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  • Unreported Judgment

Re Octaviar Ltd (No 8)

 

[2010] QCA 57

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED
ACN 114 624 958
(respondent/appellant)
v
OCTAVIAR LIMITED (FORMERLY MFS LIMITED) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
ACN 107 863 436
(respondent/first respondent)
PUBLIC TRUSTEE OF QUEENSLAND
(applicant/second respondent)
COMMISSIONER OF TAXATION
(respondent/third respondent)
OPI PACIFIC FINANCE LIMITED
(respondent/not a party to the appeal)
WELLINGTON CAPITAL LIMITED
(respondent/not a party to the appeal)

FILE NO/S:

SC No 1848 of 2009

Court of Appeal

PROCEEDING:

General Civil Appeal – Further Order

ORIGINATING COURT:

DELIVERED ON:

19 March 2010

DELIVERED AT:

Brisbane

HEARING DATE:

Heard on the papers

JUDGES:

Keane and Muir and Chesterman JJA

Judgment of the Court

ORDER:

The costs of each of the respondents in this Court should be paid by the appellant on the standard basis

CATCHWORDS:

PROCEDURE – COSTS – GENERAL RULE - COSTS FOLLOW THE EVENT – CO-DEFENDANTS – where respondents argued that the appellants should pay costs on the standard basis – where appellant argued that it was unreasonable for the respondents to have made separate submissions in relation to the fate of the appeal – where appellant argued that the respondents should be limited to one set of costs – whether each of the respondents are able to recover the costs of the appeal

Statham v Shephard (No 2) (1974) 23 FLR 244, applied

COUNSEL:

D F Jackson QC, with M J Luchich, for the appellant

K E Downes SC, with S B Hooper, for the first respondent

W Sofronoff QC, with D B O'Sullivan, for the second respondent

R M Derrington SC, with P G Bickford, for the third respondent

SOLICITORS:

Baker and McKenzie for the appellant

Henry Davis York for the first respondent

Clayton Utz for the second respondent

Australian Government Solicitor for the third respondent

[1]  THE COURT:  On 9 March 2010 this Court dismissed the appeal by Fortress.  The parties were given leave to make written submissions on the question of costs.  The first respondent to Fortress' appeal is Octaviar (acting through its liquidators).  Each of the second and third respondents asserts separate, and conflicting, rights against Octaviar.  Each of the respondents seeks an order that Fortress pay its costs of and incidental to the appeal on the standard basis.  The usual rule in relation to the disposition of the costs of a proceeding is that they should follow the event.  On this view, the costs incurred by the respondents should be met by the appellant.  Fortress, however, seeks an order that the respondents be limited to one set of costs.

[2] On behalf of Fortress it is argued that it was unreasonable of the respondents for each of them to make separate submissions in relation to the fate of the appeal and that the respondents should therefore be limited to one set of costs.

[3] Fortress relies upon the statement of principle by Woodward J in Statham vShephard (No 2) to the effect that:[1]

"The principle which I deduce from these authorities, and which I believe I should follow in spite of the two cases earlier cited, is that the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three [provisos]. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. (See In re Lyell [1941] VLR 207)

Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation.

Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time."

[4] Each of the respondents to the appeal was made a respondent to the appeal by Fortress.  On the face of things, there was nothing unreasonable in each of them seeking to support the decision below.  It is argued, however, that it was unreasonable of the respondents to fail to negotiate an agreed basis for presenting a common point on the present appeal.  We are unable to accept that argument.

[5] While it is true to say, as Fortress submits, that the respondents were united in their opposition to the appeal, it is difficult to say that they were not acting reasonably in "remaining at arm's length" from each other while maintaining that opposition. 

[6] The liquidators of Octaviar are obliged to act in the interests of all of its creditors.  Each of the second and third respondents has separate interests as creditors of Octaviar:  these interests are in conflict.  The second respondent, the Public Trustee of Queensland, represents unsecured creditors of Octaviar.  The third respondent, the Commissioner of Taxation, claims to be a secured creditor of Octaviar.  If the third respondent's claims are successful, the return to the creditors represented by the second respondent will be substantially reduced.  A lawyer acting for the first, second or third respondents might be placed in a situation of conflict of duty and duty if the same lawyer represented all respondents on the appeal.  A risk could have arisen that this lawyer would have been obliged to decline to continue to act for his or her erstwhile client by reason of a perception of conflict of duty and duty.  We are not satisfied that this risk was so insubstantial that it was unreasonable of the respondents to decline to court that risk.  Nor are we satisfied that the respondents were obliged, acting reasonably, to incur the trouble and expense of engaging a fourth set of lawyers for the sole purpose of conducting the appeal. 

[7] Moreover, it lies ill in the mouth of Fortress to criticise the reasonableness of the conduct of the respondents in relation to the conduct of the appeal.  The point agitated on the appeal by Fortress was only barely raised before the learned primary judge.  Before his Honour, no mention was made of the arguments which were developed before this Court.  If these arguments had been ventilated before the learned primary judge they could have been addressed by his Honour; if this course had been taken it may be that the absence of merit in the arguments agitated for the first time in this Court would have become apparent to all including to Fortress.  Whether that would have been the case cannot be known, but it must be said that the course taken by the appellant in agitating these arguments for the first time on the appeal to this Court was distinctly unreasonable.  It must also be said that, as is apparent from the reasons of this Court dismissing the appeal, there was little merit in the arguments advanced on the appellant's behalf. 

[8] We are not persuaded that each of the respondents should not recover its costs of the appeal.  The costs of each of the respondents in this Court should be paid by the appellant on the standard basis.

Footnotes

[1] (1974) 23 FLR 244 at 246 – 247. See also Smyth v State of Qld & Ors [2005] QSC 193 at [7]; TheBeach Retreat P/L v Mooloolaba Yacht Club Marina Ltd & Ors [2009] QSC 84 at [34]; Milillo vKonnecke [2009] NSWCA 109 at [109], [113].

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Editorial Notes

  • Published Case Name:

    Octaviar Ltd (No 8), Re

  • Shortened Case Name:

    Re Octaviar Ltd (No 8)

  • MNC:

    [2010] QCA 57

  • Court:

    QCA

  • Judge(s):

    Keane JA Muir JA Chesterman JA

  • Date:

    19 Mar 2010

Litigation History

Event Citation or File Date Notes
QCA Interlocutory Judgment [2010] QCA 57 19 Mar 2010 -

Appeal Status

No Status