Digi-Tech (Australia) Ltd v Brand & 5 Ors; Digi-Tech (Australia) Ltd v Kelliher & 3 Ors; Kalifair Pty Ltd & 3 Ors v Digi-Tech (Australia) Ltd & 3 Ors; McLean Tecnic Pty Ltd & 1 or v Digi-Tech (Australia) Ltd & 3 Ors No 2

NEW SOUTH WALES COURT OF APPEAL

CITATION: Digi-Tech (Australia) Ltd v Brand & 5 Ors; Digi-Tech (Australia) Ltd v Kelliher & 3 Ors; Kalifair Pty Ltd & 3 Ors v Digi-Tech (Australia) Ltd & 3 Ors; McLean Tecnic Pty Ltd & 1 Or v Digi-Tech (Australia) Ltd & 3 Ors No 2 [2004] NSWCA 162 revised - 4/06/2004

FILE NUMBER(S):
40832/02; 40833/02; 40838/02; 40840/02

HEARING DATE(S): On written submissions

JUDGMENT DATE: 25/05/2004

PARTIES:
(CA) 40832/02)
Digi-Tech (Australia) Ltd (Appellant)
Graham Leonard Brand (First Respondent)
Robert Edward Chambers (Second Respondent)
Christopher Gerard Kelliher (Third Respondent)
Roeturn Pty Limited (Fourth Respondent)
Morrow No 1 Pty Ltd (Fifth Respondent)
Nesyear Pty Limited (Sixth Respondent)
CA 40833/02)
Digi-Tech (Australia) Ltd (Appellant)
Christopher Gerard Kelliher (First Respondent)
Ian Michael Smith (Second Respondent)
Hametron Pty Limited (Third Respondent)
Dellfan Pty Limited (Fourth Respondent)
(CA 40838/02)
Kalifair Pty Ltd (First Appellant)
Kalinick Pty Limited (Second Appellant)
Divome Properties Pty Limited (Third Appellant)
Toltex Human Resources Pty Limited (Fourth Appellant)
Digi-Tech (Australia) Ltd (First Respondent)
Digi-Tech Equities Limited (Second Respondent)
Digi-Tech Communications Limited (Third Respondent)
John Anthony Reid (Fourth Respondent)
(CA 40840/02)
McLean Tecnic Pty Ltd (First Appellant)
A I McLean Pty Limited (Second Appellant)
Digi-Tech (Australia) Ltd (First Respondent)
Digi-Tech Equities Limited (Second Respondent)
Digi-Tech Communications Limited (Third Responent)
John Anthony Reid (Fourth Respondent)

JUDGMENT OF: Sheller JA Ipp JA McColl JA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): ED 50169/99; 50087/00

LOWER COURT JUDICIAL OFFICER: Einstein J

COUNSEL:
(CA 40832/02 & CA 40833/02)
John C Sheahan SC/M Christie (Appellant)
A J Meagher SC/I M Jackman SC (Respondents)
(CA 40838/02)
A J Meagher SC/I M Jackman SC (Appellants)
John C Sheahan SC/M Christie (Respondents)
(CA 40840/02)
A J Sullivan QC/H Stowe (Appellants)
John C Sheahan SC/M Christie (Respondents)

SOLICITORS:
(CA 40832/02 & CA 40833/02)
Blake Dawson Waldron (Appellant)
Atanaskovic Hartnell (Respondents)
(CA 40838/02)
Atanaskovic Hartnell (Appellants)
Blake Dawson Waldron (Respondents)
(CA 40840/02)
Gillis Delaney Brown (Appellants)
Blake Dawson Waldron (Respondents)

CATCHWORDS:
PRACTICE AND PROCEDURE - Complex proceedings - Costs of appeal - Orders to be made - Whether proceedings should be remitted to the trial judge or another commercial list judge - Wording of the question to be remitted - Whether leave should be granted to allow enforcement of costs orders. ND

LEGISLATION CITED:
Trade Practices Act 1974, ss 52, 82, 87(2)(ba)

DECISION:
See para [20]

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40832/02; 40833/02
40838/02; 40840/02
ED 50169/99; 50087/00
SHELLER JA
IPP JA
McCOLL JA
Tuesday 25 May 2004

DIGI-TECH (AUSTRALIA) LIMITED v Graham Leonard BRAND & 5 0RS
DIGI-TECH (AUSTRALIA) LIMITED v Christopher Gerard KELLIHER & 3 ORS
KALIFAIR PTY LIMITED & 3 ORS v DIGI-TECH (AUSTRALIA) LIMITED & 3 ORS
McLEAN TECNIC PTY LIMITED & 1 OR v DIGI-TECH (AUSTRALIA) LIMITED & 3 ORS

