Virgtel Ltd v Zabusky[2021] QSC 284

SUPREME COURT OF QUEENSLAND

1. [1]
   On 12 April 2021, the Court ordered the proceeding be dismissed for want of prosecution and set down for hearing the questions whether:

   1. (a)
      the applicants should pay the respondents’ costs of the proceeding and the application to dismiss for want of prosecution;
   2. (b)
      costs ordered to be paid should be assessed on the indemnity basis;
   3. (c)
      the respondents are entitled to set off any costs orders made in their favour against earlier orders that they pay the applicants’ costs of interlocutory proceedings in the proceeding; and
   4. (d)
      how moneys to be paid into Court by the applicants under the 12 April 2021 order are to be dealt with or disbursed.
2. [2]
   On the hearing of those questions, it was not in dispute that the Court should order that the applicants pay the respondents’ costs of the proceeding including the costs of the application to dismiss for want of prosecution.  The first disputed question was whether those costs should be ordered to be assessed on the indemnity basis.  Further, it was also not in dispute that the respondents will be entitled to set off the orders that the applicants pay the respondents’ costs of the proceeding including the costs of the application to dismiss for want of prosecution against earlier costs orders made in favour of the applicants.  The second disputed question was whether the moneys paid into Court should be paid out to the respondents because on the ascertainment of the amounts of the costs payable as between the parties under all the costs orders the balance will so favour the respondents that the moneys in Court should be paid to the respondents.
3. [3]
   Subject to presently irrelevant exceptions, the inherent power of the Court to dismiss a proceeding for want of prosecution and the express power contained in r 280 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) result in an order dismissing the proceeding that may be set aside only on appeal or by consent.^[1]
4. [4]
   On the hearing of an interlocutory application including an application for an order to dismiss the proceeding for want of prosecution, the Court’s statutory power to order costs contained in s 15 of the Civil Proceedings Act 2011 (Qld) is conferred in discretionary language: “[a] court may award costs in all proceedings unless otherwise provided”.  If an order dismissing the proceeding is made, the costs of the proceeding including the application in the proceeding for dismissal may be awarded.  Two relevant provisions of the UCPR should be noticed.  First, under r 681(1), “[c]osts of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise”.  Second, r 693(1) provides that “costs of a proceeding do not include the costs of an application in the proceeding, unless the court orders otherwise”.
5. [5]
   Again subject to presently irrelevant exceptions, when a party is ordered to pay the costs of another party, the costs of the party entitled to costs are to be assessed costs.^[2]  Where the Court orders a party to pay another party’s costs, an order for assessment is unnecessary.^[3]  Under the statutory procedure, unless the parties agree otherwise, a costs assessor must be appointed to assess the costs.  Unless an order of the Court provides otherwise, in such a case the costs assessor must assess the costs on the standard basis.^[4]  However, the Court may order costs to be assessed on the indemnity basis.^[5]
6. [6]
   An order that costs be assessed on the indemnity basis is sometimes described as a “special” costs order.  The language of the statute and the rules of Court under which such an order may be made is discretionary and the discretionary power is broad.  Nevertheless, without fettering the breadth of the discretionary power, recognised categories of case have been identified in which a special order for costs to be assessed on the indemnity basis may be made.
7. [7]
   The respondents rely upon one of the identified categories of case of that kind, namely where it appears to the Court “that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success” so that it “must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law”.^[6]
8. [8]
   Except for the first applicant, the respondents submit that the applicants did not have an arguable basis for their claims for relief because none was a member of the sixth respondent, Virgin Technologies Limited (“VTL”).
9. [9]
   In deciding this question of costs, regard should be had to r 685 of the UCPR as follows:

“(1) If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs.

3. (2)
   The court may make the order the court considers just.”

