McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Limited (No 2) [2008] FCAFC 44 (7 April 2008)

Last Updated: 11 April 2008

FEDERAL COURT OF AUSTRALIA

McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Limited (No 2) [2008] FCAFC 44

ANTHONY GREGORY MCGRATH AND CHRISTOPHER JOHN HONEY AS JOINT LIQUIDATORS OF PAN PHARMACEUTICALS LTD v AUSTRALIAN NATURALCARE PRODUCTS PTY LIMITED

NSD 2506 OF 2006


EMMETT, STONE & ALLSOP JJ
7 APRIL 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2506 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	ANTHONY GREGORY MCGRATH AND CHRISTOPHER JOHN HONEY AS JOINT LIQUIDATORS OF PAN PHARMACEUTICALS LTD Appellants
AND:	AUSTRALIAN NATURALCARE PRODUCTS PTY LIMITED Respondent

JUDGES:	EMMETT, STONE & ALLSOP JJ
DATE OF ORDER:	7 APRIL 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appellants pay 85% of the respondent’s costs of the appeal, such costs to be paid out of the assets of Pan Pharmaceuticals Limited (in liquidation).











Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2506 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	ANTHONY GREGORY MCGRATH AND CHRISTOPHER JOHN HONEY AS JOINT LIQUIDATORS OF PAN PHARMACEUTICALS LTD Appellants
AND:	AUSTRALIAN NATURALCARE PRODUCTS PTY LIMITED Respondent

JUDGES:	EMMETT, STONE & ALLSOP JJ
DATE:	7 APRIL 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

EMMETT J

1 For the reasons published on 24 January 2008, I would have upheld the appeal and ordered that, in lieu of the orders of the primary judge, there be orders dismissing the proceeding with costs. I would have ordered Naturalcare to pay the Liquidators’ costs of the appeal. I do not wish to make any comment on the order proposed by the majority that the Liquidators pay 85% of Naturalcare’s costs of the appeal and that those costs be paid out of the assets of Pan.

I certify that the preceding one (1) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:
Dated: 7 April 2008

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2506 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	ANTHONY GREGORY MCGRATH AND CHRISTOPHER JOHN HONEY AS JOINT LIQUIDATORS OF PAN PHARMACEUTICALS LTD Appellants
AND:	AUSTRALIAN NATURALCARE PRODUCTS PTY LIMITED Respondent
JUDGES:	EMMETT, STONE & ALLSOP JJ
DATE:	7 APRIL 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

STONE AND ALLSOP JJ

2 On 24 January 2008, orders were made dismissing the appeal and giving the parties an opportunity to put submissions as to the appropriate orders as to costs.

3 The parties filed submissions on the question of costs. The appellants sought orders that they be ordered to pay 50% of the respondent’s costs of the appeal. The respondent sought an order that the appellants pay "the respondent’s costs of these proceedings".

4 In their submissions, the parties dealt only with the question of the costs of the appeal. The primary judge made an order awarding the respondent only 80% of its costs of the trial. The Court was not asked to revisit that exercise of discretion.

5 The appellants submitted that they were sufficiently successful on the issues before the Court on appeal to warrant a division as they suggest.

6 With one qualification, we disagree. The issues raised by the notice of appeal were sufficiently interlocking and related not to warrant division. The point which decided the appeal in the respondent’s favour required for its analysis the great proportion of the submissions. Thus, in our view, the appellants should pay the respondent’s costs of the appeal – that is, of the issues raised by the notice of appeal.

7 The respondent ventilated, under a notice of contention, the issue of duty of care. That was, to a not insignificant degree, a separate debate, though with a significant degree of factual overlap. It was a point that had been lost by the respondent below and that was lost unanimously on appeal. The issue of what is sometimes called "pure economic loss" is often not easy: cf Perre v Apand Pty Limited [1999] HCA 36; (1999) 198 CLR 180. Nevertheless, the respondent chose to run the issue "on the back of" the appeal. We see no reason why it should not pay the costs of the consequences of that decision. Parties are free to raise matters by notice of contention, but raising additional issues in an appeal, which require additional preparation should not be seen as risk-free activity.

8 In order, however, to avoid further costs in taxation or assessment of the costs properly attributable to the appeal and to the notice of contention, we consider that a fair and appropriate balance is to require the appellants to pay 85% of the respondent’s costs of the appeal. That takes account of the costs of the issues on the notice of contention which did not overlap with the issues on the notice of appeal and of the respondent’s responsibility to pay such separate costs.

9 The parties are agreed that the words "such costs to be paid out of the assets of Pan Pharmaceuticals Limited (in liquidation)" be included in the costs order.

10 For these reasons, we would make the following costs order:

The appellants pay 85% of the respondents costs of the appeal, such costs to be paid out of the assets of Pan Pharmaceuticals Limited (in liquidation).

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Stone & Allsop.

Associate:
Dated: 7 April 2008

Counsel for the Appellant:	Mr A J Sullivan QC with Ms K C Morgan
Solicitor for the Appellant:	Blake Dawson Waldron
Counsel for the Respondent:	Mr J Stoljar with Ms K W Dawson
Solicitor for the Respondent:	Australegal
Date of Hearing:	Submissions received in Chambers
Date of Judgment:	7 April 2008