In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal - [2012] NSWSC 932

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932
Hearing dates: 27 July 2012
Decision date: 14 August 2012
Jurisdiction: Equity Division - Corporations List
Before: Ward J
Decision:
Parts of earlier judgment recalled and varied. Ruling on costs orders to be made in relation to the proceedings and defendants' application of 17 July 2012.

Catchwords:
PRACTICE AND PROCEDURE - application to reopen judgment of 1 June 2012 on basis of denial of procedural fairness - HELD - application to reopen judgment granted - judgment of 1 June 2012 varied

COSTS - offers of compromise - whether first offer was a valid offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) where it included offer to pay plaintiffs' costs as agreed or assessed - HELD - first letter was not a letter of under the Uniform Civil Procedure Rules 2005 (NSW) nor a Calderbank offer - whether first offer should be treated as a Calderbank offer - HELD - in absence of statement of intention to treat as Calderbank offer, Calderbank principles not enlivened - OBITER - rejection of first offer was not unreasonable

COSTS - Calderbank offer - whether rejection of Calderbank offer expressed to be "inclusive of costs" was unreasonable in the circumstances - HELD - rejection of second letter of offer was not unreasonable
COSTS - apportionment of costs - where plaintiffs succeeded overall, but defendants succeeded on a significant factual issue in the proceedings - where ultimate outcome obtained by plaintiffs was disproportionate to the costs involved in the litigation - whether costs should be apportioned according to the principle of proportionality - HELD - costs of the hearing apportioned in light of the factual issue on which the defendants succeeded and having regard to principles of proportionality
Legislation Cited: Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Supreme Court Rules 1970 (NSW)
Trade Marks Act 1995 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 A11 ER 685
Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120
Anglo Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873
Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 302; (1993) 111 ALR 385
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (Formerly GIO Insurance Ltd) [2006] NSWSC 583
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586
Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790
Commonwealth of Australia v Gretton [2008] NSWCA 117
Compagnie Noga d'Importation et d'Exportation SA v Abacha [2001] 3 All ER 513
Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153
Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60
Cretazzo v Lombardi (1975) 13 SASR 4
Dais Studio Pty ltd v Bullet Creative Pty Ltd [2008] FCA 42
De L v Director-General, NSW Dept of Community Services (No 2) (1997) 190 CLR 207
Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141
Dobrodinski v Salievic [2001] SASC 277
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602
DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251; (2004) 51 ACSR 555
Dunstan v Rickwood (No 2) [2007] NSWCA 266
Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98
Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322
Elite Protective Personnel Pty Limited v Salmon (No 2) [2007] NSWCA 373
Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170
Evans Shire Council v Richardson (No 2) [2006] NSWCA 61
Expo Aluminium (NSW) v Patman Pty Ltd (No.2) (unreported, NSWCA, 29 April 1991)
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672
Golding v Vella (No 2) [2001] NSWSC 731
Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] FCA 1429; (Unreported Judgment of the Federal Court of Australia, Moore J, 11 November 1998)
Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435
Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272
Hughes v Western Australian Cricket Association (1986) ATPR 40-748
In re Swire; Mellor v Swire (1885) 30 ChD 239
Ivanhoe Gold Corporation Limited v Symonds (1906) 4 CLR 642
James v Surf Road Nominees (No 2) [2005] NSWCA 296
Jones v Bradley (No 2) [2003] NSWCA 258
JT Stratford & Son Ltd v Lindley [1969] 3 All ER 1122
Lavender View Regency Pty Ltd v North Sydney Council (No 2) [1999] NSWSC 775
Leallee v Cmr of the NSW Department of Corrective Services [2009] NSWSC 518
Leichhardt Municipal Council v Green [2004] NSWCA 341
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2002] NSWSC 72
Lownds v Home Office [2002] EWCA Civ 365
M T Associates Pty Ltd v Aqua-Max Pty Ltd [2000] VSC 163
Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721
Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344
Monie v Commonwealth of Australia (No2) [2008] NSWCA 15
Mutual Shipping Corp of New York v Bayshore Shipping Co [1985] 1 All ER 520
NRMA Ltd v Morgan (No 3) [1999] NSWSC 768
New Cap Reinsurance Corporation v Grant [2009] NSWSC 950
Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs
Group Inc [2007] NSWCA 195
Old v McInnes and Hodgkinson [2011] NSWCA 410
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Pacific General Securities Limited v Soliman & Sons Pty Limited [2006] NSWSC 724
Paul's Retail Pty Ltd v Morgan [2009] NSWSC 1343
Penrith Rugby League Club Ltd (t/as Cardiff Panthers) v Elliot (No 2) [2009] NSWCA 356
Pritchard v Trius Constructions Pty Ltd (No 2) [2011] NSWSC 1114
R v Nitin Gin (No. 2) [2001] NSWCCA 234
Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368
Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453
Rogers v Ingham (1876) 3 Ch D 351
Rosniak v Government Insurance Office (1997) 41 NSWLR 608
Sahab Holdings Pty Ltd v Registrar-General (No 3) [2010] NSWSC 403
Short v Crawley (No 40) [2008] NSWSC 1302
Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
Standard Commodities Pty Ltd v Societe Socinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496
Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446
Sydney City Council v Geftlick [2006] NSWCA 280
Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951
Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153
Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213
Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194
Turkmani v Visvalingam (No 2) [2009] NSWCA 279
Twenty-First Australia Inc v Shade (Unreported, Supreme Court of NSW, Young J, 31 July 1998)
Uniline Australia Ltd (ACN 010 752 057) v Sbriggs Pty Ltd (ACN 007 415 518) (No 2) [2009] FCA 920; (2009) 82 IPR 56
Waterman v Gerling Australia Insurance Co Limited (Costs) [2005] NSWSC 1111
Waters v P C Henderson (Australia) Pty Ltd (Unreported, NSW Court of Appeal, 6 July 1994)
Wilding v Sanderson [1897] 2 Ch 534
Windsurfing International Incorporated v Petit (1987) AIPC 90-441
Wentworth v Rogers [2002] NSWSC 921
Wentworth v Wentworth [1999] NSWSC 638
Texts Cited: Quick on Costs (R Quick and D Garnsworthy, Thompson Reuters)
Category: Costs
Parties: Simone Leah Fitzpatrick (First Plaintiff)
ACN 089 142 870 Pty Ltd (Second Plaintiff)
James Mitchell Cheal (First Defendant)
Cheal Industries Pty Ltd (Second Defendant)
Chilli Surfboards Pty Ltd (Third Defendant)
Representation: Counsel
M B Evans (Plaintiffs)
Ms R Francois (Defendants)
Solicitors
Lathams Lawyers (Plaintiffs)
Brown Wright Stein (Defendants)

File Number(s): 09/291052

Judgment

HER HONOUR: In this matter on 27 July 2012 I heard the balance of the issues raised in the defendants' Amended Notice of Motion filed on 17 July 2012, following my earlier dismissal of the application also contained in the Amended Notice of Motion that I disqualify myself for apprehended bias. The defendants' remaining application is for the recall of part of my reasons for judgment of 1 June 2012; the vacation of the first order that I made on 1 June 2012; and the substitution of orders the effect of which would be to provide for the payment to the first plaintiff of the additional sum of $2,000 (over and above the $12,265.52 ordered on 5 April 2012) subject to a set-off in respect of any costs ordered to be payable by the first plaintiff. On 27 July 2012 I also heard submissions as to the costs of the proceedings (consideration of that issue having been deferred from the publication of my principal judgment in these proceedings pending the determination of the nominal value to be attributed to the goodwill associated with the company name). I then heard brief supplementary submissions on 13 August 2012, including in relation to costs of the Amended Notice of Motion.

The background to the present application is set out in the various reasons published by me to date, as well as in the reasons published by Bergin CJ in Eq in July 2012 ([2010] NSWSC 717) when her Honour gave leave under s 237 of the Corporations Act 2001 (Cth) for Ms Fitzpatrick to bring these proceedings on behalf of the second plaintiff (the company formerly known as Chilli Surfboards Pty Ltd and referred to in my previous judgments as Chilli #1).

Her Honour found that there was a serious question to be tried as to whether Mr Cheal had breached his fiduciary duties to Chilli #1 in effecting the transfer of the business of Chilli #1 to Chilli #2 and/or Cheal Industries [67] and in obtaining intellectual property recorded in the company's records as "Patents & Trademarks" by procuring the entry by Chilli #1 into certain agreements ([69] - [72]). It is relevant to note that the questions to be tried were not limited to questions as to the ownership of the relevant trademark(s) but extended to the conduct involved in the transfer of the business of Chilli #1.

Application to reopen

It is not disputed that there is has both an inherent power to reopen a hearing after judgment for the purpose of reviewing and varying reasons for judgment before judgment or order has been entered (Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 302; (1993) 111 ALR 385; Wentworth v Wentworth [1999] NSWSC 638; R v Nitin Gin (No. 2) [2001] NSWCCA 234 at [17]) and a statutory power under Rule 36.16(1) of the Uniform Civil Procedure Rules 2005 (NSW) to do so where application is made within 14 days of the judgment or order.

In Autodesk, Mason CJ, having given examples of circumstances in which the jurisdiction to reopen may properly be exercised, said (at 302-303):

These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. ...

However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.

In both New Cap Reinsurance Corporation v Grant [2009] NSWSC 950 at [20] and in Paul's Retail Pty Ltd v Morgan [2009] NSWSC 1343 at [5], Barrett J (as his Honour then was) outlined the principles in relation to the exercise of the court's power to recall its judgment and to re-open its decision. His Honour had earlier in Wentworth v Rogers [2002] NSWSC 921, said at [9]:

It seems to me that the relevant principles, as they apply in a case such as the present, can be summarised in one basic proposition, namely, that a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re-opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court. What is highly undesirable is that the first instance judge should be cast in the role of hearing what amounts to an appeal against his or her own decision.

Counsel for the defendants, Ms Francois, notes that one circumstance in which it is appropriate to exercise the jurisdiction to reopen (given by Brennan J in Autodesk) is where there has been a denial of procedural fairness. At 309, Brennan J (as his Honour then was) said:

It is one thing to reopen an appeal after judgment if the court has reached a conclusion by adopting a proposition of fact or law which the unsuccessful party has not had an opportunity to argue. In that event, natural justice is denied and it can be said that the court's jurisdiction to hear and determine the matter is not exhausted.

Ms Francois also referred to De L v Director-General, NSW Dept of Community Services (No 2) (1997) 190 CLR 207 where the majority (at 215) referred to the recognised competing objectives of the law in this regard:

On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice.

In Wentworth v Rogers, Barrett J referred to the observation of Rix LJ in Compagnie Noga d'Importation et d'Exportation SA v Abacha [2001] 3 All ER 513, to the effect that, other than in circumstances where there is a clear error of fact or law which may be corrected without imposing on the parties the need for an appeal, it would be the antithesis of justice according to law, and would subvert the appeal process, for the trial judge to open up reconsideration of his or her judgment. Rix LJ there said:

It is in my judgment wrong for a judge to be treated to an exposition such as would be presented to a court of appeal. If in such circumstances a judge should be tempted to open up reconsideration of his judgment, an appeal would not be avoided, it would be made inevitable.

Barrett J (at [7]) in Wentworth v Rogers noted that there were three matters central to the re-opening jurisdiction: first, whether the appellant has shown that, without accident or fault on the appellant's part, he or she has not been heard on a relevant matter; second, whether the appellant has shown an error in the court's reasoning because of a misapprehension of the facts; and third, whether the appellant has shown an error in the court's reasoning because of some misapprehension of the relevant law. In New Cap (at [22]), his Honour distinguished between a case in which the application to re-open was tantamount to an appeal and a case where the court's findings or reasoning proceeded on a misapprehension that could be remedied. (His Honour also referred to the further consideration identified by Young J (as his Honour then was) in Twenty-First Australia Inc v Shade (Unreported, Supreme Court of NSW, Young J, 31 July 1998), namely the inevitable delay if there were to be a need for an appeal to correct an inadvertent failure to deal with important matters argued by counsel.

In the present case, what the defendants seek to recall (from the judgment handed down on 1 June 2012) is the conclusion that the whole of the nominal value there attributed to the company name and associated goodwill as at 30 June 2006 ($4,000) should be notionally allocated to Ms Fitzpatrick's shares in the company for the purposes of the relief granted to Ms Fitzpatrick for the oppressive conduct found as against Mr Cheal.

The particular portion of the judgment in question (at [46] and [47]) of my reasons is as follows:

... and that, since it was Mr Cheal who wrongfully deprived Chilli #1 of the opportunity to obtain payment for the use of its name, this sum should be attributed to Ms Fitzpatrick's share in the company.

Accordingly, I will award Ms Fitzpatrick the additional sum of $4,000 in effect as the premium payable for the use of the Chilli #1 name.

The defendants seek consequential relief by way of the vacation of the relevant order giving effect to those reasons (order 1 made on 1 June 2012). They do not challenge the attribution of a nominal value of $4,000 to the goodwill in question (although that has previously been the subject of some criticism by Ms Francois). Rather, the defendants' position in essence is that if the nominal value attributed to the company name is $4,000 then the additional amount payable to Ms Fitzpatrick on the purchase of her shares in the company in order to reflect her share of that goodwill is only $2,000.

The defendants contend that they were denied procedural fairness as they were not put on notice, prior to the 1 June 2012 judgment, that when the nominal value of the company name came to be determined an issue might arise as to the allocation of the whole of that value to the purchase price payable for Ms Fitzpatrick's share.

On 5 April 2012, I had ordered, inter alia:

[2] That the first defendant [Mr Cheal] pay to the first plaintiff [Ms Fitzpatrick] a sum equal to half of the value attributable to the Chilli Surfboards Pty Ltd company name and associated goodwill as at 30 June 2006 (valued on the basis that ownership of the Chilli trade marks TM 767677 and 804353 reposed in the second defendant at the relevant time), such sum to be as agreed between the parties, or,s failing such agreement within 28 days, such sum to be as determined by the Court on a date to be fixed or as determined by an expert appointed by the Court, the identity of whom and the terms of reference to whom shall be fixed by further order of the Court.

The defendants' primary contention is that it was not later open to me (on 1 June 2012) to reach conclusions (and make orders) inconsistent with the above order that had been made on 5 April 2012. Ms Francois emphasises that this order had not been recalled or challenged in any way. Ms Francois submits that the Court was bound by that order (in the sense, as I understand her submission to be, that there was no power to amend that order or to make an order that would alter its operation).

Counsel for the plaintiffs (Mr Evans) submits that the terms of the order of 5 April 2012 are irrelevant in the sense that the question ultimately addressed in the judgment of 1 June 2012 was as to the fair price for Ms Fitzpatrick's shares having regard to the nominal value attributed to the company name but that in any event, inherent in the order made on 5 April 2012, was the potential that the sum payable to Ms Fitzpatrick would be determined in accordance with the legal principles applicable in cases of oppression (and hence that there was no denial of procedural fairness and no inconsistency with the earlier order so as to permit the reopening of the 1 June judgment).

Having regard to the terms of the relevant order of 5 April 2012, Mr Evans submits that it encompassed within it three alternatives (one of which was for the court to determine (failing agreement between the parties within 28 days as to the value attributable to the company name and associated goodwill) "such sum" and did not limit the grant of relief to relief only by way of an order that the defendants to pay to the plaintiff a "sum equal to half the value attributable to the Chilli Surfboards Pty Ltd company name and associated goodwill as at 30 June 2006" (valued on the basis that the trademarks reposed in the second defendant at the relevant time). Rather, he submits that it was open to me, in the absence of the parties having agreed such a sum or that issue having been referred to an expert valuer, to grant relief in accordance with s 233 of the Corporations Act in the manner that I did.

It will be apparent from my reasons of 1 June 2012 that when I came (after the provision of written submissions), almost two months after the initial orders were made, to determine (on the papers) the question of the nominal value to be attributed to the value of the company name and associated goodwill, I considered that question in the overall context of what would be a fair price for Ms Fitzpatrick's 50% share in the company (by way of a remedy for the oppressive conduct in which I found Mr Cheal had engaged in the affairs of the company). Part of that fair price was reflected in the half share of the net assets of the company as already quantified in order 1 of the orders made on 5 April 2012. The remaining question at that stage was as to what value should be attributed to the goodwill of the company name. I had indicated during the course of submissions on 5 April 2012 my view that, in the absence of expert evidence as to its value, I could attribute only a nominal value thereto.

Having reviewed the authorities on the relief to be granted for oppression (as well as a number of authorities in other contexts in which attention was given to the manner in which nominal value or nominal damages should assessed), I considered that there was support for the proposition that the court should err on the side of the wronged (or oppressed) party, when determining the fair price payable for that party's share in the company and that it was appropriate in the circumstances to allocate the whole of the nominal value to Ms Fitzpatrick's share in effect as a premium payable for that share.

In so doing I did not have regard to any potential inconsistency that might thereby be occasioned in light of the wording of the earlier 5 April orders (those orders themselves providing for the components of the price payable for Ms Fitzpatrick's shares). It is by reference to those orders that Ms Fitzpatrick's entitlement to payment arose and upon which any action to enforce payment of the sum referred to therein would have been based.

In other words, if Ms Fitzpatrick had sought to enforce the compulsory purchase orders of 5 April 2012, the sum that would have been payable by Mr Cheal pursuant to those orders would have been the aggregate of the sum specified in order 1 and the sum specified in order 2 (the latter being the sum equal to half the value attributable to the company name and associated goodwill however that value ultimately fell to be determined), subject to any set-off in respect of any costs orders that might be made. By agreement between the parties, that value ultimately fell to be determined by me. However, the orders of 5 April 2012 on their face were to operate in the same way whichever of the methodologies for fixing the value were to be adopted.

For the reasons outlined in my 1 June judgment, I fixed the value attributable to the company name at $4,000. Had the matter rested there, the additional sum payable by Mr Cheal under order 2 of the 5 April 2012 orders would have been $2,000 (not $4,000).

Seen in that light, the allocation of the whole of the nominal value so determined to Ms Fitzpatrick's shares went beyond the task contemplated by order 2 of the 5 April orders and I accept that this was not a matter that had been raised with the parties following the 5 April orders and before judgment was published (it being done on the papers) on 1 June 2012.

To the extent that account may be taken of the trial judge's ex post facto observations in ascertaining the objective intention of the Court in the making of orders (see Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group Inc [2007] NSWCA 195 per Spigelman CJ at [91] and [95], albeit there in the context of the slip rule), I placed on record on 27 July 2012 that the potential application of the oppression authorities (as to the court erring on the side of the oppressed) was not something I had in mind during in the debate on 5 April 2012 as to what orders should be made. At [182] Spigelman CJ said:

Satellite litigation and delay should be avoided with respect to both the inherent jurisdiction and the slip rule. ... the judge who made the orders is overwhelmingly the preferable person to make the corrections. That s/he may be influenced by, and even express, her or his subjective intention is not a ground for disqualification.

I accept that on 5 April 2012 the issue as to whether any allocation of value as between the respective shares other than a 50/50 allocation should be made was not raised and that the defendants did not then or later have the opportunity to raise the question of inconsistency with the earlier orders that might thereby be occasioned.

In those circumstances, I consider that a proper basis for the 1 June judgment to be reopened has been established so as to permit the defendants to make submissions as to that aspect of the orders. As noted above, the defendants do not cavil with the attribution of a figure of $4,000 by way of the nominal value; they simply cavil with the allocation of the whole of that value to Ms Fitzpatrick's share for the purpose of the price payable for that share in accordance with the 5 April orders. (The disproportionality between the cost of raising that issue and the sum in dispute - $2,000 - is explicable by reference to the potential impact of that minor difference on the costs argument to which I will turn shortly.)

Ms Francois' submissions (on the assumption that the relevant part of the judgment were to be recalled) rest, as I understand them, primarily on the basis already noted above namely that there was no power as at 1 June 2012 to vary the regime put in place by the 5 April 2012 orders (and hence that it was not open to me to order that Mr Cheal pay the whole of the value of the goodwill to Ms Fitzpatrick as opposed to a 50% share of that goodwill).

Insofar as Ms Francois contended that the Court was "bound" by those earlier orders, what in substance she contends (as I apprehend it) is that, the 5 April order having been made and remaining in place, the only power to vary it (by putting in place in effect a different way of calculating the fair price for Ms Fitzpatrick's share) would have been if application had been made by Ms Fitzpatrick within 14 days for the 5 April 2012 orders to be varied or if the "slip rule" (in 36.17 of the Uniform civil Procedure Rules) had been enlivened.

In the event that this primary submission is not accepted, the defendants submit that Mr Cheal should not be required to pay the additional $2,000 because it is said to be illogical that an asset of the company can be allocated to increase the shares of one particular shareholder. Ms Francois contends that compensation for Ms Fitzpatrick being "kept out of the enjoyment of the value" of the shares (adopting the reasoning in Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60 to which I had referred in my 1 June judgment) is met by the orthodox award of interest on the fair value of the shares. (The passage referred to by Ms Francois in her submissions is that cited in my earlier reasons and I do not repeat that here.)

Second, Ms Francois submits that the allocation of the full amount to Ms Fitzpatrick's share fails to take into account the inclusion in the overall valuation of the shares of an "asset" comprised of a debt of $5,000 (being the amount said to be still owing from Ms Fitzpatrick to the company for the car "she took" after her separation from Mr Cheal). Reference was made to Ex B, Vol 1, page 208 (a copy of which was handed up to me on the hearing of the present application as the exhibits were no longer retained on the court file). It is submitted that it is illogical to consider that further compensation is required in circumstances where Ms Fitzpatrick owes money to the company "and yet will be paid in effect by Mr Cheal half of what she still owes".

Pausing there, Mr Evans submits (and there is in my view force in this submission) that there was no suggestion raised during the hearing that any such loan was relevant to be taken into account in determining the entitlements of Ms Fitzpatrick. Mr Evans submits that any such loan would now be statute barred (though it would not necessarily have been statute barred as at June 2006 being the time at which the valuation exercise was to be carried out) and that there may have been arguments based on estoppel or the like that could have been raised in defence to a claim for that amount. (Indeed, Mr Cheal's affidavit on the current application deposes that he "gave" Ms Fitzpatrick the car after their separation, which seems inconsistent with Mr Cheal now seeking to maintain any claim on behalf of the company to that asset.) A call by Mr Evans for any notices of demand in respect of the debt recorded in the company accounts in respect of the car was met by the response from Ms Francois that there was nothing to produce. Whatever may be the position in relation to the car, I am not persuaded that an entry in the company accounts for a book debt not previously the subject of any claim by the company should affect the question whether the whole of the premium payable for use of the company name should be allocated to the shareholder whose interests were oppressed by its appropriation.

Third, Ms Francois submitted (though this was conceded to have been infelicitously worded) that the finding that the first defendant "wrongfully deprived" Chilli #1 of the opportunity to obtain payment for its name was punitive because the process being undertaken by the Court under s 233 of the Corporations Act 2001 (Cth) (being the forced acquisition of the first plaintiff's shares at fair market value) "already remedies" Mr Cheal's oppressive conduct.

As I understand it, what Ms Francois intended by that submission was that the impact of the order is punitive (not that the finding of oppression was itself punitive). I do not accept that the order now subject to review was punitive for the reasons indicated in my last judgment in this matter.

Had the question of the "fair price" to be allocated in relation to the goodwill component (as opposed to the question of what was the value of a half share of the company's asset in the company name) been at the forefront of my mind at the time of the debate as to the orders to be made on 5 April 2012 judgment, and had the issue then been determined more broadly, I am by no means persuaded on the basis of the defendants' present submissions that I would have concluded that it was inappropriate to require Mr Cheal to pay to Ms Fitzpatrick the full value of the asset that had been diverted from the company.

However, I think there is force to the submission (assuming I have understood it correctly) that, orders having been made on 5 April 2012 (following debate with Counsel as to the appropriate orders to reflect the findings made in my principal judgment) which provided for the methodology by which the amount payable for Ms Fitzpatrick's shares in the company fell to be calculated, it was not open to me later to vary the methodology so ordered (or to vary the quantum of the sum payable for the compulsory purchase of those shares as calculated in accordance with that methodology) in the absence of either an application by the plaintiffs for the recall or variation of the 5 April 2012 orders or circumstances that would give rise to the inherent jurisdiction under the 'slip rule'.

In Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446, McHugh JA, as his Honour then was, said the following (at 449) in relation to the slip rule:

The Courts of Common Law and the Court of Chancery had inherent power to correct any clerical mistake or error in a judgment or order if it was the result of an accidental slip or omission: Lawrie v Lees (1881) 7 App Cas 19 at 34-35. This power was an exception to the general principle that a party is bound by a judgment or order once it has been drawn up unless he can set it aside: Kinch v Walcott [1929] AC 482. But although the principle of the slip rule is clear enough in conception, its application in practice has often proved difficult. The dividing line between a mistake or error which is the result of an accidental slip or omission and a mistake or error which is the product of a deliberate decision has often been difficult to draw. The difficulty became much greater when it was decided that an error might be the result of an accidental slip or omission even though, because of the inadvertence of the party's legal representative, the point was not raised at the hearing of the action: cf L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594-595.

At 453 his Honour said that the rationale of the slip rule requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or as a matter upon which a real difference of opinion might exist.

The Court of Appeal in Newmont Yandal considered that the inherent jurisdiction of the court permits the correction of orders the legal consequences of which were unforeseen or contrary to those intended, applying Ivanhoe Gold Corporation Limited v Symonds (1906) 4 CLR 642; In re Swire; Mellor v Swire (1885) 30 ChD 239 (at [60]). However, the power of correction is not available for the purpose of revisiting and exercising afresh a discretion originally considered in relation to a particular issue.

In Mutual Shipping Corp of New York v Bayshore Shipping Co [1985] 1 All ER 520, at 530; [1985] 1 All ER 520; [1985] 1 Lloyd's Rep 189, Donaldson MR said that:

It is the distinction between having second thoughts or intentions and correcting an award of judgment to give true effect of first thoughts or intentions which creates the problem. Neither an arbitrator nor a judge can make any claim to infallibility. If he assesses the evidence wrongly or misconstrues or misappreciates the law, the resulting award or judgment will be erroneous but it cannot be corrected ... The remedy is to appeal, if a right of appeal exists. The skilled arbitrator or judge may be tempted to describe this as accidental slip, but this is a natural form of self-exculpation. It is not an accidental slip. It is an intended decision which the arbitrator or judge later accepts as having been erroneous. (my emphasis)

In Expo Aluminium (NSW) v Patman Pty Ltd (No.2) (unreported, NSWCA, 29 April 1991), the Court of Appeal said that the slip rule "connotes a limitation on the scope of the rule that has been said to preclude its application to mistakes that are the consequence of a deliberate decision". The distinction there drawn is between a mistake as to the effect of the decision and the making of a fresh or different decision once the consequences of that earlier decision were made known.

Applying the principles outlined in those authorities, I do not consider that this is a case in which the slip rule could properly be invoked (whether or not the 5 April 2012 orders were by consent, as Ms Francois contends, or were (as I think more accurately stated would be the case) the product of acceptance by Counsel that if I were minded to take the course there proposed then the suggested form of the orders there being discussed would appropriately be made).

Therefore, I consider that the appropriate relief on the present application before me is to recall that portion of the judgment of 1 June 2012 that contains the conclusion that Ms Fitzpatrick should be awarded a sum more than half of the value determined to be the nominal value of the goodwill; to vacate order 1 of the orders that I made on 1 June 2012; and to substitute therefor an order that, pursuant to order 2 made on 5 April 2012, the first defendant pay to the first plaintiff the further sum of $2,000 (that being half of the value attributed to the goodwill associated with the Chilli #1 company name as at 20 June 2006), the timing of such payment (and the payment under order 1 of the 5 April orders) to be dependent on any costs set-off.

Costs

This brings me to the question of what costs orders should be made in respect of the proceedings. At the outset I note that Bergin CJ in Eq ordered that Ms Fitzpatrick's costs of the application by Ms Fitzpatrick pursuant to s 237 of the Corporations Act for leave to bring proceedings in the name of Chilli #1 (alleging breach of fiduciary duty by Mr Cheal as a director of that company) should be her costs in the cause. Ms Francois therefore accepts that the defendants cannot seek their costs of that portion of the proceedings (though she contends that neither should the plaintiffs have those costs in the events that have transpired). I consider the costs of that application in due course.

For the plaintiffs, it is submitted that there should be an order for payment of their costs on the basis of the ordinary rule that costs follow the event. Mr Evans notes that both Ms Fitzpatrick's claim seeking relief for oppression and the company's claim for breach of fiduciary duty were upheld.

Insofar as the ultimate remedy was for the compulsory purchase of Ms Fitzpatrick's shares, the claims for relief made in the proceedings had been in the alternative. While I had considered that the most efficient way of remedying the wrong occasioned to Ms Fitzpatrick was a compulsory purchase order (rather than granting relief to the company and it then being a matter for the company to be wound up in order for Ms Fitzpatrick to obtain the value of her shareholding), ultimately it was the plaintiffs' election as to which of the alternative claims for relief were to be the subject of final orders.

Ms Francois submits that Ms Fitzpatrick should be ordered to pay the defendants' costs of the proceedings (other than of the leave application for the derivative suit) on a party/party basis. In summary, the primary submission of the defendants is that there should be a costs order in their favour on the basis that the plaintiffs unreasonably rejected one or both of two settlement offers made to them during the course of the proceedings. In the alternative, it is submitted that the plaintiffs should be ordered to pay the defendants' costs of and incidental to the issue as to the ownership of the Chilli Surfboards trademark (and as to the valuation of the business based upon the assumption that it owned the said trademark), that being said to be the most significant issue in the case (and one on which it is said that the plaintiffs did not succeed).

(Mr Evans disputes the characterisation of the result of the proceedings as being that Ms Fitzpatrick 'lost her case' that the trademark was owned by the company. He contends that the main issues in the proceedings were whether Mr Cheal and the other defendants had acted oppressively in respect of Ms Fitzpatrick as a shareholder in Chilli #1 in the terms of s 232 of the Corporations Act and whether Mr Cheal, with the assistance of Cheal Industries and Chilli #2, had acted in breach of the fiduciary duty he owed to Chilli #1. He points to the success of the plaintiffs on both of those issues.)

The settlement offers in question were, first, an offer (in its terms expressly said to be made pursuant to the rules applicable to offers of compromise) dated 18 December 2009 in the amount of $20,000 plus costs as agreed or assessed and, second, an offer made on 22 July 2011 (and repeated on 19 August 2011) in the amount of $55,000 inclusive of costs (that being said to be made by reference to the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586).

There seems to be no dispute between the parties as to the principles broadly applicable on a costs application of this kind.

The public policy objectives underlying the offer of compromise procedures under the Rules and, by extension, those underlying the effect given to Calderbank offers have recently been reiterated (Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344), the Court of Appeal there referring to the identification of the objects underlying the Offer of Compromise procedures under the equivalent Supreme Court Rules as found in Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724. Those objects include:

1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its "bottom line" will be revealed to the court;

2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation. (my emphasis)

The public policy considerations underpinning the making of favourable costs orders where a Calderbank offer has been made (and not accepted) had been earlier noted in Commonwealth of Australia v Gretton [2008] NSWCA 117 per Beazley JA; Leichhardt Municipal Council v Green [2004] NSWCA 341 per Santow JA at [14]; and Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 in the Court of Appeal. As Beazley JA observed in Gretton, the public policy in encouraging settlement is reflected in the statutory objectives in s 56 of the Civil Procedure Act.

Where what is being considered is not a valid Offer of Compromise under the Rules, then it is clear that the onus lies on the party seeking to rely upon the offer to satisfy the Court that it should exercise the costs discretion in its favour (Evans Shire Council v Richardson (No 2) [2006] NSWCA 61) or otherwise than would ordinarily be the case. What is being considered in such a case is whether "the failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs" (Giles JA in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]).

There is ample authority for the proposition that the making of a Calderbank offer does not automatically result in a favourable costs order (notwithstanding that the ultimate judgment is more favourable to the party making the offer than the terms of the offer) (SMEC;Jones v Bradley (No2) [2003] NSWCA 258; Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC). Nor does the making of a more favourable Calderbank offer appear to be determinative of what kind of (more favourable) costs order (or order other than the usual) should be made (Farley v Farley [1999] NSWSC 376). In Old v McInnes and Hodgkinson [2011] NSWCA 410, Beazley JA noted at [22]:

As this court (Meagher, Beazley and Santow JJA) stated in Jones v Bradley (No 2) [2003] NSWCA 258 at [5], a Calderbank offer is a well recognised means of making an offer of settlement where the party making the offer ultimately seeks to obtain a costs advantage if the offer is not accepted: see Calderbank v Calderbank (1975) 3 WLR 586. When a Calderbank offer has been made, the rules of court governing offers of compromise do not apply. Rather, the court is asked to exercise its discretion as to the costs order that it considers ought to be made. (my emphasis)

The broad discretion as to costs was recognised in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.

Consideration of Settlement Offers

Turning to the respective offers in the present case, I note as follows.

(i) Offer of Compromise dated 18 December 2009

By letter dated 22 December 2009, the defendants' solicitors served an offer expressly stated to be an Offer of Compromise in accordance with Division 4 of Part 20 of the Uniform Civil Procedure Rules 2005 (NSW). The offer (dated 18 December 2009) was an offer to compromise the claim on the following terms:

1. Without admission of liability, the Defendants pay to the First Plaintiff the sum of $20,000.00.

2. Defendants pay the First Plaintiff's costs as agreed or assessed.

3. Proceedings otherwise dismissed.

The offer was stated to be open for acceptance until 5pm on 2 February 2010 and to be made in accordance with Rule 20.26. Rule 20.26 relevantly provides:

(1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms.

(2) An offer must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs. (my emphasis)

At the time the offer was made, there had been doubt expressed in the authorities as to whether an offer of compromise that included an offer to pay the offeree's costs was a valid offer under the Rules.

In Pritchard v Trius Constructions Pty Ltd (No 2) [2011] NSWSC 1114, Hoeben J (as his Honour then was) considered an offer by the defendant to settle all of the claims in the proceedings by payment of a particular amount and to pay the costs of some, but not all, of the claims in the proceedings. His Honour noted (at [31]) the rationale behind Pt 20 r 20.26(2) of the Rules, as set out in Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 where Ipp JA (with whom Mason P and McColl JA agreed) said at [22]:

Part 20 r 20.26(2) reflects the law as stated by Giles J (as his Honour then was) in Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349. In that case, the plaintiff offered to compromise the proceedings by paying the defendant $135,000 "inclusive of costs". Giles J, in adopting the approach of Rogers CJ Comm D in Thiess Contractors Pty Ltd v SCI Operations Pty Ltd (unreported, Supreme Court of New South Wales, 21 September 1990), said (at 350 to 351):

Part 52, r 17(1), provides that on the acceptance of an offer of compromise, the plaintiff may unless the court otherwise orders tax his costs in respect of the claim against the defendant up to and including the day the offer was accepted. It goes on to provide that if the costs are not paid within four days after the signing of a certificate of taxation the plaintiff may enter judgment against the defendant for the taxed costs. Those words are apt to bring about the result that if the plaintiff had accepted the defendant's offer by the offer of compromise of 29 November 1990 then unless the court otherwise ordered the plaintiff would be entitled to tax its costs. There is immediately a conflict with the fact that the offer was made for a sum inclusive of costs.

Part 52, r 17(2) provides:

(2) If a notice of offer contains a term which purports to negative or limit the operation of subrule (1), that term shall be of no effect for any purpose under Part 22 or this rule.

If this subrule be given the effect which its words seem to require the difficulty would be resolved by treating the making of the offer as an offer inclusive of costs as of no effect, and it should be noted of no effect not only for the purpose of Pt 52, r 17(1), but for any purpose under Pt 52, r 17.

At [24], in Becker, Ipp JA went on to say:

Applying the reasoning in Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd by analogy to Pt 20 r 20.26(2), no effect, in accordance with the Uniform Civil Procedure Rules, can be given to an offer of compromise expressed to be inclusive of the costs of the proceedings. The fact that an offer does not comply with Pt 20 r 20.26(2) does not render it invalid; it merely has no effect under the Uniform Civil Procedure Rules.

Hoeben J noted that the reasoning in Becker was equally applicable to an offer which was not inclusive of costs but which specified an amount of costs (by reference to Penrith Rugby League Club Ltd (t/as Cardiff Panthers) v Elliot (No 2) [2009] NSWCA 356 and Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951).

His Honour referred then to the alternative approaches to the interpretation of the words "exclusive of costs" as used in Pt 20 r 20.26(2) as summarised in Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141. The Court of Appeal in Dean v Stockland had referred to an argument that the requirement that the offer of compromise be exclusive of costs was based on the rationale that the costs were ancillary to a substantive offer (and that the substantive offer must be one involving the payment of a money sum). It was there suggested that a plaintiff claiming relief not involving payment of a money sum should not be excluded from ability to make an offer of compromise under the Rules in which the element of compromise was as to costs. Their Honours said from [25]-[26]:

However, there are also arguments for the meaning that an offer of compromise cannot involve costs at all.

The governing reasoning is inconsistency between an offer of compromise and the provisions of the rules with respect to costs. An offer of compromise involving costs will not necessarily be of no effect by force of r 20.26(12), because the costs will not necessarily be inconsistent with a plaintiff's (or defendant's) entitlement to an order for costs. But even in cases not involving payment of a money sum, such as the present case, there will be the inconsistency. And the language of the rule does not confine exclusivity to only some kinds of offers of compromise. The phrase "exclusive of" means "excluding, not comprising of"; "that excludes"; or "so as to exclude" (Colonial Mutual Life Assurance Society Ltd v Australian and Overseas Telecommunications Corporation Ltd (1993) ANZ Conv R 347). On a natural reading, the requirement that an offer of compromise be exclusive of costs means that it may not involve costs at all. (my emphasis)

In Pritchard, Hoeben J went on to say, (from [34] onwards) that:

If the interpretation in [26] of Dean is correct, then clearly the offer did not comply with Pt 20 r 20.26(2) UCPR. ...

As the court recognized in Dean, such an interpretation of Pt 20 r 20.26(2) "may have a broader operation than either inconsistency between an offer of compromise and the provisions of the rules with respect to costs, or the rationale to which we have referred, would justify". In the absence of full argument on the point, the court in Dean declined to decide the issue. That appears to be the present state of the law. The facts of this case, of course, squarely raise the issue.

In the absence of further guidance from the Court of Appeal, I am reluctant to impose such a significant restriction on the interpretation of Pt 20 r 20.26(2). It would, in my opinion, significantly reduce the effectiveness of the rule which is designed to facilitate settlements.

In this case there was no inconsistency between the costs assessment rules and the offer to pay part of Oceanic's costs. There was nothing to stop Oceanic in due course having its costs of the cross-claim assessed. The only restriction was that the costs so assessed would be restricted to those associated with the contribution claim. Such an approach is consistent with the rationale behind the rule as explained in Becker.

Accordingly I have concluded that the document does operate as an offer of compromise in accordance with Pt 20 r 20.26 UCPR. It follows that the offer not having been accepted by Oceanic and Oceanic not having achieved a result which was better than the offer, Oceanic should pay the costs of Trius on an indemnity basis from 10 May 2011.

Ms Francois referred to Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153 where Biscoe J considered the operation of rule 42.15 where an offer of compromise made to a plaintiff was not accepted and the ultimate judgment was as or less favourable to plaintiff than the offer. At [32], his Honour noted that:

An offer of compromise for a specified amount "inclusive of costs" cannot be given effect to under the rules of court because it is impossible to determine whether or not the result of the proceedings is more or less favourable than the offer: Associated Confectionary (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 25 NSWLR 349. ... Those cases (see Dean at [23]) recognised that the governing reasoning is inconsistency between an offer of compromise and the provisions of the rules with respect to costs.

In Trustee for the Salvation Army the Court of Appeal held that an offer of compromise which included a term that the offeror's costs be paid "out of the estate of the deceased on the indemnity basis" was inclusive of the costs of the proceedings and accordingly no effect could be given to it under the UCPR: at [10]-[25]. The court of Appeal did not say whether this costs term offended the rules because of its requirement that costs be paid out of the estate or whether it also offended the rules because it required the costs to be paid on the indemnity basis. If the latter, then the decision is in point.

SCR 52A.22(1) provides that upon acceptance of an offer of compromise under the rules "the defendant shall, unless the court otherwise orders, pay the costs in respect of the claim by the plaintiff against the defendant up to and including the day the offer was accepted". That means costs on the ordinary basis (formerly called the party and party basis). The applicants' 2005 offer of compromise conflicts with that rule because it required the respondent to pay the applicants' costs on the indemnity basis. The governing reasoning in this area is inconsistency between an offer and the provisions of the rules relating to costs. That term of the offer may be regarded as purporting to negative or limit the operation of SCR 52A.22(1) within the meaning of SCR 52A.22(2). Accordingly, the 2005 offer of compromise in my opinion was ineffective as an offer of compromise under the SCR.

What was there left open by his Honour was whether the offer would have been a valid offer of compromise under the rules but for the addition of the qualification as to indemnity costs. On the test applied by Biscoe J, that question would turn on whether the offer was inconsistent with the provisions in the rules relating to costs.

Before me, however, the debate is moot because in Old v McInnes the Court of Appeal recently considered an offer framed as an offer of compromise that was on all fours in the relevant respects with the 18 December 2009 offer and held it to be an invalid offer of compromise under the Rules.

In Old, there were two appeals before the court (identified as being in relation to the premium proceedings and the partnership proceedings). There were also two summonses for leave to appeal brought by the respective respondents (Mr McInnes and Mr Hodgkinson), seeking leave to appeal from the costs orders made in each matter by the primary judge. The primary judge had ordered that there be judgment for Messrs McInnes and Hodgkinson in the premium proceedings but that there be no order for costs in those proceedings. In the partnership proceedings (apart from the costs on one aspect of the matter) the primary judge had held that costs assessed on a party/party basis be borne as to one third each by the respective parties (Mr Old having been held liable to pay an amount to the defendants by way of equitable compensation for breach of fiduciary duty but the primary judge having considered that there had been a mixed result in those proceedings).

The majority refused leave to Mr Hodgkinson to appeal from the costs order in the premium proceedings. As to Mr McInnes' appeal in relation to the costs order in those proceedings, Meagher JA found that the primary judge had erred in the factual basis upon which the costs of the premium proceedings were addressed and that costs should have followed the event (and Mr Old thus be ordered to pay the costs). The only question was as to the basis on which those costs should be awarded. Meagher JA held that as neither of the offers made by Mr McInnes was exclusive of costs ( the offers providing that he pay those costs as agreed or assessed) neither was an offer of compromise under the Rules and neither could be relied upon as a Calderbank offer (since neither contained any statement that it was to operate as a Calderbank offer, by contrast with the position in Becker).

In the partnership proceedings, leave to cross appeal was granted and the cross appeal dismissed. Again, Meagher JA held that the offer of compromise by Mr McInnes was not a valid offer under the rules and could not by its terms operate as an informal Calderbank offer.

The relevant offer of compromise in Old v McInnes had been in the following terms:

The First Defendant offers to compromise the Plaintiff's claim against him on the following terms:

1. Judgment for the Plaintiff against the First Defendant in the sum of $[X].

2. First Defendant to pay the Plaintiff's costs as agreed or assessed.

The Court of Appeal held (Beazley JA concurring in this) that this was not a valid offer of compromise in compliance with the Rules because it was not exclusive of costs.

Ms Francois concedes that I am bound to follow and apply Old v McInnes in this regard and hence to hold that the 18 December 2009 offer was not a valid offer of compromise under the Uniform Civil Procedure Rules because of the inclusion of paragraph 2 (the offer to pay Ms Fitzpatrick's costs as agreed or assessed).

For the purpose of preserving the defendants' rights should there be an appeal, Ms Francois nevertheless submits that the decision in Old v McInnes "is erroneous insofar as it holds that an offer as to costs which is a complete capitulation on costs, involving no compromise and in fact producing a more favourable result to a plaintiff, is not valid under the Rules".

Whether it can be said that the inclusion of the offer to pay Ms Fitzpatrick's costs "as agreed or assessed" would necessarily have produced a more favourable result to the plaintiffs may be open to debate. Even apart from the question as to the effect of the distinction apparently drawn in the offer of compromise between the costs of Ms Fitzpatrick - the subject of the offer - and those of the company at that stage (as to which there was no issue raised in the submissions before me), as Beazley JA noted in Old v McInnes, costs orders flowing from acceptance or rejection of an offer of compromise still remain subject to the exercise of discretion. Her Honour said (at [17]-[19]) that:

UCPR, r 20.26(2) provides, relevantly, that an offer must be exclusive of costs. The costs consequences that flow from an acceptance or rejection of the offer are governed by UCPR, Pt 42, Div 3. If a defendant's offer is accepted by a plaintiff, the plaintiff is entitled to costs on the ordinary basis up until the time when the offer was made: UCPR, r 42.13A. The rule is subject to the court ordering otherwise: UCPR, r 42.13A(2)(b).

The offer did not conform to UCPR, r 20.26, because it included an offer that Mr McInnes pay Mr Old's costs. However, the practical effect of Mr McInnes' offer of compromise was that, had it been accepted according to its terms, Mr Old would have received a sum of money together with his costs up until acceptance of the offer. The almost certain result of Mr McInnes's offer of compromise, had it conformed with the rules, would have been that by operation of the UCPR, Mr Old would have received a sum of money and his costs up until the acceptance of the offer.

I say "almost certain result" had the rules been complied with because UCPR, r 42.13A is subject to the court ordering otherwise, as I have indicated above. A court might make a different order, in favour of either party. However, there were no circumstances apparent from the facts in this case as they emerged in the proceedings that indicated that the court would have made some other order.

Had the offer of 18 December 2009 in the present case been confined to terms 1 and 3 (and had it been accepted), then the operation of the relevant rules would have been that Ms Fitzpatrick would have been entitled to judgment in her favour in the amount of the sum offered in 1 and, subject to any other order, the plaintiffs would have been entitled to their costs on the ordinary (party/party) basis to the date of the offer. In contrast, the import of term 2 appears to be to limit the costs consequences of acceptance of the offer to the payment of Ms Fitzpatrick's costs alone (though there may have been no costs independently incurred by the company) and there may have been room for uncertainty as to the basis on which those would be required to be assessed or agreed.

In any event, having regard to Old v McInnes, I am not called upon to treat this as an offer of compromise under the Rules.

The offer was rejected by email the following day on 19 December 2009 in rather emotive terms (that I can only assume reflected Ms Fitzpatrick's instructions), as follows:

Frankly, the offer is an offence and will do nothing to resolve the matter.

If your client is of the view that the business is of such little value then he would not have transferred it in the first place. Even if so, our client's better interest may be served by the orders sought that the business is transferred back to Chilli #1 and that Chilli #1 is wound up. If your client chooses to gamble with that proposition, he should affirm his offer.

I suggest if he has any serious intention of resolving the matter, your client will consider submitting some other offer in the new year, when our client has calmed down after this offence.

At the time this offer was made, these proceedings had only just been commenced (the pleadings being served on around 30 October 2009). Ms Francois notes that the value of the claim was then put at $1m.

Comparing the first offer with the judgment (as now to be varied) it is agreed that if the value of Ms Fitzpatrick's shares in the company is $14,265.52, then the value of the judgment ultimately obtained (including interest from 1 July 2006 to 18 December 2009 is $19,032.54. Hence, the first offer would have provided a slightly more favourable result than the ultimate judgment. (Had the value of Ms Fitzpatrick's shares been $16,265.52, then the value of the judgment including interest from 1 July 2006 to 18 December 2009 would have been $21,700.88.) In both scenarios, the difference (whether favourable or unfavourable to Ms Fitzpatrick), is relatively small.

Ms Francois submits that, irrespective of whether this first offer was a valid offer of compromise under the Rules, the first offer should be taken into consideration for the purpose of the application of the principles in Calderbank.

Ms Francois concedes that the offer did not expressly state that it should operate as a "Calderbank" offer (cf Dean, Becker). (Nor did the covering letter make reference to an intention to rely upon it as a Calderbank offer if, for any reason, it was not a valid offer of compromise under the Rules).

In that regard, I note that in Becker, Ipp JA emphasised that an offer that did not comply with the then equivalent provisions in the Supreme Court Rules (because it was expressed to be inclusive of the costs of the proceedings) was not invalid. Rather, his Honour said at [24] "it merely has no effect" under the relevant Rules. His Honour went on to note that an offer of compromise to which effect could not be given (for the reason that it was expressed to be inclusive of costs) might nevertheless take effect as a Calderbank offer.

At [27] his Honour said:

Calderbank offers are simply offers that do not comply with the relevant rules of court relating to the making of offers of compromise: Jones v Bradley (No 2) (at [5]). Whether an offer, intended to be an offer under the Uniform Civil Procedure Rules but which is ineffective because it does not comply with those Rules, operates as a Calderbank offer, depends upon the intention of the offeror as revealed by the terms of the offer. The offer may disclose an intention that it should take effect only if it complies with the Uniform Civil Procedure Rules. On the other hand, it may disclose a general intent to make an offer, irrespective of whether it takes effect under the Uniform Civil Procedure Rules or not. (my emphasis)

In Old vMcInnes the submission that the invalid (at least under the Rules) offer of compromise should nonetheless be treated as a Calderbank offer was rejected by the majority. Beazley JA (dissenting in this regard) noted at [20] her understanding that the basis on which Meagher JA had rejected that submission (see [100]) was that the offer did not (as the present offer does not) contain a statement that, if it failed as an offer of compromise, then it was to operate as a Calderbank offer.

Ms Francois submits that this aspect of Old v McInnes is not binding on me. She submits that the finding that the offer in question was not able to be relied upon as a Calderbank offer was not part of the ratio of the Court of Appeal's decision. However, for the purposes of his cross appeal from the costs in the premium proceedings, reliance was placed by Mr McInnes on the offer of compromise not simply as an offer under the rules but also as a Calderbank offer to support his contention that costs should have been ordered on an indemnity basis. He was unsuccessful in that respect because (on the Calderbank point) the invalid offer of compromise did not contain a statement that it was to operate as a Calderbank. The conclusion that the offer could not be treated as a Calderbank offer for that reason seems to me to be part of the ratio of the decision and binding on me.

I therefore conclude that I am bound to find that the first offer should not be regarded as a Calderbank offer. However, lest the finding by the majority in the Court of Appeal that an invalid offer of compromise under the Rules (which contains no statement that it is intended also to operate as a Calderbank offer) is not to be treated as a Calderbank offer is not binding on me, I consider below whether (but for the decision in Old) I would have found that this offer should be treated as a Calderbank offer.

The two alternatives posited in Becker were that an offer might disclose an intention that it take effect only if it complies with the Rules (which the present offer in my view did not though it was clearly predicated on an assumption that it was a valid offer under the Rules) or might disclose a general intent to make an offer irrespective of whether it took effect under the Rules (which, again, this offer in my view did not). The position in the present case seems to have fallen between those two alternatives - namely, the offer and the covering letter disclosed no intention to rely otherwise than on the Rules for the making of the offer but did not make compliance with the Rules a condition for acceptance of the offer. Does that permit a finding that there was a "general intent" to make an offer?

In the Becker case, the offeror had made it clear that if the offer was ineffective under the Rules (a possibility there contemplated because of the question as to whether different rules might be said to apply in probate proceedings) then the offer was to be treated as a Calderbank offer. Here, there was no such statement (whether in the offer itself or in the covering letter). Ipp JA considered that the offer reflected an overriding intent that, irrespective of its application under the relevant Rules that might apply to it, it should take effect as a Calderbank offer and said "[I]n my opinion, the offer of compromise was capable of being accepted by the appellant on the basis that it was an informal Calderbank offer and should be regarded as such an offer".

In Taylor, Biscoe J rejected the applicants' Calderbank claim for indemnity costs, saying at [40]:

...In the first place, the 2005 offer of compromise was not in my view a Calderbank offer because it purported to be under the SCR and did not indicate clearly or at all an intention to operate as a Calderbank offer if it did not fall within the SCR ... (my emphasis)

going on to say that the second reason for rejecting that claims was that it was not unreasonable for the respondent to have refused the offer (since it had been made at an early stage of the proceedings when the respondent had been provided with no valuation evidence that would support the offer and was for far more than the amount of the statutory valuation which was the only valuation of which the respondent was then aware).

Beazley JA, in Old, dissenting on the question of costs in this regard, said at [26]:

In my opinion, the decision in Trustee for the Salvation Army (NSW) Property Trust should not be treated as a prescriptive template for when an offer, purportedly made under the UCPR, may be treated as a Calderbank offer. More particularly, the court's discretionary power in respect of costs, provided for in the Civil Procedure Act 2005, s 98 should not be circumscribed by such an approach.

Her Honour noted that it was apparent from the correspondence between the parties that the offeror had evinced an intention to settle the proceedings for some time. Her Honour also noted that the court encourages the settlement of matters for reasons both of public policy and private interest (citing Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153, per Megarry VC at 1383).

At [32], her Honour said:

The significance of a Calderbank offer is that it provides a readily recognisable basis for the court to exercise its costs discretion in a form which may result in a more favourable costs outcome than would have been the case had UCPR, r 42.1 applied: see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; Jones v Bradley (No 2); Commonwealth v Gretton [2008] NSWCA 117 at [40]; [114]. However, the court's discretion is not confined to cases which are "strictly" characterised or expressly stated to be Calderbank offers. (my emphasis)

and at [34]:

Given the court's discretionary power as to costs and the important public policy considerations and the private interests of parties in settling litigation, the fact that a failed Rules offer of compromise is not strictly conformable with the usual Calderbank offer, does not preclude the court from considering whether it should exercise its discretion as to costs so as to make some other order than costs follow the event, in accordance with UCPR, r 42.1. Rather, when the court is asked to exercise its discretion as to costs, it is entitled to look at the conduct of the parties throughout the proceedings, including attempts made at settlement and the terms of the failed UCPR offer.

In so doing, her Honour had regard to the demonstration by Mr McInnes of both a willingness to settle and a clear intention do so from an early stage and as to the rebuff by Mr Old of those efforts "without seeking to engage in any alternate compromise, at least from the end of March 2005". Her Honour did not consider that Mr Old had engaged in "misconduct" in the proceedings, as considered in Oshlack, but said:

Rather, I am of the opinion that, in circumstances where the offer of compromise was technically deficient, but nonetheless would have achieved the same result for Mr Old had it been accepted, as would have been achieved under the UCPR, the court should act pragmatically and justly as between the parties.

Meagher JA, on the other hand, (with whom Giles JA agreed), when considering the costs correspondence that Messrs McInnes and Hodgkinson submitted the primary judge should have taken into account when exercising the discretion as to costs in the partnership proceedings, held that the primary judge had not erred in not taking those letters into account as Calderbank letters, on the basis that the first letter did not in its terms contain an offer which was sufficiently certain to be capable of giving rise to a binding agreement upon its acceptance and that the subsequent correspondence (which stated that the earlier offer "was made in accordance with the principles in Calderbank v Calderbank" and that "if your client instructs you to dispute this please let me know by return and I will formally make the same offer again") could not convert what was not a Calderbank offer into one that was and merely foreshadowed the making of an offer that was not subsequently made.

Ms Francois submits that in this case the first offer should be taken into consideration in the exercise of the discretion as to costs on the basis that it was an offer "objectively capable of valid acceptance" and on the basis of her contention that the evidence demonstrates that the defendants were genuinely willing to settle the proceedings. (As to the genuineness of the defendants' willingness to settle the proceedings, Ms Francois refers to the various offers made by the respective parties and submits that, prior to the litigation the defendants, had provided to Ms Fitzpatrick all the information she had sought without reservation, referring to the correspondence annexed to the affidavit of Mr Cheal affirmed on 30 May 2012. As to the latter, while this evidences compliance with the statutory objectives for the conduct of civil litigation, it is not immediately apparent that cooperation in the provision of the information was part of an attempt to settle any claim then in contemplation by Ms Fitzpatrick.)

Mr Evans rejects the contention that there is evidence that (other than the offer of 18 December 2009) the defendants were willing to settle. He submits that when the terms of the offer of 18 December 2009 are compared with the later offers of July and August 2011, it is clear that the defendants were offering less in July and August 2011 than they had been in December 2009. It is submitted that the offers of July and August 2011 would have left the plaintiffs severely out of pocket and, having regard to the steps taken in the proceedings since 18 December 2009, cannot be seen as an attempt by the defendants to bring about a sensible determination of the proceedings by some compromise.

As to the offer in this case being objectively capable of acceptance, even if not a valid offer of compromise under the Rules, Ms Francois notes (and there can be no dispute as to this) that the offer did not state in its terms that it was capable of acceptance only if it was a valid offer under the Rules. Mr Evans submits that the fact that the offer of 18 December 2009 did not state that it was only capable of acceptance if it was a valid offer made under the Rules is irrelevant, since the offer was expressly made as an offer of compromise under the Rules and there was no additional statement that it should also be taken to be a Calderbank offer. Therefore, it is submitted that the offer could operate only as an offer of compromise under the Rules. (As noted above, that would seem to be the conclusion to be drawn from an application of the majority reasoning in Old v McInnes.)

It is further submitted by Ms Francois that the mistaken legal basis upon which it was made by the defendants (ie, that it was a valid offer under the Rules) would not have invalidated an acceptance by Ms Fitzpatrick of the offer. In this regard, it is contended by Ms Francois that, at the time it was made, both parties thought it was a valid offer (the latter contention being disputed from the plaintiffs' perspective). (Insofar as it is suggested that the plaintiffs understood this to be a valid offer at the time it was made, Ms Francois seems to be basing this on the making of offers on a similar basis by the plaintiffs around this time - those also being stated to be offers of compromise.) It is submitted by Ms Francois that since any mistake as to the validity of the offer as an offer of compromise could not be said to have been induced by Ms Fitzpatrick, the position (had the plaintiffs accepted that offer and the defendants then attempted to avoid the consequences of the offer so as not to perform the contract constituted by its acceptance), would have been that the Court would have intervened in the plaintiffs' favour (citing Rogers v Ingham (1876) 3 Ch D 351; Wilding v Sanderson [1897] 2 Ch 534; Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98 at 107 - the last, being a case where Young J, as his Honour then was, noted in a different context to that considered in the present application to reopen, that "the court will never permit its own order to be a source of injustice and in appropriate cases, despite any technical rules there might be, the court will set its order aside").

It seems to me that there is a distinction between the question whether the offer could or should take effect for the purposes of the exercise of a discretion to make an order otherwise than the usual order (ie that costs follow the event), which depends on the existence of a general intention underlying the offer if the applicable test is that as formulated by Ipp JA, and the question whether the offer was one capable of acceptance in the contractual sense. Ms Francois' submissions seem to me to go to the latter question - namely, that the 18 December 2009 offer was capable of acceptance even if not a valid offer of compromise and, on acceptance, would have given rise to a binding contract capable of enforcement by Ms Fitzpatrick.

There was nothing said in the covering letter or the terms of the offer to suggest that it was an offer to be treated otherwise than as an offer of compromise. By contrast, in Old, there were later communications that made it clear that the offeror was intending (at least after the earlier offer had been rejected) to treat it as a Calderbank offer and in Becker it was clear at the time the offer was made that the offeror was putting the offer as a Calderbank offer if for any reason it was not a valid offer of compromise.

If the invalid offer of compromise is to be treated as a Calderbank offer in this case, then logically all offers of compromise that fail to comply with the Rules would do so unless in their terms they precluded acceptance otherwise than as an offer of compromise. That does not seem to be the approach adopted by Ipp JA in Becker and Biscoe J in Taylor. Seen in isolation, there is nothing in the December 2009 offer that seems to me to evince a "general intent" to settle, ie irrespective of the validity of the offer as an offer of comprise under the Rules. Therefore, even if Old were not being upon me in this regard, I would not consider the offer a Calderbank offer.

The approach adopted by Beazley JA (in dissent) was to view the failed offer of compromise as part of the overall circumstances to be taken into account in the exercise of the court's discretion as to costs (not necessarily as a Calderbank letter per se). If viewed in that light, then the making of the 18 December 2009 offer would, in my opinion, most appropriately be considered in the context of the submissions made by Ms Francois as to costs, having regard to the proportionality of the relief granted in this case.

Therefore, while I take this offer into account as part of the circumstances to be considered in the general exercise of the costs discretion, I do not consider that the defendants have demonstrated that at the time of this offer (December 2009) there was a general intent to settle the proceedings (as opposed to an intention to make an offer of settlement involving the offer of comprise rules) so as to enliven the principles in Calderbank.

Lest I be wrong in that conclusion, I have considered later in these reasons whether (were this to be properly characterised as a Calderbank offer) its rejection has been shown to have been unreasonable.

Second Offer ($55,000 inclusive of costs)

The second offer was made following an unsuccessful court-annexed mediation (the details of which, quite properly, were not in evidence before me) that took place on 1 July 2011. The offer was made approximately one year after Bergin CJ in Eq had given leave for the bringing of the derivative proceedings on behalf of the company and at a time when the plaintiffs' evidence (including its expert evidence) had been served and, as I understand it, there was then in place a timetable for the service of any expert evidence in reply.

The offer was made in a letter that referred in some detail to events that had transpired in relation to the mediation and the proceedings, and contained the following statement:

18. As our client understands the reality that, if he is unsuccessful in defending the Proceedings, he is unlikely to recover any of his legal costs, he is prepared to make the following offer to fully and finally [sic] settle the Proceedings on a commercial basis:

Notwithstanding that it is not necessary (for there to be an apportionment of costs by reference to the parties' success on the issues in the proceedings) that the overall successful party has acted unreasonably in raising the issue on which it failed (Short v Crawley (No 40) [2008] NSWSC 1302 at [32]; Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615; LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2002] NSWSC 72 at [38] and NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 at [25]), Ms Francois submits that in this case the plaintiffs did act unreasonably (on the basis that, despite having the evidentiary onus, the plaintiffs led no evidence that Mr Cheal had transferred or intended to transfer the trademark to Chilli #1 prior to 30 June 2001). It is said that Ms Fitzpatrick was in the "ideal position" to have known if Mr Cheal's intentions had changed because at all times prior to 30 June 2001 she was his de facto partner and lived with him; she continued to help him in all of his administrative and paper work tasks in relation to the business; and she attended the majority of business meetings (matters to which Ms Fitzpatrick gave evidence in cross-examination).

In this context Ms Francois again relies heavily on the concession made by Ms Fitzpatrick in cross-examination that she understood (both before and after Chilli #1 was incorporated) that it was always the intention that Mr Cheal own his trademark (an intention only called into question by the later transfer of the Chilli Surfboards trademark to his family trust).

Ms Francois submits that it was common ground in the evidence of Ms Fitzpatrick, Mr Cheal and his accountant (Mr Jago) that Mr Cheal intended to own the trademark at all relevant times prior to 30 June 2001. In this regard, my impression of Mr Cheal's evidence was that he did not distinguish between ownership in a personal capacity and ownership through a corporate entity (rather, he regarded the company and the business it carried on as his) and hence I think it unlikely that much can be drawn from an understanding prior to 30 June 2001 that Mr Cheal always wanted to own his trademark. The other impression I had from Mr Cheal's evidence was that he placed trust and confidence in his accountant's advice and hence, had Mr Jago given advice as to the entity in which the trademark should be held, then, at least so far as Mr Cheal understood that advice, it seems likely that it would have been followed - not necessarily with the knowledge of Ms Fitzpatrick. (In saying this, I am aware that Mr Jago gave evidence that there had been entries in the accounts that did not reflect his advice but that seems to have been more likely due to a lack of understanding than as to any decision to act contrary to Mr Jago's advice.)

Ms Francois submits that even if such an inference is permissible in relation to Mr Cheal, it cannot be said that Ms Fitzpatrick was in a similar position having regard to her evidence that she had understood Mr Cheal's intention at all relevant times to have been that he own his trademark (and there being no re-examination to explore or clarify her understanding of what was meant thereby). Ms Francois notes that Ms Fitzpatrick had been entrusted with the paperwork/book-keeping for the company and had completed the application form for Mr Cheal's trademark in his own name, not that of the company.

That said, the fact that Ms Fitzpatrick may have believed or understood that Mr Cheal had at all times wanted to own his own trademark does not seem to me to lead to the conclusion that Ms Fitzpatrick was acting unreasonably when placing reliance in these proceedings on the entry in the company's accounts that suggested that the company had at some stage acquired ownership of at least some intangible assets identified as "Patents & Trademarks" and where the company seems to have had the right to use those trademarks for a considerable period (wherever the ownership therein lay as a matter of law), at least up until such time as a reasonable explanation for that entry in the accounts had been provided. It is by no means apparent that Ms Fitzpatrick could be confident that she had been privy to all relevant discussions between Mr Cheal and Mr Jago in relation to the company accounts and it does not seem to me unreasonable that by the time of commencement of the proceedings there may have been suspicion on the part of Ms Fitzpatrick as to what may have taken place behind her back.

Weight is placed by Ms Francois on the fact that the publicly available IP Australia records demonstrated that Mr Cheal was the owner of the trademark prior to 30 June 2001 (reference being made to s 20 of the Trade Marks Act 1995 (Cth). Again, however, that does not explain the reference to "Patents & Trademarks" in the company's accounts (although I accept that this was not a reference explicitly linked to the particular trademark in question). Mr Evans points out that the accounts were prepared on the instructions of Mr Cheal at the relevant time (though, again, it does not seem to me that the evidence suggests that Mr Cheal would necessarily have understood the substance of any accounting decisions required to be taken in that regard).

Ms Francois submits that it was manifestly unreasonable for the plaintiffs to continue to pursue the proceeding on a ground which Ms Fitzpatrick knew could not be correct. I do not consider that it can be said that at the time of the commencement of the proceedings this was the case. Indeed the evidence before Bergin CJ in Eq was sufficient to lead her Honour to conclude that there was a serious question to be tried in relation to that very issue.

Mr Evans points out that it was not until the evidence was filed for Mr Cheal in September 2011 that there was documentary evidence as to the issue. Certainly, the affidavit evidence of Mr Jago of 21 September 2011 and the affidavit of Mr Cheal on 30 September 2011 seems to be the first time that there was evidence by the defendants going to the ownership by Mr Cheal of the trademark in question (the position before Bergin CJ in Eq seemingly being based on the possibility that the entry in the accounts related to another trademark).

That said, in the 22 July 2011 Calderbank letter, there is reference both to the documentary evidence of ownership of the trademark from the IP Australia records and to the then foreshadowed evidence from Mr Jago as to the error he said had been made in the MYOB accounting entries for Chilli #1, from which the plaintiffs should have been on notice that there was a risk that the claim for relief based on the diversion of a business founded on a trademark owned by the company would not succeed (and that any relief based on other oppressive or wrongful conduct would be of little value).

Ms Francois contends that the effect of the defendants' success on this issue is not just to deprive the plaintiffs of their costs but is such as to warrant an order that the plaintiffs pay the defendants' costs, referring to Hughes (affirmed in Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453 at [17]; Turkmani v Visvalingam (No 2) [2009] NSWCA 279, at [9]; Fexuto (No. 3), that being upheld on appeal in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, at [215], [725]).

In Taylor, at [63], Biscoe J observed that:

In ordinary litigation, the circumstances may make it reasonable that the successful litigant bear its own costs of litigating a discrete issue on which it has failed, or even in some cases that the litigant should be ordered to pay the other party's costs of that discrete issue: F & D Bonaccorso Pty Ltd v Canada Bay City Council (No 3) [2007] NSWLEC 569 at [15]-[17].

Ms Francois submits that it is appropriate to have regard to the value in commercial terms of the mixed result of the hearing (citing Dobrodinski v Salievic [2001] SASC 277 at [6] in this regard). She notes that the plaintiffs sought orders that would have benefited them in the amount of approximately $500,000 but obtained a judgment worth approximately $20,000.

In light of the above it is submitted that Ms Fitzpatrick should be ordered to pay the defendants' costs of and incidental to the issues of the ownership of the trademark and of the valuation of the business based upon the assumption that it owned the trademark.

Mr Evans submits that defendants rested their defence to the allegations of oppression and breach of fiduciary duty on the proposition that Mr Cheal was the owner of the trademarks and thus free to deal with them as he chose and that, therefore, Mr Cheal had not acted in breach of any duty to Chilli #1 and had not acted oppressively toward Ms Fitzpatrick as a shareholder in Chilli #1. He submits that the defendants lost on that critical issue. They did. The stance that was maintained by the defendants is highlighted by the statement made in the 22 July 2011 letter that even if (which was denied) the company had an interest in the trademarks "the reality is that the goodwill resides personally in Mr Cheal and his skills and reputation, not in any trademark, and without Mr Cheal the business is worth next to nothing". Unfortunately for Ms Fitzpatrick, that was the ultimate result. Mr Evans accepts that the value of the business transferred to Chilli #2 proved to be far less than the plaintiffs had estimated because the trademarks had always been registered in the name of Mr Cheal. However, Mr Evans points to the unsatisfactory nature of the evidence on this issue until late in the proceedings (and refers to the discussion in my principal judgment from [24] to [47] in that regard).

Mr Evans thus submits that no order other than the usual order should be made on the basis that the defendants had contested Ms Fitzpatrick's claim; had at all times denied any wrongdoing; had opposed Ms Fitzpatrick's application to bring derivative proceedings and failed on the central issues as to whether Mr Cheal (with the assistance of the other defendants) had breached the fiduciary duty he owed to Chilli #1 and as to whether Mr Cheal had acted oppressively toward Ms Fitzpatrick as a shareholder in Chilli #1.

In Hughes, Toohey J said:

It seems to me that the only basis on which it would be appropriate to depart from the general rule that costs follow the event, by reason of the circumstance that the appellant lost what might be regarded as the dominant issue, is that the judgment is made that, had that issue been excluded then, although the dominant issue was not clearly separable, the costs incurred on the appeal would be likely to have been substantially less, perhaps because there was less at stake.

Similarly, in Elite Protective Personnel Pty Limited v Salmon (No 2) [2007] NSWCA 373, it was said (at [6]) that where there are multiple issues in a case the court does not generally attempt to differentiate between those issues on which a party is successful and those on which it fails:

Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

The discretion to apportion costs is one that has been said should be exercised only in the most exceptional of circumstances (Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213). Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 (at 12) observed that:

The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.

The circumstances in which apportionment of costs as between different issues may be appropriate include: where, in respect of one or more issues, the successful party has "unfairly, improperly, or unnecessarily increased the costs" (Waddell J, as his Honour then was, in Windsurfing); where the bulk of the time has been taken on an issue on which the unsuccessful party had succeeded (Mahoney JA in Waters; and Toohey J in Hughes); where a particular issue or group of issues is clearly dominant or separable (Mahoney JA in Waters; McColl JA in Elite).

As to how any such apportionment should be made, in James (at [35]), their Honours were of the opinion that it was preferable not to speak in terms of "rules" in this context but noted that an available approach to the exercise of the court's discretion in particular cases could be to estimate the time taken on discrete issues at the hearing and to make orders accordingly. In NRMA Ltd v Morgan (No 3) [1999] NSWSC 768, Giles J (as his Honour then was) said (at [25]):

If an order reflecting success or failure on issues is made, it is appropriate to have regard to the time referable to the issues, although necessarily without mathematical precision (Lenning v Alexander Proudfood Co World Headquarters (NSWCA, 22 April 1991, unreported)).

Ultimately, as Finkelstein and Gordon JJ observed in Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 (at [5]) (citing Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272 and Standard Commodities Pty Ltd v Societe Socinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496):

Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied.

Here, evidence as to the ownership of the trademark aside, the argument before me focussed largely on issues of breach and oppression (the defendants' position being that Mr Cheal was free to act as he chose with his trademark even while he owed duties to Chilli #1 as a director and employee of the company). While I accept that an issues based approach would warrant Ms Fitzpatrick not recovering the costs, say, of the expert's report that was based on the erroneous assumption that the company owned the trademark at the relevant times, and may also warrant a deduction of the costs otherwise recoverable for the hearing, I am not persuaded that an issues based approach would of itself warrant an order that Ms Fitzpatrick pay the costs of the defendants.

It has been said that (other than where there is a special costs order by reference to the procedure provided for under the Rules or in accordance with the principles in Calderbank), a court should depart from the general rule (at least where it is doing so to award indemnity costs) only where the conduct of the party against whom the order is sought is "plainly unreasonable" (Sydney City Council v Geftlick [2006] NSWCA 280; Dunstan v Rickwood (No 2) [2007] NSWCA 266). In Leichhardt Municipal Council, Santow JA (at [57]) said that indemnity costs orders should be reserved for the most unreasonable actions by unsuccessful plaintiffs. Here, the defendants do not seek indemnity costs. Hence the caution referred to in those authorities does not necessarily apply with the same force. However, those authorities do suggest that a cautious approach is warranted.

The conduct to which Ms Francois points in her submissions as amounting to manifest unreasonableness was the failure of the plaintiffs to adduce any evidence of the transfer of the trademark from Mr Cheal to the company. Ms Fitzpatrick's case, however, was based not only on an assumption that the company accounts were correct in recording that an asset of the company was comprised by patents and trademarks (and that the relevant trademark was included in those intangible assets) but also on the company's use of the trademark over a period of time.

The context in which an order other than the usual is called for by the defendants in the present case is that there is a significant disproportion between the costs of the proceedings and the relief ultimately obtained (in circumstances where the defendants had, at least from July 2011, maintained that any success in the proceedings would not lead to a significant judgment amount in favour of the plaintiffs).

The manner in which costs applications of the present kind should be determined must take into account the statutory obligations of parties to take reasonable steps to resolve or narrow disputes (and the duty to assist the court to further the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute in the proceedings) (see s 56 of the Civil Procedure Act 2005 (NSW). Section 56(5) of the Civil Procedure Act permits the court to take into account any failure to comply with those duties in the exercise of a discretion as to costs.

What seems to me to weigh more in favour of the defendants' costs application is the disproportion between the amount of the judgment and the costs incurred in pursuing that claim (at least once the disproportion between the two should reasonably have become apparent). Where a plaintiff pursues a claim that sounds in nominal damages only, that may be taken into account in determining the costs to be awarded. Similarly, where there is a large gap between the amount recovered and the cost of the proceedings, that seems to me to be a factor to take into account.

As noted in Quick on Costs (R Quick and D Garnsworthy, Thomson Reuters), one instance where a costs order other than the usual may be appropriate is where the successful party recovers only nominal damages (the authors there citing Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 A11 ER 685; Anglo Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873).

In Alltrans, Stephenson, Griffiths and Purchas LJJ dealt with the question of what costs orders should be made in respect of a hearing on damages that followed from a summary judgment as to liability. The Court said:

On the discretion issue, since the consequence of the summary judgment was that the plaintiffs were entitled at least to nominal damages the actual issue between the parties at the hearing to assess damages was whether the plaintiffs were entitled to more than nominal damages, and the defendants had in fact succeeded on that issue. It followed that the official referee was plainly wrong in placing too much weight on the absence of any payment in when payment in of the nominal sum of £2 would not have been accepted by the plaintiffs and thus would not have made any difference to the proceedings. The official referee had accordingly exercised his discretion wrongly in holding that in the absence of any payment in the award of £2 to the plaintiffs made them the successful party. The costs of the hearing to assess damages would therefore be awarded to the defendants ...

There the hearing (the costs of which were in issue) was of the quantum alone (whereas here there was an issue of liability first to be determined). However, in Alltrans, there was an express application of the approach of Devin J in Anglo-Cyprian Trade Agencies, where Devlin J noted that on the plaintiffs' original pleadings they would have been entitled only to nominal damages and could not have been regarded as "successful" plaintiffs 'as they could not have established anything which was of value of them'. Devlin J observed that in those circumstances the court had a discretion to award the costs of the action to the defendants.

When considering the import of proportionality on costs, it is of interest to note that in Lownds v Home Office [2002] EWCA Civ 365, Lord Woolf made the following observation (having regard to the rules now applicable in relation to the conduct of civil litigation in England), emphasising the importance of litigation being conducted in a proportionate manner (at [8]):

The new requirement of proportionality, which is in mandatory and unqualified terms in rule 44.4(2) is important in itself since it should discourage parties from incurring disproportionate costs as those costs will not be recoverable unless an indemnity order is made. This restriction on costs should encourage parties to conduct litigation in a proportionate manner, which is an important objective of the CPR. ...

Balancing the above matters, including the statutory objectives enunciated in the Civil Procedure Act, and noting that the ultimate touchstone in exercising the discretion as to costs is that of fairness between the parties, I am of the view that the plaintiffs (who succeeded in the cause but recovered far less than that claimed) should have their costs of the proceedings (with the exception of the expert's report that proceeded on an assumption not made out on the evidence) up to 30 September 2011 and that (other than as specified below) the defendants should not be liable for the plaintiffs' costs from 1 October 2011, including of the main hearing before me. Further, I consider that the first plaintiff should pay half of the defendants' costs of the 4 day final hearing, on the basis that had the issue of ownership of the trademarks not still remained to be considered at the hearing, it is likely in my opinion that the hearing time would have been halved.

Costs of the application before Bergin CJ in Eq for leave to bring the derivative suit

As noted earlier, in issue before me are not only the costs of the main proceedings but also the costs of the application for leave to bring the derivative proceedings. Ms Francois has submitted that, as a matter of discretion, Ms Fitzpatrick should not obtain those costs having regard to the ultimate outcome of the proceedings (though Ms Francois accepts that the defendants cannot obtain an order for those costs in light of the order made by Bergin CJ in Eq that those costs be the plaintiffs' costs in the cause).

In JT Stratford & Son Ltd v Lindley [1969] 3 All ER 1122 at 1123, Lord Denning MR considering the import of an order for "costs in the cause" said:

... "Costs in the cause" means that the costs of those interlocutory proceedings are to be awarded according to the final award of costs in the action. If the plaintiff wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the defendant. Vice versa, if the defendant wins and gets an order for his costs, he gets those interlocutory costs as part of his costs of the action against the plaintiff. (I may add in parenthesis that "plaintiff's costs in the cause" means that, if the plaintiff wins, he gets the costs of the interlocutory proceedings; but, if he loses, he does not have to pay the other side's costs of them. "Plaintiff's costs in any event" means that, no matter who wins or loses when the case is decided, the plaintiff is to have the costs of those interlocutory proceedings. "Plaintiff's costs" means that the plaintiff is to have the costs of the interlocutory proceedings without waiting for a decision.)

Here, Ms Fitzpatrick has succeeded in the cause (though she has not recovered anywhere near the amount claimed). By reason of the conclusion reached in relation to the costs of the main proceedings, she will obtain a partial order for costs of the proceedings as a whole (though she will also be liable for a portion of the defendants' costs). The effect of the order made by Bergin CJ in Eq in 2010, in those circumstances, seems to me to be that Ms Fitzpatrick should recover her costs of the derivative proceedings since she has succeeded in the cause.

To the extent that there is any discretion open to be exercised to disallow those costs, notwithstanding that Ms Fitzpatrick has succeeded (although for a lesser amount) in the cause, I would not consider it appropriate to exercise the discretion to do so in the circumstances of this case. Ms Fitzpatrick contended, correctly, that the company had a claim against Mr Cheal for breach of his duties as a result of the diversion of the company's business. Granted, this included the assumption that the trademark was an asset of the company but it was not solely based thereon.

There was a sound basis for the claim for breach of fiduciary duties/oppression irrespective of the individual or entity in whom or in which ownership of the trademark reposed at the relevant time. There was held to be a serious question to be tried both as to the alleged diversion of the business including the trademark and as to the alleged breach of fiduciary duties/oppression.

It was not until much later (July 2011) that the question of an error in the accounts was raised and not until late September 2011 that there was evidence served as to this issue. At the time that the matter was before Bergin CJ in Eq the argument put for the defendants, as recorded in her Honour's judgment, was that the reference to "Patents & Trademarks" might refer to other trademarks and not to the critical trademark.

I consider that the plaintiffs should have their costs of the application before Bergin CJ in Eq.

Costs of the latest motion

As to the costs of the Amended Notice of Motion, the defendants failed in their disqualification application but were successful in their application to reopen the 1 June judgment. The bringing of the former application had the consequence that there was a separate and additional hearing beyond the date for the hearing of the application to recall the judgment. The latter was heard at the same time as the submissions on costs.

I consider that the appropriate order is for the defendants to pay the costs of the hearing on 17 July 2012 (an order with which Ms Francois does not cavil) and for each party to bear its own costs of the hearing on 27 July 2012 on which there was mixed success. (In that regard, while the defendants were successful in obtaining the recall and variation of the judgment, the cost of so doing would have been disproportionate but for the argument on costs. It is in relation to that argument that I consider the parties had mixed success.)

Orders

I consider (and Counsel accepted that this was appropriate) that the costs orders should be set-off as against each other. This means that the timing of the transfer of shares may need to be made dependent on the outcome of the costs assessments (since it is not possible to know who will end up being entitled to a payment in his or her favour once the orders are set-off against each other). It would be preferable (in the interests of minimising costs) if there could be a "wash-up" of the costs orders in order to avoid the need to have a formal assessment. However, the history of the litigation to date does not leave me hopeful that this can be agreed and I have insufficient information on the costs to be in position to make a broad brush estimate of that kind.

Therefore, the substantive orders I propose to make are as follows:

1. The 1 June 2012 judgment be recalled and varied by deleting the words:

[46] ... and that, since it was Mr Cheal who wrongfully deprived Chilli #1 of the opportunity to obtain payment for the use of its name, this sum should be attributed to Ms Fitzpatrick's share in the company.

[47] Accordingly, I will award Ms Fitzpatrick the additional sum of $4,000 in effect as the premium payable for the use of the Chilli #1 name.

2. Vacate order 1 made on 1 June 2012.

3. Substitute for order 1 made on 1 June 2012 the following:

Pursuant to order 2 made on 5 April 2012, order that the first defendant pay to the first plaintiff the further sum of $2,000 (representing half of the value determined on 1 June 2012 to be the value of the company name and associated goodwill as at 30 June 2012).

4. Order the defendants to pay the plaintiffs' costs of the main proceedings on a party/party basis up to and including 30 September 2011 (other than the costs of preparation of the expert's report relied upon by the plaintiffs in these proceedings).

5. Subject to order [6] below, order the first plaintiff to pay half of the defendants' costs of the main proceedings on a party/party basis from 1 October 2011.

6. Order the defendants to pay the plaintiffs' costs of the application heard by Bergin CJ in Eq in 2010 for leave for the first plaintiff to bring a derivative suit in the name of the second plaintiff against the defendants (those costs on a party/party basis).

7. Order the defendants to pay the plaintiffs' costs of the hearing before me on 17 July 2011. Otherwise order that each party bear its own costs of the Amended Notice of Motion filed on 17 July 2011.

8. Stay the operation of order 1 on 5 April 2012 and order 1 made on 1 June 2012 (as varied by order 1 above) until the costs payable pursuant to orders above have been determined (by assessment or agreement (so as to permit the set-off ordered below).

9. Order that the respective costs orders be set-off against each other, and that any sum payable to the defendants for costs after the operation of that set-off be then set-off against the amount ordered to be paid to the first plaintiff for the purchase of her shares.

10. Upon payment of the amount (if any) due to the first plaintiff following the setting-off of the respective costs orders (or, if no such sum is payable, on the finalisation of the costs orders and consequent operation of the set-offs), the first plaintiff execute and deliver to first defendant a transfer in registrable form of her shares in the second plaintiff.

As there may be some other fashion in which the set-off process might more conveniently work, I direct the parties to file draft short minutes of order (as agreed, or failing agreement as each contends should be made) reflecting the above orders and putting in place a proposed regime in relation to the proposed set-off within 7 days so that final orders can be entered to dispose of the proceedings. Unless either party seeks to be heard on the ultimate orders (in the event that they have not been able to be agreed), I will then make the final orders in chambers and notify the parties accordingly.

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Decision last updated: 14 August 2012

Medium Neutral Citation:	In the matter of Cheal Industries Pty Ltd - Fitzpatrick v Cheal [2012] NSWSC 932
Hearing dates:	27 July 2012
Decision date:	14 August 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Ward J
Decision:	Parts of earlier judgment recalled and varied. Ruling on costs orders to be made in relation to the proceedings and defendants' application of 17 July 2012.
Catchwords:	PRACTICE AND PROCEDURE - application to reopen judgment of 1 June 2012 on basis of denial of procedural fairness - HELD - application to reopen judgment granted - judgment of 1 June 2012 varied COSTS - offers of compromise - whether first offer was a valid offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) where it included offer to pay plaintiffs' costs as agreed or assessed - HELD - first letter was not a letter of under the Uniform Civil Procedure Rules 2005 (NSW) nor a Calderbank offer - whether first offer should be treated as a Calderbank offer - HELD - in absence of statement of intention to treat as Calderbank offer, Calderbank principles not enlivened - OBITER - rejection of first offer was not unreasonable COSTS - Calderbank offer - whether rejection of Calderbank offer expressed to be "inclusive of costs" was unreasonable in the circumstances - HELD - rejection of second letter of offer was not unreasonable COSTS - apportionment of costs - where plaintiffs succeeded overall, but defendants succeeded on a significant factual issue in the proceedings - where ultimate outcome obtained by plaintiffs was disproportionate to the costs involved in the litigation - whether costs should be apportioned according to the principle of proportionality - HELD - costs of the hearing apportioned in light of the factual issue on which the defendants succeeded and having regard to principles of proportionality
Legislation Cited:	Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Supreme Court Rules 1970 (NSW) Trade Marks Act 1995 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 A11 ER 685 Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120 Anglo Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 302; (1993) 111 ALR 385 Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (Formerly GIO Insurance Ltd) [2006] NSWSC 583 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 Cat Media Pty Ltd v Allianz Australia Insurance Ltd [2006] NSWSC 790 Commonwealth of Australia v Gretton [2008] NSWCA 117 Compagnie Noga d'Importation et d'Exportation SA v Abacha [2001] 3 All ER 513 Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153 Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60 Cretazzo v Lombardi (1975) 13 SASR 4 Dais Studio Pty ltd v Bullet Creative Pty Ltd [2008] FCA 42 De L v Director-General, NSW Dept of Community Services (No 2) (1997) 190 CLR 207 Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 Dobrodinski v Salievic [2001] SASC 277 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251; (2004) 51 ACSR 555 Dunstan v Rickwood (No 2) [2007] NSWCA 266 Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 Elite Protective Personnel Pty Limited v Salmon (No 2) [2007] NSWCA 373 Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Expo Aluminium (NSW) v Patman Pty Ltd (No.2) (unreported, NSWCA, 29 April 1991) Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672 Golding v Vella (No 2) [2001] NSWSC 731 Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Pty Ltd) [1998] FCA 1429; (Unreported Judgment of the Federal Court of Australia, Moore J, 11 November 1998) Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272 Hughes v Western Australian Cricket Association (1986) ATPR 40-748 In re Swire; Mellor v Swire (1885) 30 ChD 239 Ivanhoe Gold Corporation Limited v Symonds (1906) 4 CLR 642 James v Surf Road Nominees (No 2) [2005] NSWCA 296 Jones v Bradley (No 2) [2003] NSWCA 258 JT Stratford & Son Ltd v Lindley [1969] 3 All ER 1122 Lavender View Regency Pty Ltd v North Sydney Council (No 2) [1999] NSWSC 775 Leallee v Cmr of the NSW Department of Corrective Services [2009] NSWSC 518 Leichhardt Municipal Council v Green [2004] NSWCA 341 LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2002] NSWSC 72 Lownds v Home Office [2002] EWCA Civ 365 M T Associates Pty Ltd v Aqua-Max Pty Ltd [2000] VSC 163 Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 Monie v Commonwealth of Australia (No2) [2008] NSWCA 15 Mutual Shipping Corp of New York v Bayshore Shipping Co [1985] 1 All ER 520 NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 New Cap Reinsurance Corporation v Grant [2009] NSWSC 950 Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group Inc [2007] NSWCA 195 Old v McInnes and Hodgkinson [2011] NSWCA 410 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Pacific General Securities Limited v Soliman & Sons Pty Limited [2006] NSWSC 724 Paul's Retail Pty Ltd v Morgan [2009] NSWSC 1343 Penrith Rugby League Club Ltd (t/as Cardiff Panthers) v Elliot (No 2) [2009] NSWCA 356 Pritchard v Trius Constructions Pty Ltd (No 2) [2011] NSWSC 1114 R v Nitin Gin (No. 2) [2001] NSWCCA 234 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 Roads and Traffic Authority v McGregor (No 2) [2005] NSWCA 453 Rogers v Ingham (1876) 3 Ch D 351 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Sahab Holdings Pty Ltd v Registrar-General (No 3) [2010] NSWSC 403 Short v Crawley (No 40) [2008] NSWSC 1302 Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Standard Commodities Pty Ltd v Societe Socinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496 Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446 Sydney City Council v Geftlick [2006] NSWCA 280 Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951 Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153 Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213 Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 Turkmani v Visvalingam (No 2) [2009] NSWCA 279 Twenty-First Australia Inc v Shade (Unreported, Supreme Court of NSW, Young J, 31 July 1998) Uniline Australia Ltd (ACN 010 752 057) v Sbriggs Pty Ltd (ACN 007 415 518) (No 2) [2009] FCA 920; (2009) 82 IPR 56 Waterman v Gerling Australia Insurance Co Limited (Costs) [2005] NSWSC 1111 Waters v P C Henderson (Australia) Pty Ltd (Unreported, NSW Court of Appeal, 6 July 1994) Wilding v Sanderson [1897] 2 Ch 534 Windsurfing International Incorporated v Petit (1987) AIPC 90-441 Wentworth v Rogers [2002] NSWSC 921 Wentworth v Wentworth [1999] NSWSC 638
Texts Cited:	Quick on Costs (R Quick and D Garnsworthy, Thompson Reuters)
Category:	Costs
Parties:	Simone Leah Fitzpatrick (First Plaintiff) ACN 089 142 870 Pty Ltd (Second Plaintiff) James Mitchell Cheal (First Defendant) Cheal Industries Pty Ltd (Second Defendant) Chilli Surfboards Pty Ltd (Third Defendant)
Representation:	Counsel M B Evans (Plaintiffs) Ms R Francois (Defendants) Solicitors Lathams Lawyers (Plaintiffs) Brown Wright Stein (Defendants)
File Number(s):	09/291052