appellant. The first respondent was ordered to pay the applicant's costs of the application to be assessed on the indemnity basis, with those costs to be costs in the voluntary administration of the first...
Key principles
Where an external administrator successfully applies for review of a remuneration determination under the Insolvency Practice Schedule (Corporations), the costs of that...
A person granted leave to be heard under r 2.13 of the Corporations Proceedings Rules (Qld) without becoming a party to the proceeding may only be directed to pay additional...
Where a non-party creditor's appearance does not cause additional costs because the same points were taken by a party represented by the same legal practitioners, no order for...
The distinction between an objector and an adversary for costs purposes is elusive; however, opposition made for an ulterior purpose or involving tactics of technical objection...
Issues before the court
Whether the administrator's costs of a successful application for review of remuneration determination should be costs in the voluntary administration
Plain English Summary
A voluntary administrator successfully applied to increase his remuneration from the amount determined by creditors. The court ordered the company to pay the administrator's legal costs on an indemnity basis (a higher standard than usual) as costs of the administration. Two creditors had opposed the application but were not formal parties. The court held that one creditor caused no extra costs because she used the same lawyers and arguments as the company. The other creditor raised additional issues, but because the administrator could recover all his costs from the company anyway, there was no need to make a separate costs order against that creditor.
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Catchwords
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –COSTS – COSTS OUT OF FUND OR PROPERTY – OTHER
Whether non-party creditors who appeared at the hearing should be ordered to pay costs against the applicant
Whether the indemnity basis of assessment should apply to any costs order against the non-party respondents
Cited legislation
No linked legislation citations have been extracted yet.
PARTICULAR CASES
– where the court ordered that a remuneration determination be varied
– whether the administrator’s
costs of the application should be
costs in the voluntary administration – whether those costs should be
assessed on the indemnity
basis
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –
COSTS – PARTIES AND NON-PARTIES – NON-PARTIES
GENERALLY –
OTHER PARTIES – where two non-party creditors appeared – whether
additional costs were incurred by
the appearance of either non-party –
where there is an order that the administrator’s costs of the application
should
be costs in the voluntary administration to be assessed on the indemnity
basis – whether either non-party should be ordered
to pay costs against
the applicant
Civil Proceedings Act 2011 (Qld) s
15
Corporations Act 2001 (Cth) s 58AA, s 411, s 600K, s 1337B,
sch 2
Insolvency Practice Schedule (Corporations) s
60-11
Corporations Proceedings Rules (Qld) r 2.13, r
9.2A
Uniform Civil Procedure Rules 1999 (Qld) r 704, r 995, ch 17A,
sch 1A
BE Australia WD Pty Ltd (subject to a deed of company
arrangement) & Ors v Sutton [2011] NSWCA 414
(2011) 82 NSWLR 336, cited
Calderbank v Calderbank [1976] Fam 93, cited
In Re Buckton
Buckton v Buckton [1907] UKLawRpCh 98
[1907] 2 Ch 406, cited
Ji Woo
International Education Centre Pty Ltd [2019] NSWSC 338,
cited
Michaela Manicaros v Commercial Images (Aust) Pty Ltd [2022] QSC
83, cited
Re Lonnex Pty Ltd (in liq) (No 2) [2019] VSCA 62
(2019) 57 VR 238,
applied
Re Mossgreen Pty Ltd (in liq) (ACN 163 353 053) [2019] FCA
1771, applied
Re NRMA Limited (No 1) [2000] NSWSC 82
(2000) 156 FLR 349,
cited
Re Pan Pharmaceuticals Ltd & Anor
Selim v McGrath &
Ors [2004] NSWSC 129
(2004) 48 ACSR 681, cited
Re Pasminco [2004] FCA 656
(2004) 49 ACSR 470,
applied
Spitfire Corporation Limited (in liquidation) and Aspirio (in
liquidation) [2022] NSWSC 579, cited.
Stimpson v Allied Rural Pty Ltd
(subject to deed of company arrangement) & Ors [2022] QSC 74,
cited
Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and
Construction Pty Ltd (2021) 7 QR 1, cited
Judgment (59 paragraphs)
[1]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - COSTS OUT OF FUND OR PROPERTY - OTHER PARTICULAR CASES - where the court ordered that a remuneration determination be varied - whether the administrator's costs of the application should be costs in the voluntary administration - whether those costs should be assessed on the indemnity basis
[2]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - PARTIES AND NON-PARTIES - NON-PARTIES GENERALLY - OTHER PARTIES - where two non-party creditors appeared - whether additional costs were incurred by the appearance of either non-party - where there is an order that the administrator's costs of the application should be costs in the voluntary administration to be assessed on the indemnity basis - whether either non-party should be ordered to pay costs against the applicant
Spitfire Corporation Limited (in liquidation) and Aspirio (in liquidation)[2022] NSWSC 579, cited.
