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[2018] FCA 37
Federal Court of Australia
2018-02-02
Mr J, Gleeson J
Original judgment source is linked above.
GLEESON J: 1 On 8 December 2017, I made an order reinstating the registration of Ji Woo International Education Centre Pty Ltd ACN 105 435 201 ("company") and ancillary orders, including the appointment of a liquidator of the company pursuant to s 472 of the Corporations Act 2001 (Cth): Yeo v Australian Securities and Investments Commission, re Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480 ("judgment"). 2 As the orders were made over the opposition of the intervener, Mr Choi, and as I had concluded that the matter was substantially complicated by Mr Choi's intervention (judgment at [143]), including his reliance on evidence which I had disbelieved, I sought submissions on whether to order that Mr Choi pay the costs of the proceeding. 3 Rule 2.13 of the Federal Court (Corporations) Rules 2000 ("Rules") provides, relevantly: (1) The Court may grant leave to any person who is, or who claims to be: (a) a creditor, contributory or officer of a corporation; or (b) an officer of a creditor, or contributory, of a corporation; or (c) any other interested person; to be heard in a proceeding without becoming a party to the proceeding. (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, which should be borne by the person to whom leave was granted, the Court may: (a) direct that the person pay the costs; and (b) order that the person not be heard further in the proceeding until the costs are paid or secured to the Court's satisfaction. 4 On behalf of Mr Choi, it was submitted that r 2.13(2) only permits the Court to make a costs order against him under that rule if and to the extent that it is satisfied that his attendance resulted in additional costs which should be borne by Mr Choi. 5 Mr Choi appropriately concedes that his intervention resulted in additional costs but disputes that those costs should be borne by him on the basis that, but for his intervention, the plaintiff ("Ms Yeo") would have made an ex parte application without full disclosure of material facts, some of which tended against Ms Yeo. 6 The particular matters relied upon by Mr Choi are: (1) Ms Yeo had not provided the funds for the liquidator (judgment [34]). (2) The fact and status of the criminal proceedings. Ms Yeo made no disclosure of the fact that she had been criminally charged, where these charges were laid in circumstances sufficiently connected to her standing with the company (judgment [119]). (3) But for Mr Choi's intervention, the Court would not have been apprised of the true position, namely, that Ms Yeo had received and was serving a custodial sentence (judgment [39]). (4) The fact Ms Yeo had admitted to dishonesty, including misappropriation of $40,000 in circumstances sufficiently closely linked to the company as to be relevant (judgment [117]-[118]). (5) Ms Yeo's admission in cross-examination that she was accused of taking money from the company in August 2013 (judgment [73]). (6) The "admission" contained in the documents referenced at [115], [116], [118], [119] in the judgment. 7 Mr Choi contended that his intervention brought to light relevant facts and issues and, consequently, each party should bear its own costs. Alternatively, Mr Choi submitted that any costs order should be expressly limited to "additional costs" and should not include costs such as the filing fee, preparation of the application and affidavit in chief, and the time that would necessarily have been spent in making the application for re-registration in the absence of the intervener. 8 On Ms Yeo's behalf, it was submitted that her application was vigorously opposed by Mr Choi. All of Ms Yeo's witnesses were cross-examined, including Ms Yeo at length and Ms Yuri Choi by audio-visual link. In turn, all of Mr Choi's witnesses were cross-examined. 9 Ms Yeo's submissions noted that: (1) On 9 May 2017 the proceedings were relisted for directions due to difficulties in preparing her affidavits in reply to those of Mr Choi, in consequence of which the hearing date of 12 May 2017 was vacated and the hearing relisted for 19 and 20 June 2017. Ms Yeo filed three affidavits in reply and made further written submissions in reply on 8 and 15 June 2017. Objections to evidence were also served. (2) The hearing occupied the entirety of 19 and 20 June 2017. (3) On 10 and 24 August 2017, Mr Choi applied for leave to re-open his case so as to tender further evidence against Ms Yeo in relation to the criminal prosecution against her in South Korea. 10 Ms Yeo argued that, apart from Mr Choi's intervention, there would probably have been a relatively short ex parte application which could have been expected to occupy no more than one to two hours of Court time in the usual course, if unopposed. She argued that the hearings on 9 May, 14 June, 10 and 24 August 2017 were unnecessary, and would not have occurred apart from Mr Choi's intervention. Neither would it have been necessary for Ms Yeo to prepare, file and serve three additional affidavits in reply dealing at length with the matters raised by Mr Choi nor to prepare additional written reply submissions and objections to Mr Choi's evidence.
Consideration 11 Mr Choi is a person to whom leave has been granted under r 2.13(1) of the Rules. 12 There is no dispute with the general proposition that Mr Choi's attendance has resulted in additional costs for Ms Yeo. 13 I accept that Mr Choi's attendance resulted in the following expenses for Ms Yeo: (1) the costs of the hearings on 9 May, 14 June, 10 and 24 August 2017; and (2) the costs of the hearing on 19 and 20 June 2017, over and above what could reasonably have been expected to have been incurred on an ex parte application. This includes the costs of addressing the evidence served by Mr Choi by affidavit evidence in reply. 14 I accept Ms Yeo's submission as to the likely duration of the hearing of the application, absent Mr Choi. Accordingly, I find that the 75% of the costs of the hearing on 19 and 20 June 2017 were the result of Mr Choi's intervention. 15 In my view, the additional costs should be borne by Mr Choi because they were incurred as a result of Mr Choi's decision to take an active contradicting position in opposition to Ms Yeo's application. Mr Choi's position in this litigation is analogous to an unsuccessful litigant who, in the ordinary course, is ordered to pay the costs of his unsuccessful opposition. 16 Even accepting that Mr Choi identified matters of relevance to the Court's decision, that fact does not provide an answer to Ms Yeo's submission that the ordinary rule that costs should follow the event should be applied against Mr Choi by reason of his opposition to the application, subject to the terms of r 2.13. 17 Accordingly, I will direct that Mr Choi pay the additional costs which were the result of his intervention. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.
Yeo
Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd