Fiduciary Ltd v Morningstar Research Pty Ltd - [2004] NSWSC 664

No judgment structure available for this case.

CITATION: Fiduciary v Morningstar Research [2004] NSWSC 664

HEARING DATE(S): 16, 17 and 18 June 2004

JUDGMENT DATE:
27 July 2004

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: See under heading "Conclusions"

CATCHWORDS: PRACTICE & PROCEDURE - security for costs - application for order for security against two corporate plaintiffs, where person who controls them is also a plaintiff - plaintiffs unable to provide security - whether presence of individual plaintiff should prevent court from ordering corporate plaintiffs to provide security - whether proceedings by individual plaintiff should be stayed until corporate plaintiffs provide security as ordered - whether financial ability of litigation funder is relevant - whether corporate plaintiffs must prove their prior financial position in order to establish that the defendants' wrongdoing led to their impecuniosity - other relevant considerations in security for costs application - considerations relevant to quantum of security - PRACTICE & PROCEDURE - strike-out application - whether it is reasonably arguable that notice of intention to terminate an agreement was given, though the address in the agreement was not used - INDUSTRIAL RELATIONS - remuneration cap under s 108A of Industrial Relations Act - instalments of base remuneration credited to loan account with employer, and subsequently that loan is capitalised, by the issue of shares, during the 12 months prior to termination of employment - whether application of loan account should be taken into account in determining whether the remuneration cap was exceeded - COSTS - circumstances in which it is appropriate to order that costs be assessed and paid forthwith

LEGISLATION CITED: Corporations Act 2001 (Cth), s 237, 1335
Industrial Relations Act 1996 (NSW), s 106, 108A
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 5
Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 8
Supreme Court Rules, Part 52A rule 9; Part 53 rule 2

CASES CITED: Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134
Bell Wholesale Co Ltd v Gates Export Corporation (1984) 52 ALR 176
Bhagat v Murphy [2000] NSWSC 892
BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339
Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46
Cassidy v Medical Benefits Fund of Aust Ltd [2001] FCA 700
Chartspike Pty Ltd (in liq) v Chahoud [2001] NSWSC 585
Commander Australia Ltd v Kerr [2004] NSWIRComm 74
Cowell v Taylor (1885) 31 Ch D 34
D'Hormusgee & Co v Grey (1882) 10 QBD 13
Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972
Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hancock Prospecting Pty Ltd v BHP Minerals Pty Ltd [2003] WASCA 259
Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523
Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120
Horrobin v Australia & New Zealand Banking Group Ltd (unreported, 6 June 1997, per Priestley JA)
Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744
Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Management Ltd [2003] NSWSC 609
Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621
Jeffcott Holdings Ltd v Paior (1996) 15 ACLC 28
John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707
Lubrizol Corp Inc v Imperial Chemical Industries plc [2000] FCA 1464
Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133
MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97
M'Connell & East v Johnston (1801) 1 East 431
Melville v Craig Nowlan & Associates Pty Ltd (2001) 54 NSWLR 82
Midland Brick Co Pty Ltd v CMS Gas Transmission of Australia [2003] WASC 222
Morningstar Research Pty Ltd v Fiduciary Ltd [2003] FCA 870
Morris v Hanley [2000] NSWSC 957
Pan Foods Company Importers & Distributors Pty Ltd v ANZ Banking Group Ltd (2000) 74 ALJR 791
Pearson v Naydler [1977] 1 WLR 899
PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321
Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443
Rexam Australia Pty Ltd v Optimum Metallising Pty Ltd [2002] NSWSC 916
RSL Com Personal Communications Pty Ltd v Mobile Tron Pty Ltd [2001] NSWSC 819
South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519
Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 8 ACLR 410
Sykes v Sykes (1869) LR 4 CP 645 [102 ER 167]
Winthrop v Royal Exchange Assurance Co (1755) 1 Dick 282 [21 ER 277]
Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542

PARTIES :
Fiduciary Ltd (P1, XD1)
Graham John Rich (P2, XD2)
Fiduciary Consultants Ltd (P3, XD3)
Morningstar Research Pty Ltd (D1, XC1)
Morningstar Inc (D2, XC2)
Joe Mansueto (D3)
Tao Huang (D4)
Donald James Phillips II (D5)
Bevin Desmond (D6)
Nicholas John Reynolds (D7)

FILE NUMBER(S): SC 5308/01

COUNSEL: RJ Ellicott QC with RD Glasson (Ps)
RM Smith SC with SA Goodman (D2-D7)

SOLICITORS: Nash O'Neill Tomko Lawyers (Ps)
Clayton Utz (D2-D7)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

TUESDAY 27 JULY 2004

5308/01 FIDUCIARY LTD & 2 ORS V MORNINGSTAR RESEARCH PTY LTD & 6 ORS

JUDGMENT

HIS HONOUR:

Introduction

1 There are four applications before the court for determination. The plaintiffs are Mr Graham Rich and two companies, Fiduciary Ltd ("Fiduciary") and Fiduciary Consultants Ltd ("Fiduciary Consultants"). Mr Rich is the controller and sole shareholder of the corporate plaintiffs. I shall refer to the plaintiffs, from time to time, as "the Rich interests". The second defendant is a Chicago-based company, Morningstar Inc. The third to seventh defendants are officers or former officers of Morningstar Inc, who are or were nominees of the Chicago company on the board of directors of the first defendant ("the Company", sometimes referred to in the evidence as "MDU"). I shall refer to the second to seventh defendants as the "the Morningstar interests".

2 The Company is an entity in which the Rich interests and the Morningstar interests hold shares. The Rich interests allege that the Company was a joint venture vehicle, and they seek relief based on various grounds including claims for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth), breach of contract, and oppression under the Corporations Act 2001 (Cth). They also seek to assert various rights of the Company, including rights arising out of the alleged breaches of directors' duties, and for that purpose they seek leave under s 237 of the Corporations Act. Broadly speaking, this is an "oppression case", but the causes of action range more widely.