Judgment No 2

THE COURT: On 23 March 2004 this Court delivered its judgment in the four appeals (and two cross appeals) that were then before the Court (see [2004] NSWCA 58). The Court did not on that day make any orders but required the parties to file written submissions and to file minutes of proposed orders. This has now been done.
The main points of difference that now arise between the parties relate to:
(a) The costs to be awarded in each appeal.
(b) The wording of the question to be remitted.
(c)Whether the proceedings should be remitted to the trial judge or another commercial list judge.
(d)Whether leave should be granted to allow the enforcement of costs orders made in regard to the appeals from the decision of Meagher JA of 17 October 2002 (as to which see below).
In regard to costs, generally, Digi-Tech submits:
“On any view, no costs order should be made against Digi-Tech Equities Ltd (“DTEL”), Digi-Tech Communications Ltd (“DTCL”) and John Anthony Reid. Digi-Tech (Australia) Ltd (“DTAL”) was the sole Appellant in proceedings CA 40832 of 2002 and CA 40838 of 2002 [sic: CA 40833 of 2002]. No case was pursued against Mr Reid on appeal. DTCL and DTEL were parties in relation to the exercise of the option arguments in relation to the McLean and Morgan and Banks appeals and were successful in relation to the arguments in relation to these parties. The only Digi-Tech party which is potentially liable for any costs in relation to the case is DTAL.”
The Kalifair appellants submit in response:
“[T]he costs orders should be made against both DTAL and DTEL. It is accepted that DTCL and Mr Reid should not be the subject of any costs order. As to DTEL, it was directly concerned not only with the position of the McLean parties, Kalifair and Kalinick, but also with all parties to whom issue 9 (withholding tax) and issue 10 (Smith’s option) related. Further, DTEL was a necessary or desirable party in respect of the Trade Practices Act relief, as it stood to benefit or suffer (as the case may be) from the outcome on the Trade Practices Act claims.”
We accept the submissions made by the Kalifair appellants.
In both CA 40832/02 and CA 40833/02 Digi-Tech (rightly) agrees that the appeal be dismissed and the cross appeal be allowed in part. The respondents in these matters were successful in the two appeals and substantially successful in the cross appeals.
As far as we can gather, in both these appeals the only appellant and the only cross-respondent was DTAL (see the short minutes of orders contained in the submissions of the Kalifair appellants dated 14 May 2004 and the submissions of Digi-Tech companies dated 5 May 2004).
Accordingly, we consider that in both CA 40832/02 and CA 40833/02, DTAL should pay the costs of the appeals and the cross appeals.
In CA 40838/02 the appellants (Kalifair, Kalinick, Divome and Toltex) seek orders that Digi-Tech pay 80% of the costs of the appeal. Digi-Tech, primarily, seeks orders that each party should bear its own costs.
Kalifair and Kalinick were substantially successful in the appeal in CA 40838/02 and, therefore, DTAL and DTEL (the relevant Digi-Tech parties) should pay the costs of that appeal in relation to them. Divome and Toltex were both unsuccessful in that appeal and each should pay the respondents their respective costs of the appeal.
In CA 40840/02 the McLean parties submit that Digi-Tech should pay 80% of the costs of the appeal. Digi-Tech submits that each party should bear its own costs of the appeal. The McLean parties were substantially successful in the appeal and we conclude that the order they seek should be granted (that is, against DTAL and DTEL).
In coming to these conclusions, we have taken into account Digi-Tech’s submissions based on Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 at 25. We have concluded that that case is distinguishable from the present and is not helpful.
The parties are in agreement as to the wording of the question to be remitted and we shall make an order in this respect as the parties propose.
Having regard to the views already expressed by the trial judge, we consider that the proceedings should be remitted to another commercial list judge.
On 17 October 2002, in Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737, this Court ordered that the costs of certain motions before Meagher JA be costs in the appeals, and that the costs order in question not be enforced without leave. Both the Kalifair and the McLean appellants (that is, the Investors, as we have described them) were parties to those motions. Digi-Tech now seeks an order in CA 40838/02 that “[t]he appellants are not to enforce the costs orders made by the Court on 6 December 2002 in respect of the appeal from the decision of Meagher JA of 17 October 2002 without leave of this Court”. The Investors, on the other hand, seek orders that they be granted leave to enforce that costs order.
The proceedings before Meagher JA concerned applications by the Investors to stay the judgments of Einstein J entered against them in favour of Digi-Tech. Meagher JA ordered that the applications for stay be dismissed with costs. This Court, in Kalifair Pty Ltd v Digi-Tech (Australia)Ltd (2002) 55 NSWLR 737, set aside the orders made by Meagher JA and made a number of orders, including those orders presently in issue.
In consequence of this Court’s judgment of 23 March 2004, ([2004] NSWCA 58) the judgments in favour of Digi-Tech were set aside. Accordingly, we consider that the matter has to be approached on the basis that the applications for a stay of the proceedings to Meagher JA were justified. Accordingly, the Investors should be granted leave to enforce the costs orders made by this Court on 6 December 2002 in respect of the appeal from the decision of Meagher JA of 17 October 2002.
