UTSA Pty Ltd (in liq) v Ultra Tune Australia P/L [1998] VSC 13

Supreme Court of Victoria|1998-08-03|Before: CHERNOV, J.

Practice and procedure - Costs - Costs against non-parties - Jurisdiction of the Court to entertain application for non-party costs where judgment regularly entered - Corporations Law, s.1335(2) - History - Whether s.1335(2) of the Corporations Law limits the power of the Supreme Court to award costs under s.24(1) of the Supreme Court Act 1986 (Vic) - Whether proceeding was "under this Law" - Supreme Court Act 1986 (Vic), s.24(1) - Trade Practices Act 1974 (Cth), - Federal Court of Australia Act, s.43.

On 16 June 1998, the first defendant, Ultra Tune Australia Pty Ltd (UTA), issued a summons against Maxwell Roger Latimer and Godfrey David Cullen (the respondents) for an order that they pay and be jointly and severally liable for the costs of this proceeding, as ordered by me on 21 May 1998 against UTSA Pty Ltd (in liquidation) (UTSA) and Titan Corporation Ltd (Titan). The judgment that I pronounced, was authenticated on 26 May 1998. At the time of pronouncing my judgment, I reserved liberty, inter alia, to UTA to bring such proceeding as it may be advised in respect of the recovery of any costs from persons other than parties to the proceeding.

By summons issued on 23 June 1998, the respondents applied to set aside the UTA summons on the ground that the Court has no jurisdiction to entertain it. The respondents relied on two grounds.

(a) Since judgment in the proceeding has been regularly entered, the Court has no jurisdiction to exercise its discretion under s.24(1) of the Supreme Court Act 1986 (the Act) to order that costs be paid by the respondents.

(b) In any event, in this case, s.24(1) of the Act is to be read subject to s.1335(2) of the Corporations Law (the Law), which empowers the Court to order costs only against parties to the principal proceeding. Since the respondents were not parties to the principal proceeding, no order for costs as sought by UTA can be made against them.

Before considering each of the respondents' arguments, I mention that it was common ground between the parties that the reservation to UTA of the right to issue its summons, being, in effect, liberty to apply for costs against the non-parties, was not relevant to the determination of the respondents' claim.

The respondents claim that once a proceeding is concluded by regular entry of judgment, the judicial role of the Court is at an end in respect of that proceeding. If a party is dissatisfied, the only remedy is an appeal to a higher Court. Although the Court may reconsider a judgment before it is formally entered, it may not do so after formal entry (Bailey v. Marinoff [1971] HCA 49; (1971) 125 C.L.R. 529, at p.530; Gamser v. Nominal Defendant [1977] HCA 7; (1977) 136 C.L.R. 145). These submissions were not challenged by UTA.

The respondents contend that since judgment in the proceeding has been regularly entered, a consideration by the Court of the UTA summons would involve it in exercising its discretion over costs under s.24(1) of the Act; a discretion which it had already exercised on 21 May 1998. Hence, it has no jurisdiction to entertain the UTA summons. In support of this contention, the respondents relied on the unreported decision of Hayne, J. in Ken Morgan Motors Pty Ltd v. Toyota Motor Corporation Australia Ltd (Supreme Court, 23 November 1993).

In that case, the plaintiff, Ken Morgan Motors Pty Ltd, succeeded at trial and was awarded costs. The Full Court allowed an appeal and ordered the plaintiff to pay the costs of some of the defendants, including Toyota Finance Australia Ltd (TFA). It also ordered a firm of solicitors (the solicitors), which was not a party to the proceeding, to pay some of the costs. After the order of the Full Court had been entered, TFA sought an order for third party discovery against the solicitors and two trade organisations in aid of a proposed proceeding against them, or some of them, for non-party costs under s.24(1) of the Act. This application came on for hearing before Hayne, J., who declined to make orders for third party discovery because, in his view, TFA would not succeed in any application for costs against those third parties, having regard to the fact that the Full Court had already exercised its discretion on that issue under s.24(1) of the Act and, since its judgment was regularly entered, the Court could not entertain again an application of TFA. His Honour came to that conclusion notwithstanding that it was submitted by TFA that its proposed application for costs against the non-parties, would be an application for a supplementary order, not one varying or detracting in any way from the judgment already given.