[19]
Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors[2022] QSC 74, cited
[20]
Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and Construction Pty Ltd(2021) 7 QR 1, cited
[21]
[1] On 9 May 2022 the court ordered that the remuneration determination made at the second meeting of creditors in the voluntary administration of the first respondent on 10 May 2021 be varied to the amount of $228,891 plus GST and made directions for the interested parties to make submissions on costs ("principal judgment").[1]
[2] The applicant applies for an order that the applicant's remuneration costs and expenses of the application be costs in the voluntary administration of the first respondent and be paid in full out of the assets of the first respondent. None of the parties opposes an order that the applicant be indemnified from the assets of the first respondent.
[3] However, it is not appropriate by an order for costs to make an order that the applicant recover remuneration or expenses of the application that are not legal costs. Accordingly, the appropriate order against the first respondent is that the applicant's costs of the application be paid by the first respondent. It is also appropriate to order that those costs be assessed on the indemnity basis.[2] That is because the costs of an application by an external administrator for remuneration which is successful are ordinarily ordered to be assessed on the indemnity basis.[3]
[4] An order that the costs ordered to be paid by the first respondent be costs in the voluntary administration is not opposed.
[5] Next, the applicant seeks an order that the second and third respondents pay the applicant's costs to be assessed on the standard basis after 30 July 2021 and on the indemnity basis from 30 August 2021.
[6] Each of the second and third respondents opposes any order for costs against them.
[7] The applicant submits that the opposition of the second and third respondents justifies an order for costs being made against each of them because they went beyond being an objector and became an adversary who should be liable for costs. In support of that contention, the applicant submitted that the grounds of opposition raised by the second and third respondents contained serious allegations against the integrity of the applicant that were not made out or were expressly rejected and that the ground based on the invalidity of the applicant's appointment was rejected because the respondents approbated the validity of the appointment.
[22]
[9] The third respondent's opposition and the grounds relied upon in the hearing that resulted in the principal judgment were the same as for the first respondent. They did not include the additional written and oral submissions made by the second respondent that ranged over a large number of subject matters.[4]
[10] The principal judgment decided an application for review of a remuneration determination for an external administrator under the Insolvency Practice Schedule (Corporations) ("IPSC").[5] It is a proceeding provided for by the Corporations Act2001 (Cth),[6] which confers jurisdiction on this court.[7] The relevant rules of this court include the Corporations Proceedings Rules (Qld).[8]
[11] The third respondent opposes any separate order for costs against her. She submits she was not a party to the proceeding and her appearance was pursuant to an entitlement to be heard on the application for review, having served on the applicant a notice under the relevant rule.[9]
[12] The power of this court in relation to costs of the proceeding is expressly provided for in the IPSC:
(a) an order determining any question arising in the external administration of the company;
[32]
(d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;
[14] Although named in the title of the principal judgment as the third respondent, no formal order was made that the third respondent be joined as a party to the proceeding and she was not named as a respondent to the application. Accordingly, it is correct to treat the third respondent's appearance as that of an opponent or objector who was entitled to be heard under the relevant rule.
[15] Under r 2.13 of the Corporations Proceedings Rules (Qld), the appearance at the hearing of a corporations proceeding of a person who is or claims to be a creditor, contributory or officer of a corporation may occur by reason of a grant of leave to be heard without becoming a party to the proceeding.[11] In that event, specific provision is made in relation to an order for costs against a person to whom leave is given to be heard, as follows:
[34]
"(2) If the court considers that the attendance of a person to whom leave has been granted under subrule (1) has resulted in additional costs for any party, or the corporation, that should be borne by the person to whom leave was granted, the court may -
[35]
(a) direct that the person pay the costs;
(b) order that the person not be heard further in the proceeding until the costs are paid or secured to the court's satisfaction.
[36]
(3) The court may order that a person who is, or who claims to be, a creditor, contributory or officer of a corporation be added as a respondent to the proceedings.
[37]
(4) The court may grant leave to a person under subrule (1) or order that a person be added as a respondent to a proceeding under subrule (3) -
[38]
(a) on application by the person or a party to the proceeding; or
(b) on the court's own initiative. ..."
[39]
[16] The significance of r 2.13(2) of the Corporations Proceedings Rules (Qld) is that ordinarily a person who is granted leave to be heard may only be directed to pay the additional costs that result from their attendance.
[17] By analogy, in the present proceeding, the third respondent's attendance has not resulted in additional costs for the applicant because the same points relied upon by her were taken by the first respondent and she appeared by the same counsel instructed by the same solicitors who acted for the first respondent.
[18] The third respondent submitted that cases decided in relation to r 2.13(2)(a) show that costs should not be ordered against a person who was entitled to be heard, as she was, who was not a party, in circumstances where their attendance did not cause additional costs to the applicant.[12]
[19] In my view, no order for costs should be made against the third respondent in those circumstances.
