A contradictor in Mossgreen for the appeal hearing on 17 April

M: … An argument is a connected series of statements intended to establish a proposition. … Contradiction is just the automatic gainsaying of anything the other person says.

O: It is NOT!

M: It is!

O: Not at all!

M: It is![1]

Contradiction and argument are generally not to be encouraged except that our adversarial system of justice invites them. Judges would be lost without arguments on both sides, each testing the other.

In the normal course, courts generally have a respondent to an application by a plaintiff.  In cases where there is no direct respondent, a ‘contradictor’ may be enlisted to counter the arguments of the applicant, often being a government agency, or a representative of a group of affected parties.

Insolvency applications can raise particular problems when there are no real parties directly or immediately affected by the outcome – large groups of unsecured creditors, or employees, or more disparate interests, or the public interest. In the latter case, the court may want a regulator to be the contradictor on matters of policy.

Mossgreen

The liquidators of Mossgreen obtained leave to pursue an expedited appeal from the decision of Justice Perram but a question arose as to who was going to be the respondent or ‘contradictor’ at the appeal hearing.  The consignors affected by the actions of the liquidators numbered in their hundreds.  The appeal was seen as being pursued by the liquidators for their benefit.

A representative of the consignors sought an order that if they were to be represented, by a common legal representative, their legal fees should be met personally by the liquidators.  After some ‘discussion’, the consent orders made by Justice Perram were to the effect that the contradictor’s legal fees, capped at $12,500, be met firstly from the assets of the company, with any deficiency to be met by the administrators.

The appeal court will therefore have the benefit of argument from both sides when the matter is heard on Tuesday 17 April.

Briefly, the basis of the appeal is that Justice Perram denied the liquidators the right to claim the costs of organising and collating goods held on consignment by the company from the consignors: White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) [2018] FCA 471.  As the Judge described,

“the administrators, having no claim on the consignors’ goods and no need to deal with them for the purposes of administering the company’s property, in effect, [appointed] themselves as receivers de son tort of the consigned goods. … the administrators would take charge of the consigned goods with a view to returning the consigned goods to the consignors”.

If you want to know more about contradictors, read on

The cases have seen contradictors appearing for groups of unsecured creditors in applications for liquidators’ remuneration approval; or for employees’ entitlements and their priority: Re Victoria Station Corporation Pty Ltd (admins apptd),[2] where the Department of Employment was allowed to be heard as contradictor in the proceeding to advance the interests of employees to priority for their statutory entitlements. Orders have been made for such legal costs to be met by the estate.

Where matters of the public or regulatory interest arise, a government regulator is often called upon to assist, and any costs orders take into account their response to the proceeding was for a public and not a commercial purpose: Longley v Chief Executive, Department of Environment and Heritage Protection.[3] [2018] QCA 32. A court proposing to impose a penalty requires a contradictor: ASIC v Wealth & Risk Management Pty Ltd (No 2).[4]

ASIC was criticised in an earlier case of policy significance when, despite being ‘invited’ to assist by an appeal court, it did not do so: Hall v Poolman.[5]

The Inspector-General in Bankruptcy has also taken that role. An order by a court under s 30 of the Bankruptcy Act requires a contradictor: Woods & Lombe v Ulusoylu.[6]

In a case where was an issue as to ownership of trust funds held by lawyers, “the lawyers and the liquidators were each making submissions in support of the directions sought”: Re Mamounia Pty Ltd (in liq) (No 3). As no one was appearing to challenge the directions, at the Court’s suggestion the liquidators briefed counsel – Carrie Rome-Sievers – to appear as a contradictor on the application and to make submissions. The court acknowledged her valuable assistance.[7]

The case law was usefully and recently reviewed in Warehouse Sales v LG Electronics (No 2),[8] where Justice Davies gave what were in the nature of directions where there was no obvious or willing contradictor. Her conclusion was that while the absence of a contradictor is undesirable it is not fatal to directions being given.  It will also depend on the amount in issue or the limited questions the judge is deciding: Woodgate, in the matter of Bell Hire Services Pty Ltd (in liq).[9]

[1] The Argument Sketch, Montypython.net

[2]  [2018] VSC 163

[3] [2018] QCA 32

[4] [2018] FCA 59

[5] [2009] NSWCA 64

[6] [2017] FCCA 935.

[7] Re Mamounia Pty Ltd (in liq) (No 3) [2018] VSC 65.

[8] Lewis & Templeton & Warehouse Sales Pty Ltd (in liq) v LG Electronics Australia Pty Ltd & Ors (No 2) [2016] VSC 63

[9] [2016] FCA 1583

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