KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD

Court of Appeal (NSW)|2009-12-21|Before: Allsop P, Hodgson JA, Basten JA, Young CJ, Hamilton J, Palmer J

CITATION: KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) (NO 2) [2009] NSWCA 428

JUDGMENT OF: Allsop P at 1; Hodgson JA at 2; Basten JA at 3

(1) Vary the amounts specified in the declaration, being order (7) made by the trial judge, as to the balances of the loan accounts, to the following amounts: Lamru - $1,197,673 Kation - $631,651. (2) Vary new order (14) (being order (7) made by this Court on 12 June 2009) to add "legal" before "costs". DECISION: (3) Grant leave to all parties to file and serve: (a) within 28 days of this judgment submissions with respect to the variation of orders (6) and (11) made on 12 June 2009 as to the costs of the trial and in this Court, and (b) submissions in reply within a further period of 14 days. (4) Direct that the orders made on 12 June 2009, other than orders (6) and (11), as varied by these orders be entered forthwith. (5) Otherwise dismiss the motions filed by each party after 12 June 2009, with no order as to the costs thereof.

CATCHWORDS: COSTS - scope of indemnification for costs - liquidator's costs indemnified by unsuccessful party - whether indemnity included both legal costs and general expenses and remuneration - point at which indemnity to take effect - certain assumptions underlying indemnification - whether appropriate to make further clarificatory orders - EQUITY - trusts and trustees - liability for breach of trust - accessorial liability - conduct of director of trustee - failure to apply accounting conventions in calculation of trust's profits - reduction of trustee's accounts for unauthorised legal expenses -whether inferences of dishonesty and fraud available - PROCEDURE - judgments and orders - amending, varying and setting aside - primary judgment delivered - order directing parties to apply for Court to address further issues - submissions re-agitating issue settled at trial and on appeal - whether terms and purpose of order complied with - PROCEDURE - judgments and orders - formulation of final orders - order directing parties to file submissions on proposed resolution of issue - parties each holding loan accounts with trustee - declaration of balance of loan accounts - proceedings on foot for over ten years - further outstanding proceedings - whether public interest justifies final declaration of balances

LEGISLATION CITED: Civil Procedure Act 2005 (NSW), s 3 Corporations Law, s 471A

Grivas v Brooks (1997) 69 SASR 532 CASES CITED: Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd (In liq) [2009] NSWCA 145 Sheldon v Sun Alliance Aust Ltd (1989) 53 SASR 97

Matter No. 40366/06: Kation Pty Ltd (Appellant and First Cross-respondent) Peter Lawrence Lewis (Second Appellant and Second Cross-respondent) Lamru Pty Ltd (First Respondent and First Cross-appellant) Russell William Lamb (Second Respondent and Second Cross-appellant) PARTIES: Nortex Pty Ltd (In liq) (Third Respondent and Third Cross-Respondent) Brian Raymond Silvia (Fourth Cross-respondent)

Matter No. 40523/06: Peter Lawrence Lewis (Applicant) Nortex Pty Ltd (In liq) (Respondent)

IM Jackman SC/J Baird (Kation, Peter Lawrence Lewis) COUNSEL: SJ Motbey (Lamru, Russell William Lamb) VR Gray (Nortex, Brian Raymond Silvia)

Kemp Strang Lawyers (Kation, Peter Lawrence Lewis) SOLICITORS: Lyons & Lyons Solicitors (Lamru, Russell William Lamb) Somerset Ryckmans (Nortex, Brian Raymond Silvia)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): SC 3081/1977; SC 1750/2002; SC 3354/2002

LOWER COURT JUDICIAL OFFICER: Young CJ in Eq; Hamilton J; Palmer J

LOWER COURT DATE OF DECISION: 22 June 2001; 19 July 2001; 19 April 2002; 9 December 2002; 20 December 2002; 29 April 2003; 20 June 2003 (Tcpt 2689); 20 June 2003 (Tcpt 2692); 26 June 2003; 2 March 2004; 29 November 2004; 19 May 2005; 13 October 2005; 23 May 2006; 27 July 2006

