OPI Pacific Finance Ltd v Reef Cove Resort Ltd
[2010] QSC 163
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- Unreported Judgment
- OPI Pacific Finance Ltd v Reef Cove Resort Ltd[2010] QSC 163
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OPI Pacific Finance Ltd v Reef Cove Resort Ltd[2010] QSC 163
OPI Pacific Finance Ltd v Reef Cove Resort Ltd[2010] QSC 163
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO: | |
Trial Division | |
PROCEEDING: | Application |
ORIGINATING COURT: | |
DELIVERED ON: | 20 May 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 January 2010 |
JUDGE: | Daubney J |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURTS – JUDGMENTS AND ORDERS – OTHER MATTERS – where there is an application by the second and third respondents to set aside two costs orders under UCPR rule 667 or 668 – where, in respect of the first costs order, the second and third respondents were not represented at the hearing – where the respondents had notice of the hearing and did not attend – where no explanation is provided for the non-appearance – where, in respect of the second costs order, the respondents were legally represented at the hearing – whether the costs orders should be set aside under UCPR rule 667 or 668 Corporations Act 2001 (Cth), s 440B, s 441A, s 447C Uniform Civil Procedure Rules 1999 (Qld), r 667, r 668, r 706, r 708 AMA v CDK and Ors [2009] QSC 287, cited |
COUNSEL: | G Beacham for the applicant P Beazley, solicitor for the second and third respondents |
SOLICITORS: | Mallesons Stephen Jacques for the applicant Beazley Singleton Lawyers for the second and third respondents |
[1] The following applications are presently before the Court for determination:
(a)An application by the applicant (“OPI”) pursuant to UCPR r 708 for the appointment of a costs assessor in relation to costs orders made on 21 August 2009 and 28 August 2009;
(b)An application by the second and third respondents to set aside those costs orders.
[2] On 20 July 2009, OPI appointed receivers and managers over real property owned by the first respondent, Reef Cove Resort Ltd (“Reef Cove”), pursuant to a registered mortgage over that real property. On 6 August 2009, OPI appointed them as receivers and managers of all of Reef Cove’s assets and undertakings, that appointment being made pursuant to registered charges which had been given in favour of OPI.
[3] The second and third respondents, who were then purporting to act as the administrators of Reef Cove, disputed the validity of the appointment of the receivers and managers. This dispute was founded in an assertion that the appointment of the receivers and managers was not made within the “decision period” for the purposes of s 441A of the Corporations Act.
[4] On 13 August 2009, OPI instituted the present proceeding, seeking a declaration under s 447C(2) of the Corporations Act that the second and third respondents were not validly appointed as administrators of Reef Cove, or alternatively a declaration that the appointment of the receivers and managers on 20 July 2009 was an appointment made within the “decision period”. Whilst that relief was not eventually pressed for, it remained a live issue between the parties until 27August 2009. In any event, it was subsequently determined by White J, in separate proceedings,[1] that the attempted appointment of the second and third respondents as administrators was not legally effective because Reef Cove was a foreign corporation, but not a “company” within the meaning of the Corporations Act.[2]
[5] The originating application was returnable for hearing on 21 August 2009. On 18August 2009, OPI’s solicitor sent an email to Mr Grant McCartney of Simmonds &McCartney Lawyers (then the solicitors for the first, second and third respondents) advising him that OPI would, on 21 August 2009, be proceeding with certain parts of its application, including seeking the declaration that the appointment of the receivers and managers was made within the “decision period” and an order that the second and third respondents pay the costs of and incidental to the application. OPI’s solicitor advised that the balance of the application would be adjourned to 28 August 2009 to be dealt with at the same time as another application which involved the same question of law.
[6] On 19 August 2009, OPI’s solicitor received an email from Mr McCartney advising that his clients would consent to the declaration concerning the validity of the appointment of the receivers and managers, but that the respondents would oppose the costs orders. At about 9.00 pm that evening, OPI’s solicitor sent a response by email to Mr McCartney briefly outlining some of the history to the matter, and concluding:
“If your clients wish to make a counteroffer in respect of the costs for Friday, 21 August 2009 I am happy to take such an offer to my client otherwise we will just have the costs argument on Friday, 21 August 2009 to deal with the costs associated with the “decision period” point which is separate to the balance of the application.”
[7] As events transpired, there was no appearance for the respondents when the matter was mentioned in Court on 21 August 2009. When OPI’s solicitor was informed, at about 10.06 am, that there was no appearance for the respondents, she immediately telephoned the Brisbane town agent for Simmonds & McCartney, and was told that the Brisbane town agent had no instructions to appear on behalf of the respondents on that day. She then telephoned Mr McCartney’s office, and was told that he was out of the country. She then called Mr McCartney on his mobile phone number, and was advised by him that, as he was out of the country, he would not be attending that day’s hearing.
[8] After hearing argument from counsel for OPI, Martin J on 21 August 2009 made the following orders:
“1.It is declared that the appointment by the applicants of Ginette Muller and John Shanahan as Receivers and Managers jointly and severally over all of the assets of Reef Cove Resort Ltd ARBN 098 880 329 on 20 July 2009 was made within the decision period as defined by the Corporations Act 2001 (Cth) and is valid.
2.The balance of the application is adjourned until 10.00 am 28 August 2009.
3.The second and third respondents pay the costs of and incidental to the application in so far as they relate to order 1 to be assessed on the standard basis.”
[9] On Wednesday, 26 August 2009 OPI’s solicitor had numerous conversations with Mr McCartney, the substantive effect of which were that Mr McCartney advised that the second and third respondents would consent to the balance of orders sought by OPI in its originating application other than costs.
[10] On 26 August 2009, OPI’s solicitor sent an email to Mr McCartney attaching a proposed consent order. That draft consent order included a provision that the second and third respondents pay the costs of the application. The covering email said:
“If costs are not agreed as set out in the costs order we will push on on Friday in respect to costs only. If costs are resolved today as set out in the costs order our counsel will only charge a nominal fee for Friday reducing the amount to be paid by your client.”
[11] Mr McCartney responded with an email on 26 August 2009 enclosing an amended draft order which provided for the first respondent, rather than the second and third respondents, to pay the costs of the application. His covering email stated that his “clients are very clear that this is the only basis that they will provide their consent”.
[12] Later that day, OPI’s solicitor responded by email, and rejected Mr McCartney’s proposed form of consent order. OPI’s solicitor’s email concluded:
“Please obtain your clients’ instructions to the consent order that we provided this afternoon. If your clients do not intend to consent we will have no choice but to appear on Friday and outline to the court the position and request that orders be made as per the draft we sent this afternoon. As you can appreciate as this only serves to increase the costs for all parties it would be preferable if a resolution can be reached on the costs issue.”
[13] OPI’s solicitor heard no further from Mr McCartney, and at about 1.18 pm on 27August 2009 she sent him a further email which said:
“I have not heard further from you in respect to costs and presume this means that we will need to have the costs argument tomorrow.
To narrow the issues for the court tomorrow please confirm that your clients reserve their position on costs but consent pursuant to section 440B of the Corporations Act to our client’s enforcement of its securities on 6 August 2009. To this effect I attach a 440B consent and a consent order dealing with this. Please have your clients sign the 440B consent and your firm confirm that you are happy with the consent order attached so that I may forward these to the court today if possible.
In the absence of receipt of the attached signed documents by 4 p.m today I will instruct counsel that no agreement has been reached and that we will be required to proceed with the orders seeking a declaration that your clients appointment was invalid.
If the above documents are executed and returned to us we can both have the costs argument tomorrow unless we agree on appropriate costs order beforehand.
I look forward to your response and hope that this matter can be resolved commercially today without the need for further unnecessary costs being incurred.”
