Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement)
[2022] QSC 163
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- Unreported Judgment
- Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement)[2022] QSC 163
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Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement)[2022] QSC 163
Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement)[2022] QSC 163
SUPREME COURT OF QUEENSLAND
CITATION: | Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors [2022] QSC 163 |
PARTIES: | MICHAEL DAVID STIMPSON (applicant) v ALLIED RURAL PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 141 306 229 (first respondent) AND WILLIAM DOOLAN (second respondent) AND KATRINA PEREY (third respondent) |
FILE NO: | BS 3521 of 2021 |
DIVISION: | Trial Division |
PROCEEDING: | Application for costs |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 5 August 2022 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Written Submissions |
JUDGE: | Jackson J |
ORDER: | The order of the court is that:
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – COSTS OUT OF FUND OR PROPERTY – OTHER PARTICULAR CASES – where the court ordered that a remuneration determination be varied – whether the administrator’s costs of the application should be costs in the voluntary administration – whether those costs should be assessed on the indemnity basis PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – PARTIES AND NON-PARTIES – NON-PARTIES GENERALLY – OTHER PARTIES – where two non-party creditors appeared – whether additional costs were incurred by the appearance of either non-party – where there is an order that the administrator’s costs of the application should be costs in the voluntary administration to be assessed on the indemnity basis – whether either non-party should be ordered to pay costs against the applicant Civil Proceedings Act 2011 (Qld) s 15 Corporations Act 2001 (Cth) s 58AA, s 411, s 600K, s 1337B, sch 2 Insolvency Practice Schedule (Corporations) s 60-11 Corporations Proceedings Rules (Qld) r 2.13, r 9.2A Uniform Civil Procedure Rules 1999 (Qld) r 704, r 995, ch 17A, sch 1A BE Australia WD Pty Ltd (subject to a deed of company arrangement) & Ors v Sutton (2011) 82 NSWLR 336, cited Calderbank v Calderbank [1976] Fam 93, cited In Re Buckton; Buckton v Buckton [1907] 2 Ch 406, cited Ji Woo International Education Centre Pty Ltd [2019] NSWSC 338, cited Michaela Manicaros v Commercial Images (Aust) Pty Ltd [2022] QSC 83, cited Re Lonnex Pty Ltd (in liq) (No 2) (2019) 57 VR 238, applied Re Mossgreen Pty Ltd (in liq) (ACN 163 353 053) [2019] FCA 1771, applied Re NRMA Limited (No 1) (2000) 156 FLR 349, cited Re Pan Pharmaceuticals Ltd & Anor; Selim v McGrath & Ors (2004) 48 ACSR 681, cited Re Pasminco (2004) 49 ACSR 470, applied Spitfire Corporation Limited (in liquidation) and Aspirio (in liquidation) [2022] NSWSC 579, cited. Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors [2022] QSC 74, cited Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and Construction Pty Ltd (2021) 7 QR 1, cited |
COUNSEL: | L Copley for the applicant M Martin QC for the first and third respondents The second respondent appeared on his own behalf |
SOLICITORS: | McInnes Wilson Lawyers for the applicant Shand Taylor for the first and third respondents The second respondent appeared on his own behalf |
JACKSON J:
- [1]On 9 May 2022 the court ordered that the remuneration determination made at the second meeting of creditors in the voluntary administration of the first respondent on 10 May 2021 be varied to the amount of $228,891 plus GST and made directions for the interested parties to make submissions on costs (“principal judgment”).[1]
- [2]The applicant applies for an order that the applicant’s remuneration costs and expenses of the application be costs in the voluntary administration of the first respondent and be paid in full out of the assets of the first respondent. None of the parties opposes an order that the applicant be indemnified from the assets of the first respondent.
- [3]However, it is not appropriate by an order for costs to make an order that the applicant recover remuneration or expenses of the application that are not legal costs. Accordingly, the appropriate order against the first respondent is that the applicant’s costs of the application be paid by the first respondent. It is also appropriate to order that those costs be assessed on the indemnity basis.[2] That is because the costs of an application by an external administrator for remuneration which is successful are ordinarily ordered to be assessed on the indemnity basis.[3]
- [4]An order that the costs ordered to be paid by the first respondent be costs in the voluntary administration is not opposed.
- [5]Next, the applicant seeks an order that the second and third respondents pay the applicant’s costs to be assessed on the standard basis after 30 July 2021 and on the indemnity basis from 30 August 2021.
- [6]Each of the second and third respondents opposes any order for costs against them.
- [7]The applicant submits that the opposition of the second and third respondents justifies an order for costs being made against each of them because they went beyond being an objector and became an adversary who should be liable for costs. In support of that contention, the applicant submitted that the grounds of opposition raised by the second and third respondents contained serious allegations against the integrity of the applicant that were not made out or were expressly rejected and that the ground based on the invalidity of the applicant’s appointment was rejected because the respondents approbated the validity of the appointment.
