In the matter of Hillsea Pty Limited

[2019] NSWSC 1309

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Hillsea Pty Limited [2019] NSWSC 1309

Hearing dates:

Written submissions 11-12 September 2019

Decision date:

27 September 2019

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Prayers 4-8 of the Amended Originating Process filed 13 November 2017 and Points of Claim filed 24 October 2017 be dismissed. The Notice of Motion filed on 14 May 2019 be dismissed. Order that the Second Defendant be wound up. The winding up order to be stayed until 4pm on 21 October 2019.

 Orders as to costs made.

Catchwords:

COSTS – party/party – determination as to costs of hearing – where prayers of originating process divided over two separate hearings – where plaintiffs had success at first hearing – whether plaintiffs should be awarded their costs of first hearing.

 

COSTS – party/party – determination as to costs of hearing – where prayers of originating process divided over two separate hearings – where plaintiffs were unsuccessful at second hearing – whether plaintiffs should pay costs of first defendant at second hearing.

 

COSTS – party/party – general rule that costs follow the event – where interlocutory process and notice of motion need not be determined – whether filing party should be ordered to pay costs.

  COSTS – application for costs on an indemnity basis – where offer of compromise/Calderbank offer made – where offer addressed to multiple parties – where offer sent during holiday period and open for acceptance until soon after end of holiday period – whether it was unreasonable for offers to not be accepted.

Legislation Cited:

- Civil Procedure Act 2005 (NSW) s 98(1)(c)
- Corporations Act 2001 (Cth) ss 461(1)(k), 466, 532(2), 1318, 1322, 1322(4), 1322(4)(a), 1322(4)(c)
- Income Tax Assessment Act 1936 (Cth) Pt III, Div 7A
- Uniform Civil Procedure Rules 2005 (NSW) Pt 20, Div 4; rr 20.26, 20.26(2), 42.1, 42.2, 42.5, 42.14, 42.15A

Cases Cited:

- Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
- Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131
- Calderbank v Calderbank [1975] 3 All ER 333
- Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266
- Commonwealth of Australia v Gretton [2008] NSWCA 117
- Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
- Hamod v State of New South Wales [2002] FCAFC 97; (2002) 188 ALR 659
- Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34
- Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324
- Leichhardt Municipal Council v Green [2004] NSWCA 341
- Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19
- Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816
- Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
- Re Alsafe Security Products Pty Ltd atf the Alsafe Trust (in liq) [2016] NSWSC 575
- Re Hillsea Pty Limited [2019] NSWSC 1152
- Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40
- Walker v Harwood [2017] NSWCA 228
- Westpac Banking Corporation v Ollis [2007] NSWSC 1008

Category:

Costs

Parties:

Elizabeth Mary McIvor (First Plaintiff/First Cross-Defendant to First Cross-Claim/Second Cross-Defendant to Second Cross-Claim)
Maureen Ann Joseph (Second Plaintiff/Second Cross-Defendant to First Cross-Claim/Third Cross-Defendant to Second Cross-Claim)
Peter Anthony Joseph (First Defendant/Cross-Claimant to First Cross-Claim/First Cross-Defendant to Second Cross-Claim)
Hillsea Pty Limited (Second Defendant/Third Cross-Defendant to First Cross-Claim/Cross-Claimant to Second Cross-Claim)

Representation:

Counsel:
A J Grant (Plaintiffs)
D A Smallbone/D Edney (First Defendant)
M R Tyson (Second Defendant)

  Solicitors:
W K Cahill & Associates (Plaintiffs)
Terence Stern (First Defendant)
Barnes Law Group (Second Defendant)

File Number(s):

2017/285473

Judgment

1. On 4 September 2019, I delivered judgment in respect of proceedings between Mrs McIvor and Ms Joseph, as executors of the estate of the late Maris Astella Joseph (to whom I will refer, without disrespect, as “Marie”) as Plaintiffs, Mr Peter Joseph (to whom I will refer, without disrespect, as “Peter”) and Hillsea Pty Limited (“Company”): Re Hillsea Pty Limited [2019] NSWSC 1152 (“Principal Judgment”).

2. I observed that the Plaintiffs pressed a claim for declaratory relief at the hearing, as to which they were not successful, and that they sought costs of an application previously heard before Brereton J. I addressed that claim for costs in the Principal Judgment, where it comprised a large part of the substantive relief that was then pressed by the Plaintiffs, but (as the Plaintiffs requested) reserved the opportunity for the parties to make further written submissions before I made a final order in that respect. The Plaintiffs have taken up that opportunity below.

3. I also addressed a First Cross-Claim brought by Peter and held that the Court should validate several smaller payments which he had caused the Company to make (which I address further below) and excuse him from liability in respect of them under s 1322(4) of the Corporations Act 2001 (Cth). I also held that the Company should be wound up on the just and equitable basis under s 461(1)(k) of the Corporations Act, by reason of the failure of the purposes for which it was established and the collapse of the relationship between its shareholders, and in circumstances that both the Plaintiffs and Peter had proposed the Company’s winding up at various times. I noted that I would stay the winding up order for 21 days, to allow the parties an opportunity to seek to negotiate a resolution of matters so as to avoid a winding up. I held that it was not necessary to address a claim for abuse of process raised by a Notice of Motion filed by Peter, although I noted I was not persuaded that the passage of time had given rise to any difficulty in respect of his defence of the Plaintiffs’ claims relating to the allegedly unauthorised payments to him.

4. I also addressed a Second Cross-Claim brought by the Company against Peter, which had primarily sought an amount referrable to interest on loan arrangements between the Company and Peter and two of his companies, said to have originated from an oral agreement reached between Peter and Marie, as reported to Mrs McIvor by Marie in conversations said to have occurred some 15 or 16 years ago. That claim failed, because I did not accept Mrs McIvor’s evidence as to those conversations and the other evidence on which the Company relied was not capable of establishing either the terms of the alleged loan agreements or that they were intended to have legally binding effect. The Company also maintained several claims, of relatively small amounts, in respect of director’s fees paid to Peter and several payments made by the Company to third parties. The Company claimed that those payments were unauthorised because it did not satisfy the constitutional requirement for a specified number of directors at the time they were made (as was the case for many years before and in respect of many other transactions) and also challenged the propriety of the transactions. As I noted above, I held that the Court should validate those several smaller payments and excuse Peter from liability in respect of them under s 1322(4) of the Act.

5. I directed the parties to bring in agreed short minutes of order to give effect to the Principal Judgment, and as to costs, within 7 days, or, if there was no agreement, their respective short minutes of order and submissions not exceeding 10 pages, in one and a half spacing, as to the differences between them. The Plaintiffs and the Company, who were in substantially the same interests throughout the proceedings, agreed proposed short minutes of order between them and each served submissions within the time specified in the order. Peter proposed separate orders, and did not serve submissions within the specified time, but did so early the next day. I will have regard to the submissions I received, notwithstanding that the Plaintiffs’ submission marginally exceeded the page limit set in my orders and Peter’s submission was marginally late.

Proposed orders as to matters other than costs

6. All parties accepted that the balance of the Plaintiffs’ claims in the Amended Originating Process and Points of Claim should be dismissed in accordance with the Principal Judgment. I will adopt the Plaintiffs’ and the Company’s formulation of that order, which is somewhat more precise, although no party identified any difference of substance between the two forms of order in that regard. There was also substantially common ground as to orders for the winding up of the Company, leave under s 532(2) of the Corporations Act for the appointment of Mr Barnden as its liquidator and the stay of that order for 21 days in accordance with the Principal Judgment. The Plaintiffs and the Company submit that the Court should note an undertaking given by Mr Barnden in his consent to act as liquidator in respect of an invoice issued to the Company. It is not necessary or appropriate that I do so, where that is a matter between the liquidator and the Company which was not in issue in these proceedings.

7. The Plaintiffs and the Company formulated the orders to be made under s 1322 of the Act, in respect of Peter’s First Cross-Claim, as declarations rather than as orders. