Shaun McKinnon.
Liens it seems are durable beasts, not to be easily dissolved by liquidation which begs the question was there ever any chance that the former deed administrators (DAs) of the contentious Project Sea Dragon Pty Ltd DoCA would be denied their costs when the whiffy saga was at last laid to rest?
Certainly with no objection from the other parties, including those who will have to foot the substantial costs the plaintiff incurred in having the DoCA set aide, BDO duo Andrew Fielding and Shaun McKinnon probably had little to worry about when the costs question last month came before Federal Court judge Roger Derrington.
“They submitted that it was arguable that their entitlement to indemnity out of the deed fund remained despite the termination of the DOCA. They added that, notwithstanding its termination, they had an equitable right to an indemnity out of, and a lien over, the deed fund, to recover their remuneration and expense.” Justice Roger Derrington.
The only issue for the pair really was how long they had to wait.
Order were made for the setting aside of the Project Sea Dragon DoCA in February, at which point Fielding and McKinnon’s tenure as deed administrators would normally have ended as consequent winding up orders were made.
Those orders however were stayed in anticipation of an appeal from Project Sea Dragon parent Seafarms Group Limited (Seafarms).
In March the appellants commenced their challenge and on November 1 it was dismissed, paving the way for the plaintiff, Canstruct Pty Ltd to press for its costs to be paid by Project Sea Dragon and deed proponent Seafarms, but not against Fielding and McKinnon despite their participation as second defendant.
The November 1 decision of the Federal Court of Appeal also saw the winding up orders come into effect and KordaMentha’s Rob Hutson and David Johnstone were appointed liquidators.
But as explained in Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (in liquidation) (No 6) [2024] FCA 1406 Fielding and McKinnon’s lien and right of indemnity against the defunct DoCA’s deed fund survived.
This was on the basis, Justice Derrington said “that up until the date of termination, being 22 February 2024, they were entitled to be paid their legal costs out of that fund pursuant to cl 10.1(b) of the DOCA. Further, cl 10.2(e) provided that they were entitled to an indemnity in relation to their costs.
“They submitted that it was arguable that their entitlement to indemnity out of the deed fund remained despite the termination of the DOCA. They added that, notwithstanding its termination, they had an equitable right to an indemnity out of, and a lien over, the deed fund, to recover their remuneration and expense.
“Given that, until its termination, the deed administrators were entitled to recover their legal expenses from the deed fund, there is no reason why that entitlement should not be relied upon to make the orders which they now seek. That is particularly so given the absence of any opposition by any other interested party,” the judge concluded.
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