The McLean Investors seek an order declaring that Digi-Tech engaged in conduct that was misleading and deceptive contrary to s 52 of the Trade Practices Act 1974 (Cth). We think it neither necessary nor desirable to make such an order.
It has not been easy to ascertain the particular cases in respect of which the particular orders we have determined upon should be made. The parties have, throughout the appeal usually dealt with the various appeals as one. In making orders, however, it is necessary to differentiate between them. In view of the difficulties that have arisen, the orders set out herein may contain inadvertent errors. In regard to the orders in all appeals, therefore, the parties have liberty to apply by way of written submissions within seven days.
For the above reasons, we make the following orders:
CA 40832/02
(1)        The appeal is dismissed.
(2)        The cross appeal be allowed in part.
(3)The orders of Einstein J numbered (1) and (10) in proceedings ED No 50087 of 2000 in the Court below made on 28 August 2002 in so far as they relate to the respondents to this appeal are set aside.
(4)That DTAL pay the costs of the appeal and the cross appeal.
(5)The proceedings are remitted to a commercial list judge (not being the trial judge) to determine:
(a)whether the cross appellants suffered loss and damage by reason of DTAL making the revenue and profit projections upon which the Deloitte indicative valuation was based, in circumstances where DTAL had no reasonable basis for making the said projections.
(b)whether the cross appellants are entitled to relief by way of orders under s 87(2)(ba) and damages under s 82 of the Trade Practices Act 1974 (Cth).
(c)the appropriate order as to the costs of the proceedings before Einstein J and of the retrial of the issues referred to in (a) and (b) above.
CA 40833/02
(1)        The appeal is dismissed.
(2)        The cross appeal is allowed in part.
(3)The orders of Einstein J numbered (1) and (10) in proceedings ED No 50087 of 2000 in the Court below made on 28 August 2002 in so far as they relate to the respondents to the appeal are set aside.
(4)That DTAL pay the costs of the appeal and the cross appeal.
(5)The proceedings are remitted to a commercial list judge (not being the trial judge) to determine:
(a)whether the cross appellants suffered loss and damage by reason of DTAL making the revenue and profit projections upon which the Deloitte indicative valuation was based in circumstances where DTAL had no reasonable basis for making the said projections.
(b)whether the cross appellants are entitled to relief by way of orders under s 87(2)(ba) and damages under s 82 of the Trade Practices Act 1974 (Cth).
(c)The appropriate order as to the costs of the proceedings before Einstein J and of the retrial of the issues referred to in (a) and (b) above.
CA 40838/02
(1)        The appeal is allowed in part.
(2)The orders and declarations of Einstein J numbered (1), (5), (6), (7) and (9) in proceedings ED No 50169 of 1999 in the Court below made on 28 August 2002 are set aside in so far as they relate to the appellants.
(3)That DTAL and DTEL pay Kalifair and Kalinick the costs of the appeal relating to each.
(4)That Divome and Toltex pay the respondents the costs of the appeal relating to each.
(5)Kalifair and Kalinick are granted leave to enforce the costs order made by the Court on 6 December 2002 in respect of the appeal from the decision of Meagher JA of 17 October 2002.
(6)The proceedings are remitted to a commercial list judge (not being the trial judge) to determine:
(a)whether Kailifair and Kalinick suffered loss and damage by reason of DTAL making the revenue and profit projections upon which the Deloitte indicative valuation was based in circumstances where DTAL had no reasonable basis for making the said projections.
(b)whether Kailifair and Kalinick are entitled to relief by way of orders under s 87(2)(ba) and damages under s 82 of the Trade Practices Act 1974 (Cth).
(c)The appropriate order as to the costs of the proceedings before Einstein J and of the retrial of the issues referred to in (a) and (b) above.
CA 40840/02
(1)        The appeal is allowed in part.
(2)The orders and declarations of Einstein J numbered (1), (5), (6), (7) and (9) in each of proceedings ED Nos 50169 of 1999 and 50087 of 2000 in the Court below made on 28 August 2002 are set aside in so far as they relate to the appellants.
(3)That DTAL and DTEL pay the appellants 80% of the costs of the appeal.
(4)The appellants are granted leave to enforce the costs orders made by the Court on 6 December 2002 in respect of the appeal from the decision of Meagher JA of 17 October 2002.
(5)The proceedings are remitted to a commercial list judge (not being the trial judge) to determine:
(a)whether the appellants suffered loss and damage by reason of DTAL making the revenue and profit projections upon which the Deloitte indicative valuation was based in circumstances where DTAL had no reasonable basis for making the said projections.
(b)whether the appellants are entitled to relief by way of orders under s 87(2)(ba) and damages under s 82 of the Trade Practices Act 1974 (Cth).
(c)The appropriate order as to the costs of the proceedings before Einstein J and of the retrial of the issues referred to in (a) and (b) above.
Generally
In regard to all appeals, the parties have liberty to apply by written submissions within seven days.

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LAST UPDATED: 04/06/2004

[2004] NSWCA 162

25 May 2004

Key Legal Topics

Areas of Law

Civil Procedure

Commercial Law

Legal Concepts

Costs

Appeal

Remedies

Jurisdiction