Katherine Stores Pty Ltd (in liq) v B & D Lane Pty Ltd [1996] NTSC 39; 5 NTLR 152 (23 May 1996)
[2]
COURT
IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA
MASTER COULEHAN
CWDS
Costs.
HRNG
DARWIN, 23 May 1996
#DATE 23:5:1996
#ADD 13:2:1997
Appearances not available
ORDER
Judgment for defendant.
JUDGE1
MASTER COULEHAN
On 26 April 1996
judgment was entered for the defendant in this
proceeding (see reasons dated 26 April 1996, unreported, available on
SCALE). The
defendant now seeks costs.
The plaintiff failed in this proceeding because the claim was
brought in its name instead of that of
the liquidator.
The defence was filed on 4 May 1995. No issue as to the name of the
plaintiff was raised until 14 December 1995.
While it may not have been necessary to plead this issue in the
defence (see Markorp v King 106 FLR 286, 291), there is no reason why
it could not have been raised earlier, thus saving both parties costs
subsequently incurred. In these
circumstances I do not consider it
appropriate that the defendant be awarded its costs of the proceeding.
As to the costs of the
application for judgment and the application
to amend, there are grounds for departing from the usual order (see
O.63.18 and TTE
Pty Ltd v Ken Day Pty Ltd The
failure to sue in the name of the correct party was the mistake of the
plaintiff and it was necessary for the defendant to bring
the
application to put an end to the proceeding and to resist the
application to amend.
The defendant seeks an order that the
liquidator, or alternatively,
the plaintiff�s solicitor, pay the defendant�s costs.
The Court has jurisdiction to order costs
against a non-party,
including a liquidator (see Knight v FP Special Assets Ltd 174 C.L.R.
176 and Best v Gough [1992] FCA 267; 36 FCR 204). As to a solicitor, see O.63.21.
It is recognised that a liquidator is in a special position and
that the power to award costs
against him personally should only be
exercised sparingly (see Best at pp 210-211 and 219). The availability
of an order for security
for costs may also be a relevant
consideration (see Knight at pp 191 and 204).
Although the plaintiff is insolvent, the costs
of liquidation,
including any costs ordered against the plaintiff or the liquidator in
proceedings to recover assets, may have priority
(see S.556 The
Corporations Law and an article by Associate Professor Keay published
in Company & Securities Law Journal (1996) Vol.14
number 2 p.78 at
pages 81-84)
The inability of the plaintiff to pay the defendant�s costs has
not been established. However,
as the plaintiff�s solicitor was unable
to assist and the defendant is not in a position to know what funds
are available, it is
appropriate that I consider the defendant�s
application on the basis that the plaintiff is unable to pay.
While it is recognised
that a liquidator should not be discouraged
from bringing meritorious proceedings for the recovery of preference
payments, it mayhave
been open to him to seek indemnification from
creditors. The error of law which caused this proceeding to fail was
probably that
of the plaintiff�s solicitor and it would not be fair
that the defendant bear the costs. An application for security was not
a viable
option because it would have necessitated further expense at
a time when it was appropriate to apply for summary judgment.
O.63.21
provides the basis for costs to be awarded against the
solicitor where he � ... has caused costs to be incurred improperly or
without
reasonable cause or to be wasted by undue delay or negligence
or by other misconduct or default ...�.
It is not clear that there
are sufficient grounds for an order
under this rule. It may not have been obvious that the liquidator
should have been a party to
this proceeding. The defendant appears to
have taken some time to appreciate this point. As it is unlikely that
the liquidator will
be unable to pay the costs it is preferable that
this be left to the liquidator and his solicitor to resolve.
It is ordered that
Trevor Alan Angus, the liquidator of Katherine
Stores Pty Ltd, pay the defendant�s costs of the applications filed on
19 March 1996
and 3 April 1996.