FEDERAL COURT OF AUSTRALIA Apostolou as Trustee of the VA Unit Trust & Vasiliou Family Trust v VA Corporation of Aust Pty Ltd (No 4) [2012] FCA 1342 Citation: Apostolou as Trustee of the VA Unit Trust & Vasiliou Family Trust v VA Corporation of Aust Pty Ltd (No 4) [2012] FCA 1342 Parties: VASILIKI APOSTOLOU AS TRUSTEE OF THE VA UNIT TRUST & VASILIOU FAMILY TRUST and ANDREW VASILIOU v VA CORPORATION OF AUST PTY LTD (ACN 006 760 792), DAVID CHARLES QUIN (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792), CLYDE PETER WHITE (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792), PERPETUAL TRUSTEE COMPANY LIMITED (ACN 000 001 007), CHALLENGER MANAGED INVESTMENTS LIMITED (ACN 002 835 592) and REGISTRAR OF TITLES File number: VID 124 of 2008 Judge: JESSUP J Date of judgment: 5 December 2012 Catchwords: COSTS – where interlocutory order made entitling certain respondents to disbursement of moneys held in court for costs incurred "in this proceeding" – where proceeding alleged to include applications for leave to appeal and appellate proceeding – whether hearing of application for leave to appeal and appellate proceeding separate from trial proceeding – whether costs incurred in connection with application for leave to appeal and appellate proceeding were costs incurred "in this proceeding" Legislation: Federal Court Rules (Cth) Federal Court Rules 2011 (Cth) Cases cited: Apostolou v VA Corporation of Aust Pty Ltd [2011] FCAFC 103 Apostolou v VA Corporation of Aust Pty Ltd [2009] FCA 165 IMF (Australia) Ltd v Meadow Springs Fairway Resort Ltd (in liq) [2009] FCAFC 69 Thomas Borthwick and Sons (Pacific Holdings) Ltd v TPC (1988) 18 FCR 424 Date of hearing: 9 November 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Plaintiffs: The Second Plaintiff appeared in person and on behalf of the First Plaintiff Counsel for the First, Fourth, Fifth & Sixth Defendants: The First, Fourth, Fifth & Sixth Defendants did not appear Solicitor for the Defendants: Mr N Hannan of Thomsons Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 124 of 2008 BETWEEN: VASILIKI APOSTOLOU AS TRUSTEE OF THE VA UNIT TRUST & VASILIOU FAMILY TRUST First Plaintiff ANDREW VASILIOU Second Plaintiff AND: VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) First Defendant DAVID CHARLES QUIN (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) Second Defendant CLYDE PETER WHITE (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) Third Defendant PERPETUAL TRUSTEE COMPANY LIMITED (ACN 000 001 007) Fourth Defendant CHALLENGER MANAGED INVESTMENTS LIMITED (ACN 002 835 592) Fifth Defendant REGISTRAR OF TITLES Sixth Defendant JUDGE: JESSUP J DATE OF ORDER: 3 DECEMBER 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Moneys still held in court pursuant to para 3 of the orders made on 6 May 2008 in this proceeding, and any accretions thereto, be disbursed as follows: (a) the sum of $63,853.76, to the second and third defendants; (b) the balance of the said moneys and accretions, to the first defendant. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 124 of 2008 BETWEEN: VASILIKI APOSTOLOU AS TRUSTEE OF THE VA UNIT TRUST & VASILIOU FAMILY TRUST First Plaintiff ANDREW VASILIOU Second Plaintiff AND: VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) First Defendant DAVID CHARLES QUIN (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) Second Defendant CLYDE PETER WHITE (AS JOINT LIQUIDATOR OF VA CORPORATION OF AUST PTY LTD (ACN 006 760 792) Third Defendant PERPETUAL TRUSTEE COMPANY LIMITED (ACN 000 001 007) Fourth Defendant CHALLENGER MANAGED INVESTMENTS LIMITED (ACN 002 835 592) Fifth Defendant REGISTRAR OF TITLES Sixth Defendant JUDGE: JESSUP J DATE: 5 DECEMBER 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This proceeding was commenced by Application filed on 28 February 2008. At the time, the first defendant, VA Corporation of Aust Pty Ltd ("VA Corp") was under external administration, a winding up order having been made by the Supreme Court of Victoria on 29 March 2006 and confirmed on appeal on 28 July 2006. An asset of VA Corp, held in trust for the VA Unit Trust ("the trust"), was a property at 181-185 St Kilda Road, St Kilda ("the property"). In May 2007, the second and third defendants, David Charles Quin and Clyde Peter White respectively ("the liquidators"), as liquidators of VA Corp, sought an order for a judicial sale of the property. They had not obtained such an order by 6 March 2008, on