Bateman v Newhaven Park Stud Ltd - Costs

[2004] NSWSC 875

CITATION:	Bateman v Newhaven Park Stud Ltd - Costs [2004] NSWSC 875
HEARING DATE(S):	Written submissions: 06/07/04, 12/07/04, 13/07/04
JUDGMENT DATE:	22 September 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Order that plaintiffs pay defendants' costs of interlocutory application determined on 29 June 2004. Order that costs of certain defendants be assessed and payable forthwith. No order for indemnity costs.
CATCHWORDS:	PROCEDURE - costs - application for indemnity costs - application for order that costs be assessed and payable forthwith
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss.232, 233
CASES CITED:	Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 Horrobin v Australia and New Zealand Banking Group Ltd (Court of Appeal, 6 June 1997, unreported) Oshlack v Richmond River Council (1998) 193 CLR 72 Rosniak v GIO (1997) 41 NSWLR 608
PARTIES :	Edmund Gregory Thomas Bateman - First Plaintiff Abtourk (Syd No 391) Pty Limited - Second Plaintiff Belinda Cawardine Bateman - Third Plaintiff Charado Pty Limited - Fourth Plaintiff Newhaven Park Stud Limited - First Defendant Frederick John Kelly, Richard John Kelly, John Horace Ingham, Norman Eric Napper - Second Defendants Burst Pty Limited - Third Defendant Braylen Pty Limited - Fourth Defendant
FILE NUMBER(S):	SC 3600/03
COUNSEL:	Mr G K Burton - Plaintiffs Mr R J Weber SC/Mr C Mantziaris - First Defendant and First and Fourth Second Defendants Mr G A Sirtes - Second Second Defendant, Third and Fourth Defendants
SOLICITORS:	Abbott Tout - Plaintiffs Esplins - First Defendant and First and Fourth Second Defendants Macquarie Legal Practice- Second Second Defendant, Third and Fourth Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 22 SEPTEMBER 2004

3600/03 - EDMUND GREGORY THOMAS BATEMAN & 3 ORS v NEWHAVEN PARK STUD LIMITED & 3 ORS - COSTS

JUDGMENT

1 On 7 May 2004 and 29 June 2004 I dismissed two separate claims by the plaintiff for interlocutory injunctions pending determination of the substantive proceedings in which the plaintiffs, as shareholders of the first defendant, complain of oppressive or similar conduct in the affairs of the first defendant and seek relief under s.233 of the Corporations Act 2001 (Cth) accordingly.

2 It remains to deal with the costs of the two interlocutory applications. Written submissions on costs have been filed by the parties. In considering the question of costs, it is necessary to remember the roles played by the several defendants. The first defendant is the company of which the plaintiffs are shareholders and the affairs of which are said to be the context of the conduct caught by ss.232 and 233. The second defendants are the directors of the first defendant together with a former director, R J Kelly (he being the second named second defendant). The third and fourth defendants are companies associated with R J Kelly. He and those companies became the parties to agreements with the first defendant said by the plaintiffs to be the occasion or source of the oppressive conduct of which they complain. The third and fourth defendants became purchasers from the first defendant under those agreements.

3 The plaintiffs, having been unsuccessful in each interlocutory application, do not seek to resist a result which sees costs follow the event in each case. The plaintiffs do, however, oppose any order that costs be assessed and payable forthwith or that they be assessed otherwise than on the ordinary party-party basis.

4 The first defendant (that is, the subject company) and the first and fourth named second defendants (that is, the directors of the first defendant) say that their costs should be assessed and payable forthwith and that assessment should be on the indemnity basis. The second named second defendant (R J Kelly) and the third and fourth defendants (the companies associated with R J Kelly which were the purchasers from the first defendant) submit that costs awarded to them against the plaintiffs should be assessed and payable forthwith.

5 These applications arise for consideration in circumstances where the question at issue in the substantive proceedings is the question whether the conduct of the affairs of the first defendant (or some act or omission of the first defendant) is caught by s.232 of the Corporations Act and, if so, whether the court should make an order under s.233. That controversy is, in essence, a controversy between the plaintiffs and the first defendant. The third and fourth defendants (purchasers) have no role to play in relation to the plaintiff’s claims under ss.232 and 233. Nor, in any direct sense, do the second defendants (R J Kelly and the directors). Although actions of directors of the first defendant at relevant times will presumably come under scrutiny when the plaintiffs’ claims under ss.232 and 233 come to trial, any relief granted to the plaintiffs is likely to involve those directors, if at all, only to the extent of requiring them to procure the first defendant to act in certain ways.

