Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment
  • Appeal Determined (QCA)

Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd[2004] QSC 284

Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd[2004] QSC 284

 

 

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO:

Trial Division

PROCEEDING:

Application for costs

DELIVERED ON:

7 September 2004

DELIVERED AT:

Brisbane

HEARING DATE:

Written submissions

JUDGE:

Mullins J

ORDER:

The second and the third respondents pay the costs of Gregory Michael Moloney and Peter Ivan Felix Geroff (“the accountants”), including reserved costs, of the application filed on 11 September 2003 to be assessed on a standard basis up to (but not including) the service on the accountants of the respondents’ notice of objection and thereafter (from and including the service on the accountants of the notice of objection) to be assessed on an indemnity basis

CATCHWORDS:

PROCEDURE - COSTS - where court appointed investigative accountants and supervisors in respect of unregistered managed investment schemes applied for approval of remuneration - where parties responsible for paying the remuneration filed a notice of objection containing 696 objections - where remuneration was approved subject to a slight reduction - whether accountants were successful on their application and entitled to an order for costs - whether notice of objection was so oppressive and speculative that the accountants were entitled to costs on an indemnity basis - accountants entitled to an order for costs and for the costs incurred from and after the service of the notice of objection to be assessed on an indemnity basis

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

Lancet Pty Ltd v Olholm Developments Pty Ltd [2001] 1 QdR 22

Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96

SOLICITORS:

Gadens Lawyers for Messrs GM Moloney & PIF Geroff

Lynch & Company for the second and third respondents

[1] MULLINS J:  When I published my reasons for judgment (“the reasons for judgment”) in respect of the determination of the costs and remuneration of Messrs Moloney & Geroff (“the accountants”) as investigative accountants appointed pursuant to the order of this Court made on 27 May 2003 (“the order”), the question of the costs of the application was adjourned.  The citation for the reasons for judgment is [2004] QSC 133. 

[2] The parties solicitors subsequently made written submissions.  The accountants’ submissions were delivered on 15 July 2004.  The submissions on behalf of Dr Acker (“the second respondent”) and Ms Polanski (“the third respondent”), to whom I shall collectively refer to as “the respondents”, were delivered on 6 August 2004.

[3] Each of the parties relies on the course that the application took and the outcome to make the respective submissions on costs.  As the progress of the application and how the various issues were disposed of are set out in detail in the reasons for judgment, I will not repeat them in these reasons, except to the extent that is necessary to explain my decision on the question of costs. 

[4] The accountants succeeded on their application.  Although the respondents take issue with that as the description of the outcome, it reflects what occurred, when the amount of the costs and remuneration and disbursements was fixed in the sum of $201,193.61 which was only $2,813 less than what was claimed by the accountants. 

[5] The submission on behalf of the accountants is that they should have their costs and they should be assessed, in whole or part, on an indemnity basis, because of the nature and extent of the notice of objection which was delivered on behalf of the respondents on 30 December 2003 (to which reference is made in paragraph [11] of the reasons for judgment). 

[6] Because of the manner in which the respondents’ solicitor conducted the hearing of the application, as set out in paragraph 16 of the respondents’ submissions, the reduction achieved in the costs and remuneration as a result of the hearing and that the response of the accountants to the extensive objections had the effect of narrowing the issues, the respondents submit that they should pay 70% of the applicants’ costs of the application to be assessed on a standard basis.  Relying on the well known principles on the circumstances that make it appropriate for an award of indemnity costs set out in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 232-234, the submission is made that there are no grounds to support the making of a punitive order for costs against the respondents. 

[7] The affidavit of Mr Moloney that was filed in support of the application for approval of the accountants’ costs and remuneration and disbursements was in the form that was suggested in Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96, 103 and Lancet Pty Ltd v Olholm Developments Pty Ltd [2001] 1 QdR 22, 42 as appropriate to enable the court to perform the task of determining whether the remuneration that was sought was fair and reasonable. 