which date the property was sold for $4.6m at public auction by the fourth defendant, Perpetual Trustee Company Limited ("Perpetual"), it having taken possession of the property pursuant to a mortgage which secured a debt owing by VA Corp in the sum of $1.2m. 2 That was the state of things on 6 May 2008, when Finkelstein J gave and made directions and orders which included the following: THE COURT DIRECTS THAT: 1. Subject to further direction, a Registrar of the Court review pursuant to s 473(6) of the Corporations Act 2001 (Cth) the remuneration to which the [liquidators] … are properly entitled and the expenses they properly incurred in the liquidation of VA Corp. 2. The review by the Registrar in accordance with paragraph 1 shall not include a determination of the [liquidators]' entitlement to retain any sum on account of the costs of this action, that question to be reserved for determination by a judge. …. THE COURT ORDERS THAT: 1. The winding up of VA [Corp] be stayed indefinitely. 2. ... 3. The fourth defendant pay into court the sum of $470,000 as soon as is reasonably practicable after the receipt of the proceeds of sale of the … property following the settlement of that sale, to be applied: (a) first, in discharge or partial discharge of the remuneration and expenses found to be owing to the [liquidators]; (b) second, in payment of any costs and expenses incurred or to be incurred by the [liquidators]in this proceeding and ordered to be paid by the applicant or [VA Corp]; and (c) third, in payment of the balance (if any) to VA [Corp]. …. 3 Pursuant to these orders, on 15 May 2008 Perpetual paid into court an amount which included the sum of $470,000 referred to in para 3 of the orders made on 6 May 2008. That sum was held in an interest-bearing account. 4 On 29 August 2008, Finkelstein J accepted an undertaking, and made orders, in the following terms: Upon the [liquidators] each undertaking to pay to [VA Corp] the difference between: (a) the aggregate of the amount that is: i) hereafter assessed to be the proper remuneration, costs, and expenses of the [liquidators] of and incidental to the conduct of the liquidation of the [VA Corp]; and ii) incurred or to be incurred by the [liquidators] in this proceeding and is ordered to be paid by the plaintiff or [VA Corp]; and (b) the sum of $376,000 in the event that the sum in (a) is determined to be less than the sum in (b); THE COURT ORDERS THAT: From the funds presently held by the Court to the credit of this action, the sum of $376,000 be paid to the [liquidators] or at their direction on account of the fees, costs, and expenses of the [liquidators] described in paragraph (a) of the undertaking above. Although not stated in terms, the ordered payment out evidently related to the matters covered by paras 1 and 2 of the directions given, and to para 3(a) and (b) of the orders made, by the court on 6 May 2008. 5 On 7 October 2008, Finkelstein J made some purely procedural orders in the proceeding, as follows: 1. Leave be granted to withdraw the application for substitution of applicant. 2. On or before 4.00pm on 25 February 2009 any affidavit upon which the applicant will seek to rely and any further amended statement of claim the applicant may wish to file shall be provided in copy form to the respondents and the Court. 3. The matter be adjourned to a directions hearing on 6 March 2009 at 9.30am. 4. The applicant pay the respondents [sic] taxed costs of the day. 6 On two dates in October 2008 the then plaintiff, the now first plaintiff, applied for leave to appeal against the orders made on 6 May, 29 August and 7 October 2008. Those applications were dismissed by Goldberg J on 12 February 2009: Apostolou v VA Corporation of Aust Pty Ltd [2009] FCA 165. His Honour ordered the plaintiff to pay the costs of parties which included the liquidators. 7 On 11 February 2010, Finkelstein J delivered final judgment in the proceeding. His Honour dismissed the proceeding with costs. The plaintiffs appealed against that judgment, which appeal was dismissed with costs on 15 August 2011: Apostolou v VA Corporation of Aust Pty Ltd [2011] FCAFC 103. 8 The matter now before the court is the finalisation of the entitlements of the liquidators pursuant to para 3(a) and (b) of the orders made on 6 May 2008. 