Adams v Yindjibarndi Aboriginal Corporation RNTBC
[2014] WASC 467 (S)
•24 JULY 2015
ADAMS -v- YINDJIBARNDI ABORIGINAL CORPORATION RNTBC [2014] WASC 467 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 467 (S) | |
| Case No: | CIV:2491/2014 | 12 MAY 2015 | |
| Coram: | KENNETH MARTIN J | 24/07/15 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | CHARMAINE ADAMS KEN SANDY JOHN SANDY YINDJIBARNDI ABORIGINAL CORPORATION RNTBC |
Catchwords: | Costs Costs against non-parties Proposal for joint liability with unsuccessful defendant party for costs Circumstances in which an order of that kind might be made Senior officers of unsuccessful party No evidence unsuccessful party impecunious Applications refused |
Legislation: | Nil |
Case References: | Adams v Yindjibarndi Aboriginal Corporation RNTBC [2014] WASC 467; (2014) 104 ACSR 29 Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154 Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) atf Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 (S) Kebaro Pty Ltd v Saunders [2003] FCAFC 5 Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178 Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 Oxer v Astec Paints Australia Pty Ltd [2008] SASC 210 Swick Nominees Pty Ltd t/as Swick Drilling Australia v Norncott Pty Ltd [No 3] [2013] WASC 173 (S) Vestris v Cashman (1998) 72 SASR 449 WHW v Commissioner of Police [2014] WASCA 153 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
KEN SANDY
JOHN SANDY
Second Plaintiffs
AND
YINDJIBARNDI ABORIGINAL CORPORATION RNTBC
Defendant
Catchwords:
Costs - Costs against non-parties - Proposal for joint liability with unsuccessful defendant party for costs - Circumstances in which an order of that kind might be made - Senior officers of unsuccessful party - No evidence unsuccessful party impecunious - Applications refused
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr M L Bennett & Ms T J C Elder
Second Plaintiffs : Mr M L Bennett & Ms T J C Elder
Defendant : No appearance
Non-parties : Mr J R Ludlow
Solicitors:
First Plaintiff : Bennett + Co
Second Plaintiffs : Bennett + Co
Defendant : No appearance
Non-parties : HWL Ebsworth Lawyers
Case(s) referred to in judgment(s):
Adams v Yindjibarndi Aboriginal Corporation RNTBC [2014] WASC 467; (2014) 104 ACSR 29
Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154
Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) atf Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 (S)
Kebaro Pty Ltd v Saunders [2003] FCAFC 5
Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178
Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516
Oxer v Astec Paints Australia Pty Ltd [2008] SASC 210
Swick Nominees Pty Ltd t/as Swick Drilling Australia v Norncott Pty Ltd [No 3] [2013] WASC 173 (S)
Vestris v Cashman (1998) 72 SASR 449
WHW v Commissioner of Police [2014] WASCA 153 (S)
- KENNETH MARTIN J:
Order sought
1 These reasons address an application by the plaintiffs seeking orders for costs against non-parties to this litigation.
2 The special costs order is sought against two officers of the defendant, the Yindjibarndi Aboriginal Corporation RNTBC ('YAC'): its CEO, Mr Michael Woodley, and its general counsel, Mr George Irving. (The defendant did not take part in the special costs application.)
3 The plaintiffs sought orders that Mr Woodley and Mr Irving be made jointly liable for the plaintiffs' costs along with the defendant corporation, which is the subject of my earlier taxed costs orders, as I will explain.
4 While Mr Irving is a legal practitioner admitted in this jurisdiction, the costs order was not sought against him under O 66 r 5(1) of the Rules of the Supreme Court 1971 (WA), or otherwise under the court's powers to regulate legal practitioners.
Background
5 On 6 November 2014, I heard an expedited trial to determine the validity of a notice given by the first plaintiff and another director of YAC, Ms Jill Tucker, seeking to convene a general meeting of the members of the defendant corporation (ie, YAC) and the validity of certain motions proposed to be put to such a general meeting.
