New South Wales Supreme Court CITATION : Mirembe Pty Ltd v Craig Dangar & ors [2010] NSWSC 637 HEARING DATE(S) : 4 May 2010 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 4 May 2010 DECISION : That the costs order made against the fifth defendant be set aside. CATCHWORDS : PROCEDURE – Orders – setting aside – where costs order made against administrator personally in his absence – application to set aside. LEGISLATION CITED : Uniform Civil Procedure Rules r 36.16(2)(b) CATEGORY : Consequential orders Mirembe Pty Ltd (as trustee of Verna Stewart Superannuation Fund) (plaintiff/respondent) Craig Gerard Dangar (first defendant) PARTIES : Deputy Dog Pty Ltd (second defendant) Meakin Pty Ltd (third defendant) NSW Finance & Leasing Pty Ltd (fourth defendant) Nicholas Crouch (as Deed Admin'r of NSW Finance & Leasing P/L) (fifth defendant/applicant) FILE NUMBER(S) : SC 08/280480 COUNSEL : Mr S Donaldson SC (plaintiff/respondent) Mr A W Smith (fifth defendant/applicant) SOLICITORS : Certus Law (plaintiff/respondent) Douros Lawyers (fifth defendant/applicant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Tuesday 4 May 2010 2008/280480 Mirembe Pty Ltd as trustee of Verna Stewart Superannuation Fund v Craig Dangar & ors JUDGMENT (ex tempore) 1 HIS HONOUR: By notice of motion filed on 22 February 2010, the fifth defendant Nicholas Crouch, seeks an order pursuant to Uniform Civil Procedure Rules, r 36.16(2)(b), that order 3 orders made by me on 15 October 2009 in these proceedings be set aside. That order was an order that the fourth and fifth defendants pay the plaintiff's costs of the proceedings as against them. Although it appears that, at one stage, those advising the plaintiff may have taken the view that that order, properly construed, limited the fifth defendant's liability to some correspondence with him alone, that is no longer the view adopted on behalf of the plaintiff, who presumably contends that under the subject order the fifth defendant is jointly and severally liable with the fourth defendant for all the costs of the proceedings against both of them. 2 The order in question was made at the conclusion of an undefended hearing in which neither the fourth nor fifth defendant was represented. On an application such as the present the court exercises a discretion to set aside a regularly made order having regard to two considerations, namely, the sufficiency of the explanation for the absence of an appearance when the order was made in the defendant's absence, and the merits of the defendant's argument that some alternative order was appropriate. 3 As to the second, it seems to me plainly arguable that some costs order different from the one that was made would be appropriate – even if only to the extent that there be a qualification that the costs order be limited to the available assets of the company in administration. It is certainly arguable that the fifth defendant should not be personally liable for all of the costs of the proceedings against the fourth and fifth defendants. That is not to say that either such argument will ultimately prevail, but, in circumstances where no criticism is made of the administrator's conduct – save perhaps as to his response to the proceedings – there is plainly a basis for contending that he should not personally have to bear the costs of a proceeding, to the need for which he did not significantly personally contribute, and to which he was a party only because he was an administrator or a corporate party. 4 So far as concerns the sufficiency of his explanation for being absent when the order, I have to say that it is somewhat troubling that a professional liquidator, who received repeated communications drawing attention to listings before the court, and on at least once requesting advice as to whether he intended to be represented, and pointing out that the matter would proceed on an undefended basis if he did not file a defence or was not represented and so on, made no formal response at all to any of those communications. The present application and circumstances would have been avoided had there been a single letter from the administrator saying something along the lines that he did not propose to participate in proceedings, but in the event that any order or any costs order was sought against him, would wish to be heard. Likewise, had he filed an appearance submitting to such order as the court might make save as to costs, the present circumstances would have been completely avoided. It was largely because of what seemed to be his studied indifference to the proceedings, despite ample opportunity to express a view or take an interest or afford the court the courtesy of an indication that he was aware of the proceedings but did not propose to participate, that the costs order was made in his absence, effectively on a default basis. 5 Against that, on reading (as the administrator did) the further amended statement of claim, one can see that no relief was expressly sought against him, (although his interests were potentially affected by some of the orders sought). Even the costs order sought was generically expressed as a claim for "costs", not directed specifically to the fifth defendant. One could be forgiven for thinking that the fifth defendant was joined merely for the purposes of being bound and with no expectation that he would be an active defendant, let alone that any order would be sought against him personally. I can therefore readily accept that Mr Crouch formed the view that he did not need to be represented or to appear, because no relief has been sought against him personally as deed administrator. 6 It is unnecessary for me to resolve the contested question of fact as to what Mr Bourke said to Mr Crouch in their disputed conversation of June 2009. Neither apparently has a contemporaneous note of that conversation. Both appear to be working from recollection of a conversation, which now took place some months ago and does not appear to have been documented by anyone at the time. Unsurprisingly, each has a view of that conversation which favours his own interests and position. Choosing between them would be arbitrary, and an unsatisfactory way of disposing of the case. The preferable basis is to find that, while it was a misconceived view, and one that I am not prepared affirmatively to find that the plaintiff contributed to, nonetheless Mr Crouch was proceeding on a belief that his interests would not be adversely affected if the proceedings went to an undefended hearing, because no relief (let alone a costs order) was apparently sought against him personally. 7 For those reasons, I will set aside the costs order as made against Mr Crouch. However, as the necessity for the present application has been occasioned by Mr Crouch's failure to respond on repeated occasions to correspondence and occasions which invited or afforded him ample opportunity to respond, he must pay the costs of the present application. 8 I therefore order that: 1. order (3) made on 15 October 2009, insofar as it concerns the fifth defendant only, be set aside. 2. applicant/fifth defendant pay the respondent/plaintiff's costs of the motion filed on 22 February 2010. 9 I direct that: 3. the plaintiff lodge with my associate and serve on the fifth defendant by 18 May 2010 a document setting out the costs order that it seeks against the fifth defendant and its submissions in connection therewith, and annexing any documentary evidence not already filed on which it proposes to rely in that behalf. 4. the fifth defendant by 1 June 2010 lodge with my associate and serve a document in response. 10 I adjourn the proceedings to Tuesday 15 June 2010 at 9.30am before me for any remaining oral argument, which will be limited to a few minutes, and, if practicable, for judgment. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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