10. [10]
    The terms of this and cognate rules recognise that, in an appropriate case, a Court will make an order for costs without a hearing on the merits where the moving party no longer wishes to proceed with the action.^[7]  It is not to be thought that it is necessary or appropriate in most cases for the Court to try “a hypothetical action between the parties”.^[8]  On the other hand, whether a proceeding was hopeless is a question that may be agitated in circumstances like the present case.
11. [11]
    The applicants’ claims and the causes of action alleged to support them have been the subject of discussion in a number of interlocutory decisions of the Court.  One was decided on 6 April 2006.^[9]  For present purposes, it is enough to set out paragraphs 1 to 11 of the reasons of de Jersey CJ as follows:

“Background facts

[1]  This proceeding concerns alleged misdealing in the property of the sixth respondent (VTL). VTL is a Nigerian company which conducted a business of providing satellite based telephone services in that country. A secured creditor Afribank Nigeria plc placed VTL into receivership on 8 March 2004. By December of that year, Afribank’s debt had been fully discharged. The receivership has not yet however been formally terminated. (The receiver has yet to render his accounts of the receivership.)

[2]  The proceeding is promoted by Mr van Leeuwen, who became involved in VTL in October 2000, at the invitation of the party prominent on the other side of the present ledger, the first respondent Mr Zabusky. Mr Zabusky lived in Nigeria and was actively involved in the day-to-day management of VTL, although the applicants deny that Mr Zabusky was an employee of that company.

[3]  Before the involvement in VTL of Mr van Leeuwen, 85% of the shares in VTL were owned by the first applicant (Virgtel). Virgtel had three shareholders: Amalia Investments Ltd, a company associated with Mr Zabusky; White Owl Ltd, associated with a Mr Gazal; and BZ Investments Ltd, a company associated with a Mr Shaibu, and latterly, his widow. In October 2000, Mr van Leeuwen caused his company, Viscaya Armadora SA, to acquire the shares in VTL held by White Owl. That gave Viscaya a majority holding in, and control of, VTL.

[4]  The second applicant (Virgtel Global) was incorporated in August 2001 by Mr van Leeuwen. Virgtel Global remains under his control. The applicants contend that Virgtel Global was incorporated in order to act as a general agent for VTL in relation to VTL’s dealings with multinational customers and suppliers. On the other hand, the respondents say that Virgtel Global was incorporated with a view to becoming the sole shareholder in VTL. That is said to emerge from a “Protocol of Understanding and Undertaking” dated 20 October 2000 between Amalia and Viscaya. While accepting that the protocol was agreed upon, Mr van Leeuwen’s position is that it was terminated or disbanded because of Mr Zabusky’s alleged failure to secure a transfer of other shares as contemplated by it.

[5]  Whatever the ultimate significance of that, disputes about shareholdings in VTL came to a head at VTL’s Annual General Meeting in London in February 2004. That led to proceedings in the High Court of Nigeria, concerning the shareholdings in VTL, involving those recorded by the Nigerian Corporate Affairs Commission, through its registration of a “form CO2” on 15 November 2000. That form dated 14 November 2000 was lodged purportedly pursuant to a resolution, but one which the van Leeuwen interests deny was ever passed. Those proceedings are extant. (I return later to some detail of them.)

[6]  The vast bulk of the affidavit material filed by Mr van Leeuwen and other deponents for the applicants, if accepted, establishes a prima facie circumstantial, and in some respects direct, case in support of the following allegations:

1.  that Mr Zabusky used his position as a director of VTL, and through his day-to-day involvement in its management, improperly to divert substantial sums of money from VTL to himself, and to his wife and son (the second and third respondents), and to entities associated with him and them (the fourth and fifth respondents);

2.  that Mr Zabusky and his son Erez improperly sold VTL assets and retained the proceeds for themselves; and

3.  that Mr Zabusky and Erez improperly removed and retained computers, information storage devices, information and records belonging to VTL, and brought them to Queensland, where the Zabusky family now resides.

