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  • Unreported Judgment

Virgtel Ltd v Zabusky

 

[2012] QSC 42

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Virgtel Ltd & Anor v Zabusky & Ors [2012] QSC 42

PARTIES:

VIRGTEL LIMITED
(first applicant)
and
VIRGTEL GLOBAL NETWORKS NV
(second applicant)
v
HARVEY ZABUSKY
(first respondent)
and
AMALIA ZABUSKY
(second respondent)
and
EREZ ZABUSKY
(third respondent)
and
COMMSLOGIC PTY LTD (ACN 109 057 543)
(fourth respondent)
and
SOFTQUEST SOLUTIONS PTY LTD (ACN 057 679 599)
(fifth respondent)
and
VIRGIN TECHNOLOGIES LIMITED
(sixth respondent)

FILE NO:

BS 6547 of 2005

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

2 March 2012

DELIVERED AT:

Brisbane 

HEARING DATE:

Written submissions

JUDGE:

Daubney J

ORDERS:

Disposition of the joinder applicationUpon:

(a)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguillia), by their counsel, giving the usual undertaking as to damages retrospective to the commencement of these proceedings; and

(b)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguilla), by their counsel, undertaking to be bound by the orders made in the proceedings for the provision of security for costs, namely the orders made on 10 August 2005, 9 November 2005 and 29 February 2008;  and

(c)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguilla), by their counsel, undertaking to be liable in respect of the costs orders that have already been made against the applicants, Virgtel Limited and Virgtel Global networks NV or which may be made in the future in relation to orders previously made reserving costs

IT IS ORDERED THAT:

1.Viscaya Armadora SA (Panama) be joined as an applicant to the proceedings nunc pro tunc.

2.Viscaya Armadora SA (Anguilla) be joined as an applicant to the proceedings as from 7 August 2009, the date of its incorporation.

3.Costs reserved.

Disposition of the temporary stay application

1.The Order made on 9 September 2011 is varied to provide as follows:

“The respondents’ application for a temporary stay is dismissed with costs (including the reserved costs of and incidental to that application).”

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PARTIES – OTHER MATTERS – where the parties were called on to bring an order providing for the joinder nunc pro tunc of two further companies as applicants – whether the companies will be joined as applicant’s to the proceedings

PROCEDURE – COSTS – PRACTICE MATTERS – FORM, EFFECT AND SETTLING OF ORDERS – where the parties were not called on, or given liberty to make submissions on costs in respect of the present proceeding – where, notwithstanding this, the applicants sought further specific orders in respect of costs of the application for a joinder – where costs in respect of the application had been reserved on a previous occasion – whether it is necessary to make any further orders

PROCEDURE – COSTS – PRACTICE MATTERS – FORM, EFFECT AND SETTLING OF ORDERS – where the parties were not called on, or given liberty to make submissions on costs in respect of the present proceeding – where, notwithstanding this, the applicant’s sought further specific orders in respect of the costs ordered to be paid on the stay application made on 9 September 2011– where these costs were to be assessed by a costs assessor – whether it is the proper role of a judge to act as cost assessor and make directions for the assistance of the taxing officer

PROCEDURE – COSTS – PRACTICE MATTERS – FORM, EFFECT AND SETTLING OF ORDERS – where the parties were not called on, or given liberty to make submissions on costs in respect of the present proceeding - where, notwithstanding this,  the applicant’s sought an order for payment out of funds described as “trust funds” – whether it is appropriate to make an order in respect of these funds

Uniform Civil Procedure Rules 1999 (Qld), Chapter 17A , r 702(2), r 742, r 702

Emanuel Management Pty Ltd (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors and Coopers & Lybrand & Ors [2003] QSC 299, distinguished

Emanuel Management Pty Ltd & Ors v Fosters Brewing Group Limited & Ors [2003] QSC 205, distinguished

Virgtel Ltd & Anor v Zabusky & Ors [2011] QSC 269, cited

Zabusky & Anor v van Leeuwen & Anor [2011] QSC 270, cited

Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2008] QSC 316, cited

Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2009] QCA 349, cited

COUNSEL:

G C Newton SC with S S Monks for the applicants

SOLICITORS:

James Conomos Lawyers for the applicants

Tucker & Cowen for the first, second, third and fifth respondents

  1. On 9 September 2011, I gave a judgment[1] in this proceeding in which I:
  1. Called for the parties to bring in an order providing for the joinder nunc pro tunc as applicants of Viscaya Panama and Viscaya Anguilla, with the costs of the joinder application to be reserved, and
  1. Ordered that the respondent’s application for a temporary stay be dismissed with costs.
  1. On that day, I also gave judgment[2] in a related proceeding (No. 4405 of 2010) in which I dismissed certain applications and called on the parties to make submissions as to costs in respect of those applications in that proceeding.
  1. Notwithstanding that I had not called for, or given the parties liberty to make, further submissions on costs in respect of the present proceeding, the applicants put on submissions by which they sought:
  1. Further specific orders in respect of the costs of the application for joinder;
  1. Further specific orders in respect of the costs ordered to be paid on the stay application;
  1. An order for payment out of the funds described as “the trust funds” in an order made by me on 7 May 2010.
  1. By reason of the van Leeuwen interests raising these further matters, a further review of the proceeding was necessary, and on 19 October 2011 I made directions for the parties to exchange consolidated costs submissions. The van Leeuwen side provided those submissions in accordance with the directions.
  1. On 31 October 2011 the solicitors for the Zabusky interests delivered their submissions. On that same day, however, Mrs Amalia Zabusky (the second respondent in the proceeding) wrote to my associate, and to the solicitors for the parties, advising that she was now acting in person and that her erstwhile solicitor did not represent her anymore. Mrs Zabusky provided costs submissions on her own behalf. On the following day she forwarded to my associate and the solicitors for the parties an affidavit sworn by her, said to be in support of her costs submissions. Mrs Zabusky’s submissions did not, however, deal with the matters which require determination at this juncture; rather, they were directed particularly to the contention that the solicitors for the applicants lack authority to act on behalf of the applicants in this derivative action (ie the “retainer issue”, which has been described in the principal judgement). Her submissions also canvassed factual assertions concerning the nature and extent of the shareholding in the various entities which are involved in this proceeding. Apart from the fact that these submissions go to matters which are clearly at issue in the proceeding, and which need to be determined at trial, they are irrelevant to the particular matters which I must now decide, and I do not propose giving them any weight for present purposes.

The costs associated with the respondents’ application for a temporary stay

  1. This application was dismissed with costs. The applicants seek several supplementary orders.
  1. The first submission is that the applicants should recover the costs of and incidental to that application which were reserved on 27 July 2010, 23 August 2010, 23 September 2010, 2 November 2010, 26 November 2010, 10 December 2010, 1 February 2011 and 14 February 2011. It was submitted that the appearances on those occasions were for the purpose of obtaining directions in relation to the prosecution of the respondents’ application for a temporary stay, and that those costs should follow the event.
  1. In the submissions delivered by the respondents’ solicitors (presumably prepared at a time when they were still acting for Mrs Zabusky), it was submitted that the Zabusky interests:
  1. Did not oppose the applicants recovering in respect of the costs reserved on 27 July, 23 August and 23 September 2010; but
  1. Opposed recovery of the balance.
  1. The basis for the opposition was, in essence, that the other appearances were concerned with the respondents’ application to cross-examine Mr van Leeuwen, and that this cross-examination was related to the applicants’ joinder application and not the respondents’ stay application. Indeed, it was submitted that the Zabusky interests should have their costs of numerous of these appearances:

-2 November 2010 - A review to timetable the respondents’ request to cross-examine Mr van Leeuwen;  the Zabusky interests should have their costs because they were later successful in obtaining an order for the cross-examination;

-26 November 2010 - The Zabusky interests applied for, and obtained, leave to cross-examine Mr van Leeuwen for which the Zabuskys should have their costs;

-10 December 2010 - This was a review which was required, in effect, to settle the terms of the order for Mr van Leeuwen’s cross-examination and the Zabuskys should have their costs;

-1 February 2011 - This review was necessitated because of apprehended difficulties in Mr van Leeuwen obtaining a visa; it canvassed the prospect of Mr van Leeuwen giving his evidence by video link, and was also concerned with the provision of documents by Mr van Leeuwen prior to cross-examination; accordingly, the Zabusky interests sought their costs;

-14 February 2011 – The entire day was devoted to argument as to whether the order for cross-examination of Mr van Leeuwen should be set aside, which it was.  The Zabusky interests contend that the costs of this day ought be the applicants’ costs in the cause.

