Loo, in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Quinlan

1. The appellant pay the costs of the first, second, third and fourth respondents of and incidental to the application for an extension of time to seek leave to appeal, the application for leave to appeal and the appeal, such costs to be on a party-party basis, as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 These reasons for judgment deal with issues of costs consequent upon the judgment of the Full Court in Loo, in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Quinlan (Liquidator) [2021] FCAFC 186, delivered on 26 October 2021. These reasons should be read together with the 26 October 2021 reasons. We will adopt the abbreviations used in those reasons. 2 Pursuant to orders made on 26 October 2021, the parties have filed written submissions on costs. In addition, the Liquidators rely on an affidavit of Catherine Crawford, a solicitor at K&L Gates, the solicitors for the Liquidators, dated 2 November 2021, attaching relevant correspondence. 3 Mr Loo contends that the appropriate order as to costs is that there be no order as to costs, with costs to lie where they fall (noting that, to date, the costs of Elysium and the Liquidators have been paid out of the funds held by the Liquidators). In the alternative, Mr Loo contends for an order that he pay the costs of Elysium. 4 The Liquidators contend that there is no reason why costs should not follow the event. Accordingly, they submit that Mr Loo, as the unsuccessful party, should be required to pay costs. Further, it is contended that these costs should be payable on an indemnity basis. 5 Elysium supports the costs orders sought by the Liquidators. 6 By way of background and context, we note that in the proceeding at first instance an order was made on 19 February 2020 that the representative defendants be indemnified in respect of their legal expenses reasonably incurred in so acting, such expenses to be paid out of the accounts described in Annexure A to the plaintiffs' interlocutory process filed 31 July 2019, as agreed by the Liquidators or taxed. 7 Further, in the present proceeding, an order was made on 22 July 2021 that Elysium is to be indemnified in respect of its legal expenses reasonably incurred in this matter (including any adverse costs orders), as agreed by the Liquidators or taxed, and without prejudice to the Liquidators' ability to seek orders that another party including Mr Loo pay those expenses either directly to Elysium or to the Liquidators in the event that the Liquidators have already indemnified Elysium, including on an indemnity basis, such expenses to be paid out of the accounts referred to in the 19 February 2020 order described above. 8 In our view, the matters raised by Mr Loo in his written submission do not provide a reason to depart from the usual order that costs follow the event. In particular, we do not accept that the matters raised by Mr Loo in paragraph 4 of his written submission - namely, that Mr Loo was appointed as a representative defendant in the proceeding at first instance and pursued the appeal in the same capacity; the point taken on appeal was reasonably taken; the delay in distribution of the assets has had the effect of increasing the size of the pool; and the situation arose due to investment positions being kept open - constitute reasons to depart from the usual order as to costs. Accordingly, it is appropriate to order that Mr Loo pay the Liquidators' and Elysium's costs of and incidental to the appeals. It is also appropriate that Mr Loo pay the costs of the application for an extension of time to seek leave to appeal and of the application for leave to appeal, which were heard at the same time. 9 We note that in the Liquidators' written submission dated 2 November 2021, reference is made in paragraphs 2 and 12 to the costs of the other defendants at first instance (who are named as respondents to the appeal, but did not participate). It appears to be suggested that Mr Loo should be ordered to pay the costs of those respondents in considering whether or not to participate in the appeal. We do not consider it necessary or appropriate to order Mr Loo to pay the costs of the other respondents, in circumstances where those respondents did not participate in the proceeding. 10 Turning to the application that the costs payable by Mr Loo be payable on an indemnity basis, in our view the matters raised by the Liquidators in their written submissions do not provide a sufficient basis to order indemnity costs. It is not suggested, for example, that Mr Loo made allegations which ought never to have been made, or that the case was one where the applicant, properly advised, should have known that he had no chance of success (see Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5]). It may be accepted that, to the extent that the Liquidators and Elysium are not able to recover their reasonable costs from Mr Loo these costs will be borne by the investors as a whole. However, this does not provide a sufficient basis to order Mr Loo to pay costs on an indemnity basis. Further, the character of the proceeding at first instance (a proceeding seeking judicial advice and directions) does not provide a basis to order indemnity costs in respect of the appeal. 11 We note for completeness that, if and to the extent that Elysium has already been reimbursed by the Liquidators for costs it has incurred in the proceeding, it will be necessary for Elysium to account to the Liquidators for the amounts Elysium receives from Mr Loo in respect of the same legal work and disbursements. 12 We will therefore make an order that Mr Loo pay the Liquidators' and Elysium's costs of and incidental to the application for an extension of time to seek leave to appeal, the application for leave to appeal and the appeal, such costs to be on a party-party basis, as agreed or taxed. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Middleton, Beach and Moshinsky.