The respondents submitted that his Honour's conclusion that the Court could not order costs against non-parties, had nothing to do with the Full Court's decision to order costs against a non-party, namely, the solicitors. They said that the decision was based solely on the ground that the judgment (of the Full Court) was entered and it was, thereafter, too late to seek orders against non-parties in respect of the concluded proceeding. The fact is, however, that the case before his Honour was one in which the question of what order should be made against a non-party to the proceeding, had been considered and ruled upon by the Full Court. That his Honour recognised this, is clear from a number of passages in his judgment. No such determination, however, has been made by me in the context of this case. I have not considered the question of whether costs should be ordered against non-parties and, therefore, if the UTA summons is heard, there will be no "re-agitation of issues that the parties to the judgment, had long since believed to be at an end". Thus, in my view, the Ken Morgan case was relevantly different from the situation in the present case.

A similar view was reached by Byrne, J. in the unreported case of Akedian Co Ltd v. Royal Insurance Australia Ltd, Sun Alliance Australia Ltd (Supreme Court, 19 February 1998). His Honour had pronounced judgment for the plaintiffs against one of the defendants and also ordered it to pay the plaintiff's costs. The plaintiff applied by summons against the underwriters, C.E. Heath Underwriting and Agency Services, for orders that they be jointly and severally liable with the defendant on the question of the plaintiff's costs. The underwriters contended that his Honour had no jurisdiction to entertain the plaintiff's application because he had already dealt with the question of costs. They relied on the observations of Hayne, J. in the Ken Morgan case referred to earlier. Byrne, J. distinguished that case on the basis that his Honour held there that orders had already been made against a non-party (the solicitors) by the Full Court and that accordingly, the power should not be re-exercised. Byrne, J. held that the orders sought against the underwriters in the case before him were truly supplemental and did not affect the legal impact of the judgment which he had earlier pronounced.

Even if I am wrong in my view that the Ken Morgan case can be distinguished from this case, I prefer the views of Byrne, J. and those of the Full Court of the Federal Court in Caboolture Park Shopping Centre Pty Ltd (in liq) v. White Industries (Qld) Pty Ltd [1993] FCA 471; (1993) 45 F.C.R. 224; (1993) 117 A.L.R. 253, that orders sought in a situation such as the present, are truly supplemental and do not effect the legal impact of the earlier judgment. In my opinion, the consideration by the Court of an application for costs against a non-party, even after it has given judgment on the issue of costs inter-partes in the proceeding, would amount to the exercise of a new discretion and not a re-agitation of issues previously considered. In other words, it would not involve re-consideration of matters that had been decided on an earlier occasion. Whether the Court proceeds to exercise that jurisdiction, however, is a separate question.

In the Caboolture Park Shopping Centre case, the successful respondent, after final orders were made in its favour on its cross-claim, including an order for party-party costs against the applicant, applied for an order that the solicitors acting on behalf of the insolvent applicant, pay the costs awarded in its favour against the applicant. The Full Court rejected the solicitors' argument that the making of final orders including costs orders, meant that the Court lacked jurisdiction to make, at a later stage, supplementary orders for costs against non-parties. (The substantive matter raised in that case was later considered by Goldberg, J. in White Industries (Qld) Pty Ltd v. Flower & Hart (a firm) [1998] 806 F.C.A. (14 July 1998). His Honour ordered that the solicitors pay the respondent's costs on a solicitor-client basis.)

Section 43 of the Federal Court of Australia Act 1976 (Cth), provides in sub-s.(1):

"Subject to subsection (1A), the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of prosecution) other than proceedings in respect of which any other Act provides that costs shall not be awarded."

Sub-section (2) provides that "except as provided by any other Act, the award of costs is in the discretion of the Court or Judge."

The Full Court held that the section conferred upon the Federal Court jurisdiction to award costs not only against persons who were parties, but also against persons who were not parties.

