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Some external administrations seem genuinely cursed and given the tribulations experienced by Chifley Advisory boss Gavin Moss, the liquidation of Fogo Brazilia Franchise Holdings Pty Ltd (FBFH) would appear to be one of them.
“I would nevertheless have been inclined to make a specified gross sum costs order, having regard to the impecuniosity of the plaintiffs, if the defendant had placed sufficient material before the Court to enable an appropriate sum to be determined adopting a logical, fair and reasonable “broad-brush” approach. The defendant failed to do so.” NSW Supreme Court judge Kate Williams.
Moss has had a hellish time of it. He’s been harassed endlessly in regards to a perceived conflict, forced to defend applications seeking his removal and on occasion pilloried by judges unimpressed with some or other aspect of his handling of this undeniably challenging administration, or the litigation that’s accompanied it.
In May this year however it looked as if the curse had at last been lifted.
Moss successfully defended proceedings brought by FBFH director Ian Dresner, who wanted to replace Moss with Adam Farnsworth on the basis that Moss had allegedly breached his fiduciary duties.
This was, Dresner alleged, because Moss had entered into a funding agreement with an outfit in the USA connected to lawyer Stewart Levitt of Levitt Robinson while Levitt was also acting for both Moss and for various franchisee creditors of FBFH.
Those franchisee creditors had lodged proofs of debt in the winding up of FBFH on 19 November 2018 in respect of debts totalling $4,784,597, representing 56.5% of total creditor claims.
Dresner alleged that this meant Moss was preferring the claims of creditors represented by his lawyer over and above the general pool.
Moss denied he was in breach – he’d taken care to provide certain undertakings in relation to his arrangements with the funder – and successfully defended the action.
As is explained In the matter of Fogo Brazilia Holdings Pty Ltd (in liq) [2022] NSWSC 556, the curse it seemed was lifted.
Alas not. Emboldened after repelling Dresner Moss sought a gross sum costs order in relation to various elements of litigation he’d been forced to engage with as Dresner pressed his concerns.
In the matter of Fogo Brazilia Holdings Pty Ltd (in liq) [2022] NSWSC 1070 suggests the curse is restored.
“I would nevertheless have been inclined to make a specified gross sum costs order, having regard to the impecuniosity of the plaintiffs, if the defendant had placed sufficient material before the Court to enable an appropriate sum to be determined adopting a logical, fair and reasonable “broad-brush” approach. The defendant failed to do so,” NSW Supreme Court judge Kate Williams said.
Moss wanted Dresner and related entity FOGO Brazilia Holdings to pay about $330,000 of his total costs of almost $400,000, most of which had been run up by his lawyer Jonathan Hidayat, who despite being made partner at Piper Alderman during the course of the FBFH exad, continued to perform much of the work on the basis that “Given my knowledge of the matter, I considered that there were inherent efficiencies in having the majority of the work undertaken by me. However, I delegated to junior lawyers where I considered appropriate.”
Remarking that such a statement, contained in Hidayat’s May 16, 2022 affidavit, rose no higher than “bare assertion” her honour determined that Moss hadn’t put enough evidence before the court to allow her to make the gross sum costs oder he sought and dismissed the application. For good measure she ordered that he pay the costs Dresner incurred resisting.
Further reading:
Liquidator Repels Conflict And Removal Bid
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