King Tide Company Pty Ltd v Arawak Holdings Pty Ltd
[2023] QSC 184
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- Unreported Judgment
- King Tide Company Pty Ltd v Arawak Holdings Pty Ltd[2023] QSC 184
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King Tide Company Pty Ltd v Arawak Holdings Pty Ltd[2023] QSC 184
Reported at (2023) 16 QR 261
King Tide Company Pty Ltd v Arawak Holdings Pty Ltd[2023] QSC 184
Reported at (2023) 16 QR 261
SUPREME COURT OF QUEENSLAND
CITATION: | King Tide Company Pty Ltd v Arawak Holdings Pty Ltd [2023] QSC 184 |
PARTIES: | King Tide Company Pty Ltd (applicant) v Arawak Holdings Pty Ltd (respondent) |
FILE NO: | BS No 5530 of 2017 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 23 August 2023 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 12 July 2023 |
FURTHER SUBMISSIONS: | 17 July 2023 |
JUDGE: | Martin SJA |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – RECOVERY OF COSTS – OTHER MATTERS – where the respondent has paid funds into Court for security for costs – where the applicant applies for funds paid into Court – whether funds paid into Court for security for costs can be paid out for an alternative purpose Uniform Civil Procedure Rules 1999 (Qld), r 561, 676 Duncan (as trustee for the bankrupt Estate of Garrett) v National Australia Bank Ltd (2006) 95 SASR 208 Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd (2014) 49 VR 86 Virgtel Ltd & Ors v Zabusky & Ors [2021] QSC 284 |
COUNSEL: | B Kidston for the applicant/respondent D Skennar KC for the respondent/appellant |
SOLICITORS: | Enyo Lawyers for the applicant/respondent Hartnett Lawyers for the respondent/appellant |
- [1]This is an application by Arawak Holdings Pty Ltd for the payment of funds out of Court pursuant to rule 561 of the Uniform Civil Procedure Rules 1999 (UCPR). It is opposed by King Tide Company Pty Ltd – the payer of the funds into Court.
- [2]The only issue is whether the Court should release the funds to Arawak.
Background
- [3]It is necessary to set out some history of the matter to understand the context to this application.
- [4]The relevant background is:
- on 9 September 2016, King Tide commenced proceedings against Arawak;
- on 5 May 2017, I dismissed the proceedings;
- on 15 September 2017, I ordered King Tide and its sole director, Mr Hartnett, to pay Arawak’s costs;
- on 2 June 2017, King Tide filed an appeal;
- on 27 October 2017, the appeal was dismissed;
- on 29 November 2017, King Tide served on Arawak an application for special leave to appeal in the High Court of Australia;
- on 29 June 2018, King Tide and Mr Hartnett was ordered to pay the costs of the appeal;
- on 14 September 2018, the High Court dismissed the application and ordered costs against King Tide and Mr Hartnett;
- on 27 November 2018, King Tide and Mr Hartnett were served a costs statement for the appeal dismissed on 27 October 2017;
- on 23 January 2019, King Tide and Mr Hartnett served an objection to the costs statement;
- on 2 April 2019, Mr Louden was appointed as the costs assessor;
- on 16 April 2019, King Tide and Mr Hartnett applied to set Mr Louden’s appointment aside;
- on 7 May 2019, Flanagan J (as his Honour then was) dismissed that application and ordered King Tide and Mr Hartnett to pay Arawak’s costs;
- on 6 August 2019, Mr Louden filed a costs assessor’s certificate;
- on 8 August 2019, the Deputy Registrar ordered King Tide and Mr Hartnett to pay Arawak $86,730.69 for the costs of the appeal dismissed on 27 October 2017 (the Costs Order);
- on 22 November 2019, King Tide filed an application to set aside the Costs Order;
- on 16 December 2019, Boddice J (as his Honour then was) dismissed that application (the December Orders);
- on 13 January 2020, King Tide appealed the December Orders;
- on 6 March 2020, Sofronoff P directed King Tide to file and serve a written outline by 18 March 2020;
- on 6 May 2020, King Tide filed an amended notice of appeal and an outline of submissions;
- on 30 October 2020, the appeal was heard;
- on 5 May 2021, the Court of Appeal allowed the appeal. The December Orders were set aside and the matter remitted to the trial division confined to one ground;
- between 5 May 2021 and 3 May 2023, no steps were taken;
- on 3 May 2023, Arawak filed an application to dismiss the proceedings;
- on 17 May 2023, King Tide filed an application for leave to proceed;
- on 17 May 2023, Bradley J heard both applications and allowed King Tide to take a step in the proceeding on the condition that security for costs of King Tide’s application be paid into Court (the May Orders);
- on 31 May 2023, King Tide paid $61,976 into Court in compliance with the May Orders; and
- on 6 July 2023, Arawak filed this application.