Their Honours recognised the common law rule that once a judgment of the Court has been passed and entered, the Court thereafter lacks power to make an order which alters or sets aside that judgment. They went on to say, however, that in an appropriate case, the Court has power to make supplemental orders after judgment has been entered. They referred to Preston Banking Co v. William Allsup & Sons [1895] 1 Ch. 141, where Lord Lindley recognised, at pp.143-4, that the Court may make supplemental orders. The jurisdiction to make such orders, said the Full Court, was not limited to the making of orders in aid of enforcement and working out of original orders. They said, at p.265 (A.L.R.), that:

"cases such as Ford-Hunt v. Raghbir Singh [1973] 1 W.L.R. 738; [1973] 2 All E.R. 700; Universal Homes Ltd v. Kloet [1976] 1 N.Z.L.R. 246; Neylon v. Dickens [1987] NZCA 55; [1987] 1 N.Z.L.R. 402; and Cowan v. Cavanagh [1978] VicRp 61; [1978] V.R. 665, are all examples of supplemental orders being made in proceedings where an order for specific performance has initially been made. But it does not follow that the power to make supplemental orders is limited to such a case. That the present case involves the making of a supplemental order is made more apparent when the form of the appropriate order is considered. In our view that order would be that the solicitors pay the costs of White Industries (Qld) Pty Ltd on an indemnity basis and that payment by the solicitors operate to discharge the liability of Caboolture. So framed it is clear that the Court has no need in any way to vary or alter any order previously made by it."

Their Honours pointed to the fact that in the case before them, White Industries did not seek to vary or alter the initial order. It sought a supplemental order. Relevantly, they concluded, at p.265 (A.L.R.), that:

"The principle behind denying the right of a Court to vary or alter a judgment regularly given and entered is the need for finality of litigation. The Court has adjudicated upon the facts of the claim brought by a plaintiff against a defendant, found for one side and entered the relevant judgment. Neither the facts nor the law are to be agitated again, save on an appeal. But the issues involved where a claim is made against a solicitor for costs by a party to the litigation have not been determined by the judgment which has been entered. They remain yet to be resolved."

Consequently, it is my view, that the entry of judgment in this case did not deprive the Court of jurisdiction to hear and determine an application under s.24(1) of the Act for an order that the non-party respondents pay UTA's costs incurred in relation to its proceeding against UTSA and Titan.

I now turn to consider the respondents' claim that in this case, the above section cuts down the wide discretion given to the Court by s.24(1) of the Act and restricts it to awarding costs only as between parties to the proceeding. So far as is relevant, s.24(1) provides that "unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court ... is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid". Section 1335(2) of the Law says that "the costs of any proceeding before a Court under this Law shall be borne by such party to the proceeding as the Court, in its discretion, directs."

Two broad questions arise under the respondents' submissions in relation to s. 1335(2) of the Law. The first, is whether s.1335(2) constitutes an "Act" which "otherwise expressly (provides)" within the meaning of s.24(1) of the Supreme Court Act 1986 (Vic). If it is such an "Act", the next question is, whether the principal proceeding was one which was "under this Law" for the purposes of s.1335(2). I turn to examine those questions.

The "Act" to which s.24(1) refers, is an Act of the Parliament of Victoria (s.38 of the Interpretation of Legislation Act 1984 (Vic)). By s.7 of the Corporations (Victoria) Act 1990 (Vic), the Corporations Law of the Commonwealth (being "the Corporations Law" set out in s.82 of the Corporations Act 1989 (Cth)) is adopted as part of the law of Victoria. Consequently, the Law is a relevant "Act" for the purposes of s.24(1). There remains the question, does s.1335(2) of the Law "otherwise expressly (provide)" for the purpose of s.24(1), so as to limit the Court's discretion under that section to awarding costs only to and against parties to the proceeding?

In support of their claim that s.1335(2) operates to circumscribe the operation of s.24(1) of the Act, the respondents relied on the decision of Lindgren, J. in Australian Forest Managers Pty Ltd (in liq) v. Bramley, Simbert & Houston (1996) 65 F.C.R. 13. His Honour held that the section deprived the Court of the power which it would otherwise have had under s.43 of the Federal Court of Australia Act 1976 (Cth), including the power to order that the costs of the proceeding be paid by a non-party, where the proceeding was "under this Law." (He noted that a similar view was reached by Jenkinson, J. in Re Wridgemont Display Homes Pty Ltd [1992] FCA 604; (1992) 39 F.C.R. 193.) In that case, approximately two and a half years after the plaintiff company was wound up, the liquidator brought a proceeding against its former directors (the first three respondents) and a shareholder (the fourth respondent) for damages and payment of money for breach of ss.232(2) and (4) of the Law. The Statement of Claim alleged that the first, second and third respondents (who were directors) were at all material times directors and controllers of the company and that they, and the fourth respondent, were shareholders in it. It was pleaded that the directors, in breach of the obligation of honesty imposed on them by s.232(2) of the Law and the obligation of care and diligence imposed by s.232(4) of the Law, agreed to sell certain property to the second and fourth respondents and that they settled the sale and paid the proceeds of the sale to the second and fourth respondents.

In the proceeding, the company failed to meet an order that it provide security for costs and the respondents applied to have the proceeding dismissed and the liquidator pay their costs. They contended that the Court had the power to make such an order for costs under s.43 of the Federal Court of Australia Act 1976 (Cth). The liquidator, however, argued that the Court lacked such jurisdiction because the case fell within s.1335(2). His Honour held that once a proceeding was regarded as "under" the Law, s.1335(2) limited the power of the Court to award costs, to making orders as between the parties to the proceeding. He regarded its terms as inconsistent with an exercise of power granted by s.43 of the Federal Court of Australia Act 1976 (Cth), which is relevantly similar to s.24(1) of the Supreme Court Act 1986 (Vic). It limited the wide discretion given to the Court under s.43.

His Honour also concluded that the case was one "under this Law" for the purposes of s.1335(2). At p.18, he said that "it could hardly be clearer that the proceeding against the directors was a proceeding 'under' the Law". As to the fourth respondent, it was not pleaded that she had been an officer or an employee of the company, but since the contravention of s.232 by the directors was an essential part of "whatever cause of action was intended to be relied upon as against her", his Honour held that the proceeding against the fourth respondent was also "under" the Law for the purposes of s.1335(2). Thus, his Honour held that where the proceeding was exclusively brought "under" the Law (or where one part of the proceeding was inextricably intertwined with a proceeding which is brought solely "under" the Law), the proceeding in question fell within the section.

In my view, however, s.1335(2) does not fall within the words "otherwise expressly provided ... by any other Act" in s.24(1) of the Act, and, therefore, does not limit the wide power conferred on the Court by that provision. As to the wide operation of s.24(1) of the Act, see Brooking, J. (as his Honour then was) in Burns Philp & Co Ltd v. Bhagat [1993] VicRp 13; [1993] 1 V.R. 203, at pp.210-220. The exceptive words of s.24(1) of the Act have no legal effect beyond "citing early enactments which otherwise would be inconsistent with the provision introduced ... In regard to later enactments (the words) ... are not really necessary because if the later Act shows a contrary intention, the earlier enactment cannot control it" (Rose v. Hvric [1963] HCA 13; (1963) 108 C.L.R. 353, at p.357). The real question, therefore, is, does s.1335(2) (being the later enactment) evince an intention to limit the operation of s.24(1) of the Act in the way described? Given its legislative history, it is my opinion that it does not intend so to limit the operation of s.24(1). I turn to consider briefly, the history of the relevant legislation leading to s.1335(2).