[7]  The applicants contend that the misappropriated monies referred to in paras one and two above, found their way into the substantial real estate holdings in the Gold Coast region now owned by Mr and Mrs Zabusky, Erez and their companies; and into the companies Commslogic (the fourth respondent) and Softquest (the fifth respondent). The applicants assert an entitlement to declarations of the consequent existence of constructive trusts affecting that property, and invoke a tracing remedy.

[8] The respondents comprehensively deny those various factual allegations.

The court proceeding

[9]  The applicants commenced the proceeding by means of an ex parte application for Mareva injunctions and an Anton Piller order. Those orders were granted on 10 August 2005. After execution of the Anton Piller order, the respondents successfully challenged that order on the ground it did not adequately protect their right to claim legal professional privilege.

[10]  The substantial quantity of seized documents remains quarantined under a regime of consent orders and undertakings. The Mareva injunctions, in modified form, remain on foot by consent.

[11]  The pleadings in the proceeding have been completed. A mountain of affidavit material has been generated in the course of various interlocutory applications. It has been necessary for me to read all of that material, notwithstanding the issues presently agitated are of rather narrower scope, and susceptible of determination on uncontroversial factual material.”

12. [12]
    At the time of that decision, only the first and second applicants were parties to the proceeding.  The second relevant interlocutory decision was made in 2011.^[10]  It is relevant to set out paragraphs 17 to 24 and paragraphs 27 to 31 of the reasons of Daubney J on that occasion:

“The joinder application

[17] The van Leeuwen interests have now applied for the joinder as applicants of two other companies associated with Mr van Leeuwen. Each is called Viscaya Armadora SA. One is incorporated in Panama and the other in Anguilla. For convenience, they are identified as ‘Viscaya Panama’ and ‘Viscaya Anguilla’.

[18] The application for joinder is made under UCPR r 69(1)(b), which relevantly provides that the Court may order that any of the following be included as a party:

‘(i) a person whose presence before the court is necessary to enable the Court to adjudicate effectually and completely on all matters in dispute in the proceeding;

2. (ii)
   a person whose presence before the court would be desirable, just and convenient to enable the court to adjudicate effectually and completely on all matters in dispute connected with the proceeding.’

[19] The van Leeuwen interests contend that the joinder of these companies is appropriate because:

1. (a)
   Panama, is a shareholder in VTL and is a proper applicant in the derivative action;

2. (b)
   the presence of these parties is appropriate for the purpose of resolving the so-called “retainer issue”.

[20] To say that there is a dispute between the van Leeuwen and the Zabusky interests as to the extent and identity of the shareholders in VTL and Virgtel is somewhat of an understatement. That dispute is now being litigated in numerous courts in several jurisdictions.

[21] At the very least, however, it appears common ground that as at 1 October 2000, the shareholding in VTL was:

Virgtel85 per cent

Shehu Malami5 per cent

Ray Wilson Enterprises Ltd5 per cent

Air Virgo Ltd5 per cent

[22] At that time, Virgtel’s shares were held as follows:

White Owl Ltd50.0002 per cent

Amalia Investments Ltd39.9998 per cent

BZ Investments Ltd10 per cent

[23] It is to be noted in passing that Amalia Investments Ltd is a company associated with the Zabusky interests.

[24] There is great disputation between the parties as to how shares in these companies were subsequently dealt with, and the terms of those dealings. The following contested positions emerge:

VTL

The van Leeuwen interests say that on 15 August 2002, ViscayaPanamapurchased Malami’s interest in VTL. It is conceded that the Zabusky interests, throughAmalia Investments, provided 50 per cent of the funds to purchase those shares, and may therefore be entitled to half of the Malami shares. As a consequence, the shareholding in VTL became:

Virgtel85 per cent

ViscayaPanama2.5 per cent

Amalia Investments2.5 per cent

Ray Wilson Enterprises Ltd5 per cent

Air Virgo Ltd5 per cent

In November 2000, a Form CO2 was lodged with the Nigerian Corporate Affairs Commission purporting to record VTL shareholders as:

Virgtel Global99 per cent

ViscayaPanama1 per cent

This is the form to which the Chief Justice referred in his judgment. The court inNigeriasubsequently (and for reasons that do not presently need to be traversed) ordered the Form CO2 be set aside and directed a substitute form be filed. In 2004, however, other proceedings had been commenced by Amalia Investments inNigeriaseeking, inter alia, declarations for a new share structure for VTL, namely:

ViscayaPanama41.85 per cent

Amalia Investments41.85 per cent

BZ Investments6.7 per cent

Ray Wilson Enterprises Ltd5 per cent

Air Virgo5 per cent

Both sides, therefore, have advanced the proposition that Viscaya Panama was, or was entitled to be, a shareholder in VTL, although the extent of that shareholding is obviously a matter of dispute.

Virgtel

The identity and extent of the shareholdings in Virgtel is also in issue. Thevan Leeuwen interests contend that in October 2000, White Owl’s shares in Virgtel were transferred to ViscayaPanama. The Zabusky interests contend, however, that the single share (which gave White Owl the 0.0002 per cent majority) was held by White Owl on constructive trust for Amalia Investments, and that Viscaya Panama was bound by that same trust. In 2001, ViscayaPanamapurchased 18,000 ofBZ Investments’ shares in Virgtel (equal to 3 per cent of the issued capital); the Zabusky interests say that this was a purchase by ViscayaPanamaand Amalia Investments jointly.

In summary, the position with the shareholding of Virgtel, depending on whose case is accepted, is that Virgtel’s shares were held as follows:

ViscayaPanama– on the Zabusky case, 50 per cent, increasing to 51.5 per cent after purchase of the BZ Investment shares; on the van Leeuwen case, 53.002 per cent, after purchase of the BZ Investments shares

Amalia Investments – on the Zabusky case, 40 per cent increasing to 41.5 per cent after purchase of the BZ Investment shares

BZ Investments – 10 per cent, reduced after sale to 7 per cent

…

Should Viscaya Panama and Viscaya Anguilla be joined?

[27] I have given only the barest summary of the competing contentions on the identity and extent of the shareholdings in VTL and Virgtel because, as the matter was argued before me, the fact of these competing contentions was not in issue.

[28] The applicants contend that Viscaya Anguilla, or at the very least, ViscayaPanama, is on any view of the matter a shareholder in VTL and is therefore a proper applicant in this derivative action.

[29] The applicants’ further reason for joining these parties is by reason of the Zabusky interests having raised the question of the ability of the van Leeuwen interests to bring the present proceedings in the name of Virgtel and Global. It is necessary to explain a little more about that issue.

[30] In April 2009, some three years after the Chief Justice gave leavenunc pro tuncfor Virgtel and Global to bring these derivative proceedings, counsel for the Zabusky interests asserted for the first time in the course of a review hearing that Virgtel and Global had never had authority to retain solicitors to bring and prosecute this action. Directions were made to enable the respondents to pursue that argument fully, but that application was never brought on. It is, however, a point that is expressly pleaded on behalf of the respondents in defence to the present proceeding. As a consequence, the respondents have put in issue in this proceeding the question as to who had authority to act on behalf of Virgtel and Global. This will require determination of who was, or was entitled to be, directors of those companies, whether those persons had authority to instruct solicitors on behalf of those companies, and will also require determination of the identity and interests of the companies’ shareholders and which of those have the power to control the composition of the boards of the companies. At least so far as Virgtel is concerned, it is apparent from the summary of the disputed shareholding positions set out above that the extent of the shareholding of Viscaya Panama is a matter of dispute between the parties, as is the question whether the shares were transferred from Viscaya Panama to Viscaya Anguilla or whether such a transfer was prohibited.

[31] In my opinion, each of these points weighs considerably in favour of the joinder of each of Viscaya Panama and Viscaya Anguilla as applicants – whichever one of those companies is held to be a member of VTL is clearly an appropriate party to join in pursuit of the derivative action on behalf of VTL, and in any event I consider it desirable, just and convenient to have those parties before the Court for the purposes of determining the retainer issue.”