6 I am satisfied that the third and fourth defendants and R J Kelly (the second named second defendant) have no effective role left to play in the proceedings and that, in substance, the first and fourth named second defendants are in the same position.

7 Another important point is that a major (if not the major) objective of the plaintiffs in bringing the proceedings was to try to ensure that the properties contracted to be sold by the first defendant to the third and fourth defendants did not leave the ownership of the first defendant – an objective which, in the events that happened, came to be concentrated in the plaintiffs’ two interlocutory applications that were unsuccessful. There is, of course, still full scope for the plaintiffs to pursue their claims to relief based on oppression and like conduct in the affairs of the first defendant but they will no longer be able to realise the principal objective to which I have referred.

8 The matters referred to in the two immediately preceding paragraphs are, in my judgment, sufficient to warrant, in relation to the second named second defendant, the first and fourth named second defendants, the third defendant and the fourth defendant, an order that their costs of the two interlocutory applications be assessed and payable forthwith. I rely, in that connection, on the following passage in the judgment of Priestley JA in Horrobin v Australia and New Zealand Banking Group Ltd (Court of Appeal, 6 June 1997, unreported):

“None of the cases is on all fours with the present one; indeed, a
reading of them emphasises the need for cases to be considered by
reference to their own particular facts. Nevertheless, those relied on by counsel for H and S show there is a tendency for costs orders to be made payable forthwith and without waiting for the conclusion of further proceedings when the proceedings in respect of which the costs orders have been made are regarded as sufficiently self contained and detached or detachable from proceedings yet to be heard, whether between the same or associated parties, as to make it seem just for an actual payment to be made in the meantime."

9 I consider next the first defendant’s submission that its costs should be assessed and payable forthwith. I refer to (without setting out) the three factors I considered relevant to such a submission in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 at [10] to [13]. On the evidence now before me, I do not see it as open to me to conclude that any of those factors exists here, so far as this claim by the first defendant is concerned. The proceedings are ongoing as regards the first defendant in the way I have already described. There is nothing to show that a particularly long time will elapse before they come to trial.

10 The second of the three factors identified in the Fiduciary case (and on which I have expressed a conclusion adverse to the first defendant’s application) is whether there was some unreasonable conduct on the part of the party against whom costs have been ordered, that is, the plaintiffs. That question is also relevant to the application by the first defendant and the first and fourth named second defendants for an order that the costs awarded to them be assessed on the indemnity basis. The inquiry there is as to “relevant delinquency” (Oshlack v Richmond River Council (1998) 193 CLR 72) or “unreasonable conduct, albeit that it need not rise as high as vexation” (Rosniak v GIO (1997) 41 NSWLR 608).

11 Although, in determining each of the interlocutory applications, I ultimately decided that there was no serious question to be tried, the situation was, in neither case, one in which the interlocutory application was made without some reasonable foundation. It could not be said that either application should have been recognised from the beginning as devoid of any prospect of success. The outcome of the first application, so far as it concerned the ASX Listing Rules, was significantly influenced by evidence of the attitude of ASX that was obtained by the defendants only after the hearing had commenced; and the plaintiffs’ claims as to the inadequacy of disclosure in materials sent to shareholders was supported by the opinion of an expert in the relevant field. The second interlocutory application turned very much on the “acting in concert” question. The matters the plaintiffs advanced in support of their contention that a finding of “acting in concert” should be made had a sufficient degree of cogency to be responsibly advanced, even though eventually not seen as warranting the conclusion for which the plaintiffs contended. There will be no order for indemnity costs.

12 In the result, therefore, the only orders with respect to costs, in addition to the order for costs against the plaintiffs made on 7 May 2004, are

(a) an order that the plaintiffs also pay the defendants’ costs of the interlocutory application determined on 29 June 2004; and
(b) an order that the costs of the second named second defendant, the first and fourth named second defendants, the third defendant and the fourth defendant under both the order of 7 May 2004 and order (a) above be assessed and payable forthwith.
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Last Modified: 09/23/2004