In England, costs at law were "entirely and absolutely creatures of statute" (Garnett v. Bradley (1878) 3 App.Cas. 944, at p.958) and the statutes governing the common law position as to costs, date back at least to the Statute of Gloucester of 1278 (Burns Philp & Co Ltd v. Bhagat, supra, at p.210). The Court of Chancery, on the other hand, always claimed to have power to deal with costs at its discretion, although the position was not entirely clear-cut in relation to certain proceedings and certain parties. The Judicature Acts of 1873-5, which fused the administration of law and equity and which created the Supreme Court of Judicature consisting of the High Court and the Court of Appeal (and O55 of the 1875 Rules, which became O65 of the 1883 Rules), did not entirely clear up all the anomalies and confusions as to the Court's powers in relation to costs. Thus, for example, in Re Mill's Estate; Ex parte Commissioners of Works and Public Buildings (1886) 34 Ch.D. 24, at pp.33, 42, 43, the Court held that the legislation did not give a new jurisdiction, but only regulated the way in which costs were to be dealt with where the Court had jurisdiction before the Acts: see Re Annand [1891] VicLawRp 28; (1891) 17 V.L.R. 108; Re Duff [1918] VicLawRp 65; [1918] V.L.R. 426; Burns Philp & Co Ltd v. Bhagat, supra, at pp.211-214. The Acts merely reflected the way in which costs were to be dealt with in proceedings in which there was existing jurisdiction as to costs. Thus, it seems that the position in equity, which distinguished between plaintiffs and defendants in determining its jurisdiction as to costs, continued to prevail: see Dicks v. Yates (1881) 18 Ch.D. 76, at p.85; Foster v. Great Western Railway Co (1882) 8 Q.B.D. 515.

The situation was resolved by s.5 of the Judicature Act 1890, which expanded the jurisdiction of the Court to award costs, giving it power to deal with all questions of costs. So far as is relevant, the section provided that "subject to the ... Acts and the Rules ... and to the express provisions of any statute ... the costs of and incidental to all proceedings in the Supreme Court ... shall be at the discretion of the Court or Judge and the Court or Judge shall have full power to determine by whom and to what extent such costs are to be paid." The section subsequently became s.50(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (Eng.) and is now s.51(1) of the Supreme Court Act 1981 (Eng.).

It was not until the 1928 Consolidation, that s.5 of the Judicature Act 1890 was adopted in Victoria by s.32(1) of the Supreme Court Act 1928 (Vic). It was introduced principally in order to overcome the decision in Re Mill's Estate, supra. It was taken from s.50(1) of the Supreme Court of Judicature (Consolidation) Act of 1925, to which I have referred earlier: see Burns Philp & Co Ltd v. Bhagat, supra, at p.210. Thus, since the passage of that legislation, the Supreme Court here has had jurisdiction to deal with all questions of costs including proceedings that involved questions under the Companies Act. Before 1961, no provision such as 1335(2) existed in Victoria. It was not picked up by the Victorian Companies Act of 1938 or by the Consolidation of 1958. (I mention for convenience at this point, that so far as I can tell, no like section existed or exists now, in England.)

New South Wales did not adopt the Judicature Acts until 1970 and, it was also not until then that New South Wales gained a statutory provision equivalent to s.24(1) of the Act, in the form of s.76 of the Supreme Court Act 1970 (NSW). Before New South Wales effectively fused the administration of law and equity, the principles of equity (including the administration of the Companies Act), were administered by a separate division of its Supreme Court. Its power to award costs came essentially from its inherent jurisdiction, but for reasons referred to earlier, there was at least some uncertainty as to the ambit of that jurisdiction.

The predecessor of s.1335(2) was first enacted as s.365(2) of the Companies Act 1936 (NSW). By that provision, the Court was given discretion to direct how the costs of any proceeding before it "under this Act (should) be borne by such party to the proceeding". This provision eventually became s.1335(2) of the Law. It seems fairly clear that this sub-section was an enabling provision, intended to give the Supreme Court in New South Wales a similar discretion to that which was given to English Courts in 1890 and to the Victorian Supreme Court in 1928. Bearing in mind that s.24(1), or its equivalent, was in force in Victoria and England, there was no need to introduce in those jurisdictions, a provision such as s.365(2) of the Companies Act of NSW. On the other hand, there was reason to pass such legislation in New South Wales in 1936, if its Supreme Court was to have a wide discretion to award costs in a proceeding under the companies legislation. Thus, the sub-section was intended to be an enabling provision and not one which imposed restrictions on the jurisdiction and discretion of the Court. That this was the intention behind the provision, can be seen from the second reading speech of the Minister in the Legislative Assembly in relation to the then Companies Bill, during which he said (at p.2184 of the N.S.W. Parliamentary Debates, Legislative Assembly, 1936), that:

" ... Clause 365(2) giving the Court discretion as to costs is not in the English Companies Act as the Courts have the same discretion under the English Judicature Acts."