- [8]The applicant submits further that neither the second nor third respondent submitted that the work performed for which remuneration was being sought was either unnecessary or not properly carried out by reference to the tasks, times or rates relied upon by the applicant. The application was necessary because of the approach put forward by the second respondent that the remuneration should be determined as an “ad valorem” amount being 20 per cent of the value of the admitted proofs of creditors entitled to share in the fund provided for under the deed of company arrangement.
Third Respondent
- [9]The third respondent’s opposition and the grounds relied upon in the hearing that resulted in the principal judgment were the same as for the first respondent. They did not include the additional written and oral submissions made by the second respondent that ranged over a large number of subject matters.[4]
- [10]The principal judgment decided an application for review of a remuneration determination for an external administrator under the Insolvency Practice Schedule (Corporations) (“IPSC”).[5] It is a proceeding provided for by the Corporations Act 2001 (Cth),[6] which confers jurisdiction on this court.[7] The relevant rules of this court include the Corporations Proceedings Rules (Qld).[8]
- [11]The third respondent opposes any separate order for costs against her. She submits she was not a party to the proceeding and her appearance was pursuant to an entitlement to be heard on the application for review, having served on the applicant a notice under the relevant rule.[9]
- [12]The power of this court in relation to costs of the proceeding is expressly provided for in the IPSC:
“90-15 Court may make orders in relation to external administration
Court may make orders
- (1)The Court may make such orders as it thinks fit in relation to the external administration of a company.
Orders on own initiative or on application
- (2)The Court may exercise the power under subsection (1):
- (a)on its own initiative, during proceedings before the Court; or
- (b)on application under section 90- 20.
Examples of orders that may be made
- (3)Without limiting subsection (1), those orders may include any one or more of the following:
- (a)an order determining any question arising in the external administration of the company;
- (b)…
- (d)an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;
- (e)…”
- [13]As well, this court is empowered to order costs under the Civil Proceedings Act 2011 (Qld) and the Uniform Civil Procedure Rules 1999 (Qld).[10]
- [14]Although named in the title of the principal judgment as the third respondent, no formal order was made that the third respondent be joined as a party to the proceeding and she was not named as a respondent to the application. Accordingly, it is correct to treat the third respondent’s appearance as that of an opponent or objector who was entitled to be heard under the relevant rule.
- [15]Under r 2.13 of the Corporations Proceedings Rules (Qld), the appearance at the hearing of a corporations proceeding of a person who is or claims to be a creditor, contributory or officer of a corporation may occur by reason of a grant of leave to be heard without becoming a party to the proceeding.[11] In that event, specific provision is made in relation to an order for costs against a person to whom leave is given to be heard, as follows:
“(2) If the court considers that the attendance of a person to whom leave has been granted under subrule (1) has resulted in additional costs for any party, or the corporation, that should be borne by the person to whom leave was granted, the court may –
- (a)direct that the person pay the costs;
- (b)order that the person not be heard further in the proceeding until the costs are paid or secured to the court’s satisfaction.
- (3)The court may order that a person who is, or who claims to be, a creditor, contributory or officer of a corporation be added as a respondent to the proceedings.
- (4)The court may grant leave to a person under subrule (1) or order that a person be added as a respondent to a proceeding under subrule (3) –
- (a)on application by the person or a party to the proceeding; or
- (b)on the court’s own initiative. …”
- [16]The significance of r 2.13(2) of the Corporations Proceedings Rules (Qld) is that ordinarily a person who is granted leave to be heard may only be directed to pay the additional costs that result from their attendance.
- [17]By analogy, in the present proceeding, the third respondent’s attendance has not resulted in additional costs for the applicant because the same points relied upon by her were taken by the first respondent and she appeared by the same counsel instructed by the same solicitors who acted for the first respondent.
- [18]The third respondent submitted that cases decided in relation to r 2.13(2)(a) show that costs should not be ordered against a person who was entitled to be heard, as she was, who was not a party, in circumstances where their attendance did not cause additional costs to the applicant.[12]
- [19]In my view, no order for costs should be made against the third respondent in those circumstances.
Second respondent
- [20]The second respondent was also entitled to be heard on the application as a creditor who gave the applicant a notice of objection stating his intention to appear at the hearing of the application and setting out the issues he sought to raise before the court.[13] He too submits that he was not a party to the proceeding because an order joining him as a respondent was not made. That submission should be accepted.
- [21]However, his position differs to an extent from the third respondent because his opposition to the order sought by the applicant was not confined to the grounds relied upon by the first and third respondents, as previously mentioned.
- [22]The second respondent submits that the current application for costs is before a costs assessor pursuant to an order of the Magistrates Court of Queensland made on 18 March 2022. There is no evidence of that and the Magistrates Court of Queensland has no jurisdiction to make an order for costs of the current proceeding as an application made for review of a remuneration determination of the creditors of company under s 60-11 of the IPSC.