13. [13]
    Daubney J concluded as follows:

“Conclusion on the joinder application

[43] The respondents have not persuaded me that I should not exercise the discretion conferred by r 69(1) for the joinder of ViscayaPanamaand Viscaya Anguilla. On the contrary, I am quite satisfied that it is appropriate for those parties to be joined. The joinder of each of those companies as applicants should, however, be subject to the following conditions, namely:

1. (a)
   that each of ViscayaPanamaand Viscaya Anguilla is bound by the previous orders made in this proceeding for the giving of security for costs;

2. (b)
   that each of Viscaya Panama and Viscaya Anguilla is liable in respect of costs orders that have already been made against the existing applicants in this proceeding or which may be made in the future in relation to orders previously made reserving costs; and

3. (c)
   the provision of an undertaking as to damages that relates back to the commencement of the proceedings.

[44] Subject to the parties bringing in a form of order which incorporates these conditions, there will be an order for the joindernunc pro tuncof each of ViscayaPanamaand Viscaya Anguilla as applicants in the proceeding.”

14. [14]
    Paragraphs 50 to 53 of the third further amended statement of claim (“statement of claim”) allege:

“50.  By reason of the matters alleged in paragraphs 9, 9A and 27 to 36 above, Virgtel Limited is entitled to be registered as the owner of 85% of the issued shares in VTL.

50A.  By reason of the matters alleged in paragraphs 38 and 45C above, Viscaya Anguilla, or alternatively Viscaya Panama, is entitled to be registered as the owner of 5% of the issued shares in VTL.

50B.  In reasons for judgment delivered on 9 September 2011 in the Supreme Court of Queensland, Justice Daubney found at paragraph 24 that it is common ground between the applicants and the respondents that Viscaya Panama was, or was entitled to be, a shareholder in VTL, although the extent of that shareholding is a matter in dispute.

51.  In the premises, it is just that Virgtel Limited and Viscaya Panama and Viscaya Anguilla have leave, nunc pro tunc, to commence and conduct this proceeding as a derivative action on behalf of VTL in respect of the causes of action set out below.

52.  Alternatively to paragraphs 50 and 51 above, Virgtel Global is presently registered as the owner of 99% of the issued shares in VTL.

53.  If the Court does not deem it just that Virgtel Limited and Viscaya Panama and Viscaya Anguilla have leave, nunc pro tunc, to commence and conduct this proceeding as a derivative action on behalf of VTL in respect of the causes of action set out below, then in the alternative it is just that Virgtel Global have such leave.”

