Federal Court of Australia 5G Developments Pty Ltd (in liq) v Massie, in the matter of 5G Developments Pty Ltd (in liq) (No 2) [2021] FCA 887 File number: NSD 1536 of 2019 Judgment of: STEWART J Date of judgment: 2 August 2021 Catchwords: COSTS – interlocutory application – whether the costs should follow the event or be costs in the cause in the main case – whether taxation and payment of costs should await the outcome in the main case Legislation: Federal Court Rules 2011 (Cth) rr 40.04, 40.13 Cases cited: Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 Re 5G Developments Pty Ltd (in liq) [2021] FCA 791 Date of last submissions: 27 July 2021 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of Paragraphs: 13 Counsel for the Applicants: First applicant prepared his own written submissions Solicitor for the First Respondent: TurksLegal Counsel for the Second Respondent: C Harris SC and E Keynes Solicitor for the Second Respondent: Colin Biggers & Paisley ORDERS NSD 1536 of 2019 BETWEEN: 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and another named in the Schedule) First Plaintiff AND: HUGH HAMON ROBERT MASSIE (and others named in the Schedule First Defendant AND BETWEEN: SPV28 PTY LTD Cross-Claimant AND: 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and others named in the Schedule) First Cross-Respondent AND BETWEEN: SAPSFORD FINANCIAL SERVICES PTY LTD (and another named in the Schedule) First Cross-Claimant AND: 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ) (and others named in the Schedule) First Cross Respondent IN THE INTERLOCUTORY APPLICATION BETWEEN: HUGH HAMON ROBERT MASSIE (and others named in the Schedule) First Applicant AND: GLENN LIVINGSTONE IN HIS CAPACITYAS SPECIAL PURPOSE LIQUIDATOR OF 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQUIDATION) (and others named in the Schedule) First Respondent order made by: STEWART J DATE OF ORDER: 2 August 2021 THE COURT ORDERS THAT: 1. On the interlocutory application filed on 24 February 2020, the applicants pay the respondents' costs on a party and party basis as agreed or assessed. 2. The first respondent's costs (i.e., Mr Livingstone's costs) be taxed forthwith and paid within 28 days of being agreed or assessed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT STEWART J: 1 This judgment deals with the costs of the application brought by way of interlocutory process filed on 24 February 2020 that I dismissed on 13 July 2021 for the reasons given in Re 5G Developments Pty Ltd (in liq) [2021] FCA 791. These reasons assume familiarity with those reasons and they adopt the same abbreviations. 2 The applicants to the application are Mr Massie, 5G Capital Investments Pty Ltd, 5G Capital SPV27 Pty Ltd and SPV28 Pty Ltd. The respondents, Mr Livingstone and Mr Hayes, submit that the costs should follow the event, which is to say that the applicants should pay their costs as taxed or agreed. 3 Mr Massie submits on behalf of the applicants that the costs of the application should be costs in the cause of what he refers to as the "substantive main proceedings". That is the "main proceeding" referred to in paragraph 1 of the principal judgment. That is a convenient course for Mr Massie to take since he is not personally a party to the main proceeding. Be that as it may, the applicants bear the burden to persuade me to depart from the usual rule that costs follow the event. In respect of interlocutory applications, that rule finds expression in r 40.04(a) of the Federal Court Rules 2011 (Cth) which provides that if no order for costs is made on an interlocutory application or hearing in which an order is made in favour of a party, the costs of the application or hearing should follow the event. 4 Mr Massie's principal submission is that the interlocutory application was not "a final hearing by which an amount is due and payable by the defendants." Also, he submits that there are many significant and complex legal and evidentiary hurdles that Mr Hayes has yet to overcome before he can succeed in the significant claims made against the defendants. Finally, he submits that he acted reasonably in bringing the interlocutory application to challenge Mr Livingstone's determination because of the lack of information available to him at the time and his consequent inability to independently determine whether the amount found by Mr Livingstone to be owing by DW to DC was indeed correct. 5 The purpose of the appointment of the special purpose liquidator, namely Mr Livingstone, was to adjudicate on DC's proof of debt in the DW liquidation. Mr Livingstone undertook that adjudication and he made a determination which was accepted by DW's liquidator, Mr Hayes. Absent the applicants' challenge to that determination it would have stood such that the determined debt by DW to DC would have been "final". 6 The applicants elected to challenge the determination. They failed. The consequence is that the determination is final. In that sense, the application resulted in the final determination of that debt. The issues to be determined in the main proceeding will not revisit that determination. Whilst it is true that the interlocutory application did not determine the liability of the defendants to DW in the main proceeding, that is not relevant to the consideration of costs on the interlocutory application. 7 Similarly, it is not to the point that Mr Hayes is still a long way from succeeding in the main proceeding, or that the applicants acted reasonably (as Mr Massie submits) in bringing the interlocutory application. The principal case has had to await the outcome of the applicants' challenge to Mr Livingstone's determination for reasons explained in Mr Massie's submissions, but the interlocutory application retained an essentially separate existence. Whether or not it was reasonable to bring the interlocutory application need not be decided because it is no answer to a costs claim to say that one acted reasonably. If it was found that the application been brought unreasonably that may have been grounds for a punitive costs order, but no one seeks that. 8 In the circumstances, on the interlocutory application the applicants should pay the respondents' costs. 9 Insofar as Mr Livingstone's costs are concerned, he submits that he did not take the position of a contradictor; he fulfilled his obligations to the Court as an officer of the Court by filing an affidavit and making submissions to assist the Court, and beyond that he had to be present through counsel because the applicants had made an attack on his conduct in the adjudication, not only on the outcome as expressed in the determination itself. I accept those submissions. 10 Since Mr Livingstone is not a party to the main case, he submits that there should be an order that his costs are payable within 28 days so that he does not have to wait until the outcome of the main proceeding before being paid. That is in effect as an exception to the general rule, as expressed in r 40.13, that a costs order on an interlocutory application should not be taxed until the proceeding in which the order is made is finished. Mr Massie disputes that on the basis that, on his submission, Mr Livingstone is indemnified by Mr Hayes with respect to his costs so he is not out-of-pocket in the meanwhile. 11 It is not clear to me on the evidence before me that Mr Livingstone is indemnified by Mr Hayes with regard to Mr Livingstone's costs on the interlocutory application. But assuming that he is, I am not persuaded that that is a factor sufficient to deprive Mr Livingstone of his costs at this stage. It is his determination that was challenged, including by making criticisms of his conduct, and the role that he played in response to that challenge was limited and appropriate. Moreover, the rationale for the general rule that costs on an interlocutory application are not taxed and hence not payable until the determination of the principal case does not apply to Mr Livingstone as a non-party to the principal case. That rationale recognises that by the end of the principal case there may be different costs orders, including as to the principal case itself, to be set off. It seeks to avoid the need for multiple taxations in a proceeding and the unfairness that would result if a party is unable to set off an order for costs in its favour against an earlier liability to pay costs. See Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 at [15] per Kenny J, and the cases cited there. 12 In my view, justice in the case requires that Mr Livingstone should be able to have his costs taxed and paid now and not have to wait. 13 In the circumstances, I will make orders on the interlocutory application filed on 24 February 2020 that: (1) The applicants pay the respondents' costs on a party and party basis as agreed or assessed. (2) The first respondent's costs (i.e., Mr Livingstone's costs) be taxed forthwith and paid within 28 days of being agreed or assessed. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate: Dated: 2 August 2021 SCHEDULE OF PARTIES NSD 1536 of 2019 Plaintiffs Second Plaintiff: ALAN JOHN HAYES Interested Person GLENN LIVINGSTONE IN HIS CAPACITYAS SPECIAL PURPOSE LIQUIDATOR OF 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQUIDATION) Defendants Second Defendant: 5G CAPITAL INVESTMENTS PTY LTD Third Defendant: PEPPERFIELD HOLDINGS PTY LTD Fourth Defendant: 5G CAPITAL SPV27 PTY LTD Fifth Defendant: SPV28 PTY LTD Sixth Defendant: 5G CAPITAL MANAGEMENT PTY LTD Seventh Defendant: SAPSFORD FINANCIAL SERVICES PTY LTD CROSS CLAIM Cross-Respondents Second Cross-Respondent DENHAM CONSTRUCTIONS PTY LTD (IN LIQ) Third Cross-Respondent STEVEN JAMES MCGRATH Fourth Cross-Respondent MASTER RECEPTION PTY LTD (FORMERLY KNOWN AS DENHAM CONSTRUCTIONS PROJECT COMPANY 910 PTY LTD) (IN LIQ) Fifth Cross-Respondent PC 940 PTY LTD (FORMERLY KNOWN AS DENHAM CONSTRUCTIONS PROJECT COMPANY 940 PTY LTD) (IN LIQ) Sixth Cross-Respondent MHI HIRE PTY LTD (IN LIQ) Seventh Cross-Respondent AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION CROSS CLAIM Cross-Claimants Second Cross-Claimant PEPPERFIELD HOLDINGS PTY LTD Cross-Respondents Second Cross-Respondent 5G CAPITAL INVESTMENTS PTY LTD INTERLOCUTORY APPLICATION Applicants Second Applicant 5G CAPITAL INVESTMENTS PTY LTD Third Applicant SPV 28 PTY LTD Fourth Applicant 5G CAPITAL SPV 27 PTY LTD Respondents Second Respondent ALAN JOHN HAYES Third Respondent 5G DEVELOPMENTS PTY LTD (FORMERLY KNOWN AS DENHAM WYNDHAM PTY LTD) (IN LIQ)