[40]
[20] The second respondent was also entitled to be heard on the application as a creditor who gave the applicant a notice of objection stating his intention to appear at the hearing of the application and setting out the issues he sought to raise before the court.[13] He too submits that he was not a party to the proceeding because an order joining him as a respondent was not made. That submission should be accepted.
[21] However, his position differs to an extent from the third respondent because his opposition to the order sought by the applicant was not confined to the grounds relied upon by the first and third respondents, as previously mentioned.
[22] The second respondent submits that the current application for costs is before a costs assessor pursuant to an order of the Magistrates Court of Queensland made on 18 March 2022. There is no evidence of that and the Magistrates Court of Queensland has no jurisdiction to make an order for costs of the current proceeding as an application made for review of a remuneration determination of the creditors of company under s 60-11 of the IPSC.
[23] The applicant relies upon a recent decision of this court in relation to the costs of an application for the determination of the remuneration of a provisional liquidator.[14] The applicant submits that ordinarily an objector who exercises a right to object will only be ordered to pay costs in exceptional circumstances or where the objections raised were frivolous and without substance and not properly and justifiably advanced, even if unsuccessfully.[15] However, it should not be forgotten that the cases where the relevant discussion of principle took place concerned the opposition of a member of a corporation to a member's scheme of arrangement under s 411(1) of the Corporations Act2001 (Cth) or equivalent.[16] The applicant further relies on the distinction between an opponent who is merely an objector and one who becomes an adversary such that they should be liable for costs.
[41]
[1]Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors[2022] QSC 74.
[18]Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors[2022] QSC 74 [71].
[59]
[19]Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and Construction Pty Ltd(2021) 7 QR 1 [68]; Calderbank v Calderbank[1976] Fam 93.
Parties
Applicant/Plaintiff:
Stimpson
Respondent/Defendant:
Allied Rural Pty Ltd
Cases Cited (3)
(2011) 82 NSWLR 336
(2019) 57 VR 238
(2000) 156 FLR 349
AI Analysis
Outcomeappellant
Disposition:
The first respondent was ordered to pay the applicant's costs of the application to be assessed on the indemnity basis, with those costs to be costs in the voluntary administration of the first respondent. No order for costs was made against the second or third respondents.
[8] The applicant submits further that neither the second nor third respondent submitted that the work performed for which remuneration was being sought was either unnecessary or not properly carried out by reference to the tasks, times or rates relied upon by the applicant. The application was necessary because of the approach put forward by the second respondent that the remuneration should be determined as an "ad valorem" amount being 20 per cent of the value of the admitted proofs of creditors entitled to share in the fund provided for under the deed of company arrangement.
[24] In my view, the distinction relied upon by the applicant is elusive. However, I do not doubt that opposition made for an ulterior purpose or tactics of technical objection and delay are instances where it may be appropriate to make an order for costs against an objector.
[25] To the extent that the second respondent relied on the same points made by the first and third respondents, his attendance did not cause additional costs of any significance to the applicant. Second, it was always necessary for the applicant to bring the application for review of the remuneration determination once the second meeting of creditors had resolved that his remuneration as voluntary administrator be fixed on an "ad valorem" basis and at 20 per cent of the creditor value as admitted for dividend purposes under the deed of company arrangement.[18] On the bringing of the application for review of that determination under s 60-11 of the IPSC, the material relied upon by the applicant as to a reasonable remuneration was necessarily required.
[26] Accordingly, the additional costs incurred by the applicant on the application by reason of the second respondent's opposition over and above the grounds of opposition advanced by the first and third respondents may be seen to be concerned mostly with his written and oral submissions that ranged over the additional subject matters that were required to be dealt with. At least to that extent, it may fairly be said that the second respondent's attendance occasioned additional costs for the applicant.
[27] However, in circumstances where the first respondent will be ordered to pay the applicant's costs of the application to be assessed on the indemnity basis and that those costs are costs in the voluntary administration of the first respondent, it is unnecessary to order that there be a separate assessment of the additional costs that resulted from the second respondent's additional grounds of opposition, at least in the absence of any suggestion that the first respondent will be unable to pay the costs ordered against it.
[28] Last, the applicant relies upon an offer made without prejudice save as to costs in the form of a Calderbank offer[19] as a ground for an order that both the second respondent and third respondent should be ordered to pay the applicant's costs of the application to be assessed on the indemnity basis. In the circumstances, given that I do not consider that either the second respondent or the third respondent should be ordered to pay the applicant's costs, in any event, it is unnecessary to consider whether any order for costs to be assessed on the indemnity basis by reason of a Calderbank offer should be ordered against the second respondent or the third respondent.