15. [15]
    It is necessary to say a little more law about each of the applicants and their roles in the proceeding.
16. [16]
    The first applicant, Virgtel Limited (“Virgtel”), has always been a party to the proceeding.  It claims damages and accounts against the first and third respondents and declarations of constructive trust against the fourth respondent as well as declarations and charging orders against the first to fifth respondents.  Each of those claims was made by Virgtel on behalf of the sixth respondent, Virgin Technologies Limited (“VTL”), on the basis that Virgtel was entitled to bring the proceeding on VTL’s behalf under an exception to the rule in Foss v Harbottle.^[11]
17. [17]
    Paragraph 50 of the statement of claim alleges that Virgtel is entitled to be registered as the owner of 85 per cent of the issued shares in VTL.  The basis of that entitlement is alleged in paragraph 9, that on 13 November 2000 Virgtel was recorded in the records of the Nigerian Corporate Affairs Commission as the holder of 85 per cent of the shares and in paragraph 9(A), that what is known as the “BVI judgement” found that Virgtel was and remains the holder of 85 per cent of the issued share capital of VTL.
18. [18]
    Paragraphs 10 to 11A and 18A of the statement of claim allege facts as to the shareholding of Virgtel.
19. [19]
    Paragraph 28 of the statement of claim alleges that a company form signed by the first respondent and lodged with the Nigerian Corporate Affairs Commission purported to record an allotment of additional shares in VTL to the second applicant, Virgtel Global Networks NV (“Virgtel Global”), as to 49,500,000 shares and to the third applicant, Viscaya Armadora SA (Incorporated in Panama) (“Viscaya Panama”), as to 500,000 shares.  Paragraph 35 of the statement of claim alleges that the purported allotment was of no force and effect.  In other words, each of the applicants alleged that neither Virgtel Global nor Viscaya Panama was the holder of shares in VTL under an allotment of 50,000,000 shares in VTL on or about 14 November 2000.
20. [20]
    Paragraph 38 of the statement of claim alleges that Viscaya Panama purchased 5 per cent of the shares in VTL.
21. [21]
    Accordingly, the proceeding involved a dispute as to the membership or shareholding of VTL and allegations and counter allegations that each of Virgtel, Virgtel Global and Viscaya Panama was either a holder or entitled to become a holder of shares in VTL.  On the face of the statement of claim, each of them was a proper party.  As well, it was held in Virgtel Ltd v Zabusky ^[12] that Virgtel Global was included as applicant to address a contention made by the respondents that, because of the registration of the challenged company form, Virgtel lacked the standing it might otherwise assert to bring the proceeding on behalf of VTL,^[13] and in Virgtel Ltd v Zabusky^[14] it was held that Viscaya Panama should be joined as an applicant to the proceeding, over the respondents’ opposition, as both sides advanced the proposition that Viscaya Panama was or was entitled to be a shareholder in VTL, although the extent of that shareholding was a matter of dispute.^[15]
22. [22]
    On the hearing of this application, the applicants read affidavits many of which went to the question of shareholding in or membership of VTL and Virgtel.  A body of that evidence supported the allegations made in the statement of claim not for the purpose of a final hearing but for the purpose of the hearing of this application as to the appropriate orders for costs.
23. [23]
    Those affidavits also dealt substantially with another contention made by the respondents in support of their application for costs, namely that the solicitors acting for the applicants were not properly instructed by Virgtel or the other applicants.  At the hearing of the application, the question was raised whether, if the solicitors did not have lawful authority to act for the applicants, it would follow that the applicants were not represented by the solicitors and would not be responsible for the conduct of the proceeding by the unauthorised solicitors.^[16]  The respondents thereupon abandoned the contention that a lack of authority of the applicants’ solicitors was a basis for an order that the costs ordered to be paid by the applicants should be assessed on the indemnity basis.
24. [24]
    Accordingly, the respondents’ application for indemnity costs was pressed on the footing that, so far as the second and third applicants were concerned, their claims were hopeless because neither of them was arguably a member or shareholder of VTL.
25. [25]
    In my view, the contention should be rejected.  The second applicant became a party to the proceeding because of the respondents’ contention that it was a member or shareholder of VTL – a contention which it rejected.  The third applicant became a party to the proceeding both because it rejected that it was a member or shareholder of VTL under the challenged company form and also because it alleged it was entitled to be a member of VTL by reason of its acquisition of Malami’s 5 per cent shareholding in VTL.
26. [26]
    The respondents’ counsel cross-examined three of the applicants’ deponents as to their knowledge of the relevant shareholdings.  However, none of them made any concession or gave evidence which shows that the first applicant was not the holder of 85 per cent of VTL’s shares or that the third applicant was not entitled to be the holder of 5 per cent of the shares in VTL or that the second applicant did not properly assert that it was not a shareholder in VTL.
27. [27]
    In any event, it is not submitted that the respondents’ costs of the proceeding overall were substantially increased by the joinder of the second applicant or the third applicant as parties to the proceeding.
28. [28]
    In those circumstances, in my view, this is not a case where an order should be made that the respondents’ costs be assessed on the indemnity basis because the second applicant’s or third applicant’s cases were hopeless.

