Supreme Court New South Wales Medium Neutral Citation: KENNARDS HIRE PTY LTD v RMGA PTY LTD [2011] NSWSC 226 Hearing dates: 3 February 2011 Decision date: 30 March 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: Order that the applicant under the interlocutory process filed on 12 April 2010 pay 95% of (a) the costs of the respondent of and incidental to the interlocutory process up to 2 December 2010; and (b) the costs of the respondent of and incidental to the hearing on costs on 3 February 2011. Order that the respondent to the interlocutory process filed on 12 April 2010 pay 5% of (a) the costs of the applicant of and incidental to the interlocutory process up to 2 December 2010; and (b) the costs of the applicant of and incidental to the hearing on costs on 3 February 2011. Order that the costs ordered by orders 1 and 2 be assessed and payable forthwith. Catchwords: PROCEDURE - costs - where applicant comprehensively unsuccessful but achieving success on one claim - costs to be apportioned - whether indemnity basis appropriate - whether there should be interest on costs Legislation Cited: Civil Procedure Act 2005, s 101(4) Corporations Act 2001 (Cth), s 536 Cases Cited: Kennards Hire Pty Ltd v RMGA Pty Ltd [2010] NSWSC 1387 Category: Costs Parties: Kennards Hire Pty Ltd - Plaintiff RMGA Pty Ltd - Defendant Mignon Esther Gardener - Applicant David Lewis Clout - Respondent Representation: Counsel: Mr R C Gration - Applicant Mr J T Johnson - Respondent Solicitors: Clamenz Corporate Lawyers - Applicant Owen Hodge Lawyers - Respondent File Number(s): 2009/289068 Judgment 1I am dealing with the question of costs consequent upon my judgment of 2 December 2010 on Mrs Gardener's interlocutory process filed on 12 April 2010: Kennards Hire Pty Ltd v RMGA Pty Ltd [2010] NSWSC 1387. I heard submissions on costs on 3 February 2011. 2The outcome of the interlocutory process was that the applicant, Mrs Gardener, failed in her application for an order that there be an inquiry under s 536 of the Corporations Act 2001 (Cth) into the conduct of the respondent, Mr Clout as liquidator of RMGA Pty Ltd. Mrs Gardener did, however, obtain an order that Mr Clout's remuneration as liquidator of RMGA Pty Ltd be reviewed by the court. In relation to the second matter, it was ordered that the matter of conducting and determining the review be referred to a registrar. 3Mr Clout says that he should have an order for costs of the interlocutory process up to 2 December 2010 (the date of judgment) and that those costs should be assessed on the indemnity basis. Mr Clout also says that interest should be awarded under s 101(4) of the Civil Procedure Act 2005; also that the costs should be assessable and payable forthwith. 4Mrs Gardener's contention is that she is entitled to costs because she succeeded in obtaining an order for review of remuneration. 5The subject matter of the application may be gathered from paragraphs [46] and [47] of the judgment of 2 December 2010: "Much could be said about the pleading in the statement of claim. For present purposes, however, its deficiencies may be passed over and the following complaints said by Mrs Gardener to justify inquiry under s 536 (by reference to s 536(1)(b)) can be said to be identifiable: (a) excessive remuneration claims and excessive disbursements; (b) opposing Mrs Gardener's application for a stay in the winding up, rather than to "make a submitting appearance"; (c) failure to keep or obtain proper books or records; (d) failure to comply with the order of 12 April 2010. To these may be added an apparently unpleaded complaint raised in submissions that the liquidator retained the firm Owen Hodge Lawyers to provide legal advice in connection with the winding up and that this was improper because that firm had acted for the plaintiff in obtaining the winding up order." 6The only matter in relation to which Mrs Gardener had any measure of success was that concerning remuneration. But she did not succeed in her allegation that Mr Clout had charged fees and incurred disbursements "that are excessive in the circumstances and are not properly incurred" and thereby arguably breached his duties in a way relevant to s 536. She did no more than raise what the judgment described as "potential queries" forming "a proper basis for the court to undertake a review" of remuneration. Her success in that regard related, however, to four discrete and easily understood items which indicated no more than a need for further examination. 7In these circumstances, the outcome of the interlocutory process was, in general terms, comprehensive victory for Mr Clout and comprehensive defeat for Mrs Gardener, but with Mrs Gardener having pointed to four particular matters of "potential query" regarding remuneration which formed a proper basis for a decision by the court to undertake a review of remuneration. The four matters were, as I have said, easily understood and were not the subject of any detailed or time-consuming analysis in the course of the proceedings or in the judgment. 8The case is one in which it is appropriate to make an apportionment. Mrs Gardener should pay 95% of Mr Clout's costs and Mr Cloud should pay 5% of Mrs Gardener's costs. I refer, of course, to costs up to 2 December 2010 plus costs of the hearing on costs on 3 February 2011. The costs of the review itself are thus excluded and will be appropriately dealt with when the review has been completed. 9Because the review is pending and the interlocutory process will not be fully disposed of until it is complete, the costs the subject of the orders just outlined should be assessable and payable forthwith. They relate to the discrete aspect determined by the judgment of 2 December 2010 and this judgment. 10There will be no order for assessment on the indemnity basis of the costs to be paid by Mrs Gardener. She enjoyed some success. 11As to interest on costs, there is no evidence of moneys outlaid or of other circumstances that would justify such an order. The simple statement that moneys have been outlaid and that interest should therefore be allowed really amounts to the proposition that interest under s 101(4) should be allowed as a matter of course in every case. That cannot be so. 12The orders with respect to costs are as follows: (1)Order that the applicant under the interlocutory process filed on 12 April 2010 pay 95% of (a)the costs of the respondent of and incidental to the interlocutory process up to 2 December 2010; and (b)the costs of the respondent of and incidental to the hearing on costs on 3 February 2011. (2)Order that the respondent to the interlocutory process filed on 12 April 2010 pay 5% of (a)the costs of the applicant of and incidental to the interlocutory process up to 2 December 2010; and (b)the costs of the applicant of and incidental to the hearing on costs on 3 February 2011. (3)Order that the costs ordered by orders 1 and 2 be assessed and payable forthwith. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 March 2011