[8] After the application was filed, directions were made on 25 September 2003 which set a timetable for the steps to be undertaken by the parties, before the hearing of the application.  The accountants were required by the directions to allow the respondents’ solicitors to review and seek copies of the non-privileged documents created by the accountants in respect of the work and expenses the subject of the application for the approval of remuneration and disbursements, before the respondents were required to file and serve the notice of objection. 

[9] The notice of objection comprised 696 separate objections covering most of the items of work undertaken by the accountants in the period of about six weeks that was involved in the claim for remuneration and disbursements. 

[10] The accountants in their written submissions on the question of costs give examples of what they describe (and I accept) as illogical and unmaintainable objections.  For example, complaint was made by the respondents about lack of file notes and the complaint was made, when there were file notes, about the time spent in drafting them.  The description which I applied in paragraph [11] of the reasons for judgment was that the notice of objection was speculative, having regard to the fact that all possible objections were taken.  It is particularly pertinent in considering the nature and extent of the objections that the respondents were familiar with the loans and dealings in respect of which the accountants were required to undertake their work pursuant to the order and that the accountants’ tasks were affected by the withholding of information by the respondents from the accountants: paragraphs [17] to [19] of the reasons for judgment.  The respondents were also privy to the time constraint that was placed on the accountants in undertaking the tasks required under the order which affected how the work was carried out.   

[11] The work required of the accountants to respond to the notice of objection was immense.  That was apparent from the written response prepared by the accountants to the notice of objection that was filed on 27 January 2004, accompanied by five volumes of annexures. 

[12] At one stage it was foreshadowed in connection with this application for approval of remuneration and disbursements that the accountants would be seeking an order for costs in respect of their work and that of their staff in responding to the notice of objection.  The written submissions of the accountants on the question of costs note that the accountants will be making a separate approval for remuneration in respect of that work. 

[13] Although the respondents claim that their approach in filing such an extensive notice of objection resulted in some reduction (which was very slight) to the remuneration that was claimed and that a large number of the objections were able to be abandoned as a result of the further information elicited by the respondents in cross-examination of the accountants and their staff about the accountants’ work practices which were pursued in cross-examination as a result of the content of some of the objections that were made, the reality was that the notice of objection had very little impact on the ultimate outcome of the application. 

[14] It was the respondents’ choice to take the approach they did in the notice of objection and to speculate on whether that would effectively reduce the amount of the costs and remuneration and disbursements sought by the accountants. 

[15] The nature and extent of the objections in the notice of objection had an immense effect on the work required on the part of the accountants to respond and prepare for the hearing of the application for the approval of their remuneration and disbursements.  The accountants were required to go to great lengths to support their claim for fair and reasonable remuneration that was far beyond what the material which they filed in support of the application should reasonably have required.  Having regard to all the circumstances pertaining to the work for which the accountants were seeking approval of their remuneration and disbursements of which the respondents were aware, the notice of objection was not what should have been expected from the respondents.  The notice of objection was so oppressive and speculative, that it warrants a departure from the usual order for costs, as from the service of the notice of objection on the accountants.

[16] The order for costs which I consider is appropriate in all the circumstances of this application is:

The second and the third respondents pay the costs of Gregory Michael Moloney and Peter Ivan Felix Geroff (“the accountants”), including reserved costs, of the application filed on 11 September 2003 to be assessed on a standard basis up to (but not including) the service on the accountants of the respondents’ notice of objection and thereafter (from and including the service on the accountants of the notice of objection) to be assessed on an indemnity basis. 