Set-off of Costs and Payment of Moneys in Court

29. [29]
    An order that the applicants pay the respondents’ costs of the proceeding including the costs of the application to dismiss for want of prosecution will entitle the respondents to have those costs assessed without an order for assessment.  Unless the parties agree otherwise, the respondents will be required to serve a costs statement,^[17] following which there will be a costs assessment by a costs assessor.^[18]
30. [30]
    The costs assessor appointed will carry out the costs assessment under Ch 17A, Pt 3, Div 3 of the UCPR.  That must include the costs of the costs assessment.^[19]  At the end of the costs assessment, the costs assessor must certify the amount or amounts payable by whom and to whom and certify them.^[20]  After the certificate of assessment is filed, the Registrar of the Court must make the appropriate order having regard to the certificate.^[21]
31. [31]
    If a party entitled to be paid costs is also liable to pay costs and the costs payable have been assessed, the Registrar may set off one amount against the other and by order direct by whom any balance is payable.^[22]  Alternatively, the Registrar may decline to make an order for costs after a certificate of assessment is filed until the party entitled to those costs has paid the amount that party is liable to pay the other party for assessed costs.^[23]
32. [32]
    An order for costs made in accordance with that process takes effect as a judgment of the Court.^[24]  As a liquidated sum, it may be set off as a mutual debt against another order for costs in a money amount made between the same parties in the proceeding.^[25]
33. [33]
    Accordingly, it was not in dispute on the hearing of the application that when the respondents’ costs of the proceeding including the application to dismiss for want of prosecution are assessed, certified and ordered to be paid, the respondents will be entitled to set them off against other orders for costs in the proceeding that the respondents pay the applicants’ costs of particular applications, appeals and other matters.
34. [34]
    The sum of $650,000 plus any accretions since 10 August 2005 was paid into Court pursuant to paragraph 4 of my order of 12 April 2021, as varied.  That amount was previously held to secure the respondents’ obligations to pay under four earlier orders that the respondents pay the applicants’ costs of various matters.
35. [35]
    The respondents apply for an order that the moneys paid into Court should be paid out to them.  They submit that order should be made on account of the balance that they submit will be payable to the respondents after ascertainment and set-off of the various amounts of orders for costs that have been made to date including those that remain to be assessed.
36. [36]
    Moneys paid into Court as required by an order are under the Court’s control.  An application for payment out of Court must be served on all other parties.^[26]  The Court retains a general discretionary power as to whether they should be paid out of Court.
37. [37]
    The respondents submit that that power extends to payment out of Court in anticipation of a net sum in the respondents’ favour that will be ascertained on set-off of the relevant costs orders.  The applicants submit that no order could or should be made because it is not clear that on set-off the costs orders in favour of the respondents will exceed the costs orders in favour of the applicants by the amount of the money paid into Court or at all.
38. [38]
    Neither of the parties addressed the interests that are or may be held in the money paid into Court or the principles that apply to a contested claim to a payment out of Court.  It would be inappropriate, therefore, to examine them in detail.  However, some points should be noticed.
39. [39]
    First, before payment into Court, the money in Court was held in an account or accounts to answer four costs orders made in favour of the applicants under an arrangement agreed to and made so as to stop execution on those orders proceeding against the respondents’ property.  Accordingly, the money may have been held beneficially for the respondents subject to an equitable charge in favour of the applicants or on contractual terms equivalent to those interests.
40. [40]
    Second, it seems likely that the payment into Court was made so that the money could be held in Court pending the resolution of these applications as to the costs of the proceeding.  The funds so paid may be seen as paid to abide the outcome of the orders for costs of the proceeding.
41. [41]
    Where money is paid into Court, it is in the control of the Court but that statement does not exhaust the possible interests in the money.  For example, where money is paid into Court by a stakeholder who interpleads, neither of the claimants has an interest in the money whilst in Court although it will ordinarily be paid out to the successful party.  On the other hand, where money is paid into Court as security to answer some event, such as security for costs, the party intended to benefit will have an equitable security interest.  Not all circumstances are free from doubt, but the relevant principles have been discussed in detail in intermediate appellate courts.^[27]