  1. Counsel for the van Leeuwen interests submitted that the basis for setting aside the order for cross-examination of Mr van Leeuwen was, in essence, that the order had been obtained in circumstances that amounted to abuse of process of the court, and that the submission that the costs associated with the obtaining of that order should be paid by the van Leeuwen interests was “devoid of reality” and would result in a “bizarre exercise of … discretion”.
  1. It is unnecessary to delve further into these entrails. The reasons I gave for setting aside the order for Mr van Leeuwen’s cross-examination speak for themselves. That, however, was all within the umbrella of the respondents’ joinder application, in respect of which the costs have been reserved. It is not necessary for me to make any further order in respect of that application.
  1. As to the applicants’ stay application, the costs which have been ordered to be paid should clearly include the costs which were reserved in respect of that application.  Accordingly for the avoidance of doubt the order made on 9 September 2011 will be varied to read:

“2.The respondents’ application for a temporary stay is dismissed with costs (including the reserved costs of and incidental to that application).”

  1. Beyond that, I do not consider it appropriate to embark on the analysis of appearances urged by the applicants. The costs which are recoverable under that order will be assessed by a costs assessor, in accordance with the provisions of Chapter 17A of the Uniform Civil Procedure Rules[3].  In making the assessment of the standard costs recoverable under my order, the costs assessor will be required to “allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed” – UCPR r 702(2)[4].
  1. The UCPR provides a comprehensive mechanism for the parties to make submissions to the costs assessor with respect to their respective claims for, or objections to, items of costs, and for the costs assessor to certify as to the assessment and, if required, give reasons. A party dissatisfied with a costs assessor’s decision may apply to the court for a review – UCPR r 742[5].
  1. It is not the proper role of a judge to act as a costs assessor. That is what the van Leeuwen interests are now asking me to do, ie to pre-empt the costs assessor’s assessment, which he or she must undertake in accordance with the requirements of r 702[6].  The rules of court provide a proper process for that assessment.  That process ought be followed.
  1. For similar reasons, I decline to make an order or direction, as also sought by the van Leeuwen interests, that the costs they recover should include “the costs consequent upon the perusing, considering and taking instructions on all affidavit material identified by the respondents as material upon which they propose to rely on the hearing of their application for the temporary stay whether or not those affidavits were formally read by the respondents on the hearing of that application”. This order, or direction, was said to be necessary because of the “enormous volume of affidavit material filed and served by [the Zabusky interests], but then not read or relied upon on the hearing of the applications”. In empirical terms, the complaint was that material spanning more than 6,000 pages was filed and served by the Zabusky interests in support of the application for a temporary stay, but only about 700 pages of material were read and relied on on the hearing of the application.
  1. Counsel for the van Leeuwen interests submitted that an order, or direction, of this kind had been made previously by this court in Emanuel Management Pty Ltd (in liquidation) and Ors v Fosters Brewing Group Limited and Ors.[7]  That case was, however, quite different from the present.  The Emanuel case was an enormous piece of litigation – so much is apparent from the 465 page judgment of Chesterman J (as his Honour then was).[8]  In his judgement on costs in that case, Chesterman J was particularly concerned with the question whether the successful party ought to recover their costs on the indemnity basis.  His Honour allowed recovery of costs on the indemnity basis, and also ordered that the costs were to be assessed on the basis that it was necessary and proper for the attainment of justice and for enforcing the relevant defendant’s rights for, inter alia, numerous senior and junior counsel to be retained, several expert witnesses to be retained, and documents relevant to the proceedings to be converted to electronic format.  His Honour explained the justification for making those orders as follows:

“[82]The defendants seek directions in relation to the assessment of costs for the assistance of the taxing officer.  Subject to the requirement in UCPR 704(3) that costs will only be allowed if they were reasonably incorrect and were of a reasonable amount I think it appropriate to make the directions sought.  It should lessen the scope for further argument.”