6 On 7 November 2014, I delivered ex tempore reasons and judgment (the reasons were later published as Adams v Yindjibarndi Aboriginal Corporation RNTBC [2014] WASC 467; (2014) 104 ACSR 29, on 9 December 2014), granting the plaintiffs declaratory relief concerning validity of the calling of the general meeting of YAC members and motions to be put to the general meeting, as set out in the notice.
7 On 7 November 2014, the successful plaintiffs sought liberty to bring an application in respect of payment of the plaintiffs' costs by non-parties. As set out in Adams [131] - [133], I granted the plaintiffs such liberty to apply. The plaintiffs have subsequently sought such orders in respect of Mr Irving and Mr Woodley.
8 Following an exchange of written submissions between the plaintiffs and the non-parties, I heard oral submissions on the non-party costs application by the plaintiffs, on 12 May 2015.
9 The basis for the plaintiffs obtaining special costs orders against Mr Irving and Mr Woodley as non-parties to the litigation is said to arise from the non-parties' instructions on behalf of YAC to a Queensland firm of lawyers, Cleary Hoare Solicitors ('Cleary Hoare'), to act for YAC in these proceedings and to oppose the holding of the general meeting sought by the plaintiffs. This is in circumstances where, it is said, Messrs Irving and Woodley lacked authority to instruct Cleary Hoare, or to cause YAC to incur the substantial costs of defending the proceedings, under provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (WA) (CATSI Act) and YAC's constitution (referred to as its 'Rule Book').
10 There is no suggestion the defendant corporation is unable to, or has expressed an unwillingness to, fully meet all the plaintiffs' taxed costs of the expedited trial as I ordered YAC to bear, on 7 November 2014.
The evidence in this application
11 The evidence in the application for special costs orders against the non-parties was provided under a number of affidavits.
Plaintiffs' evidence
12 The plaintiffs' evidence is principally found across five affidavits:
1. three affidavits by Ms Taleesha Jayne Conlan Elder, respectively sworn 28 October 2014, 21 November 2014 and 13 March 2015, with their internal attachments;
2. an affidavit of the first plaintiff, Ms Adams, sworn 16 March 2015; and
3. an affidavit of Ms Jill Tucker, sworn 16 March 2015.
13 The non-parties raised no objections to the plaintiffs' affidavits (ts 119), save for suggesting that parts of the evidence of Ms Tucker and Ms Adams were not relevant to the non-party costs application.
14 (The plaintiffs also rely on minutes of a board meeting of YAC of 23 October 2014, found in an affidavit sworn earlier by Mr Michael Woodley of 4 November 2014 and noted below.)
15 The first affidavit of Ms Elder, sworn 28 October 2014, was made in support of the application for an urgent trial (as subsequently ordered). It broadly established the rules applicable to the calling of general meetings of YAC and, specifically, the manner in which a general meeting was called by notice dated 16 October 2014. This affidavit attached correspondence between solicitors for the plaintiffs, officers of YAC (including one of the non-parties), and Cleary Hoare, concerning the validity of the notice of meeting and its proposed resolutions. The correspondence shows Cleary Hoare responded to initial letters from solicitors for the plaintiffs, expressing a view in one letter of 24 October 2014 that the notice given by the plaintiffs requisitioning the general meeting was invalid, and by another of that date disputing (as per their instructions) the account of proceedings at a board meeting. There is a reply from the solicitors for the plaintiffs of 27 October 2014 (attachment 'TJE8') querying how solicitors Cleary Hoare could lawfully act for YAC, indicating the plaintiffs were not aware of any specific resolution authorising Cleary Hoare to act (nevertheless proceeding on the basis Cleary Hoare would defend any proceedings brought and inviting conferral between the legal representatives).
16 The second affidavit of Ms Elder, sworn 21 November 2014, is specifically prepared in support of the application for non-party costs orders. It attaches detailed correspondence from 28 October 2014 to 18 November 2014 passing between the solicitors for the plaintiffs and Cleary Hoare. It includes as well a polling form for the general meeting of YAC members held 10 November 2014.
17 By letter dated 18 November 2014 (attachment 'TJE15') the solicitors for the plaintiffs expressly contended Cleary Hoare was not validly instructed. They sought information regarding which officers of YAC had instructed Cleary Hoare to defend the proceedings.
18 Cleary Hoare replied by letter the same day ('TJE16') indicating it had taken its instructions from the CEO of YAC (Mr Woodley), YAC's in-house counsel (Mr Irving) and 'other executive staff'.
19 The affidavit also attached an affidavit by Mr Lyn Cheedy, chairperson of YAC, which, as Ms Elder deposed, had been served on the plaintiffs, but not filed (attachment 'TJE17'). It set out particulars of a 31 October 2014 YAC board meeting and attached minutes and YAC's audited financial statements.
20 The third affidavit of Ms Elder, sworn 13 March 2015, attached correspondence in mid to late February 2015, passing between solicitors for the plaintiffs and the appointed solicitors for the non-parties - regarding the costs incurred by YAC in defending the primary proceedings. Included with a response from solicitors for the non-parties (attachment 'TJE20') were a number of invoices from Cleary Hoare, Lemonis Tantiprasut (a Perth firm of solicitors) and counsel, totalling roughly $119,000. These legal costs invoices appear to have been paid by YAC - but, in any event, they are not the opposition's legal costs in respect of which the non-party costs orders are being sought.
21 The affidavit of Ms Adams, sworn 16 March 2015, provides background to the primary proceedings, including her recounting of discussions at YAC board meetings. It relates that Ms Adams is a director both of the defendant and of the Wirlu-murra Yindjibarndi Aboriginal Corporation RNTBC (WMYAC). The affidavit refers to a YAC board meeting held on 23 October 2014, prior to commencement of these proceedings, at which it is related that Mr Irving had said that a general meeting of YAC members, as Ms Adams and Ms Tucker sought to requisition, had not been validly called; that civility then deteriorated, and that as Ms Adams had another meeting to attend, she had left that board meeting without conceding to Mr Irving's invalidity contention (which, as was subsequently determined under these proceedings, was wrong).
22 Ms Adams also relates the events of a YAC board meeting of 10 February 2015 - at which Mr Woodley and Mr Irving (themselves not directors) are said to have insisted Ms Adams suffered from a conflict of interest and should not be present, following which she had left that meeting. She relates that at the time of her affidavit she had not been provided with minutes of certain YAC board meetings. Ms Adams' affidavit also notes that minutes of a 31 October 2014 board meeting suggest the minutes of the 23 October 2014 board meeting were confirmed unanimously, but that she was not present at the 31 October 2014 board meeting.
23 The affidavit of Ms Tucker, sworn 16 March 2015, indicates that she attended the 31 October 2014 YAC board meeting. She does not recall a motion being put or voted on confirming the minutes of the 23 October 2014 board meeting. She also relates that Mr Woodley and Mr Irving had insisted at the board meeting that Ms Tucker suffered from a conflict of interest and says that she had left the meeting after they repeatedly told her to leave and she had felt pressured to leave. She further says that at later YAC board meetings (after the holding of the meeting the subject of the primary proceedings), held on 27 November 2014, 18 December 2014 and 10 February 2015, Mr Woodley and Mr Irving repeatedly insisted Ms Tucker had a conflict of interest. As a result, Ms Tucker says she had then left each of the board meetings.
The non-parties' affidavit evidence
24 The non-parties' evidence relied upon to resist the application for special costs orders against them, is found across four affidavits, namely:
1. two affidavits of Mr George Marshall Irving, sworn 23 January 2015 and affirmed 16 March 2015, with their attachments; and
2. two affidavits of Mr Michael Woodley affirmed 4 November 2014 and sworn 23 January 2015.
25 The plaintiffs raise a number of objections against parts of these affidavits - going to both form and substance. Some of these objections were conceded. It was not necessary to resolve the remaining objections.