42. [42]
    Third, the principles upon which an application to pay money out of Court is decided are matters of practice and procedure.  However, r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) is in pari materia to r 561 of the UCPR as to an application for payment out of Court of money paid into Court.  What an applicant seeking money to be paid out of Court must establish has been considered in a number of cases under the New South Wales rule.^[28] 
43. [43]
    In the result, the respondents must establish an entitlement to the funds in Court having regard to the circumstances and the events against which it was paid into Court.  They seek to establish that they are entitled to the funds because there is no amount owing or that will remain owing in respect of the four costs orders against which the funds paid into Court were intended to be secured or other liabilities that will entitle the applicants to any of the money in Court.
44. [44]
    It might be said that until the amount of an order that the applicants pay the respondents’ costs of the proceeding including the costs of the application to dismiss for want of prosecution is ascertained by agreement or a costs assessment process there can be no order or liquidated sum capable of set-off against the four orders for costs in favour of the applicants, so as to discharge or satisfy the amounts owing under the four costs orders.  However, that argument was not advanced by the applicants.
45. [45]
    Instead, they submitted that, even if the amount of a set-off need not be ascertained first, the evidence does not enable a conclusion that there is sufficient proof (that is, “strict proof” ^[29]) as to the respondents’ entitlement to the money in Court.
46. [46]
    The first respondent is now a solicitor.  He swears in an affidavit that the respondents’ costs incurred in the proceeding are $4,246,492.29.  Those are not said to be assessable costs on the standard basis.  No costs statement has been produced.  There are questions about whether components of the amount of the costs incurred are recoverable, as follows.
47. [47]
    First, the amount includes the respondents’ costs of other proceedings between some of the parties and other parties in the Netherlands, the British Virgin Islands and Nigeria.  Second, the amount includes costs of disputes between the respondents and their own solicitors in this jurisdiction.  Third, the amount includes costs of proceedings by way of appeals in this jurisdiction where costs have not been awarded in favour of the respondents.  Fourth, the respondents’ costs will have been increased because they have changed solicitors and counsel on a number of occasions causing duplication of costs or wasted costs.  Fifth, the respondents’ costs include costs of the amendments of their pleadings that will be costs thrown away and not recoverable.  Sixth, the amount includes costs of interlocutory applications where the applicants have not been ordered to pay the respondents’ costs and applications where orders were made that the respondents pay the applicants’ costs. 
48. [48]
    A table reflecting the possible amounts of some of those reductions is as follows:

49. [49]
    Seventh, there is the amount that the recoverable items of costs will be reduced on assessment as standard costs from the amount incurred that may result in a percentage reduction of as much as thirty per cent or more.  Finally, I note that the present application was supported by more than one thousand five hundred pages of affidavits and exhibits, nearly all of which was immaterial to the questions that were ultimately submitted for decision on the hearing of this application.
50. [50]
    Against the reduced amount of the respondents’ costs that may be assessed, the applicants have a number of amounts of costs for possible set-off.  First, the applicants have ordered amounts of costs payable by the respondents.  Second, they may have an entitlement to interest on those amounts.  Third, they have an entitlement to costs to be assessed upon other orders for costs.
51. [51]
    A table reflecting the possible amounts (but which does not appear to include the amounts of other orders for costs that resulted in the amount of $650,000 paid into Court to stop execution on those orders) is as follows:

52. [52]
    No reliable opinion as to the degree of likelihood of a particular outcome or range of outcomes can be formed on these matters for the purpose of deciding this application.  That is enough to conclude that, even if the amount of a set-off need not be ascertained first, the evidence does not enable a conclusion that the respondents are entitled to the money in Court before the relevant costs assessments are made.