LOWER COURT MEDIUM NEUTRAL CITATION: [2001] NSWSC 511; [2001] NSWSC 610; [2002] NSWSC 337; [2002] NSWSC 1192; [2002] NSWSC 1245; [2003] NSWSC 354; [2003] NSWSC 581; [2004] NSWSC 121; [2004] NSWSC 1143; [2005] NSWSC 482; [2005] NSWSC 1062; [2006] NSWSC 480; [2006] NSWSC 768

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40366/06 CA 40523/06 SC 3081/97 SC 1750/02 SC 3354/02

ALLSOP P HODGSON JA BASTEN JA

21 December 2009 KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) [NO 2] Judgment 1 ALLSOP P: I agree with Basten JA. 2 HODGSON JA: I agree with Basten JA. 3 BASTEN JA: The principal judgment in this matter was delivered by the Court on 12 June 2009: [2009] NSWCA 145. Order (12) was in the following terms: (12) Direct that these orders not be entered for 28 days and thereafter only with leave of a judge of the Court and that, within 28 days, the parties shall: (a) apply by notice of motion for variation of these orders on the basis of - (i) any suggested failure to deal with an issue addressed on the appeal or cross-appeal, or (ii) any suggested failure of the orders to accord with the reasons for judgment;

(b) provide to the Court agreed figures, or submissions in support of their separate calculations, with respect to the terms of a declaration as to the respective loan account balances of Kation and Lamru as at 2 September 1997, and

(c) provide submissions (if any) as to the orders proposed in [185] above with respect to Nortex' costs. 4 Pursuant to the grant of leave, notices of motion were filed by each party, followed, in accordance with directions given by the Registrar, by written submissions. (Three affidavits were filed, but nothing turns on their contents.) As a result of a query as to the proper understanding of order (7) raised by the liquidator, the time provided by the Court was varied by the Registrar so as to permit a further notice of motion to be filed by the liquidator in respect of that order. In all, some 14 written submissions were filed and served, the last being dated 3 September 2009. Seeking to draw together the issues raised in three notices of motion, three affidavits and the written submissions, the matters requiring consideration are as follows:

(1) Accessorial liability: accounting conventions. (2) Accessorial liability: differential interest calculation. (3) Accessorial liability: legal fees. (4) Proposed resolution of legal expenses issue. (5) Conduct of case by liquidator: 1997 bonus payments. (6) Statement of loan account balances. (7) Costs. (8) Reconsideration of order as to trial costs. (9) Conclusions. (1) Accessorial liability: accounting conventions 5 The first matter raised by Lamru Pty Ltd ("Lamru") in its notice of motion was that the Court had failed to determine the liability of Mr Peter Lewis and Kation Pty Ltd ("the appellants") for the failure to apply the accounting conventions as to add-backs and as to interest in 1996 and 1997. The significance of this issue, as of others with respect to which Lamru sought to establish accessorial liability on the part of the appellants, derived from the likelihood of recovery from Nortex Pty Ltd (In liquidation) ("Nortex"). 6 Lamru identified this as an issue which had been raised before this Court, but not dealt with in its principal judgment. 7 That submission is not in dispute: accordingly, the matter (which was raised in ground 20 of the notice of cross-appeal) needs to be addressed. The issue, as identified in Lamru's statement of issues was as follows: "Did the trial judge err in deciding that Lewis' failure to apply the add-back agreement and the differential interest agreement, in the calculation of the 96 and 97 profits, was not shown to be dishonest?" 8 The appellants noted that the discussion in relation to the use of accounting conventions in the principal judgment carried no suggestion of any dishonesty: [2009] NSWCA 145 at [132]-[142]. That is so, but beside the point: that part of the principal judgment was addressing the appellant's challenge to his Honour's findings that the accounting conventions were to be applied. 9 There was no direct evidence relied upon by Lamru before the trial judge demonstrating dishonesty on the part of Mr Lewis in preparing accounts for the 1996 and 1997 financial years which did not apply the accounting conventions. Rather, in its submission to the trial judge Lamru relied upon a more general case based on inference drawn from other conduct of Mr Lewis and from Mr Lewis' failure to give evidence. The submission was put in the following terms: "This being a civil case, and the evidence of Mr Lewis' other dishonest actions being already received (and for all purposes), it is open to the Court, in connection with the issue of his state of mind in 96 and 97, to use the fact of the other dishonest conduct (stealing, swearing false affidavits, falsifying trust accounts, misleading the Court in answering notices to produce on oath, cheating Dufty, accessory dishonesty re Mark Lewis payments) as tending to show that he was acting dishonestly again in 96 and 97 when he, in breach of the add/back and differential interest agreements, accounted some of Lamru's money to his company." 10 Reference was made to the judgment of Matheson J in Grivas v Brooks (1997) 69 SASR 532 at 545-548, a case involving a claim of a "fraudulent system" in the issue of parking tickets: see at 545. As explained in a lengthy extract from the judgment of Bollen J in Sheldon v Sun Alliance Aust Ltd (1989) 53 SASR 97 at 144-148, so-called "propensity" evidence is a form of circumstantial evidence. That a state of mind revealed on one occasion may be inferred from conduct on other occasions is not in dispute. Whether an inference is to be drawn will, however, depend on the facts of the particular case. 11 The trial judge dealt with this question in his judgment of 19 May 2005: [2005] NSWSC 482 at [20]-[24]. His Honour noted that he had concluded that Mr Lewis procured Kation to make bonus payments to Mr Mark Lewis on the basis that Mr Lamb had agreed to them when he knew that not to be the case. Accordingly there had been a finding of dishonesty and fraud in relation to those payments which attracted accessorial liability: at [22]. His Honour continued at [23]: "However, I do not in relation to the steps taken to reverse the application of the conventions in relation to the 1996 and 1997 accounts find established the relevant element of dishonesty or fraud. There is considerable evidence that Lewis in a number of instances acted dishonestly. However, dishonesty cannot be presumed, but must be established in each particular instance. Here, there were two views available as to whether the conventions should be persisted with. They were the subject of considerable argument at the trial, the outcome of which was not self-evident. I am not prepared to find (particularly bearing in mind the gravity of the issue) that these departures from the conventions involved dishonesty or fraud." (2 Red 247) 12 Lamru's complaint appears to be that, although there may well have been a legitimate explanation of the abandonment of the accounting convention, Mr Lewis did not give evidence that he had acted on such a basis. In the absence of evidence from him, the appropriate inference was that his conduct was dishonest. 