- [23]The applicant relies upon a recent decision of this court in relation to the costs of an application for the determination of the remuneration of a provisional liquidator.[14] The applicant submits that ordinarily an objector who exercises a right to object will only be ordered to pay costs in exceptional circumstances or where the objections raised were frivolous and without substance and not properly and justifiably advanced, even if unsuccessfully.[15] However, it should not be forgotten that the cases where the relevant discussion of principle took place concerned the opposition of a member of a corporation to a member’s scheme of arrangement under s 411(1) of the Corporations Act 2001 (Cth) or equivalent.[16] The applicant further relies on the distinction between an opponent who is merely an objector and one who becomes an adversary such that they should be liable for costs.[17]
- [24]In my view, the distinction relied upon by the applicant is elusive. However, I do not doubt that opposition made for an ulterior purpose or tactics of technical objection and delay are instances where it may be appropriate to make an order for costs against an objector.
- [25]To the extent that the second respondent relied on the same points made by the first and third respondents, his attendance did not cause additional costs of any significance to the applicant. Second, it was always necessary for the applicant to bring the application for review of the remuneration determination once the second meeting of creditors had resolved that his remuneration as voluntary administrator be fixed on an “ad valorem” basis and at 20 per cent of the creditor value as admitted for dividend purposes under the deed of company arrangement.[18] On the bringing of the application for review of that determination under s 60-11 of the IPSC, the material relied upon by the applicant as to a reasonable remuneration was necessarily required.
- [26]Accordingly, the additional costs incurred by the applicant on the application by reason of the second respondent’s opposition over and above the grounds of opposition advanced by the first and third respondents may be seen to be concerned mostly with his written and oral submissions that ranged over the additional subject matters that were required to be dealt with. At least to that extent, it may fairly be said that the second respondent’s attendance occasioned additional costs for the applicant.
- [27]However, in circumstances where the first respondent will be ordered to pay the applicant’s costs of the application to be assessed on the indemnity basis and that those costs are costs in the voluntary administration of the first respondent, it is unnecessary to order that there be a separate assessment of the additional costs that resulted from the second respondent’s additional grounds of opposition, at least in the absence of any suggestion that the first respondent will be unable to pay the costs ordered against it.
- [28]Last, the applicant relies upon an offer made without prejudice save as to costs in the form of a Calderbank offer[19] as a ground for an order that both the second respondent and third respondent should be ordered to pay the applicant’s costs of the application to be assessed on the indemnity basis. In the circumstances, given that I do not consider that either the second respondent or the third respondent should be ordered to pay the applicant’s costs, in any event, it is unnecessary to consider whether any order for costs to be assessed on the indemnity basis by reason of a Calderbank offer should be ordered against the second respondent or the third respondent.
Footnotes
[1] Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors [2022] QSC 74.
[2] See Uniform Civil Procedure Rules 1999 (Qld) r 704.
[3] Re Mossgreen Pty Ltd (in liq) (ACN 163 353 053) (2019) 140 ACSR 331, 338 [42]-[44]; Re Lonnex Pty Ltd (in liq) (No 2) (2019) 57 VR 238, 246 [26]; Re Pasminco (2004) 49 ACSR 470, 481 [36].
[4] Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors [2022] QSC 74 [124]-[127].
[5] Insolvency Practice Schedule (Corporations) s 60-11.
[6] Corporations Act 2001 (Cth) s 600K.
[7] Corporations Act 2001 (Cth) ss 58AA and 1337B.
[8] Uniform Civil Procedure Rules 1999 (Qld) r 995 and Schedule 1A.
[9] Corporations Proceedings Rules (Qld) r 9.2A(3) and (4).
[10] Civil Proceedings Act 2011 (Qld) s 15 and Uniform Civil Procedure Rules 1999 (Qld) ch 17A.
[11] Corporations Proceedings Rules (Qld) r 2.13(1).
[12] Re Pan Pharmaceuticals Ltd & Anor; Selim v McGrath & Ors (2004) 48 ACSR 681 [18]; Ji Woo International Education Centre Pty Ltd [2019] NSWSC 338 [3], [9]; Spitfire Corporation Limited (in liquidation) and Aspirio (in liquidation) [2022] NSWSC 579 [4]-[7].
[13] Corporations Proceedings Rules (Qld) rr 9.2A(3) and (4).
[14] Michaela Manicaros v Commercial Images (Aust) Pty Ltd [2022] QSC 83.
[15] Michaela Manicaros v Commercial Images (Aust) Pty Ltd [2022] QSC 83 [31]-[32].
[16] Re NRMA Limited (No 1) (2000) 156 FLR 349 [45].
[17] BE Australia WD Pty Ltd (subject to a deed of company arrangement) & Ors v Sutton (2011) 82 NSWLR 336, 387 [213]; In Re Buckton; Buckton v Buckton [1907] 2 Ch 406, 414-415.
[18] Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors [2022] QSC 74 [71].
[19] Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and Construction Pty Ltd (2021) 7 QR 1 [68]; Calderbank v Calderbank [1976] Fam 93.