Close

Editorial Notes

  • Published Case Name:

    ASIC v Atlantic 3 Financial (Aust) Pty Ltd

  • Shortened Case Name:

    Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd

  • MNC:

    [2004] QSC 284

  • Court:

    QSC

  • Judge(s):

    Mullins J

  • Date:

    07 Sep 2004

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2003] QSC 26519 Aug 2003Appointment of liquidators to wind up unregistered managed investment schemes: Mullins J.
Primary Judgment[2003] QSC 36631 Oct 2003Application for directions by court appointed liquidators as to justification of entering deed of relinquishment: Mullins J.
Primary Judgment[2003] QSC 386 [2004] 1 Qd R 59114 Nov 2003Application by court appointed accountants for an injunction restraining winding up of unregistered managed investment scheme ordered pursuant to s 601EE(2) Corporations Act pending the payment of fees; role as investigative accountants and supervising accountant are analogous, in the circumstances, to the role of court appointed receiver and that they should have the same protection; grant the injunctive relief sought in support of an equitable lien for fees and expenses claimed: Mullins J.
Primary Judgment[2003] QSC 398 (2003) 48 ACSR 33527 Nov 2003Application for directions by court appointed liquidators as to being justified in refusing to sign deed providing for the transfer of assets in the unregistered managed investment scheme to investors; support of the investors for the proposed deed does not outweigh the considerations which fall under the umbrella of public interest which would not justify the liquidators entering into the proposed deed for this scheme: Mullins J.
Primary Judgment[2004] QSC 13307 May 2004Application for approval of remuneration and disbursements by court appointed investigative accountants for unregistered managed investment scheme; satisfied that fair and reasonable remuneration for the work undertaken by the accountants as investigative accountants pursuant to the order made on 27 May 2003 for preparing the report and undertaking the supervision is $183,451.40 and that the disbursements should be determined in the amount of $17,742.21: Mullins J.
Primary Judgment[2004] QSC 28407 Sep 2004Costs following judgment in [2004] QSC 133; costs following successful application for approval of remuneration of court appointed investigative accountants over unregistered managed investment scheme; notice of objection was so oppressive and speculative, that it warrants a departure from the usual order for costs, as from the service of the notice of objection on the accountants; accountants awarded costs on indemnity basis after service of notice of objection: Mullins J.
Primary Judgment[2004] QSC 42211 Nov 2004Application for an order determining the remuneration and disbursements of court appointed investigative accountants for work performed in relation to an application; orders made per draft: Douglas J.
Primary Judgment[2006] QSC 13205 Jun 2006Application by ASIC for declarations regarding the operation of unregistered managed investment schemes, not holding a dealer's licence or AFSL, and the offering of securities without disclosure documents in contravention of the Corporations Act; seeking disqualification orders arising from the alleged contraventions; declarations made and disqualifications ordered: Atkinson J.
Primary Judgment[2006] QSC 15223 Jun 2006Application for directions to the Registrar for the assessment of costs; seeking to overturn decision of Registrar to find client agreement was void under s 48F QLS Act, on the basis that the cost agreement did not comply with s 48 QLS Act; declared sufficient to amount to cost agreement for r 704(3)(b) UCPR: Mullins J.
Primary Judgment[2008] QSC 9 [2008] 2 Qd R 29808 Feb 2008Application following [2004] QSC 284 to fix costs; costs fixed in the amount of $84,000: Mullins J
Primary Judgment[2008] QSC 5320 Mar 2008Costs following judgment in [2008] QSC 9; respondents pay costs to be assessed: Mullins J.
Appeal Determined (QCA)[2004] QCA 23002 Jul 2004Appeal following [2004] QSC 133 dismissed with costs; no reasons for judgment: Davies JA.
Appeal Determined (QCA)[2006] QCA 540 [2007] 2 Qd R 39915 Dec 2006Appeal against [2006] QSC 152 dismissed with costs; appeal against decision declaring client agreement complied with s 48 QLS Act: Williams and Jerrard JJA and McMurdo J (Jerrard JA dissenting).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd [2004] QSC 133
1 citation
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 F.C.R 225
2 citations
Lancet Pty Ltd v Olholm Developments Pty Ltd[2001] 1 Qd R 22; [1999] QSC 183
2 citations
Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96
2 citations

Cases Citing

Case NameFull CitationFrequency
Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd[2008] 2 Qd R 298; [2008] QSC 93 citations
Australian Securities and Investments Commission v Atlantic 3 Financial (Aust) Pty Ltd [2004] QSC 4221 citation
1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.