13 Although no doubt an inference of dishonesty was available, his Honour was correct in not drawing that inference in relation to the accounting convention. The finding that Mr Lewis had acted dishonestly on occasion did not warrant an inference that he acted dishonestly on all occasions. Rather, the inference was that he was prepared to act dishonestly in order to achieve a particular benefit to which he was not entitled. It does not follow that his state of mind was such as to invoke accessorial liability for breach of trust in circumstances where there was a reasonable basis for acting as he did. The challenge to the finding of the trial judge is rejected. (2) Accessorial liability: differential interest calculation 14 Although the manner in which interest was calculated on the loan account balances was separately identified as an issue by Lamru in the notice of motion, no separate argument was put with respect to that aspect of the accounting conventions. In any event, no different issue arises and Lamru's submissions as to an inference of dishonesty should be rejected. (3) Accessorial liability: legal fees 15 An issue was raised in respect of the 1997 accounts for Nortex which were reduced by an amount of legal expenses. The issue was whether those expenses were properly expenses of Nortex or were expenses incurred by the appellants in relation to their dispute with Lamru. The substantive issue was dealt with in the principal judgment at [172]-[186]. The Court noted that the approach adopted at [185] was not one which had been proposed by either party and the parties were therefore given leave to comment on the proposed resolution. However, Lamru read that discussion as to the responsibility of the appellants as arguably constituting a finding of accessorial liability for breach of trust. 16 That resolution involved apportioning the legal costs between Nortex on the one hand and the appellants on the other. Accordingly, in identifying an amount for which the appellants should bear responsibility, the Court was merely giving effect to that apportionment; it made no comment on accessorial liability of the appellants for the error in the loan accounts. 17 The claim for imposing accessorial liability for the breach of trust on the appellants was again based upon the general evidence of dishonesty on the part of Mr Lewis. Again, however, it was a question of drawing inferences on the basis of the specific accounting issues. 18 The correct approach to the allocation of the legal costs was even more obscure than the correct approach to the accounting conventions. The fact that this Court had taken a view not apparently adopted by the parties at any stage indicates the weakness of the submission that Mr Lewis must be taken to have acted dishonestly in allocating the expenses to Nortex. The circumstances are fully explained in the principal judgment in the passages set out above. Lamru's contention with respect to accessorial liability in this respect must be rejected. (4) Proposed resolution of legal expenses issue 19 Lamru did not take issue with the manner in which this Court proposed to deal with the allocation of responsibility for legal expenses incurred in 1997. The appellants, however, took issue with the proposed order on two bases. The first was an arithmetical issue: the Court had apportioned the costs "after reducing the account by the amount identified by the liquidator as an amount in which Nortex had no interest": at [185]. The Court reduced the amount of the expenses by $6,594, being the figure adopted by the liquidator as the amount not attributable to Nortex expenses. It then apportioned the balance, which was an incorrect calculation, because the liquidator's allowance had been displaced by the apportionment proposed by the Court, and was therefore irrelevant. Kation, however, contended that the amount of the costs paid by Nortex was lower than that used in the calculation by an amount of $7,500, a figure which was paid into the solicitors trust account, but not shown to have come from Nortex. That submission should be accepted. 20 It is therefore necessary to vary the amounts by which the loan accounts should be calculated. That process involves two steps. First, the calculation undertaken by the trial judge must be reversed by removing from Lamru's loan account the amount which his Honour included, namely 40% of $6,594. That amount must also be added back in to the Kation account, so that the base figures will now be $1,147,108 (Lamru) and $682,216 (Kation). 21 The figure for expenses ($176,050) must be reduced by the amount of $7,500. As 25% of that figure was held to be properly attributed to the expenses of Nortex, the amount to be distributed between the loan accounts was 75% of the balance, namely $126,412. Of that amount, 40% ($50,565) must be added to Lamru's account and the same amount deducted from Kation's account. The respective balances will then be $1,197,673 (Lamru) and $631,651 (Kation). 22 The appellants, however, raised a more fundamental objection to the approach adopted in the principal judgment, arguing that the costs should be approached on a piecemeal basis so as to exclude from the apportionment those costs which were incurred in seeking to set aside the statutory demand issued by Lamru. It was said that the statutory demand forced Nortex to defend its position to avoid being wound up. Further, it was argued that Nortex was forced to defend a challenge by Lamru to a resolution authorising Nortex to retain solicitors. Finally, it was submitted that Nortex incurred costs in the course of a mediation in 1997, which were also appropriately incurred on its behalf. 23 None of these submissions was novel, each having been raised in the course of the proceedings below and reiterated at the hearing of the appeal. They were taken into account in considering the appropriate apportionment, and the amount to be apportioned, in the principal judgment. Accordingly, the approach identified in the principal judgment should not be varied, but the arithmetical calculation will be varied, as noted above. (5) Conduct of case by liquidator: 1997 bonus payments 24 The principal judgment addressed complaints relating to the way in which the trial judge had determined issues with respect to three bonus payments made to Mr Mark Lewis (Mr Peter Lewis' son), described as "bonus payments", in the years 1995, 1996 and 1997. The issue raised for further consideration relates only to the payment in 1997. The trial judge determined in his 2004 judgment that each amount was paid without authority. In a further judgment of 19 May 2005, he noted the submission on behalf of the appellants that no loss had been suffered in respect of the 1997 year because "no payment was made": [2005] NSWSC 482 at [29]. His Honour then noted the submission that, in respect of the 1997 year, "the journal entry made by [Mr Peter] Lewis was made after the appointment of the provisional liquidator" and therefore had no effect, by virtue of s 471A of the Corporations Law. There was discussion in the same passage as to whether the liquidator did in fact "recognise the journal entries". His Honour concluded that the liquidator's conduct in respect of that matter had been "inconsistent and equivocal" but he must be "taken to have conducted himself on the basis that the payments were made". 