3 The claims made by the Rich interests are set out in their Amended Statement of Claim ("the ASC"), a 115 page document. I shall return to consider the plaintiffs' claims later, but it should be noted at the outset that, if all the matters raised in the ASC are carried into the final hearing, this will be very lengthy and expensive litigation.

4 In their first application, made by an Amended Interlocutory Process dated 21 August 2002, the Morningstar interests seek an order that the two corporate plaintiffs give security for costs. Their solicitors made a demand for security on 8 April 2002, which was refused by the solicitors for the Rich interests on 15 May 2002. It appears that the application has taken so long to reach the point of interlocutory hearing because directions for the filing of evidence have been made, extended or not complied with, and perhaps also because the parties have been distracted by other aspects of the litigation to which I shall refer, in the Industrial Relations Commission of New South Wales and the Federal Court of Australia.

5 Secondly, by the same interlocutory process, the Morningstar interests seek an order that paragraphs 240-243 of the Amended Statement of Claim ("the ASC") be struck out. Those paragraphs plead breaches of a shareholders' agreement, and the application to strike them out is based on the contention that proper notice of the alleged breaches was not given under the agreement.

6 Thirdly, the Morningstar interests seek, by notice of motion filed in the Industrial Relations Commission on 17 April 2003 and now "cross-vested" to this court, an order that the claim brought by the Rich interests in the Commission be struck out on the ground that Mr Rich's remuneration as managing director of the Company exceeded the limit of $200,000 set by s 108A of the Industrial Relations Commission Act 1996 (NSW).

7 Fourthly, the Morningstar interests seek an order that their costs of a motion in a proceeding in the Federal Court of Australia, which has been cross-vested to this court, so that it has effectively merged with their cross-claim against the Rich interests, should be assessed and paid by the Rich interests forthwith.

Outline of facts

8 The second plaintiff, Mr Rich, founded the FPG group of companies in New Zealand in about 1983. In 1993 the Company, formed in Victoria and previously known as FPG Research, acquired business assets in Australia and commenced business here. In 1997/98 Mr Rich commenced to search for a global partner for the Company, and late in 1998 he commenced discussions with a Chicago company, Morningstar Inc (the second defendant).

9 In February 1999 Fiduciary and Morningstar Inc entered into heads of agreement under which Morningstar Inc would acquire a substantial shareholding in the Company, in return for a capital injection and the licensing of some of their US ratings and research products. On 16 April 1999 the following agreements were made:

10 There was also a management agreement, expressed to be between the Company, Mr Rich and Fiduciary Consultants. Although that agreement was never executed, it is common ground that the parties operated on the basis that some of its terms, including those relating to the amount of remuneration payable to Fiduciary Consultants and the obligations of Fiduciary Consultants and Mr Rich to provide management services to the Company, were agreed terms.

11 Under these agreements:

12 Later, Morningstar Inc subscribed for shares in the Company pursuant to these arrangements, for a total investment of USD750,000 made in three tranches, giving it a 49.9% shareholding in the Company. In fact the investments were made on 30 June 1999, 28 October 1999 and 1 March 2000, completing the investment programme much earlier than the agreements provided.

13 Subsequently, Morningstar Inc made further advances to the Company. There were six payments from 17 May 2000 to 16 October 2001, in amounts varying from $100,000 to $550,000, totalling $2.45 million. On 29 November 2001 an additional $1,070,000 was paid. Five of these payments were made under convertible loan agreements which entitled Morningstar Inc to convert the loan amounts into equity in the Company. Upon the exercise of the rights of conversion, Fiduciary's shareholding interest in the Company was reduced, in stages, from 50.1% to 9.35%, according to the claims made by the Rich interests.

14 On 5 October 2001 Morningstar Inc gave notice to Mr Rich that it would seek to remove him as managing director and chief executive officer of the Company. On 1 November 2001 Mr Rich and Fiduciary commenced the present proceeding and sought interlocutory relief, to prevent Mr Rich's removal as a director and executive officer and to prevent the issue of shares in satisfaction of one of the advances made by Morningstar Inc.

15 On 23 November 2001 Barrett J dismissed the interlocutory application, with costs, and he eventually ordered that those costs be assessed and paid forthwith: Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. Subsequently a costs assessor determined those costs at just over $118,000, and then there was a review by a Costs Review Panel which reduced the figure to just over $111,000 (plus assessment costs). The Rich interests successfully appealed to Gzell J on the ground that the Review Panel had mistakenly held that the costs were subject to GST, with the consequence that the recoverable amount was reduced by orders made by Gzell J on 13 May 2004 to just over $101,000 (plus assessment costs). The amount due has not yet been paid.

16 On 24 November 2001 Mr Rich was removed as managing director and chief executive officer of the Company.

17 The proceeding continued by pleadings. The Rich interests filed a statement of claim on 19 March 2002, and on 24 July 2002 they filed the present ASC. It makes a wide range of complaints in respect of events from late 1998 to November 2001. The application by the Morningstar interests for security for costs and to strike out paragraphs 240-243 of the ASC was filed on 25 July 2002, and subsequently amended.

18 The Morningstar interests filed a cross-claim against the Rich interests on 18 December 2002, making various complaints in relation to the agreements and conduct of the Rich interests.

19 On 22 November 2002 the Rich interests commenced proceeding No IRC 6661 of 2002 in the Industrial Relations Commission, seeking relief under s 106 of the Industrial Relations Act 1996 (NSW) on broadly the same facts as in the proceeding in this court. The summons for relief was not served on the Morningstar interests until 25 February 2003. On 17 April 2003 the Morningstar interests filed their notice a motion in the Commission seeking to strike out the summons for lack of jurisdiction.

20 On 24 April 2003 the Morningstar interests commenced a proceeding in the Federal Court against the Rich interests. Their statement of claim propounded substantially the same claims as the cross-claim in the present proceeding. It appears that their purpose in doing so was to establish a "jurisdictional transit point" required under the Commonwealth and State cross-vesting legislation, with the ultimate objective of transferring each of the IRC proceeding and the Federal Court proceeding to the Supreme Court.

21 I should briefly explain the jurisdictional peculiarities underlying these steps. The Jurisdiction of Courts (Cross-Vesting) Act 1997 (NSW) does not give this court the power to order that an IRC proceeding be directly cross-vested into this court and amalgamated with a proceeding in this court, even if the two proceedings raise common issues of law and fact between the same parties: RSL Com Personal Communications Pty Ltd v Mobile Tron Pty Ltd [2001] NSWSC 819 (Barrett J); Rexam Australia Pty Ltd v Optimum Metallising Pty Ltd [2002] NSWSC 916 (Einstein J). However, under s 8(1) of that Act, where a proceeding is pending in the IRC, and it appears to this court that the IRC proceeding is related to a proceeding in the Federal Court, this court is empowered to make an order removing the IRC proceeding to this court, if there are grounds on which the Federal Court proceeding could be transferred to this court. But removal of the Federal Court proceeding to this court must be made by an order of the Federal Court under s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). A practical way of achieving the ultimate outcome is for this court to make an order under s 8 for the removal of the IRC proceeding into this court, but to stay the operation of that order pending a decision by the Federal Court as to whether to transfer the Federal Court proceeding into this court; and then for the Federal Court, if it sees fit, to transfer the proceeding before it to this court.

22 Pursuing this procedure, on 30 April 2003 the Morningstar interests filed of notice a motion in this court, seeking the removal of the IRC proceeding to this court. The court was informed that the Morningstar interests intended to file a notice of motion in the Federal Court proceeding seeking an order that the Federal Court proceeding be transferred to the Supreme Court and that thereafter the Federal Court proceeding be consolidated with the Supreme Court proceeding. On 2 May 2003, the Morningstar interests filed the foreshadowed notice of motion in the Federal Court, seeking an order under s 5(4) of the Commonwealth cross vesting legislation transferring the Federal Court proceeding to this court.

23 On 17 June 2003, the Rich interests filed a notice of motion in the Federal Court seeking dismissal of the Federal Court proceeding as an abuse of process. After a contested interlocutory hearing, that motion was dismissed by Hely J, with costs, on 22 August 2003: Morningstar Research Pty Ltd v Fiduciary Ltd [2003] FCA 870.

24 In July 2003 the Morningstar interests changed tack. They filed an amended notice of motion in this court seeking orders that the IRC proceeding be removed into this court and consolidated with this proceeding, and that the consolidated proceeding thereafter be transferred to the Federal Court and consolidated with the Federal Court proceeding. However, at a directions hearing before Hely J, concern was expressed by counsel for the Rich interests that there might be a constitutional difficulty in the Federal Court determining the IRC proceeding. Once that potential problem emerged, counsel for the Morningstar interests reverted to the course originally charted by his clients, namely that both the IRC proceeding and the Federal Court proceeding should be removed into this court and consolidated with the present proceeding.

25 On 20 October 2003, Burchett AJ, sitting in this court, heard the application for removal of the IRC proceeding, and made an order that the IRC proceeding be removed to this court and consolidated with this proceeding; but that the order be stayed pending an order by the Federal Court transferring the proceeding before it to this court. On 11 November 2003 Hely J ordered that the Federal Court proceeding be cross-vested to this court, and on 5 December 2003 this court ordered that the Federal Court proceeding be consolidated with this proceeding.

26 The result of these manoeuvres is that all of the claims inter partes, as far as I am aware, are now before this court in a single proceeding.

27 The Rich interests entered into a litigation funding agreement with Litigation Lending Services No 3 Partnership ("LLS") on 10 December 2003.

28 If the security for costs issue is resolved, it will then be necessary for the court to make further directions to give effect to the consolidation orders, to deal with the application by the Rich interests under s 237 of the Corporations Act to assert the Company's rights in the proceeding, and to establish a pre-trial directions programme so that the case can be brought forward to trial.

The claims by the Rich interests in the ASC

29 The ASC comprises 247 paragraphs, many of them lengthy, as well as prayers for relief. A detailed account of it is not appropriate here. However, it will be useful to provide a brief schematic outline of the claims. I shall first identify the eight causes of action that are pleaded, and then apply those causes of action to headings which briefly identify areas of factual allegation.

30 The eight causes of action are:

misleading and deceptive conduct

frequently in the pleading, it is alleged that Morningstar Inc made representations amounting to misleading and deceptive conduct, partly or wholly in respect of future matters, for the purposes of ss 52 and 51A of the Trade Practices Act 1974 (Cth), and that all or some of the three plaintiffs, and sometimes the Company, acted in reliance on the representations and would not otherwise have acted as they did, and have suffered loss and damage;

breach of contract

encouraged assumptions and estoppel

it is contended that Morningstar Inc, by the agency of Mr Phillips and others, acted on various occasions in such a way as to encourage the Company and some or all of the plaintiffs to make specified assumptions about the attitude of Morningstar Inc and its future conduct, and the Company and Mr Rich acted in reliance on such assumptions, so that it was unconscionable for Morningstar Inc subsequently to act inconsistently with the assumptions and it was estopped from doing so;

unconscionable conduct

it is said that in various specified ways, Morningstar Inc engaged in conduct that was unconscionable, both at general law and under s 51AA of the Trade Practices Act, and that the Company and some or all of the plaintiffs suffered loss and damage;

economic duress

it is said that by its conduct, Morningstar Inc applied improper pressure to cause the Company, Mr Rich and Fiduciary to enter into four convertible loan agreements, and that the agreements should be set aside;

oppression

it is said that in various specified ways, Morningstar Inc and some or all of the third to seventh defendants acted contrary to the interests of the members of the Company as a whole, and in a manner that was oppressive and unfairly prejudicial to, and unfairly discriminatory against, Fiduciary in its capacity as a shareholder in the Company, and that (by reason of the specific matters pleaded) the affairs of the Company are a being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, Fiduciary in its capacity as a shareholder of the Company, and contrary to the interests of the members of the Company as a whole, for the purposes of Part 2F.1 of the Corporations Act, and that Fiduciary is entitled to relief, such as an order that Morningstar Inc buy its shares in the Company or an order that Fiduciary buy the shares of Morningstar Inc, at a price to be determined by the court;

breach of directors' duties

it is said that in various specified ways Morningstar Inc (which, it is claimed (paragraph 35), was a director of the Company for the purposes of the statutory duties contained in the Corporations Act) and all or some of the third to seventh defendants failed to exercise reasonable care, or to act in good faith in the interests of the Company, or for proper corporate purposes, and that they improperly used their positions to cause detriment or gain advantage, contrary to s 180-182 of the Corporations Act and their general law duties (generally, see paragraphs 35-38);

breach of fiduciary duties as joint venture partner

it is said that Morningstar Inc and its nominee directors on the board of the Company were each subject to fiduciary duties to act in the best interests of the Company and of the joint venture partners as a whole (apparently the joint venture partners were Morningstar Inc, Mr Rich, Fiduciary and Fiduciary Consultants) and not to improperly use their positions to gain advantage or cause detriment (generally, see paragraph 39).

31 The broad categories of facts alleged to give rise to these causes of action are:

pre-contractual representations by Morningstar Inc to the three plaintiffs

*misleading and deceptive conduct by Morningstar Inc, damage to the Company and the three plaintiffs;

failure by Morningstar Inc to comply with the Product Terms and other matters

*breach of contract (licensing agreement, subscription agreement, shareholders agreement) by Morningstar Inc, damage suffered by the Company and the three plaintiffs;

representations by Morningstar Inc with respect to business strategy and capital requirements from December 1999 to February 2000 ("Enhanced Plan Representations")

epresentations, agreement and conduct by Morningstar Inc in respect of the February 2000 funding and the April 2000 funding

the negotiation and making of the first, second, third and fourth convertible loan agreements by Morningstar Inc and its nominee directors

conduct on behalf of Morningstar Inc in respect of the 2001 Business Plan

conduct by Morningstar Inc and its nominee directors in connection with the 2001 capital raising, negotiations with Investorinfo and DST, the Combined Proposal, the DST Proposal and the Free Use Condition

conduct of Morningstar Inc and its nominee directors in connection with the removal of Mr Rich as chief executive officer and managing director of the Company

failure by Morningstar Inc and its nominee directors to provide Fiduciary and Mr Rich with information since 24 November 2001

failure by Morningstar Inc and its nominee directors to prevent conflict of interest arising out of Clayton Utz acting for the Company and also for the Morningstar interests

conduct of the third to sixth defendants in making and acting upon irrevocable agreements as to how to vote at board meetings of the Company

Security for costs

32 The application by the Morningstar interests is that Fiduciary and Fiduciary Consultants be ordered to give security for the costs of the defendants to be incurred up to and including the hearing. While the Amended Interlocutory Process also sought an order for security for the costs of the defendants incurred up to the date of the making the order, I was informed in submissions that this relief is no longer pressed. Orders are sought that the proceeding be stayed until security is given, and that the defendants have liberty to apply to increase the amount of security, should the amount prove inadequate.

33 The Rich interests' primary submission is that no order for security for costs should be made at all. If, however, the court decides to make an order, the plaintiffs say that the amount of security should be no more than approximately $800,000, whereas the Morningstar interests seek an order for security for approximately $6.5 million. I shall deal first with the general approach taken by courts to applications of this kind, and with the Rich interests' grounds for contending that no order should be made. Since I do not agree with the Rich interests' submissions, I shall then deal with the question of quantum of security.

Jurisdiction to order security for costs

34 There are three sources of power for the court to make an order for security for costs against the two corporate plaintiffs: first, the inherent power of the court to regulate its own procedure and practice, reinforced by s 23 of the Supreme Court Act 1970 (NSW): see Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443, 447-8 (Holland J); affirmed on appeal [1983] 2 NSWLR 122; secondly, Part 53 rule 2(1)(e) of the Supreme Court Rules; and thirdly, s 1335 of the Corporations Act 2001 (Cth). In my opinion, the issues raised by the parties go to the proper exercise of discretion, rather than the existence of jurisdiction or power, for reasons I shall explain.

General approach to the exercise of discretion

35 An order for costs is made to indemnify the successful party: Oshlack v Richmond River Council (1998) 193 CLR 72, 97 per McHugh J. The purpose of an order for security for costs against a corporate plaintiff is to protect the defendant against the risk of being deprived, through the plaintiff's inability to pay, of the benefit of a costs order made for that purpose, should the defendant be successful. The general approach of the courts to an application for security for costs against a corporate plaintiff was described by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744. As his Honour pointed out (at [20]), the defendant has the evidentiary onus of satisfying the court that the corporate plaintiff will be unable to meet the defendant's reasonable costs if the defendant succeeds in the litigation. Once that is established, the court's discretion is triggered, though it is not an unfettered discretion: Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542.

36 Not only does proof of the unsatisfactory financial position of the corporate plaintiff trigger the court's discretion, but that evidence is also substantial factor in the exercise of the discretion: Idoport, at [56]-[57]. And once the defendant has shown that the corporate plaintiff will be unable to meet its reasonable costs, the evidentiary burden shifts to the plaintiff to satisfy the court that, taking into account all relevant factors, the court should exercise its discretion by refusing to order security or by ordering security of a lesser amount than the defendant seeks: Idoport, at [60]-[62].

The court's approach to assessing the strength of the plaintiff's case

37 For the purposes of the security for costs application, the Rich interests say that their claims against the Morningstar interests are bona fide and have reasonable prospects of success. The Morningstar interests do not assert otherwise, but they say that the merits of the underlying claims should be regarded as a neutral factor, and that the court should simply assume that the claims are bona fide and arguable and should not embark on a more detailed consideration of the merits: Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972 at 50-636 per Hill J; Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621, 624 per Ormiston J.

38 I agree with these submissions. Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133 was an appeal from a Master who had declined security after forming the conclusions that the plaintiff had a very strong case and the defences were prima facie implausible. Meares J agreed (at 136) with the Master's conclusions, on the limited evidence that was available, but he held that these conclusions were not a ground for refusing to grant security. However, he cited (at 135) authorities in support of the view that it is relevant to consider whether the plaintiff's claim is bona fide and has a reasonable prospect of success.

39 Here, looking at the ASC as a whole and not focusing on particular cause of action, I have no reason to doubt that the claims by the Rich interests are bona fide claims with a reasonable prospect of success. The claims are extensive and complicated, and they are vigorously contested by the Morningstar interests. It would therefore be highly imprudent, at the stage, to attempt to form any view as to the proportionate strength of the cases of the parties, even if the authorities permitted me to do so. In the present case, the merits of the Rich interests' case against the Morningstar interests are a neutral factor.

The financial position of the corporate plaintiffs and their ability to meet an adverse costs order

40 It is clear from the evidence that the factual issues to be addressed for the plaintiff to prove the case asserted in the ASC will be numerous and complex. So much is effectively conceded by the evidence of the Rich interests on the application (for example, in the affidavit of their solicitor, Mr O'Neill, made on 15 April 2004, paragraph 32, and in the affidavit of Ms Rosati made on 12 May 2004, paragraph 9). By any measure, the defendants' costs up to and including the hearing will be substantial.

41 According to the evidence given on behalf of the Morningstar interests by their solicitor, Mr Wang, the anticipated costs of the defendants in this proceeding are in the order of $6.5 million. In Mr O'Neill's view, given on behalf of the Rich interests, a reasonable provision for costs up to and including the hearing would be in the order of $800,000. I shall return to this evidence when I consider the question of quantum of security. It is unnecessary to resolve the conflict of evidence at this point, for on either view of the quantum of costs, the evidence clearly shows that the corporate plaintiffs will be unable to meet those costs in the event that the defendants succeed.

42 It appears from the evidence that Fiduciary's only assets are 44 shares in the Company, which the Morningstar interests claim to be entitled to purchase for book value, and all of the shares in a company called FPG Research Holdings Ltd, which in turn owns 999 shares in the Company and 5/6 of the shares in FPG Research Ltd. According to the solicitor for the Rich interests, Mr O'Neill, Fiduciary has no other substantial assets (affidavit made on 15 April 2004, paragraph 16). The evidence includes financial statements of the Company for various years, including the year ended 31 December 2003, which show that the Company now has a negative net worth. Therefore Fiduciary's shares in the company appear to have no value. According to the financial statements for the year ended 31 December 2003, the Company's holding in its subsidiary, FPG Research Holdings Ltd, has no significant value. It seems to follow that Fiduciary has no substantial assets, and certainly insufficient assets to meet an order for costs in the order of $6 million or even $800,000.

43 It is unnecessary, for present purposes, to go further than that, although I should note that I agree with the contention made by the Morningstar interests that such a conclusion is supported by the failure of Fiduciary to comply with Barrett J's order that the costs of the interlocutory application in November 2001 be paid forthwith. I summarised the process of assessment of costs, reviewed by the Costs Review Panel, and determination by Gzell J that the Panel had erred with respect to GST, in my outline of the facts. In the result, an amount in excess of $101,000 has been payable since 13 May 2004, and no part of it has been paid.

44 According to Mr O'Neill (affidavit made on 15 April 2004, paragraph 17), Fiduciary Consultants asserts that it has claims against the Company. But there is no evidence of the value of the claims, and no proceeding has been commenced to assert them. Mr O'Neill's evidence concedes (affidavit made on 15 April 2004, paragraph 25) that Fiduciary Consultants is unable to provide any security for costs.

45 In considering the ability of a corporate plaintiff to meet an order for security for costs, it is relevant, in my opinion, to have regard to any funding arrangement that the corporate plaintiff has made. Here, the Rich interests have a litigation funding agreement with LLS, but there is no evidence at all with respect to the financial position of LLS.

The arguments against an order for security

46 The Rich interests contend that an order for security for costs should not be made, for three reasons. First, they point out that one of the plaintiffs is Mr Rich, a natural person, and they say that the court should not make an order against Mr Rich's co-plaintiffs when it would not (or perhaps could not) make an order against Mr Rich personally (I shall call this "the personal plaintiff argument"). Secondly, they say that to require the corporate plaintiffs to provide security would have the effect of stultifying the ability of the plaintiffs to pursue their claims in the proceeding ("the stultification argument"). Thirdly, they say that the two corporate plaintiffs are impecunious as a direct result of the wrongful conduct of the Morningstar interests (I shall call this "the causation argument").

The personal plaintiff argument

47 In Cowell v Taylor (1885) 31 Ch D 34, 38, Bowen LJ said:

"The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity."

48 That statement, and similar observations by Baggallay LJ (at 37), appear to identify a strict rule, subject to specific exceptions identified by their Lordships, rather than a guideline for the exercise of discretion. The rationale for rule appears to be a public policy requiring the defendant to accept the risk that the plaintiff might not be able to satisfy an order for costs, so as to ensure that the doors of the court are not barred to a resident plaintiff simply because he or she is impecunious: Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523, 530 per Connolly J. As Megarry V-C observed in Pearson v Naydler [1977] 1 WLR 899, 902, "the power to require security for costs ought not to be used so as to bar even the poorest man from the courts". Nowadays, however, the "rule" may be less absolute than the formulations in Cowell v Taylor would suggest (Melville v Craig Nowlan & Associates Pty Ltd (2001) 54 NSWLR 82, 108, per Heydon JA), and there may be room for debate about its true nature (Morris v Hanley [2000] NSWSC 957, at [11] to [21] per Young J).

49 In some New South Wales cases, an order for security has been made against a plaintiff who is a natural person, outside the recognised exceptions now found in Part 53 rule 2(1), suggesting that the "rule" is discretionary: Rajski v Computer Manufacture & Design Pty Ltd (supra); Bhagat v Murphy [2000] NSWSC 892. But it is unnecessary, in the present case, to explore the scope of the court's discretion to depart from the "general rule" outside the established exceptions, for two reasons. First, the present case does not display the kind of extreme circumstances that influenced the courts to act in the Rajski and Bhagat cases; and secondly, the defendants do not seek to have an order for security for costs against the natural person plaintiff, but only against the two corporate plaintiffs.

50 Where an order for security is sought against a corporate plaintiff, the court's inherent power is supplemented by Part 53 rule 2(1)(e) of the Supreme Court Rules, which provides:

51 Section 1335(1) of the Corporations Act is to similar effect. It says:

"(1) Where a corporation is plaintiff in any action or other legal proceedings, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given."

52 Thus jurisdiction to make an order that a corporate plaintiff provide security for costs is conferred by the Corporations Act and the Supreme Court Rules. That being so, the question is whether the court should in its discretion refuse to order security for costs against the corporate plaintiffs because they are co-plaintiffs with a natural person. For the purpose of answering this question, I shall assume that, in accordance with the "general rule", the court would not make an order for security for costs against Mr Rich personally.

53 There is a striking contrast between the approach taken to security for costs against a corporation and the approach taken where the plaintiff is an individual. The justification for such a sharp distinction is not immediately obvious. It appears to lie in an endeavour, where an impecunious corporation is the plaintiff, to prevent the corporation's controller from hiding behind it and avoiding liability for costs: Harpur v Ariadne Australia Ltd, at 527 per Connolly J; Pearson v Naydler (where Megarry V-C said, at 905, that the statutory provision "provides some protection for the community against litigious abuses by artificial persons manipulated by natural persons"). If, therefore, the individual who stands behind the impecunious corporation accepts responsibility for costs, the Court may decide not to make an order for security: Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46, 53 per Burchett J.

54 Understandably, difficulty arises where there are two or more plaintiffs, including one or more individuals and one or more corporations. There is an exception to the rule that security for costs will not be ordered against an individual plaintiff, if the plaintiff ordinarily resides abroad: see, in New South Wales, Part 53 rule 2(1)(a). In a series of cases courts have declined to make an order for a foreign plaintiff to provide security for costs when his or her co-plaintiff resides within the jurisdiction and is therefore protected by the general rule: Winthrop v Royal Exchange Assurance Co (1755) 1 Dick 282 [21 ER 277]; M'Connell & East v Johnston (1801) 1 East 431; Sykes v Sykes (1869) LR 4 CP 645 [102 ER 167]; D'Hormusgee & Co v Grey (1882) 10 QBD 13. An order for security for costs will be declined, according to these cases, even where the local plaintiff is insolvent or bankrupt. The issue in the present case is whether, by analogy with these cases, an order for security for costs against a corporate plaintiff should be refused where its co-plaintiff is an individual residing within the jurisdiction.

55 The issue was considered in John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707, where Plowman J distinguished the "foreign co-plaintiff" cases and made an order for security for costs. There were two grounds of distinction. First, in the foreign co-plaintiff cases the claims of the plaintiffs were identical or overlapped, whereas in the case before Plowman J, in which there was a long and complicated statement of claim, there were very large areas of claims raised by the corporate plaintiff as to which the individual plaintiff, a secured creditor of the corporate plaintiff, had no locus standi, and consequently the overlap was comparatively small. This meant, according to Plowman J (at 710), that if the corporate plaintiff were to lose at the trial, it would be unlikely that the individual plaintiff would be ordered to pay the defendants all of the defendants' costs incurred vis-a-vis the corporate plaintiff. The second ground of distinction was that the foreign co-plaintiff cases did not arise under the security for costs provisions of companies legislation, an area which the legislature had "singled out for special treatment" (at 711).

56 The question was addressed rather more fully by Megarry V-C in Pearson v Naydler. He distinguished the foreign co-plaintiff cases (at 904) on the ground that the basic rule for an individual plaintiff was that security for costs would not be ordered, and the exception for a foreign plaintiff arises only where the sole plaintiff is, or all of the plaintiffs are, resident abroad; whereas in the case of a limited company, there is no basic rule conferring immunity from liability to give security for costs, and the basic rule is in fact the opposite. He said that the correct approach, under the statutory provision, was to regard the presence of an individual co-plaintiff as a matter going to the exercise of discretion rather jurisdiction. He made an order for the provision of security for costs. One of the matters to which he referred (at 906), in the exercise of his discretion, was that in the case before him, the plaintiff company was in truth the only real plaintiff, and the case was not one of a plaintiff company which had as a true co-plaintiff a natural person. But he did not base his decision on that factor.

57 In Harpur v Ariadne Australia Ltd, Connolly J (with whom Campbell CJ and Demack J agreed) allowed an appeal against an order for the corporate plaintiffs to provide security, in the action by an individual and three companies. The evidence indicated that the corporate plaintiffs were impecunious, but the individual plaintiff, Mr Harpur, was a man of substantial means who controlled the corporate plaintiffs. After analysing the cases and stressing the breadth of the court's discretion under the predecessor of s 1335, he observed (at 532):

"The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play. If however he is already available for whatever he is worth, the object of the legislation is seen to be satisfied."

58 He found that Mr Harpur was the real plaintiff, and the corporate plaintiffs had been joined "as a means to his establishing his own rights". There was no question of the companies having any claim independent of Mr Harpur's claim and there was a complete overlap in the interests put in suit. Since Mr Harpur was the prime plaintiff and was not seeking to shelter behind the companies, he should not be in any different position from any other individual plaintiff whose assets are within reach of the court process.

59 There are some similarities between that case and the present case. Here, as there, the individual plaintiff controls the corporate plaintiffs. But in this case, although there is substantial overlapping of claims and a largely common factual substratum, conceptually some of the claims of the individual plaintiff and the corporate plaintiffs are quite distinct - for example, the oppression claims, which can only be asserted by the corporate plaintiff which is the shareholder in the Company, and the Company's claims for breach of directors' duties and other matters, which the plaintiffs seek to assert derivatively. Therefore, to the extent that Connolly J's reasoning requires the court to refuse security if the individual plaintiff is the "true" or "prime" plaintiff, it cannot be said that Mr Rich is in that position in the present case, notwithstanding that he controls the corporate plaintiffs. Another difference is that in the present case, unlike the Harpur case, all plaintiffs are impecunious but there is a litigation funding agreement in place. That makes it more difficult to say that the outcome should be governed by the presence of the individual plaintiff.

60 In Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621, Ormiston J summarised the effect of the earlier cases (at 624-5) as follows:

John Bishop

Harpur v Ariadne Australia Ltd

John Bishop

61 The facts before his Honour indicated that it would be unlikely that the individual plaintiffs could meet an adverse costs order, and it was clear that the corporate plaintiffs could not do so. Noting, however, that the individual plaintiffs could not be the subject of any order, he said (at 625) that "due allowance" should be made for the consideration that the court "ought not to give any indirect benefit to the defendants in respect of their defence of the individual plaintiffs' claims". He concluded (at 625) that "the presence of the individual plaintiffs' claims and their relative significance should be seen as a factor diminishing the defendants' claim to security but not extinguishing it".

62 The effect of these cases is that the presence of an individual plaintiff, alongside the corporate plaintiffs against whom security is sought, is to be taken into account in the weighing up of discretionary considerations, but it is not an absolute bar to the ordering of security. The presence of the individual plaintiff may be significant in various ways.

63 First, it is relevant to consider whether the causes of action asserted by the various plaintiffs are sufficiently distinct that if the plaintiffs are unsuccessful, the Court is unlikely to make the individual plaintiff responsible for failure of the claims made by the corporate plaintiffs. If that is the position, it is likely that the defendants, if they are successful against the corporate plaintiffs, will be forced to look to the corporate plaintiffs alone for recovery of costs in respect of that success, and in such a case the normal rules for the provision of security by corporations should apply in respect of the defendants' costs of defending the corporations' claims.

64 It will be seen, from my summary of the ASC set out above, that some of the causes of action are asserted by all the plaintiffs, some of them are asserted by fewer than all of the plaintiffs, and some of them are causes of action of the Company. As to the latter, the ASC contains an interlocutory application for an order under s 237 of the Corporations Act granting leave to the three defendants to bring and maintain the proceeding in the Company's name. That application has not yet been heard.

65 The causes of action for misleading and deceptive conduct under the Trade Practices Act, and for unconscionable conduct under the Trade Practices Act and the general law, have been asserted by all three plaintiffs and additionally, the plaintiffs wish to make those claims on behalf of the Company. The breach of contract claims have sometimes but not always been asserted on behalf of all three plaintiffs and the Company, although it is not apparent that they can be maintained except by parties to the relevant agreements. The causes of action for breach of fiduciary duties to joint venture partners are sometimes asserted against the individual defendant directors as well as Morningstar Inc, and are asserted on behalf of all three plaintiffs and the Company, although there must be some doubt as to whether all of these people are properly designated as joint venture partners. Notwithstanding these doubts, I shall proceed on the basis that, to the extent that the ASC asserts causes of action for breach of contract and breach of joint venture duties on behalf of the three plaintiffs and the Company, it is permissible to do so. What follows is that there is a very large overlap of, and sometimes a coincidence between, the claims asserted by each of the plaintiffs and by the Company with respect to misleading and deceptive conduct, unconscionable conduct, breach of contract and breach of joint venture duties. As far as I can tell from reviewing the pleading, it is likely that each of the plaintiffs will rely on the same facts to establish the claims in these categories.

66 The various claims for encouraged assumptions and estoppel are in a somewhat different category, because generally they are only asserted by the Company and Mr Rich and not the other plaintiffs. Nevertheless, the factual grounds for the assertions are also grounds for claims for relief made by all of the plaintiffs, particularly with respect to misleading conduct. Therefore there is a high degree of overlapping of the factual grounds for those claims with the factual grounds for claims made on behalf of all plaintiffs. Much the same can be said with respect to the economic duress claims. They are asserted for the purpose of setting aside the convertible loan agreements, and strictly, therefore, are to be asserted only by the parties to those agreements. But the factual basis for the claims is also the basis for claims for breach of directors' duties made by the Company, and for breach of joint venture duties made by the Company and all plaintiffs. The degree of overlapping is therefore very high.

67 The causes of action for oppression and breach of directors' duties are in a different category. Under s 234 of the Corporations Act, only Fiduciary can obtain statutory relief for oppression under Part 2F.1. There is a tension between Fiduciary's oppression claim and Mr Rich's claim for damages for misleading conduct, based on the same facts, because if the oppression claim succeeds Mr Rich will presumably be unable to prove loss. The claims based on breaches of directors' duties can only be made in the name of the Company, though if their interlocutory application succeeds, the claims will be prosecuted on the Company's behalf by all of the plaintiffs. Once again, however, the factual grounds for seeking relief against oppression, and remedies for breaches of directors' duties, are grounds for claiming other relief, such as relief for breach of contract (in particular, the Best Interests Term in the heads of agreement) and other relief such as remedies for breaches of the joint venture duties. Although, therefore, the claims in this category cannot be maintained by all plaintiffs, they are maintained in respect of a common factual substratum, and therefore the degree of overlapping is again high.

Conclusions

176 For the reasons I have given, I shall make orders for the provision of security in the sum of $924,536, with ancillary orders, including liberty to apply. I shall dismiss the application by the Morningstar interests to strike out part of the ASC, and their application to strike out the claim under the Industrial Relations Act. I shall order that the costs of the motion in the Federal Court be assessed and paid forthwith.

177 Both sides have had partial success at the hearing of these four applications. Although most of the time was directed to the security for costs application, on which the Morningstar interests were successful, the bulk of the hearing time on that application was directed to questions of quantum of security, as to which the Morningstar interests did not achieve anything like the outcome that they advocated. In these circumstances, I am inclined to order that the costs of the four applications now heard and determined be costs in the cause in this proceeding. However, I shall give the parties the opportunity to make submissions, if they wish.

178 I propose to make orders to the following effect:

179 I shall stand the proceeding over for a brief time, in order to give the parties the opportunity to consider these reasons for judgment, and to make submissions on costs and the form of orders. I shall direct the Morningstar interests to bring in draft short minutes of orders.

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Last Modified: 08/03/2004

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Fiduciary Ltd v Morningstar Research Pty Ltd [2004] NSWSC 664

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CITATION:	Fiduciary v Morningstar Research [2004] NSWSC 664
HEARING DATE(S):	16, 17 and 18 June 2004
JUDGMENT DATE:	27 July 2004
JURISDICTION:	Equity
JUDGMENT OF:	Austin J
DECISION:	See under heading "Conclusions"
CATCHWORDS:	PRACTICE & PROCEDURE - security for costs - application for order for security against two corporate plaintiffs, where person who controls them is also a plaintiff - plaintiffs unable to provide security - whether presence of individual plaintiff should prevent court from ordering corporate plaintiffs to provide security - whether proceedings by individual plaintiff should be stayed until corporate plaintiffs provide security as ordered - whether financial ability of litigation funder is relevant - whether corporate plaintiffs must prove their prior financial position in order to establish that the defendants' wrongdoing led to their impecuniosity - other relevant considerations in security for costs application - considerations relevant to quantum of security - PRACTICE & PROCEDURE - strike-out application - whether it is reasonably arguable that notice of intention to terminate an agreement was given, though the address in the agreement was not used - INDUSTRIAL RELATIONS - remuneration cap under s 108A of Industrial Relations Act - instalments of base remuneration credited to loan account with employer, and subsequently that loan is capitalised, by the issue of shares, during the 12 months prior to termination of employment - whether application of loan account should be taken into account in determining whether the remuneration cap was exceeded - COSTS - circumstances in which it is appropriate to order that costs be assessed and paid forthwith
LEGISLATION CITED:	Corporations Act 2001 (Cth), s 237, 1335 Industrial Relations Act 1996 (NSW), s 106, 108A Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 5 Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 8 Supreme Court Rules, Part 52A rule 9; Part 53 rule 2
CASES CITED:	Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134 Bell Wholesale Co Ltd v Gates Export Corporation (1984) 52 ALR 176 Bhagat v Murphy [2000] NSWSC 892 BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339 Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46 Cassidy v Medical Benefits Fund of Aust Ltd [2001] FCA 700 Chartspike Pty Ltd (in liq) v Chahoud [2001] NSWSC 585 Commander Australia Ltd v Kerr [2004] NSWIRComm 74 Cowell v Taylor (1885) 31 Ch D 34 D'Hormusgee & Co v Grey (1882) 10 QBD 13 Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972 Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hancock Prospecting Pty Ltd v BHP Minerals Pty Ltd [2003] WASCA 259 Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523 Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120 Horrobin v Australia & New Zealand Banking Group Ltd (unreported, 6 June 1997, per Priestley JA) Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Management Ltd [2003] NSWSC 609 Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621 Jeffcott Holdings Ltd v Paior (1996) 15 ACLC 28 John Bishop (Caterers) Ltd v National Union Bank Ltd [1973] 1 All ER 707 Lubrizol Corp Inc v Imperial Chemical Industries plc [2000] FCA 1464 Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133 MA Productions Pty Ltd v Austarama Television Pty Ltd (1982) 7 ACLR 97 M'Connell & East v Johnston (1801) 1 East 431 Melville v Craig Nowlan & Associates Pty Ltd (2001) 54 NSWLR 82 Midland Brick Co Pty Ltd v CMS Gas Transmission of Australia [2003] WASC 222 Morningstar Research Pty Ltd v Fiduciary Ltd [2003] FCA 870 Morris v Hanley [2000] NSWSC 957 Pan Foods Company Importers & Distributors Pty Ltd v ANZ Banking Group Ltd (2000) 74 ALJR 791 Pearson v Naydler [1977] 1 WLR 899 PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321 Rajski v Computer Manufacture & Design Pty Ltd [1982] 2 NSWLR 443 Rexam Australia Pty Ltd v Optimum Metallising Pty Ltd [2002] NSWSC 916 RSL Com Personal Communications Pty Ltd v Mobile Tron Pty Ltd [2001] NSWSC 819 South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519 Spiel v Commodity Brokers Australia Pty Ltd (in liq) (1983) 8 ACLR 410 Sykes v Sykes (1869) LR 4 CP 645 [102 ER 167] Winthrop v Royal Exchange Assurance Co (1755) 1 Dick 282 [21 ER 277] Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542
PARTIES :	Fiduciary Ltd (P1, XD1) Graham John Rich (P2, XD2) Fiduciary Consultants Ltd (P3, XD3) Morningstar Research Pty Ltd (D1, XC1) Morningstar Inc (D2, XC2) Joe Mansueto (D3) Tao Huang (D4) Donald James Phillips II (D5) Bevin Desmond (D6) Nicholas John Reynolds (D7)
FILE NUMBER(S):	SC 5308/01
COUNSEL:	RJ Ellicott QC with RD Glasson (Ps) RM Smith SC with SA Goodman (D2-D7)
SOLICITORS:	Nash O'Neill Tomko Lawyers (Ps) Clayton Utz (D2-D7)