9 Pursuant to para 1 of the directions given on 6 May 2008, a Registrar has reviewed the remuneration to which the liquidators are entitled, and the expenses which they properly incurred in the liquidation. The Registrar's order, dated 7 October 2011, is that these items amount in total to the sum of $276,907.07. That is the entitlement of the liquidators pursuant to para 3(a) of the order made on 6 May 2008. 10 The liquidators have now had their costs taxed, as follows: • Costs of proceeding before Finkelstein J (ie this proceeding): $152,800.00 • Costs of applications for leave to appeal dismissed by Goldberg J: $ 10,146.69 • Costs of appeal from final judgment: $ 27,450.00 The liquidators claim an entitlement to all of those costs, to be taken from the sum of $470,000 paid into court and any accretions thereto, pursuant to para 3(b) of the orders made on 6 May 2008. 11 It is clear that the liquidators are entitled to the first sum mentioned above pursuant to para 3(b) of those orders. However, the question which arises in relation to the second and third sums is whether either of them represents costs and expenses incurred "in this proceeding" within the meaning of that sub-paragraph. 12 With respect to the second sum, at the time the orders were made, the Rules of Court required that an application for leave to appeal from an interlocutory judgment of the court, if not made orally to the Judge who pronounced the judgment, was to be made by motion on notice, and that O 19 applied to such a Notice of Motion: O 52 r 10 (2) and (2A). Order 19 applied to "any interlocutory or other application in any proceeding which has already been commenced". The first plaintiff's application for leave to appeal, therefore, was an application in the proceeding which was pending in Finkelstein J's docket. This was so notwithstanding that the jurisdiction exercised by Goldberg J was appellate, and that new matter numbers had been assigned to the applications for leave by the Registry: see Thomas Borthwick and Sons (Pacific Holdings) Ltd v TPC (1988) 18 FCR 424 at 432. It follows that the costs ordered in favour of the liquidators in the applications for leave to appeal were "in this proceeding" within the meaning of para 3(b) of the orders made on 6 May 2008, and that those costs should be paid from the moneys held in court. 13 The position with respect to the costs of the appeal from the final judgment of Finkelstein J is, however, different. An appeal is a proceeding separate from that out of which it arose: IMF (Australia) Ltd v Meadow Springs Fairway Resort Ltd (in liq) [2009] FCAFC 69 at [34] per North, Emmett and Rares JJ. The appeal decided on 15 August 2011 was not "this proceeding" within the meaning of para 3(b) of the orders made on 6 May 2008, and the costs which the liquidators then secured from the Full Court cannot be paid from the moneys paid into court. 14 Counsel for the liquidators applied, orally and without any prior notice, for a variation of para 3(b) of the orders of 6 May 2008 so as to insert, after "proceeding", the words "or any other proceeding arising out of the subject matter of this proceeding". It was said that the court had the power to make this variation under r 39.05(c) because the original order was interlocutory. It was interlocutory, but no good reason, other than the convenience of the liquidators, was offered for following the course proposed. They might well have sought a special costs order from the Full Court. I am not persuaded that I should now make such an order. The unsuccessful appellants in the appeal proceeding did not include VA Corp: it was a respondent to the appeal (and it was, as it happens, a beneficiary of the Full Court's costs order). Although para 3(b) of the orders made on 6 May 2008 grouped VA Corp with the first plaintiff, that was an expedient adopted by Finkelstein J for reasons which, no doubt, appeared self-evident to his Honour at the time. That does not mean that the effect of the order should be retrospectively varied to the detriment of VA Corp on the present occasion, particularly having regard to the paucity of the arguments advanced on behalf of the liquidators in favour of such a course. 15 It follows that I shall require the disbursement of the moneys held in court as follows: To the liquidators: ○ Under para 3(a) $276,907.07 ○ Under para 3(b) $152,800.00 $ 10,146.69 $162,946.69 ○ Total $439,853.76 ○ Less already paid $376,000.00 ○ Now payable $ 63,853.76 To VA Corp, the balance of the money held in court. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 5 December 2012