25 The written submission in respect of that passage, said to have been ignored by this Court, was in the following terms (omitting references): "The Trial Judge's finding that Section 471A could be overcome by reference to the Liquidator's conduct of the proceedings is wrong for three reasons: … (b) the Trial Judge found that the Liquidator's conduct concerning this matter was 'inconsistent and equivocal'; and (c) in the First Judgment, the Trial Judge made a contradictory finding, namely that the Liquidator found that the amounts paid were in excess of the value of the services by Mark Lewis." 26 When the matter was raised for further consideration in the judgment of 19 May 2005, his Honour said that he did not "propose to allow any departure from the basis on which the trial was conducted, namely, that the payment had been made". 27 The matter was dealt with in the principal judgment of this Court, not inconsistently with the manner in which it was dealt with by the trial judge, namely that the payment must have been made prior to 30 June 1997 and before the appointment of the provisional liquidator. The journal entry, created later, could provide evidence of the payment but could not effect a payment made in the previous financial year. On the basis that the payment was made, the issue raised by Lamru was whether or not it constituted a valid expense of Nortex, or whether it was a payment made from Nortex' funds by Mr Peter Lewis, without there being any legal liability on the part of Nortex to make such a payment. 28 The appellants' notice of motion referred to the failure of this Court to consider and deal with "the oral submission" made in support of grounds 1A and 7 of the amended notice of appeal. Although reference was made to the relevant written submissions, and references were given to the judgments, both at trial and in this Court, in the notice of motion, there was no reference to the transcript of oral submissions. In the written submissions in support of the notice of motion, there was no reference to anything said in oral submissions. The Court has done its best to identify any relevant oral submission which related to this topic and expanded on the written submissions, but has been unable to find such material. If a party seeks to rely upon a particular submission and fails to identify either its content or where it may be found, there can be no basis for complaint if this Court is unable to deal with it. 29 The application to revisit orders relating to the 1997 bonus payment made to Mr Mark Lewis is rejected. (6) Statement of loan account balances 30 In its principal judgment, the Court directed the parties to provide it with either agreed figures or submissions in support of their separate calculations "with respect to the terms of a declaration as to the respective loan account balances of Kation and Lamru as at 2 September 1997": order (12)(b). 31 Order (7) made by the trial judge was in the following terms: "Declare that as a result of the foregoing declarations and orders the balances of the loan accounts with Nortex of Lamru and Kation respectively as at the date of the commencement of the winding up of Nortex (2 September 1997) should stand at: Lamru - $1,149,745.62 Kation - $679.579.55" 32 In its written submissions of 4 August 2009, Lamru contended that those balances should be adjusted so as to take into account the variation in respect of Nortex legal fees, which had been identified by this Court as involving a reduction in the expenses attributable to Nortex of $127,092.57. Lamru submitted that its loan account should be increased by an amount of 40% of that figure and Kation's account debited with the same amount, namely $50,837. 33 As indicated above, the Court accepts that the figure for which the appellants were responsible was not $127,092.57 but $126,412. Forty percent of that figure is $50,565. On that basis, the balances of the respective loan accounts have been recalculated at [21] above. 34 The appellants had challenged order (7) of the trial judge in their notice of appeal, ground 55. In their written submissions, this issue was identified as a "consequential matter", noting that adjustments would be required consequent upon resolution of the arguments on the appeal. The submission continued: "Those questions must also abide the outcome of the separate hearing relating to the Mark Lewis bonuses and the resolutions of appeals concerning a number of proofs of debt (including three lodged by Kation and other Lewis interest) which have not yet been argued or determined." 35 Consistently with that submission, the appellants argued that the Court should not attempt to restate the balances of the loan accounts. The appellants did not assert that the Court had not considered that submission, but nevertheless repeated it in submissions first filed on 10 July 2009. In a further submission of 13 August 2009, the appellants repeated their primary position (namely that this Court should not attempt to restate the balances of the accounts) and also took issue on a further basis with the adoption by the trial judge of calculations made by Lamru which formed the basis of order (7) below. In his judgment of 23 May 2006, his Honour had stated that the "correctness of the calculations [had] not been questioned by any other party": [2006] NSWSC 480 at [14]. The appellants contended that this statement was "erroneous and challenged in the appeal". 