Case: U.T.S.A. Pty Ltd (In liquidation) v Ultra Tune Australia Pty Ltd [1998] VSC 13 ; (1999) 1 VR 204
Outcome: applied
decision was followed by Chernov J in the Supreme Court of Victoria in U.T.S.A. Pty Ltd (In liquidation) v Ultra Tune Australia Pty Ltd [1998] VSC 13 ; (1999) 1 VR 204. His Honour held that orders for costs are truly supplemental and do not affect the legal impact of the earlier judgment. He said at 208: Consequently, it is my view that the entry of judgment in this case did not deprive the court of jurisdiction to hear and determine an application under s. 24(1) of the Act for an order that the non-party respondents pay U.T.A.'s costs incurred in relation to its proceeding against U.T.S.A. and Titan. It follows therefore that the Court would have jurisdiction to order costs against the non-parties in these proceedings even though orders have already been made dismissing the proceedings. The non-parties argued that s 1335(2) of the Corporations Act is a bar to making an order in a proceeding under the Corporations Act against a non-party. Section 1335(2) provides: The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs. However, there are decisions of the Supreme Court of Victoria and the Supreme Court of New South Wales which need to be considered. In U.T.S.A. Pty Ltd (In liquidation) v Ultra Tune Australia Pty Ltd 1 VR 204, Chernov J was concerned with an application by the defendant to a proceeding for an order that two non-parties pay the costs of the proceeding. His Honour assumed, but later decided otherwise, that the proceeding with which he was concerned was a proceeding under the Act. The two non-parties sought to set aside the notice of motion seeking costs on two grounds. First, because judgment had been entered and therefore there was no jurisdiction for the Court to exercise its discretion under s 24(1) of the Supreme Court Act 1986 (Vic) (SC Act (Vic)) to order that costs be paid by the respondents; and secondly, because s 24(1) of the SC Act (Vic) which gave the Court jurisdiction to award costs was to be read subject to s 1335(2) of the Corporations Law. The decision in U.T.S.A. v Ultra Tune 1 VR 204 was followed by Brereton J in Re Struthers (liq of Project Management, Architecture and Construction Interiors Pty Ltd) (No 3) [2005] NSWSC 1113 ; (2005) 56 ACSR 238. His Honour said at [50]-[51]: At first sight, the suggestion that the Commonwealth Parliament has enacted a provision to detract from the existing costs powers of courts in which it invests jurisdiction to deal with proceedings under the Corporations Act is a surprising one. But were it not for the judgment of Chernov J in UTSA , despite these initial impressions about s 1335 , I would unquestionably have followed Wridgemont and Australian Forest Managers , particularly given Lindgren J's strong endorsement of Wridgemont , and also given that those cases had been followed in this court by Bergin J. However, in circumstances where there has been, since Australian Forest Managers , what impresses me as a compelling analysis of the history and purpose of the section by Chernov J &#8212; the benefit of which does not appear to have been afforded to Bergin J when her Honour came to consider the point &#8212; and where Ryan J, albeit without reference to the authorities, had adopted an opposite approach, I consider that I am at liberty to give effect to my own views. I agree with Chernov J that s 1335 should not be construed as a limiting provision, but as an enabling one. Its history shows that it was intended to confer a jurisdiction or a power to make costs orders when there was doubt as to the existence that power, at least in the equitable jurisdiction of this court in this state. If there were no s 1335(2) , the court would not be without power to make costs orders in proceedings under the Act; it would have all its powers under the Supreme Court Act and the Civil Procedure Act. Section 1335 was not intended to limit such other powers to make costs orders as the court already enjoyed, but to supplement them. In my opinion, the current provisions ought not be taken as intended to exclude the power of courts under, for example, Civil Procedure Act, s 98, and UCPR, r 42.27, to make costs orders which are designed to protect the processes of the courts and the integrity of those processes and the procedural rights of parties who litigate in those courts. The defendants contended that in the event that the decisions of this Court in Re Wridgemont Display Homes Pty Ltd [1992] FCA 604 ; 39 FCR 193 and in Australian Forest Managers Ltd (in liq) v Bramley 136 ALR 431 are to be preferred to the decisions of in U.T.S.A. Pty Ltd (In liquidation) v Ultra Tune Australia Pty Ltd 1 VR 204 and Re Struthers (liq of Project Management, Architecture and Construction Interiors Pty Ltd) (No 3) [2005] NSWSC 1113 ; 56 ACSR 238 then I should make an order joining the non-parties as parties for the purpose of avoiding the consequences of s 1335(2).