It should be noted that s.365(2) was contained in Part XIV of the Companies Act which was entitled "Miscellaneous". This Part dealt with matters such as penalties for offences (s.354), how offences were to be punishable (s.356) and service of documents on a company (s.359). The provision dealing with the power to order a plaintiff company to give security for costs, was contained in s.360. Sub-section (1) of s.365, dealt with the manner of enforcing orders made by the Court.

It was not until the Uniform Companies legislation of 1961, that s.365(2) became part of the Victorian law; it was brought in as sub-s.363(2). (The provision of security for costs was dealt with in another section, namely, sub-s.353(1)). The learned authors of the 1965 edition of Wallace and Young, Australian Company Law and Practice, recognised that the provision was intended to give a judicial discretion to the New South Wales Supreme Court in its equitable jurisdiction and in that way, it dealt with a "difficulty" that existed in that State, but which did not exist in Victoria. They said, at p.931, in relation to sub-s.363(2):

"Sub-section (2) gives an unfettered, albeit judicial, discretion to the Court (in NSW the Supreme Court in its equitable jurisdiction) as to the incidence of costs in all proceedings before such Court.

In Victoria there does not seem to be any difficulty."

The reason why there was then a "difficulty" in New South Wales, but not "any difficulty" in Victoria, was because in the former jurisdiction, the Judicature Acts had not been introduced, whereas in Victoria, s.24(1) of the Act had been in operation since 1928. Thus, s.363(2) of the Companies Act 1961 carried on, for the benefit of the New South Wales jurisdiction, the enabling provision (the former s.365(2)) without any intention, so far as I can see, that the wide power given to the Victorian Supreme Court by s.24(1) of the Act, be cut down by that sub-section. Strictly speaking, there was no need to retain the equivalent of s.365(2) after the introduction in New South Wales of the equivalent of s.24(1) of the Act in 1970, but the provision remained in the legislation and, eventually became s.1335(2) of the Law. In my view, the fact that it was not repealed after 1970, does not alter the conclusion that the provision was not intended to operate as a restriction on the wide discretion granted to the Court by s.24(1) of the Act.

Consequently, in my view, s.1335(2) does not fall within the exceptive words of s.24(1) of the Act and, therefore, does not operate to limit the power of this Court under it to award costs against a non-party to the proceeding, even where it is one "under this Law". Whatever may be the position in relation to s.43 of the Federal Court of Australia Act 1976 (Cth), s.1335(2) does not so inhibit the jurisdiction of this Court on the question of costs as was contended for by the respondents. I note that the Full Court of South Australia in Health & Life Care Ltd v. South Australian Asset Management Corporation [1995] SASC 5181; (1995) 13 A.C.L.C. 1148, upheld the decision of Debelle, J., who ordered under the South Australian equivalent of s.24(1) of the Act, that the liquidators personally pay the costs of a successful party, even though they were not parties to the litigation. See also the unreported decision of Teague, J. in Shroder v. Cozens (Supreme Court, 15 May 1990).

In case my view on the operation of s.1335(2) is incorrect, I turn to consider whether it operates in this case, that is to say, whether the proceeding was one "under this Law". For the brief reasons I give below, it is my opinion that the principal proceeding was not one which was "under" the Law.

In the course of argument before me, the question arose as to whether cases dealing with the jurisdiction of the Federal Court in Trade Practices and associated general law cases, were of assistance in determining this issue. At the relevant time, s.86 of the Trade Practices Act 1974 (Cth), provided:

"Jurisdiction is conferred on the Court to hear and determine actions, prosecutions and other proceedings under this Part and that jurisdiction is exclusive of the jurisdiction of any other Court, other than the jurisdiction of the High Court under s.75 of the Constitution."

