Xat Ky v Australvic Property Management Pty Ltd

T & G Welding 14 T & G Welding sought orders that its costs of the proceeding (including the costs of the hearing on 12 June 2007) should be: (a) costs in the winding up; and/or (b) paid by Mr Fisher, in each case on an indemnity basis, alternatively on a solicitor and own client basis. 15 For the reasons given above in relation to the submission of the plaintiffs that Mr Fisher should pay costs, I reject the similar contention put on behalf of T & G Welding. 16 However, I accept that T & G Welding, as a supporting creditor, should be entitled to its costs in the winding up. 17 In addition to making submissions similar to the plaintiffs' about the events which occurred after the hearing on 11 July 2007, T & G Welding also submitted that because of the conduct of APM during the proceedings generally (particularly its tardiness in filing material as ordered by the Court and its abandonment of certain evidence), the costs to be ordered in favour of T & G Welding should be ordered on an indemnity or solicitor and own client basis. 18 I am prepared to do so in relation to the costs of and in connection with the hearings after the hearing on 11 July 2007 for the reasons given above. However, I do not consider that it is appropriate to otherwise order indemnity costs or costs on a solicitor and own client basis, despite the series of events accurately described in the written submissions of T & G Welding. 19 In view of the nature of APM, its business activities, its involvement in other litigation and the state of its financial records, I cannot be satisfied without more that APM had involved itself in this part of the proceedings in sufficiently unmeritorious, deliberately high-handed or otherwise improper conduct so to as warrant the order sought by T & G Welding.

ASIC 20 ASIC sought its costs of this proceeding. ASIC intervened in this proceeding pursuant to s 1330 of the Corporations Act. A costs order could be granted in its favour should the Court so exercise its discretion. 21 In normal circumstances ASIC, in protecting the public interest, may not obtain a costs order in its favour even if its contentions are accepted, or, for that matter, suffer an adverse costs order against it in the event that its contentions are not accepted by the Court. 22 However, in this proceeding, ASIC appropriately played a significant part. ASIC had a special interest in supporting the order sought in view of other proceedings before the Court, heard concurrently, where it also sought as final relief the winding up of APM. 23 I propose to order that ASIC's costs of the proceeding be costs in the winding up and be taxed on a party/party basis. 24 ASIC also seeks costs of its notice of motion dated 28 September 2007 notwithstanding that it was dismissed on 5 October 2007. 25 ASIC, through its notice of motion, was properly seeking to inform the Court of relevant matters which APM had failed to do in a timely and appropriate manner. Whilst the motion was dismissed, the substantive matters raised by ASIC were accepted by the Court. By making the general order as to costs as proposed above in favour of ASIC, without excluding the notice of motion dated 28 September 2007, ASIC will be entitled to its costs of the proceedings generally (including the notice of motion dated 28 September 2007).

Saxbys 26 Saxbys submitted that its costs of: · the notice of motion filed by APM on 24 July 2007; and · the notice of motion filed by Saxbys on 28 August 2007 (to set aside the subpoena served on it), should be: · costs in the winding up; and/or · paid by Mr Fisher, in each case on an indemnity basis, alternatively on a solicitor and own client basis. 27 For the reasons given above, I do not propose to make any orders against Mr Fisher. However Saxbys are entitled to costs in the winding up, and the question is whether the costs should be on an indemnity (or solicitor and own client basis) or on a party/party basis. 28 In my view, the application to restrain Saxbys was misconceived and obviously without merit, as was the subpoena to Saxbys seeking various documents in support of that application. Saxbys put APM on notice that such application and subpoena should be withdrawn to avoid adverse cost consequences for APM. 29 I do not accept on the current material that the application to restrain Saxbys was necessarily to intimidate or harass Saxbys or its clients, although I do accept that there was no basis to support the legitimacy of such motion to disqualify. The allegations made against Saxbys were unsuccessful. In my view they were clearly unmeritorious, and to the extent possible, Saxbys should not be out of pocket - see generally Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401; Ugly Tribe Company Pty Ltd v Sikola [2001] VSC 189; Australian Guarantee Corp Ltd v De Jager [1984] VR 483 at 502. 30 I propose to order that Saxbys costs be costs in the winding up and be taxed on an indemnity basis.

Other Supporting Creditors 31 In relation to the other supporting creditors, I propose that the order as to costs of those professionally represented be the same as those I propose to order in relation to T & G Welding. No submissions were received in respect of costs by those who were not professionally represented before me and I do not propose to make any order in relation to their possible disbursements.

Conclusion 32 Accordingly, I propose to order that: · The plaintiffs' costs of the proceeding (including the hearing before Registrar Mussett) be taxed: (a) on a party/party basis up to and including the hearing of 11 July 2007; (b) thereafter on an indemnity basis of and in connection with the hearings after 11 July 2007, and reimbursed in accordance with s 466(2) of the Corporations Act; · The plaintiffs be entitled in respect of their costs to be paid out of the security provided pursuant to orders made by the Court on 29 May 2007; · ASIC's costs of the proceeding be costs in the winding up and taxed on a party/party basis; · Saxbys' costs of the notice of motion filed by APM on 24 July 2007 and of the notice of motion filed by Saxbys on 28 August 2007 be costs in the winding up and taxed on an indemnity basis; · T & G Welding's costs of the proceeding (including the hearing before Registrar Mussett) be costs in the winding up and taxed: (a) on a party/party basis up to and including the hearing of 11 July 2007; (b) thereafter on an indemnity basis of and in connection with the hearings after 11 July 2007; · R & A Cab Co Pty Ltd's costs of the proceeding (including the hearing before Registrar Mussett) be costs in the winding up and taxed: (a) on a party/party basis up to and including the hearing of 11 July 2007; (b) thereafter on an indemnity basis of and in connection with the hearings after 11 July 2007. I certify that the preceding thirty two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

Counsel for the Plaintiffs: P Bravender - Coyle

Solicitor for the Plaintiffs: Dandanis & Associates

Counsel for the Defendant: J Levine

Solicitor for the Defendant: Issac Brott & Co

Counsel for ASIC (Intervenor): M Scott

Solicitor for R & A Cab Co Pty Ltd (Supporting Creditor): John Matthies & Co

Counsel for T & G Welding Pty Ltd (Supporting Creditor): C Gobbo

Solicitor for T & G Welding Pty Ltd (Supporting Creditor): Saxbys Lawyers

Solicitor for Caveat Finance Pty Ltd: Frank Sanna

Solicitor for Erik Steemers (Supporting Creditor): Self-represented

Solicitor for Francis Giles Bray ATF (Supporting Creditor): Self-represented

Solicitor for Kathleen Murphy (Supporting Creditor): Self-represented

Counsel for Saxby Lawyers: J Dixon, L Magowan

Date of Hearing: 29 May 2007, 18 June, 9, 10, 11 July 2007, 3, 30 August 2007, 10 September 2007 and 2 October 2007

Date of Judgment: 22 November 2007