- [5]The Costs Order has been partially satisfied, but $40,162.66 remains unpaid. It is this amount plus interest that Arawak applies to be paid out of Court from the funds King Tide paid into Court.
- [6]King Tide and Mr Hartnett have not sought a stay of the Costs Orders and have not satisfied (in full) the Costs Orders.
Position of Each Party
- [7]Arawak contends that UCPR r 561 gives the court an unfettered discretion to make an order releasing money paid into court. It was submitted the Court should exercise this discretion given the lengthy history of the matter and that King Tide has not satisfied the Costs Orders.
- [8]Rule 561 provides:
- An application for payment out of court of money paid into or deposited in court in a proceeding must be served on all other parties.
- A person who applies for payment out of court of money paid into or deposited in court in a proceeding must state whether the person is aware of a right or a claim made by another person to all or part of the money.
- Unless these rules provide otherwise, money paid into or deposited in court must be dealt with under the Court Funds Act 1973.
- [9]The only part of the Court Funds Act which appears to be relevant is s 7 which provides that the Registrar shall deal with money in court in accordance with and subject to the Court Funds Act and any rules of Court.
- [10]A rule which is directly relevant (but which did not capture the attention of the parties) is r 676. It provides:
- This rule applies if, in a proceeding, security for costs has been given by a party under an order made under this chapter.
- If judgment is given requiring the party to pay all or part of the costs of the proceeding, the security may be applied in satisfaction of those costs.
- However, the security must be discharged—
- if a judgment is given which is not within subrule (2); or
- if the court orders the discharge of the security; or
- if the party entitled to the benefit of the security consents to its discharge; or
- in relation to the balance after costs have been satisfied under subrule (2).
- [11]Contrary to Arawak’s argument, r 561 does not confer any discretion on the court, let alone an unfettered discretion. Rule 561 sets out the steps which must be taken on an application for payment out of court, but says nothing about the basis on which such an order might be made. For that, one goes when security for costs has been given, to r 676.
- [12]Rule 676 is in Chapter 17 which is the chapter under which the May Orders were made. Therefore, r 676 applies to these circumstances and it sets out the conditions under which a payment out (or a discharge of the security) may be made. The rule is expressed in that permissive way so that a payment out does not follow automatically upon the making of a costs order. Other matters sometimes impinge upon a costs order, for example, where other costs orders are made such as a Bullock or Sanderson order or where a costs order is stayed. The rule relates to a “proceeding” which, in this case, concerns the specific matter for which security was ordered. I do not read r 676 as allowing payment out in these circumstances.
- [13]That is sufficient to dismiss the application but King Tide advanced a different argument which I should consider. Its argument was that in order for Arawak to be entitled to the funds it must establish an entitlement to the funds in Court having regard to the circumstances and the events against which it was paid into Court.” King Tide submitted that Arawak cannot establish an entitlement to the funds as the funds were paid to satisfy the May Orders and not the Costs Orders.
- [14]Ms Skennar KC relied on Jackson J’s statements in Virgtel Ltd & Ors v Zabusky & Ors[1] where he said:
“[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.
…
[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.”
- [15]These comments were obiter. Justice Jackson acknowledged that neither party in that proceeding had addressed the issue of what principles apply in a contested claim.[2]
- [16]I respectfully agree with Justice Jackson’s statements that a party must establish an entitlement to the funds having regard to the circumstances and events against which it was paid into Court. That is consistent with the view I take of r 676.
- [17]At the conclusion of the hearing, the parties sought, and were given, leave to provide short submissions on the two cases of Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd[3] and Duncan (as trustee for the bankrupt Estate of Garrett ) v National Australia Bank Ltd.[4] Neither of those cases concerned payments made as security for costs nor did they consider a rule similar to r 676. Dura concerned a payment in to secure a stay on the execution of a judgment debt pending the hearing and determination of an appeal. Duncan involved a payment in as part of some undertakings to restrain a bank from exercising rights under a mortgage. They both, though, support the general principle outlined by Jackson J.
Payment out of Court
- [18]Arawak does not have an entitlement to the funds unless it is successful on the remitted question and receives a costs order in its favour.
- [19]The practical effect of Arawak’s application would allow an application like this to be used as an alternative to enforcement proceedings. That must be discouraged.
- [20]I dismiss the application.
King Tide’s failure to comply with the original costs order
- [21]In its submissions, King Tide sought an order for indemnity costs should it be successful. It has been successful. It has also admitted that it has not complied with the Costs Order and has given no reason for this failure. Had it complied with the Costs Order then this application would not have been brought.
- [22]The parties are to provide, within 14 days, brief written submissions on costs with reference to the position of King Tide and its failure to obey an order of this Court.
Orders
- [23]I make the following orders:
- the application is dismissed; and
- the parties are to provide, within 14 days, brief written submissions on costs with reference to the position of King Tide and its failure to obey an order of this Court.