Attached to that email were a form of consent by the second and third respondents pursuant to s 440B of the Corporations Act and a form for consent to judgment or order of a registrar which provided for the respondents to consent to the order under s 440B and for “costs to be paid as order by the Court on 28 August 2009”. Later in the day on 27 August, Mr McCartney returned both the form of consent under s440B and the form of consent order noting “costs to be paid as ordered by the Court on 28 August 2009”. The form of consent under s 440B had been signed by the second and third respondents. The consent to judgment had been signed by MrMcCartney as solicitor for the first, second and third respondent.
[14] At the hearing on Friday, 28 August 2009, Mr McCartney’s Brisbane town agent appeared for the respondents, but did not make any submissions on behalf of the respondents. Further submissions were made by counsel for OPI, and Martin J then made the orders by consent on the terms which had been agreed between the parties and further ordered:
“In addition to the order for costs made on 21 August 2009, the second and third respondents pay the costs of and incidental to the application insofar as they relate to the balance of the application, to be assessed on the standard basis.”
[15] The order made by Martin J on 21 August 2009 was taken out on 8 September 2009. The orders (including the costs order) made by his Honour on 28 August 2009 were taken out on 7 September 2009.
[16] OPI subsequently served a costs statement on the second and third respondents, but no objections to the costs statement were received. Accordingly, on 30 November 2009, OPI applied for an order for the appointment of a costs assessor to make a default assessment under UCPR r 708. That is the application which OPI wishes to have determined. The second and third respondents have applied for the costs orders made by Martin J to be set aside.
Application by the second and third respondents
[17] It is convenient to deal first with the application by the second and third respondents to have these costs orders set aside. This application was expressly founded on r 667, or alternatively r 668. Those rules provide:
“667Setting aside
(1)The court may vary or set aside an order before the earlier of the following -
(a)the filing of the order;
(b)the end of 7 days after the making of the order.
(2)The court may set aside an order at any time if -
(a)the order was made in the absence of a party; or
(b)the order was obtained by fraud; or
(c)the order is for an injunction or the appointment of a receiver; or
(d)the order does not reflect the court’s intention at the time the order was made; or
(e)the party who has the benefit of the order consents; or
(f)for a judgment for specific performance, the court considers it appropriate for reasons that have arisen since the order was made.
(3)This rule does not apply to a default judgment.
668Matters arising after order
(1) This rule applies if -
(a)facts arise after an order is made entitling the person against whom the order is made to be relieved from it; or
(b)facts are discovered after an order is made that, if discovered in time, would have entitled the person against whom the order is made to an order or decision in the person’s favour or to a different order.
(2)On application by the person mentioned in subrule (1), the court may stay enforcement of the order against the person or give other appropriate relief.
(3)Without limiting subrule (2), the court may do one or more of the following -
(a)direct the proceedings to be taken, and the questions or issue of fact to be tried or decided, and the inquiries to be made, as the court considers just;
(b)set aside or vary the order;
(c) make an order directing entry of satisfaction of the judgment to be made.”
[18] Having regard to the matters to which I have referred above, it is clear that r 668 cannot be invoked. Affidavits by each of the second and third respondents have been filed. Neither of them deposes to any facts of the kind referred to in either r 668(1)(a) or (b).
[19] Nor are the second and third respondents able to invoke r 667(1). The present application was made long after both the filing of each of the orders and the expiration of seven days after the making of each order.