26 The 23 January 2015 affidavit of Mr Irving, sworn in opposition to non-party costs orders against himself and Mr Woodley, sets out Mr Irving's background and describes events from 2011 - 2014, generally. Mr Irving says that on reviewing the plaintiffs' notice requisitioning a general meeting of YAC members he had contacted Cleary Hoare for assistance in relation to corporations legal issues. He refers to resolutions of the YAC board in 2011, 2012 and 2014 (and attaches minutes of board meetings setting out these resolutions). The scope and relevance of these resolutions was disputed by the plaintiffs, as set out below.
27 Mr Irving also says he and Mr Woodley approved Cleary Hoare's invoices for payment.
28 In relation to the 23 October 2014 YAC board meeting, Mr Irving says that he had advised the directors that Cleary Hoare agreed with his opinion as to the [in]validity of the notice, that the entire board accepted this and that no-one present had raised any issue over the engagement of Cleary Hoare.
29 In relation to the 31 October 2014 YAC board meeting, Mr Irving relates that he advised the YAC board that he had briefed Cleary Hoare to 'handle' (ie, resist) the litigation, that one hearing had already occurred, and that no YAC directors or executive officers who had been present had objected to the engagement of Cleary Hoare, or to YAC's resisting of the plaintiffs' application generally.
30 This affidavit of Mr Irving also attaches minutes of the 23 October 2014 (also included in the 4 November 2014 affidavit of Mr Woodley) and 31 October 2014 YAC board meetings, and of the YAC general meeting subsequently held on 10 November 2014.
31 The 16 March 2015 affidavit of Mr Irving attaches an attendance and voting register and a polling tally concerning the 10 November 2014 general meeting of YAC.
32 The 4 November 2014 affidavit of Mr Woodley had been made for the purposes of the primary proceedings. Relevantly here, it contains, as Annexure 3, a copy of the minutes of a YAC board meeting of 23 October 2014. These minutes, which are in respects inconsistent with the plaintiffs' evidence (see above), set out particularly some notes of a discussion between Mr Irving, Mr Woodley and the plaintiffs. They would suggest that Ms Adams at one point had accepted that the notice of the meeting was not valid (on the basis of Mr Irving's proffered legal advice), and that she had seconded a motion for the 2014 YAC AGM to be held in early December 2014, before leaving the meeting prior to the board resolving to design a director appointment procedure.
33 The 23 January 2015 affidavit of Mr Woodley briefly sets out his position in relation to some events in dispute. He notes that he had 'co-approved' Cleary Hoare's invoices. He agrees with Mr Irving's summary of the 23 October 2014 and 31 October 2014 board meetings. He also suggests a lawyer from Cleary Hoare was included in some of these board meetings via a telephone link and that some of the YAC directors had asked questions of that Cleary Hoare lawyer.
Applicable law
34 The principles applicable to the making of non-party costs orders are well developed, so I will only briefly discuss and assemble some of the leading case authorities.
35 This court holds a discretion to order costs against a non-party: see s 37 of the Supreme Court Act 1935 (WA), WHW v Commissioner of Police [2014] WASCA 153 (S) [7], Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [39] (Steytler P), note also Oxer v Astec Paints Australia Pty Ltd[2008] SASC 210 [28] (Duggan J, Doyle CJ and Anderson J agreeing) in relation to the similarly worded Supreme Court Act 1935 (SA) s 40(1). The discretion is unfettered, but it must be exercised judicially: Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 192 (Mason CJ and Deane J), Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154 [74]. The only fixed requirement appears to be a need to show a sufficient connection between the non-party and the unsuccessful party and litigation, which is material to the question of costs: Dunghutti [89].
36 The categories of non-party costs order scenarios cannot be said to be closed: Swick Nominees Pty Ltd t/as Swick Drilling Australia v Norncott Pty Ltd [No 3] [2013] WASC 173 (S) [49] (Allanson J). Broadly speaking, it will be a consideration of the interests of justice in each particular case which will govern the availability of costs orders against non-parties: see, eg, WHW v Commissioner of Police[2014] WASCA 153 (S) [17].
37 Nonetheless, a non-party costs order is exceptional and is to be granted only in limited circumstances: Kebaro Pty Ltd v Saunders [2003] FCAFC 5 [103]. Such an order is not punitive in character: Dunghutti [95]. The order should not be made except in the 'clearest of cases': Dunghutti [96].
38 Many of the exceptional situations where non-party costs orders have been previously made concern the insolvency of a primary entity and its consequent incapacity to meet an adverse costs order made against it as an unsuccessful participant in litigation. In Knight, Mason CJ and Deane J recognised the general category of case involving 'circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation': Knight v FP Special Assets Ltd (192 - 193) (Mason CJ and Deane J). Not all cases fall within this general category. But each of the underlying features (particularly the insolvency of an actual party to the litigation) will bear upon the assessment as to whether the exceptional order should be granted against a non-party: see Swick Nominees [50] (Allanson J).
39 Whilst the exercise of the court's discretion is clearly not just limited to circumstances where the unsuccessful party to litigation is insolvent, orders beyond underlying circumstances of insolvency do present as being even more exceptional: Dunghutti [87] - [91].
40 Moreover, many of the exceptional situations where such orders have been made, on close analysis, can be seen to concern non-parties who have been assessed to have been (wrongly) acting in their own personal interests, or improperly.
41 Where, as here, the non-parties sought to be subjected to such costs orders are officers of the (unsuccessful) corporate party to litigation, it will be relevant to consider the underlying reasons for which they caused the unsuccessful party to bring (or resist) the proceedings, the legal qualifications of the non-parties, and the nature of any legal advice which the non-parties had received in relation to the bringing or defending of proceedings: see Dunghutti [97]-[100]. Merely benefiting in some fashion from underlying litigation would not of itself present as being enough to justify such an order. But the holding of a direct personal financial interest in the litigation may be very relevant. It is not necessary to show bad faith, if a direct personal financial interest or potential benefit from the litigation is shown: see Vestris v Cashman (1998) 72 SASR 449, 457 (Olsson J) and case authorities cited therein, referred to in Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281 [17] (Steytler J). It may also be said to be inappropriate to judicially determine if non-parties have acted in their own interests, in circumstances where the unsuccessful party is in a position to meet an order for costs: Dunghutti [100].
42 Finally, the timeliness of notice given to non-parties that legal costs will be sought directly against them may be relevant. This notice may be informed by an application for security: Vestris v Cashman (457 - 458) (Olsson J). However, this may be less useful when the primary entity is solvent. See also Huntingdale Village Pty Ltd (Receivers and Managers Appointed) atf Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 (S) [27]-[30] (Le Miere J).
43 Here,in circumstances of correspondence passing between the parties, and for reasons that will be seen, it is not necessary to assess the adequacy of notice given to Messrs Irving and Woodley by the plaintiffs about a personal costs exposure.
Plaintiffs' submissions
44 The plaintiffs provided two tranches of written submissions, of 21 November 2014 and 2 April 2015, canvassed by counsel for the plaintiffs in oral argument at the hearing of the application on 12 May 2015.
45 The plaintiffs point to a largely unconstrained discretion of the court as regards non-party costs orders. They observe that the categories of case for which a non-party costs order may be made are not closed and that it is not necessary for the unsuccessful defendant to be shown to be impecunious. Consequently, they argue that it is overall just, in present circumstances, that the non-parties be ordered to be made jointly liable, along with YAC, for their taxed costs of the failed resistance to the plaintiffs' action.