  1. The order, or direction, which the van Leeuwen interests seek to have me make is in quite a different category.
  1. Just as it is the proper function of the costs assessor to allow all of the reserved costs which represent “costs necessary or proper for the attainment of justice or for enforcing or defending the rights of” the van Leeuwen interests, so too it is an everyday part of the costs assessor’s function to make an assessment of the extent to which the van Leeuwen interests should recover for the costs incurred in perusing large volumes of material which were served but not ultimately relied on at the hearing. It is not for me to perform the costs assessor’s role.
  1. Similarly, I decline to make an order or direction in relation to the recovery of costs for the counsel whose appearances were announced not only at the substantive hearing of the temporary stay application but also on the reviews and other hearing days in respect of which costs were reserved within that application. Once again, that is a function of the costs assessor determining which of counsel’s fees ought be allowed as “costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed”.

The joinder application

  1. At the time I published my reasons, I indicated that the costs of the joinder application were to be reserved. Notwithstanding my express intimation in that regard, the van Leeuwen parties initially made further submissions seeking their costs of that application on the indemnity basis, including all of the costs associated with the applications associated with the cross-examination of Mr van Leeuwen. In the costs submissions made pursuant to my directions on 19 October 2011, however, it was made clear on the part of the van Leeuwen interests that no further order was being sought in relation the joinder application.
  1. Accordingly, I do not need to address the costs of the joinder application any further.

A stay of the present costs order?

  1. In the written submissions lodged on behalf of the Zabusky interests, it was indicated that the Zabusky interests did, or at least might, apply for a stay of the costs order in respect of the temporary stay application until the conclusion of the proceeding, or until the determination of an appeal against my judgment of 9 September 2011. This submission concluded:

“Of course, we anticipate that the other side may wish to be heard on this, and possibly adduce evidence, so it may be more appropriate to make directions for the filing of an application with supporting material.”

  1. The van Leeuwen interests in reply made it clear that they objected to any such stay application simply being dealt with on the papers.
  1. Accordingly, the Zabusky interests shall need to bring such stay application as they wish in the conventional manner. Directions have previously been made in this proceeding with respect to the notice to be given and procedure to be followed for interlocutory applications, and no further directions are required.

Payment out of monies presently held in trust

  1. In their written submissions, the van Leeuwen interests also sought an order for payment out of monies held in an interest bearing account pursuant to an order made by me in proceeding No. 4405 of 2010 on 7 May 2010. No formal application for that payment out was made by the van Leeuwen interests. The Zabusky interests rightly say that if a variation of the order of 7 May 2010 is sought, then a proper application ought be brought on notice and be the subject of evidence and argument by counsel.
  1. The order on 7 May 2010 was made against the following background. The van Leeuwen interests had the benefit of a number of costs orders in the present proceeding against the Zabusky interests. On 5 December 2008, I dismissed an application by the Zabusky interests for a stay of execution in respect of those costs orders.[9]  An appeal by the Zabusky interests against my refusal to grant that stay was dismissed by the Court of Appeal on 10 November 2009.[10]
  1. After the Court of Appeal dismissed the appeal, the van Leeuwen interests sought to execute upon the costs orders by having an enforcement warrant issued in respect of the Zabusky’s home. This enforcement was to be executed by way of the Zabusky home being auctioned. In May 2010, the Zabusky interests applied, in proceeding No. 4405 of 2010, for an interlocutory injunction to restrain the sale of the family home. The application was resolved upon the giving of undertakings and the making of certain orders by consent. It is appropriate to set out the full text of the undertakings and consent orders:

“UPON the First Applicant, by his counsel, giving the usual undertakings as to damages;

AND UPON the Second Respondent, by its counsel, undertaking THAT, upon the Second Respondent’s receiving a copy of a trust account receipt issued by the solicitors for the First Applicant, not later than 9.00 am on Tuesday 11 May 2010, confirming the receipt of cleared funds into the trust account of the solicitors for the First Applicant of the sum of not less than $326,329.13 by or on behalf of the First Applicant for the purposes of this order, the Second Respondent shall forthwith provide written instructions to the Sheriff of Queensland to take no further step to effect a sale of the property pursuant to the Enforcement Warrant filed 15 January 2010 in proceedings BS 6547 of 2005 (‘the 2005 proceedings’). 