Counsel for the respondent, in a supplementary submission, referred to a number of decisions dealing with the term "proceedings under this Part" (then) in s.86, including Philip Morris Incorporated v. Adam P. Brown Male Fashions Pty Ltd (1981) 148 C.L.R. 457, at p.512 and Fencott v. Muller (1983) 152 C.L.R. 570, at pp.593, 607. Those cases recognised that a proceeding involving mixed statutory and non-statutory causes of action, is to be regarded as a "proceeding under this Part" for the purposes of s.86, if the claims are based on a common sub-stratum of fact. On that basis, counsel submitted, a proceeding should be treated as "under this Law" for the purposes of s.1335(2), where the statutory and non-statutory causes of action are derived from a common sub-stratum of fact. If this were the test, the argument went, the present proceeding would be regarded as "under this Law" because, as the Statement of Claim shows, the causes of action, based on the general law and breaches of s.232 of the Law, are all founded on a common sub-stratum of fact.

It is necessary to bear in mind, however, that the Trade Practices cases dealt with a different issue or, put another way, with the interpretation of legislation which was of a different character to that being considered here. Section 86 of the Trade Practices Act 1974 (Cth) is an enabling provision, whereas here, on the respondents' own case, we are concerned with the interpretation of a restrictive piece of legislation. Hence, what was said in those cases is of only limited use in the construction of s.1335(2). But even in the Trade Practices cases, the Courts were concerned with determining whether, as a matter of proper characterisation, a principal claim was founded on the Act. Similarly, here, in order to determine whether a proceeding is "under this Law", it is necessary to characterise the claims to see if they constitute such a proceeding.

If that is the correct analysis, then cases such as those dealt with by Lindgren, J. in Australian Forest Managers Pty Ltd (in liq) v. Bramley, Simbert & Houston, supra, should prove to be of little difficulty, because there, the proceeding was one which was based exclusively, or almost exclusively, on the provisions of the Law. Where the claims are based both on statutory provisions and general law, however, it does not follow that merely because they arise out of a common sub-stratum of fact, they can be characterised as being "under this Law" for the purposes of s.1335(2). This difficulty was recognised by Lindgren, J. His Honour said, at p.18, that "I need not stay to consider other and different situations such as multiple claims against the one respondent, some (in particular a minority) under the Law and others not, and multiple respondents against only one or some (in particular a minority) of whom a claim is made under the Law."

In my view, therefore, much will depend on whether the claims in the proceeding, including the relief sought, are such as to justify characterising the whole proceeding as one "under" the Law. I agree with the submission by counsel for UTA, that the section probably contemplates a proceeding which is essentially one authorised by the Law, such as a winding up, an action against directors for insider trading, or breaches of s.232. It does not operate where, properly characterised, the proceeding is one based on the general law, notwithstanding that the factual allegations on which those claims are based, also underpin a claim for breach of the provisions of the Law, such as s.232. Lindgren, J., in the above case, did not suggest to the contrary.

In the present case, putting to one side the liquidator's statutory causes of action, the plaintiff's claims were based on alleged breaches of fiduciary duty by several directors and officers of UTSA. The proceeding against UTA was based almost wholly on Barnes v. Addy, arising out of such breaches of fiduciary duty. The same facts gave rise to the tacked-on allegation of breaches of s.232 of the Law. But such addition of alleged breaches of statutory duty does not convert a proceeding that is based squarely on the general law to one which can be properly characterised as one "under" the Law for the purpose of s.1335(2).

It is my view that the principal proceeding was not one "under" the Law. It follows that even if, contrary to my earlier expressed view, s.1335(2) limits the discretion given to the Court under s.24(1) of the Act, there is no such limitation applying here, because the proceeding did not fall within the ambit of s.1335(2). Therefore, the Court is not deprived of jurisdiction to consider UTA's application for an order for costs against the respondents.

For the above reasons, the respondents' application fails and their summons must be dismissed.

Companies Act 1936(NSW)

Court of Australia Act 1976

Legislation Act 1984

Supreme Court of Judicature (Consolidation) Act 1925

Supreme Court Act 1981

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