46 The plaintiffs are critical of the erroneous stance adopted by the non-parties, particularly Mr Irving, against the plaintiffs' requisitioning of a general meeting, during YAC board meetings. They note, in effect, that the trial was ultimately defended for YAC upon legal arguments different to Mr Irving's legal advice to the YAC board (the basis ultimately raised in resisting the application was dramatically distinct: see Adams [18] - [24]). The plaintiffs emphasise that Mr Irving's advice was effectively abandoned at the trial by the defendant's counsel, on the basis it was 'untenable'. The plaintiffs say that the non-parties by their conduct have thereby 'caused' YAC as the defendant corporation (which I repeat takes no part in this application) to expose itself to the wholly unnecessary financial loss and burdens of:
(a) its own lawyers' and counsel's costs on a failed defence of the plaintiffs' successful application (as noted above, there is no suggestion that these costs have not been paid); and
(b) the plaintiffs' taxed costs which were ordered against YAC, on the basis of costs following the event of YAC's resistance failing at the trial (the costs exposure which this application is concerned with).
47 It should be noted again that there is also no suggestion put to me on this application that YAC has expressed an unwillingness to fully meet the plaintiffs' taxed costs, as has been ordered. This is of some significance, in circumstances where the present application seeks only to make the non-parties jointly liable with YAC for the plaintiffs' taxed costs. Of course, once paid, any joint liability for these costs would be discharged (ie, to the plaintiffs).
48 The plaintiffs say that as members of the defendant corporation, as regards YAC meeting the plaintiffs' taxed costs, they ought not be prejudiced by the defendant corporation's funds being diminished by, in effect, the folly of resisting the plaintiffs' requisitioning of a general meeting. They say a special costs order is fully justified because, in their view, it is the foolhardy conduct of the non-parties which has caused the defendant to incur, unnecessarily, very substantial legal costs to the plaintiffs. This conduct they say was 'wholly unreasonable'.
49 The plaintiffs also contend Mr Irving and Mr Woodley either held no authority or insufficient authority to instruct solicitors to resist the action, pointing, in particular, to a lack of any specific contemporaneous YAC board resolution. They seek to distinguish previous general resolutions relied on by the non-parties (see below) as outdated (in the sense of expired), insufficiently specific, or inapplicable - having regard to context.
50 The plaintiffs also submit, in any event, the non-parties lacked authority to cause YAC to incur the legal expenses of resisting the action, pointing to a general authorisation for expenditure being limited to $100,000, by the defendant's constitution ('Rule Book' rule 5.14), and suggesting the absence of a specific resolution authorising the costs that were ultimately incurred. They note the invoices to YAC totalling roughly $119,000 appear to have been split, potentially so they would each look to fall below a $100,000 threshold. Counsel for the plaintiffs suggested that an adoption of an incorrect position without authority added a 'rogue' element, going beyond the non-parties merely being found to be proven wrong in their decision making and advice to YAC, as things turned out.
51 At the hearing of the application the plaintiffs sought to explain why non-party costs orders were sought against Messrs Irving and Woodley, making them jointly liable with the defendant. If made jointly liable (with YAC) for the plaintiffs' taxed costs of the action, they suggest the defendant corporation might then resolve to not pay the plaintiffs' costs - as the amount would exceed a $100,000 authority limit and that the YAC board may not achieve a consensus required to take decisions under its constitution. (It is relevant to recall that Ms Adams, the first plaintiff, and Ms Tucker both remain as directors of YAC.)
52 The plaintiffs do accept that if YAC fully meets the costs order, the non-parties will have no remaining liability to the plaintiffs.
53 The plaintiffs contend that the evidence earlier canvassed from their materials demonstrates that the non-parties were closely connected with the litigation and, in effect, have caused the plaintiffs' litigation.
54 However, the plaintiffs did not demonstrate why the underlying litigation participation failure scenario as seen here is significantly different from that where decisions are made by CEOs of other (eventually) unsuccessful corporate parties in litigation where at the end there must usually be a winner and a loser. The plaintiffs suggest only that YAC has been 'dragged into' this litigation without having a proper opportunity to decide to not resist the general meeting sought to be requisitioned by the plaintiffs.
Non-party's submissions resisting (joint) costs orders against them
55 The non-parties provided written submissions of 25 March 2015. They were amplified by counsel at the hearing.
56 The non-parties point to the substantial body of case law already seen, requiring exceptional circumstances to be shown before an order for costs will be made against a non-party, particularly when an unsuccessful party (as here) presents to be in a position to meet the adverse order for taxed costs. They say that this is far from an exceptional case.
57 The non-parties dispute the plaintiffs' contention that neither Mr Woodley nor Mr Irving were authorised to instruct Queensland solicitors, Cleary Hoare, or to cause YAC to incur the costs of resisting the plaintiffs' action.
58 The non-parties point to various resolutions, broadly worded, at YAC board meetings of 10 March 2011, 22 February 2012 and 23 January 2014 (the scope or relevance of which is disputed by the plaintiffs). In particular, the non-parties contend that these resolutions of the YAC board instructed and authorised both Mr Woodley and Mr Irving to instruct solicitors to resist the Wirlu-Murra group (which they say was attempting to take control of YAC by means of the plaintiffs' requisitioned general meeting). The non-parties further contend the engagement of Cleary Hoare was made known to the YAC board at the 23 October 2014 and 31 October 2014 board meetings.
59 The non-parties say further that they did not maintain or finance this action and did not cause the action, in a sense of starting it by some negligent act. They are not a party to a closely related action and are not involved in some relevant group litigation. The non-parties say, and I would accept, that they have not at any stage ever acted to advance their own personal interests by their decisions taken for YAC.
60 The non-parties say that this costs application is being used as a de facto derivative action by some members of the defendant corporation against them. They argue that the costs orders sought are, in substance, to the benefit of the defendant (ts 152). They argue that where the litigation has been managed on behalf of a solvent limited liability corporation with authority from that corporation, non-party costs orders as sought would be unjust.
61 They further suggest that the costs orders, if granted, may be used against the non-parties in a fashion which could potentially appear to be improper (ts 152), and that practical issues might arise in determining any distribution of liability as between Mr Irving and Mr Woodley and the abilities of each (with YAC as the defendant corporation) to seek contribution from each other.
62 In response to the contention that the invoices for legal services exceeded the general $100,000 limit for authorised expenditure, the non-parties say that the invoices were split in a reasonable manner (as between solicitors and counsel) and that, in any event, an exceeding of the limit (which is disputed) would be an internal manner for the defendant to resolve.
63 The non-parties note that they would enjoy the benefit of the 'business judgment' rule, as officers of YAC under the CATSI Act s 265-1, if they ever came to be sued for negligence by the defendant corporation - as regards the resisting of the plaintiffs' proceedings. They also suggest that they would be protected by some form of estoppel, if the defendant corporation (hypothetically) ever brought proceedings against them. Lengthy submissions were made on the estoppel point (refuted by the plaintiffs). It is not necessary for me to resolve those arguments in order to determine this application.
64 The non-parties seek their taxed costs of resisting this application.
Evaluation: non-parties were 'wrong but not rogue'
65 I am not ultimately persuaded in exercising a discretion here towards the making of non-party costs orders, that this is a sufficiently established, clear or exceptional case concerning these two non-parties. On my assessment, this was a case of the non-parties being shown to be 'wrong' in their advice to YAC, but not 'rogue'. The court undoubtedly holds power to grant the orders sought. But it is well established that a court should only make such orders in the clearest of cases. On my assessment, this is not such a clear case.
66 It was not in dispute that Mr Woodley and Mr Irving instructed Queensland solicitors Cleary Hoare to resist the plaintiffs' requisitioning of a general meeting and then their subsequent litigation seeking to validate their position. In that respect, both men clearly do appear to have a sufficient connection to the proceedings to support such orders in a causative sense. But more is required.
67 While Mr Irving is a legal practitioner admitted in this jurisdiction, that fact does not seem to attract any particular significance or weight, in present circumstances. It is not possible given privilege constraints to fully probe the full extent of legal advice provided to YAC by Cleary Hoare. However, there is no suggestion to me that the legal advice of Cleary Hoare was to not resist or not defend the plaintiffs' action, and that such legal advice was suppressed, ignored or resisted due to the conduct of Mr Woodley or Mr Irving. Nor is it shown that Mr Irving failed to communicate any relevant legal advice from Cleary Hoare to the YAC board.