36 With respect, the reference to the challenge on the appeal is the passage which has been partly quoted above at [34]: that challenge did not address the specific calculations, but was limited to the contention that recalculation of the balances should await the resolution of further proceedings. 37 By letter dated 27 August 2009, the appellants gave notice that they wished to have an opportunity to file further supplementary submissions identifying errors contained in the loan account balances propounded by Lamru and adopted by the trial judge. Lamru opposed that course. The Registrar granted leave, but there is no suggestion that in doing so he sought to resolve the dispute as to whether such submissions were properly available under the orders made by the Court. 38 In submissions dated 31 August 2009, over the name of senior counsel for the appellants, figures were presented as to the effect of the findings made in relation to the "add-backs" accounting convention. Further, issue was taken with the arithmetical basis of the Lamru calculations presented to the trial judge. These were not issues which were raised by the appellants on their appeal and it is far too late for them to seek, in the exercise of leave granted pursuant to order (12)(b), to agitate those matters now. No attempt was made in the submissions to address the entirely reasonable objection that Lamru took to the course the appellants had proposed and then executed. The purpose of the leave granted by the Court was self-evidently to permit the formulation of a direction to give effect to the findings made by the Court, subject to the additional entitlement to address the substance of the order proposed at [185] and to identify any matter raised on the appeal or cross-appeal which had not been dealt with by the Court. The appellants' submissions failed to comply with this purpose. 39 The question of outstanding proceedings was the subject of explicit consideration in the principal judgment in determining whether to grant leave to appeal: at [220]-[236]. Those factors all strongly supported a refusal of leave to appeal to both parties. Leave was nevertheless granted, on the basis that the public interest in favour of resolution of the outstanding disputes was more likely to be favoured by the Court making the determinations proposed in the principal judgment, than otherwise. Those determinations include a form of declaration similar to that made by the trial judge, in relation to the outstanding balances of the loan accounts as at the date of appointment of the liquidator. That date, it may be recalled, is now more than 12 years in the past. Neither the public interest, nor the interests of third party creditors, favour any further delay. Accordingly, a declaration of the loan account balances should be made in the terms noted above. (7) Costs 40 In its notice of motion of 8 July 2009, Lamru sought an opportunity to make submissions on costs arising out of the rulings of the Court in relation to the outstanding issues. To the extent that the leave granted by the Court to make submissions in relation to outstanding issues may be understood as including a reference to make submissions in relation to costs arising from the resolution of those issues, that opportunity has been afforded. Lamru was unsuccessful in relation to the additional orders it sought and should not have its costs of the notice of motion. 41 Kation also sought costs in its notice of motion. It too has been unsuccessful in relation to the orders it sought and should not have its costs of the notice of motion. 42 The only other issue with respect to costs, raised by the notices of motion, was a declaration sought by the liquidator as to the operation of new order (14). The order identified in the principal judgment was as follows: "(14) To the extent that the liquidator's costs diminish Lamru's interests in the assets of the company, order that Kation and Mr Peter Lewis indemnify Lamru." 43 The liquidator identified an element of ambiguity in the operation of that order, which it seeks to have the Court clarify. It also sought to have further orders made providing for the manner by which it should give effect to order (14). 44 The ambiguity was said to arise from the use of the term "costs" which the liquidator contended was a reference to "the remuneration, fees and expenses of the liquidator (including all legal costs, fees and disbursements)", as identified in paragraph (a) of the proposed new order. The appellants submitted that the term "costs" in the order was limited to legal costs and disbursements. Lamru supported the broader construction proposed by the liquidator and sought support in the definition of "costs" in s 3(1) of the Civil Procedure Act 2005 (NSW). 45 Given that there is a dispute in this regard, with each party pursuing a construction which would further its interest, it is desirable that the dispute be resolved by clarification of the order. In this regard, the submissions of the appellants should be accepted. The Court noted in its principal judgment that there was no application on foot with respect to the quantum of the liquidator's remuneration: at [216]. The orders made by the Court related to legal costs and disbursements and did not in terms affect the rights (or otherwise) of the liquidator to recover his expenses generally from the trust fund: [217]. Accordingly, order (14) should be varied so as to add before the word "costs" the word "legal". 46 The second issue raised by the liquidator involved a request for further orders indicating how order (14) would take effect and at what point the indemnity would operate. The explanatory paragraphs involved a number of steps and assumptions. The assumptions were that the indemnity would operate only after:

(a) "all litigation affecting proofs of debt has been concluded"; (b) the administration, including the realisation of assets, has been completed, and (c) the liquidator has deducted from the fund "all payments made or incurred by the liquidator for his remuneration, fees and expenses but excluding the liquidator's costs". 47 As Lamru correctly submitted, to make orders based on these assumptions might impose undue constraints on the proper administration of the fund and might foreclose the possibility of steps available to the parties in the liquidation, for example, steps challenging the quantum of the remuneration of the liquidator. That course should not be adopted. 48 By way of illustration of the difficulties which could arise in formulating such orders, Lamru proposed that costs payable by the liquidator pursuant to adverse costs orders were his "personal liability not chargeable against the fund". As a general proposition, that position is untenable; nevertheless, it illustrates the possibility that some order might be sought in future proceedings seeking to limit the entitlement of the liquidator to recoup such costs. 49 The appellants submitted that the effect of order (14) was that the liquidator's costs should be paid from the reconstituted Nortex unit trust, first from Kation's share of the assets, secondly from Lamru's share of the assets and, to the extent that Kation's share of the assets was insufficient to satisfy the whole of the liquidator's costs, then Kation and Mr Peter Lewis would be liable to indemnify Lamru for such amount as may be chargeable against Lamru's interest in the assets of the trust. That understanding of the order is correct, but requires no variation of order (14) beyond that already noted by way of clarification of the term "costs". (8) Reconsideration of order as to trial costs 50 In its notice of motion, Lamru also sought to obtain a more beneficial order against the appellants with respect to the costs of the trial. The effect of the orders made on the appeal was to leave in place order (11) made by the trial judge, namely that the appellants pay 70% of Lamru's costs of the proceedings at trial. In this Court, Lamru also obtained an order that the liquidator pay 30% of part of its costs at trial: order (6). 51 Lamru submitted that its additional successes in this Court should have led to recovery of a greater proportion of its trial costs against the appellants. 52 The liquidator noted that this submission appeared to go beyond the grant of leave, but that if leave were extended to allow Lamru to be heard in relation to costs more generally, he would also wish to be heard on costs. (9) Conclusions 53 Leaving to one side the question of the orders in relation to costs, the only variation of the orders made on 12 June 2009 required by the subsequent submissions, pursuant to leave granted in order (12), is the variation of order (7), adding to the orders made by the trial judge a new order (14), so as to insert the word "legal" before the word "costs". 54 Both Lamru, without seeking leave, and the liquidator through an application for leave, wish to make submissions in relation to the costs of the trial and the cross-appeal. In relation to the costs orders made at trial, that may involve a variation of orders (11) and (13) made by the trial judge on 23 May 2006 and entered on 15 August 2006. Such submissions may also seek variation of orders (6) and (11) made by this Court on 12 June 2009. Any parties wishing to make submissions in relation to those orders should have leave to do so within 28 days of the delivery of this judgment, together with any reply to the submissions of other parties to be filed and served within 14 days thereafter. 55 The Court should also provide for the immediate entry of orders made on 12 June 2009, with the exception of orders (6) and (11) and with the variation to order (7) noted above. 56 The Court makes the following orders:

(1) Vary the amounts specified in the declaration, being order (7) made by the trial judge, as to the balances of the loan accounts, to the following amounts: Lamru - $1,197,673 Kation - $631,651.

(2) Vary new order (14) (being order (7) made by this Court on 12 June 2009) to add "legal" before "costs".

(3) Grant leave to all parties to file and serve: (a) within 28 days of this judgment submissions with respect to the variation of orders (6) and (11) made on 12 June 2009 as to the costs of the trial and in this Court, and (b) submissions in reply within a further period of 14 days.

(4) Direct that the orders made on 12 June 2009, other than orders (6) and (11), as varied by these orders be entered forthwith.

(5) Otherwise dismiss the motions filed by each party after 12 June 2009, with no order as to the costs thereof.

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