BY CONSENT, THE ORDER OF THE COURT IS THAT:

(1)Any funds paid by the solicitors for the First Applicant as contemplated in the said undertaking of the Second Respondent (herein called ‘the trust funds’) shall, so soon as is reasonably practicable, be placed in an interest-bearing account or term deposit with a licensed Australian bank in the joint names of:

a.Coyne & Associates, as the solicitors for the Second Respondent in this proceeding;  and

b.Tucker & Cowen, as the solicitors for the Defendants in the 2005 proceedings BS 6547 of 2005.

(2)The trust funds shall be held as provided in paragraph (1) of this order until:

a.The determination in the 2005 proceedings, of the ‘retainer issues’ (being the issues raised in paragraphs 95 to 97 of the further Amended Defence filed 7 April 2009 in the 2006 proceedings, and paragraphs 27 and 28 of the Reply filed 2 November 2009 in the 2005 proceedings);  or

b.Further order of the Court.

(3)No further step be taken in this proceeding pending the determination of the retainer issues or earlier order.

(4)Each party have liberty to apply on not less than seven (7) days’ written notice.

(5)Costs reserved.”

  1. It is clear on the face of that order that the “trust funds” are to be held in accordance with the conditions set out in order 2(a). The “retainer issues” have not yet been determined in the 2005 proceedings. The van Leeuwen interests contended, in their consolidated costs submissions, that the trust funds were to be “temporarily … quarantined pending any interlocutory determination of the ‘retainer’ point”. That, however, is not what was provided for in the order made on 7 May 2010.
  1. If the van Leeuwen interests desire to seek a variation of the order made on 7 May 2010, then that should be done in proper form and on proper notice, and not by way of a postscript to costs submissions in the present matter.

Disposition of the joinder application

  1. Having had regard to the submissions of the parties in respect of the joinder application, and noting the undertakings which have been offered, there will be the following orders in respect of the joinder application filed on 24 August 2010:

Upon:

(a)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguillia), by their counsel, giving the usual undertaking as to damages retrospective to the commencement of these proceedings;  and

(b)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguilla), by their counsel, undertaking to be bound by the orders made in the proceedings for the provision of security for costs, namely the orders made on 10 August 2005, 9 November 2005 and 29 February 2008;  and

(c)Viscaya Armadora SA (Panama) and Viscaya Armadora SA (Anguilla), by their counsel, undertaking to be liable in respect of the costs orders that have already been made against the applicants, Virgtel Limited and Virgtel Global networks NV or which may be made in the future in relation to orders previously made reserving costs

IT IS ORDERED THAT:

  1. Viscaya Armadora SA (Panama) be joined as an applicant to the proceedings nunc pro tunc.
  1. Viscaya Armadora SA (Anguilla) be joined as an applicant to the proceedings as from 7 August 2009, the date of its incorporation.
  1. Costs reserved.

Disposition of the temporary stay application

  1. The order made on 9 September 2011 is varied to provide as follows:

“The respondents’ application for a temporary stay is dismissed with costs (including the reserved costs of and incidental to that application).”

Footnotes

[1] Virgtel Ltd & Anor v Zabusky & Ors [2011] QSC 269

[2] Zabusky & Anor v van Leeuwen & Anor [2011] QSC 270

[3] UCPR, Chapter 17A

[4] UCPR, 702(2)

[5] UCPR, rule 742

[6] UCPR, rule 702

[7] Emanuel Management Pty Ltd (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors and Coopers & Lybrand & Ors [2003] QSC 299.

[8] Emanuel Management Pty Ltd & Ors v Fosters Brewing Group Limited & Ors [2003] QSC 205.

[9] Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2008] QSC 316.

[10] Virgtel Ltd & Anor v Zabusky & Ors (No 2) [2009] QCA 349

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Editorial Notes

  • Published Case Name:

    Virgtel Ltd & Anor v Zabusky & Ors

  • Shortened Case Name:

    Virgtel Ltd v Zabusky

  • MNC:

    [2012] QSC 42

  • Court:

    QSC

  • Judge(s):

    Daubney J

  • Date:

    02 Mar 2012

Litigation History

No Litigation History

Appeal Status

No Status