68 I can accept that the non-parties were of a certain pre-disposed state of mind against the plaintiffs' attempts to convene a general meeting, following the defendant's board meetings of 23 October 2014 and 31 October 2014. But the present application should not descend to an exercise in nit-picking over the terms of minutes of YAC board meetings, or to raise technical objections over the scope of what Mr Woodley and Mr Irving were authorised to do or not do, without express YAC board approval. That is all a matter for the YAC board to pursue and address as it sees fit, in terms of the levels of confidence it reposes in the two men, at this time or otherwise.
69 The plaintiffs put significant emphasis on the general $100,000 limit of authorisation for expenditures which they say the non-parties were subject to, and that costs incurred arguably exceeded. But the issue is not whether Mr Woodley and Mr Irving were permitted to expend YAC funds without specific board approval. The present application is not about the legal fees YAC has incurred to its lawyers or to counsel. That is again a matter for YAC and its board to resolve.
70 The key issue, and the cause of the defendant's resulting exposure to the plaintiffs' taxed costs, were decisions to resist the plaintiffs' requisitioned general meeting of YAC members, seeking to pass motions to spill the YAC board.
71 The plaintiffs' application searches to show some impropriety crutch to found this claim for costs, but fails in that endeavour on my assessment. There is no evidence that YAC repudiated the conduct of its non-party officers, as regards YAC's own costs, or its present exposure to the plaintiffs' taxed costs. If the plaintiffs' resolutions had passed at the general meeting and a new board had repudiated the non-parties' actions, the situation might have been different. But that is not the case. Any lack of authorisation for expenditures would appear to raise only an internal matter for YAC to pursue against its officers, if it sees fit to do that.
72 In the circumstances, it is up to YAC, not the plaintiffs, to pursue internally Mr Irving or Mr Woodley over any alleged negligence, incompetence or any breach of their employment contracts - on the basis of poor judgment. That is not a matter for the plaintiffs to second-guess, in the present context of a non-party costs application, notwithstanding that they are members and directors of the defendant.
73 A more detailed analysis of the underlying motives of Mr Woodley and Mr Irving might be justified, if the defendant corporation had been shown to be unable, or manifestly unwilling to meet the taxed costs order made against YAC, now favouring the plaintiffs. It is another barrier to the plaintiffs' application, that the defendant corporation presents as solvent and both able and willing to meet the taxed costs order to the plaintiffs. In recognising this difficulty as faced by the plaintiffs, I am not imposing a precondition of impecuniosity for an order, as was suggested by counsel for the plaintiffs. Rather, I am simply recognising this to be one highly relevant factor and tending here against a grant of non-party costs relief by joint orders - which would not alleviate YAC of its exposure to the plaintiffs' taxed costs. Speculating that the defendant could elect not to meet the taxed costs order (as was suggested by counsel for the plaintiffs) if the orders sought were made, is not sufficient. I will not approach the evaluation on the basis that the primary entity is unable or unwilling to meet the plaintiffs' taxed costs.
74 There is no suggestion the defendant's board has lost faith or confidence in Mr Woodley or Mr Irving, despite what would appear to have been an ongoing and expensive series of erroneous decisions on behalf of YAC to resist the holding of the requested general meeting of members, as sought by the plaintiffs.
75 Mr Woodley and Mr Irving were causal contributors to that conduct - but I do not find that in the erroneous position they caused and counselled YAC to follow vis-à-vis the plaintiff, that they acted improperly, or in their own interests, or on some frolic of their own.
76 Whilst Mr Woodley and Mr Irving would remain answerable longer-term to the YAC board and to the members of the defendant, there is no basis to make them jointly liable with the defendant upon a non-party costs order.
Conclusion
77 For reasons I have set out above, the non-party costs application should be refused, and with the non-parties' costs of resisting the present application to be taxed if not agreed and payable by the plaintiffs to the non-parties.
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