[20] In relation to the order made on 28 August 2009, none of the circumstances specified in r 667(2) are present in this case. In particular, it simply cannot be said that the order on 28 August 2009 was made in the absence of the second and third respondents. The solicitor who appeared before me on this application for the second and third respondents sought to advance an argument to the effect that, whilst there was a legal representative present at the costs argument, he was a town agent who “had no instructions on the issue of costs”, was “not prepared for an argument on costs”, and did not know of matters which, if known, would have formed a proper basis for arguing against the order for costs. On the present application the second and third respondents somehow sought to argue that, despite the presence before the Court of a legal practitioner appearing on their behalf, the order was made in their absence. This argument is completely devoid of merit. I have set out above the correspondence between the parties which led to the hearing before Martin J on 28 August 2009. It was abundantly clear from the emails and exchanges of proposed draft orders leading up to the hearing that the question of costs was a live issue for argument and determination on the day. In the hearing before me, the new solicitor for the second and third respondents went so far as to submit that his clients had been “denied natural justice” because they had not been heard. Once again, that submission is completely unmeritorious. The facts, as I have set them out above, make it clear that the second and third respondents were given every opportunity to appear and be heard on the question of costs on 28 August 2009. As a matter of fact, they were legally represented at that hearing. The fact that they (by themselves or their solicitors) chose not to make submissions is a matter for them.
[21] There is, accordingly, no basis under r 667 for disturbing the order made on 28 August 2009.
[22] In relation to the order made on 21 August 2009, the discretion under r 667(2)(a) may be engaged because that order was made in the absence of the second and third respondents. That absence is, however, completely unexplained on the material. That was the hearing at which, again, there had been correspondence putting the second and third respondents’ solicitor on notice that there would be a limited costs argument. The second and third respondents’ solicitor did not instruct town agents to attend at Court on that day. He left the country. When he was contacted on his mobile phone he advised that, as he was out of Australia, he would not be attending that day’s hearing.
[23] The fact that the discretion arises under r 667(2) does not, of course, mean that it will automatically be exercised in favour of the second and third respondents. It is not exercised just for the asking. In a case such as the present, where the second and third respondents’ solicitor was given express notice of the fact that the costs argument was to proceed on 21 August 2009, the very least that one would expect to see on an application by the parties asking the Court to exercise a discretion to set aside that costs order is an explanation for the non-appearance which resulted in the order being made in their absence. No such explanation was proffered or deposed to by the second and third respondents in the application before me. Rather, their solicitor before me sought to mount an argument to the effect that if the second and third respondents had appeared before Martin J, and argument had been advanced before his Honour (including with respect to what the second and third respondents contend is a state of the law which does not conform with that determined in the other proceedings by White J) then some other costs order would have been made. As Applegarth J noted in AMA v CDK and Ors [2009] QSC 287 at [19], it is inappropriate, on an application such as this, to agitate arguments which, in effect, seek to appeal against the costs order in circumstances where there has been no application for leave to appeal the costs order within time. It is sufficient for me to observe simply that there has been no application made for leave to appeal against the costs order made by Martin J on 21 August 2009.
[24] Notwithstanding that the order on 21 August 2009 was made in the absence of the second and third respondents, no good reason has been demonstrated for the exercise of the discretion conferred by r 667(2)(a) to set aside the costs order made on that day.
[25] Accordingly, the application by the second and third respondents will be dismissed.
The applicant’s application under r 708
[26] As already noted, OPI has made an application under r 708 for the appointment of a costs assessor in relation to these costs orders. It needed to make that application because of the failure of the second and third respondents to serve objections to the costs statement.
[27] Rule 706(1) allows a party on whom a costs statement is served 21 days to object to any item in the statement by serving a notice of objection. Counsel for OPI, in the course of the hearing before me, very fairly and quite properly conceded that he could point to no prejudice which would be occasioned to OPI if I were to grant the second and third respondents an extension of the time within which to serve a notice of objection under r 706 in connection with the cost statement relating to the orders made on 21 and 28 August 2009. That, it seems to me in all the circumstances, is an appropriate course to be adopted to enable the second and third respondents now to ventilate their objections.
Conclusion
[28] Accordingly, there will be the following orders:
1.The application by the second and third respondents to set aside the costs orders made on 21 August 2009 and 28 August 2009 is dismissed;
2.The time for the second and third respondents to serve a notice of objection under r 706 in respect of the applicant’s costs statement relating to the costs orders made on 21 August 2009 and 28 August 2009 be extended to 31 May 2010.
[29] I will hear the parties in respect of the costs of these applications.