wilderness Society Inc v Turnbull (2007) FCA 1863 at [30]. Second, Mr Redwood submits that the matters advanced by the Victorian Applicants did not engage the “public interest”, where the Victorian Applicants sought to bring claims, including for compensation, and other debenture holders had a broader interest in receiving a final distribution of their funds. It seems to me that the Victorian Applicants interest here was primarily a private interest and was opposed to an important public interest in the SPR, who was a receiver appointed by the Court, completing a distribution to debenture holders as expeditiously as possible, which was delayed rather than promoted by the application brought by the Victorian Applicants. Mr Redwood also submits, and I accept, that the claim for a public interest is undermined by the lack of substance in the Victorian Applicants’ contentions, to which I return in dealing with the SPR’s application for indemnity costs below. Third, Mr Redwood emphasises the Victorian Applicants’ private interest in claiming compensation to individual applicants, including Ms Botsman, is a matter which I had noted in the October Judgment. Mr Redwood also submits, and I accept, that no public interest arose in matters identified by Dixon J in the Remitter Judgment, to which I referred in the Second Judgment, where his Honour had made clear, as I also recognised in the Second Judgment, that there was no reason to think that there had been any relevant failing by the SPR in the performance of the SPR’s duties.

17. The Victorian Applicants also emphasised that they had now discontinued the Section 29 Proceedings against the SPR, and it appears that they have also discontinued those proceedings against a firm of solicitors although the October Judgment did not require that they take that course. Mr Redwood submits, and I accept, that that matter does not affect the question of who should pay the costs of the application. I also accept, had that not occurred, the Court may have more readily ordered indemnity costs against the Victorian Applicants, and may have been required to take other steps to restrain the continuance of other proceedings until the costs of these proceedings were paid.

18. The Victorian Applicants also point to contributions made by Mr Botsman, Mrs Botsman and Mr Pitman in earlier proceedings in the Court of Appeal of the Supreme Court of Victoria and the SPR acknowledges that matter. The SPR submits, and I accept, that that matter is not relevant to the proper exercise of the costs discretion in this application, which must be determined by reference to this application and not the position in those earlier proceedings. The Victorian Applicants also submit the Court should not make a costs order which will deter the conduct of proceedings in the public interest. Even if that proposition could be accepted, in general terms, the authorities made clear that it does not have the consequence that the Court should not make an order for costs against persons who claim to advance public interest, as they perceive it, in a proper case.

19. I am satisfied that the Victorian Applicants should be ordered to pay 80% of the SPR’s costs of the Relevant Matters on an ordinary and not an indemnity basis. That finding reflects, first, the usual application of the principle that costs follow the event. Second, an order the Victorian Applicants pay 80% of the Relevant Matters seems to me to reflect an apportionment, on a basis that is likely generous to the Victorian Applicants, recognising the additional time that was required to deal with the application and the additional evidence that had to be led by reason of their raising issues as to which they were ultimately unsuccessful, where the application would likely otherwise have proceeded on a straightforward and uncontested basis. I address the question of indemnity costs below.

20. For completeness, the SPR acknowledges that a question may arise as to the extent to which he should enforce any costs orders made in respect of this application for the benefit of debenture holders. He rightly submits that that is a matter for the SPR and not for the Court in determining whether such orders should be made.

Whether costs should be order on an indemnity basis

21. The SPR put several factors in support of an order for costs against the Victorian Applicants on an indemnity basis. The first, which I recognise, is that the costs incurred by the SPR and the Contradictor have necessarily been funded by monies held by the SPR on trust for debenture holders, which would otherwise have been available for distribution to those debenture holders and would likely have been distributed to them without the delay resulting from this aspect of the application. Mr Redwood submits that it would “plainly be unjust” if debenture holders were left to bear the substantial costs of responding to the Victorian Applicants’ arguments. While I accept that proposition, so far as it supports an order for costs on the ordinary basis, I am not persuaded that I should go further to order costs against the Victorian Applicants on an indemnity basis by reason of that matter.

22. Mr Redwood also submits that many of the arguments raised by the Victorian Applicants were “specious”, and I recognise that there were difficulties with some of those arguments, including the proposition that the Section 29 Proceedings was no more than an invitation to the Supreme Court of Victoria to act of its own motion, which was inconsistent with the active position taken by the Victorian Applicants in that application. Mr Redwood submits, and I accept, that the Victorian Applicants were put on notice of the deficiencies in their claims and the risk of adverse costs consequences, including by a letter dated 17 December 2024 from the SPR’s solicitors to Mr Botsman, who appears to have played a significant role in promoting the application brought by the Victorian Applicants.

23. Mr Redwood submits that the decision of the Victorian Applicants to commence the Section 29 Proceedings without obtaining leave of the Court was unreasonable, given the authorities which established the requirement for such leave. Mr Redwood also submits, and I accept, that the position taken by the Victorian Applicants, and the manner in which they conducted the application, significantly delayed the resolution of the issues, the finalisation of the special purpose receivership and a consequential distribution to debenture holders generally. Having recognised all of these matters, and having had regard to the detailed chronology of events set out in Mr Redwood’s submissions, it nonetheless seems to me that these matters are adequately reflected by an order for costs on an ordinary basis against the Victorian Applicants, apportioned in the manner that the SPR proposes.

24. I am not persuaded that the order for costs against the Victorian Applicants should be made on an indemnity basis. Although they were unsuccessful in the application, the lack of success is adequately reflected by an order for costs on the ordinary basis.

The Contradictor’s costs of the application

25. I am also not persuaded that the Victorian Applicants should pay the Contradictor’s costs of the application, where the Court would have appointed a contradictor in the application in any case; the Contradictor’s careful and thorough approach to the application is what one would have expected in any event; and the position taken by the Victorian Applicants was only relevant to the Contradictor’s role so far as it clarified matters that the Contradictor needed to address. It seems to me that the Contradictor’s costs of the application are properly costs of the special purpose receivership.

Orders

26. For these reasons, I note the following matter and make the following orders:

Final Distribution

1. Note that the Special Purpose Receiver will distribute the sums received by the Special Purpose Receiver pursuant to Elliott Settlement Deed, the Zita Settlement Deed, and the Symons Settlement Deed to all debenture-holders of Banksia pari passu.

2. Order that the costs incurred by the Special Purpose Receiver in respect of the distribution are costs incurred in the special purpose receivership.

Unpresented Payments

3. Direct that the Special Purpose Receiver would be justified in acting on the basis that, six months after the date of the distribution referred to in paragraph 1, any unpresented payments be paid by the Special Purpose Receiver to the Australian Securities and Investment Commission (“ASIC”), in such a manner as required by ASIC to be dealt with under Part 9.7 of the Corporations Act 2001 (Cth).

Costs

4. Mrs Botsman and the 28 other persons (“Victorian Applicants”) identified in the schedule to a notice of appearance filed by them in these proceedings on 30 July 2025 jointly and severally pay 80% of the Special Purpose Receiver’s costs of and incidental to the relief sought in paragraphs 13C – 13E of the SPR’s Third Further Amended Interlocutory Process dated 3 October 2025 in the Victorian Applicants’ Notice of Motion filed 5 September 2025, on an ordinary basis, as agreed or as assessed.

Liberty to apply

5. Reserve liberty to the Special Purpose Receiver to apply on two business days’ notice.

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