Did Neil Cussen “de-loiter” too long in choosing not to comply with court orders?
“The deliberate and knowing delinquency on the part of the liquidator was done for his own ulterior and strategic purpose, and was so serious as to warrant summary dismissal of the proceedings. In my view, it clearly rises to the level of a special or unusual feature which justifies that the applicants pay the respondents’ costs on an indemnity basis in each proceeding, and I will order accordingly.” Justice David O’Callaghan.
Certainly the ex-Deloitte partner – now well ensconced at Olvera Advisors – copped a harsh rebuke this week for taking too much of his own sweet time pursuing voidable transaction proceedings against multiple individuals and entities linked to Monarch Tower Pty Ltd, the administration Cussen took from the big four firm when he left Deloitte in 2021.
In Cussen, in the matter of Monarch Tower Pty Ltd (in liq) v Sinoace Holdings Ltd (No 2) [2024] FCA 1309 Justice David O’Callaghan said Cussen’s decision to delay serving originating processes and supporting affidavits by the February 2 first return date in the five sets of proceedings he commenced on January 22 amounted to a “deliberate and knowing delinquency” of such seriousness that it warranted dismissal of the proceedings, which his honour duly did on July 4. (See: Cussen, in the matter of Monarch Tower Pty Ltd (in liq) v Sinoace Holdings Ltd [2024] FCA 716).
As a consequence of the proceedings being dismissed the respondents queued to get their costs and his honour agreed that there was enough that was unusual about the matter to justify awards of indemnity costs to most respondents.
We asked Cussen if the funder backing the proceedings would indemnify him. He confirmed not only that the costs were covered but that his legal advisors at Mills Oakley had filed a Notice of Appeal on August 1. Those defendants licking their lips at the prospect of indemnity costs in their favour have some uncertainty ahead.
According to the July 4 primary judgment and this week’s decision on costs Cussen, who was planning to hold public examinations in April and was in talks with his funder, apparently accepted legal advice indicating he could breach the rules and then apply for orders for the time for service of the relevant originating processes and supporting affidavits to be extended nunc pro tunc.
As his honour makes clear, Cussen’s legal advisors were not sufficiently acquainted with the relevant authorities to recommend that he could safely tread such a perilous path.
“The liquidator’s lawyers proposed that rather than complying with the rules for service, he should instead not serve the applications until after the conclusion of planned public examinations commencing in April 2024.
“The liquidator deposed in affidavits read and relied upon in the 2024 proceedings that his intention was to complete the public examinations before continuing with the voidable transactions.
“On 1 February 2024, the liquidator’s solicitors advised the court of their client’s position that they “ought to refrain” from serving the originating processes until after the public examinations had concluded, and that the respondents had not been served but had been “informed” about the proceedings,” the judge said.
On February 16 the parties returned to court for case management. It was then that counsel for one of the respondents indicated their clients would apply for a permanent stay on the basis that the originating process and supporting affidavit had not been served in accordance with the rules.
“In the course of doing so, counsel referred to the decision of the Victorian Court of Appeal in in Horne v Retirement Guide Management Pty Ltd (2017) 54 VR 325 which recites the well-established principles, among others, that a decision not to serve, made by a plaintiff for forensic or strategic purposes, is antithetical to the duty to serve promptly; and a delay in service of a proceeding commenced under s 588FF, in contravention of the applicable rules, is particularly serious if it occurs after the expiration of the limitation period.”
Cussen subsequently deposed that: ” ….. his solicitors and counsel informed him that they had not been aware of the decision in Horne”.
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Liquidator obtained a shelf order and appears to have commenced proceedings without having conducted appropriate examinations, on the last day permitted under that order. The failure to service as required by the Federal Court Rules and the Federal Court of Australia (Corporations) Rules, without leave of the Court appears to be a clear failure on the part of the liquidator and the lawyers acting for him of the Overarching Principle: s 37M and s 37N of the Federal or Australia Act, which would justify the costs orders being made with those costs being paid on an indemnity basis. this was viewed sufficiently as being also justifying dismissal of the proceedings. One must wonder whether the creditors may have something to say after disclosure to them by the liquidator and whether the causes of action having become barred there may an action against the liquidator and or the lawyers for any proven loss or damage? The Courts are becoming tired of these types of delays on the part of external administrators belatedly coming to Court seeking an indulgence.