(b) that it would not be proper or appropriate in this case to make an order that the second defendant liquidator pay any costs personally.
9 Mr Weaver, on the other hand, put that the general discretion as to costs applied in this sort of case, and cited the decision of the Court of Appeal in Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21. He submitted that the order for dealing with the third defendant's costs had been dealt with in 2002 and should not be reopened and that there were factors in the instant case which, despite any general rule to the contrary, warranted an order for costs against the liquidator personally. These included the fact that the liquidator was, on the findings I had made in 2002, not an officer of the court, but a person who was very much involved in the decision to make the disclaimers. Further, the plaintiff was a completely innocent party who had been foisted with contaminated product by the deliberate act of the company (and the second defendant), the second defendant had made a profit out of the liquidation and there was no reason why he should not be responsible for the costs of the failed disclaimers.
10 As to the first point as to the liability for the third defendant's costs, Mr Jackman read evidence that showed that the second defendant had called the plaintiff's attention on more than one occasion to the fact that the third defendant was not an appropriate party to the dispute and should be dropped from the case.
11 There seems no doubt that those suggestions were made. However, in my earlier judgment I noted that the present case was a very unusual one. The third defendant was the purchaser of the first defendant's business. The sale was negotiated out by the liquidator. Although there was a clause in the sale agreement by which the company agreed to keep indemnified the third defendant in respect of any liability arising out of the claim in respect of the contaminated Fullers Earth, that was more window dressing than anything else as the company had no assets. The third defendant was a company which appeared to have the capability of being able to process the contaminated product in New Zealand at a profit.
12 In the peculiar circumstances of this case it seemed to me reasonable, despite the letters written to it, for the plaintiff to involve the third defendant in the litigation as the only practicable solution in getting rid of the contaminated product. I clearly thought that in 2002 when I made the order for costs against the first defendant, and I see no reason to come to any other view.
13 As to the question as to whether the liquidator should pay costs at all, I fully appreciate the normal rule that costs orders are not made against liquidators save in special circumstances. However, one special circumstance here is that the liquidator is not a court appointed liquidator and so an officer of the court, but originally a members' appointed voluntary liquidator and later a creditors' voluntary liquidator. Moreover he was personally involved more than the "normal" liquidator would have been in the rearrangement of the company's business, the sale to the third defendant and the disclaimer of the contaminated produce, leaving Mrs Sullivan to bear the loss. I fully understand that he expected the Malaysian principal of the company to provide sufficient funds to discharge all liabilities and that that company reneged, but, in a situation where there was nothing binding the Malaysian principal to pay, a professional insolvency practitioner such as the second defendant would ordinarily be expected not to be involved with a members' voluntary winding up until there was a binding promise to pay the money to discharge all debts and liabilities.
14 The matter of when a liquidator might be required to pay costs personally has been considered on a number of occasions recently, significantly by Austin J in Cresvale Far East Ltd v Cresvale Securities Ltd (No 2) (2001) 39 ACSR 622; the appeal from that judgment reported as Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21; Hypec Electronics Pty Ltd v Mead (2004) 61 NSWLR 169 and the appeal from that judgment reported as Mead v Watson (2005) 23 ACLC 718.
15 The headnote of the last mentioned case commences:
"The question to be answered … was whether the liquidator's conduct of the litigation on behalf of the company was negligent or unreasonable. A degree of personal misconduct or wilful recklessness on the part of the liquidator was not required: mere negligence or mistake or the incurring of costs unreasonably or unnecessarily was sufficient to constitute the relevant degree of impropriety to justify an order that the costs be paid by the liquidator personally."