Jirsch Sutherland.
The Federal Court made orders yesterday highlighting the unpalatable realities facing liquidators who choose to reject offers of compromise.
In this tale Jirsch Sutherland Queensland head Chris Baskerville, in his capacity as liquidator of Dig It Landscapes Pty Ltd (Dig It), chose to reject an offer of compromise made by Bupa Aged Care Australia Pty Ltd on December 17, 2020.
“Dig It should have known as at the time of the offer of compromise that its case of misleading or deceptive conduct was likely to fail.” Justice Jackson.
Baskerville was appointed liquidator of Dig It in March 2018 and the proceedings against Bupa alleging misleading and deceptive conduct amongst other things were commenced the following month.
As is explained in Dig It Landscapes Pty Ltd (in liq) v Bupa Aged Care Australia Pty Ltd (No 3) [2024] FCA 230, Baskerville’s decision will prove costly for someone given the presiding Federal Court judge found that all costs incurred by Bupa after December 21, 2020 “must be assessed on an indemnity basis.”
“The offer was made by way of a notice of offer of compromise in Form 45 under the Federal Court Rules 2011 (Cth), invoking the terms of Part 25 of the Rules,” the judge said.
“The offer complied with that Part. It was in terms that Bupa would pay Dig It $80,000, and in addition that the $35,000 paid in as security would be released to Dig It. It was stated to be inclusive of costs: see r 25.03(1). It was open to be accepted until 14 days after service,”.
According to the judge Baskerville never responded to the offer, thereby triggering the indemnity cost provision if the court ultimately found in the respondent’s favour, which it did on January 30, 2024 in Dig It Landscapes Pty Ltd (in liq) v Bupa Aged Care Australia Pty Ltd (No 2) [2024] FCA 31.
The appearances indicate that the Respondent did not engage a lawyer other than as advocate. Therefore, costs would be substantially reduced and only extend to third parties engaged or direct costs of inhouse lawyer: Cf Bell Partners Pty Ltd v Pentalow. It may as bad as it otherwise may have been.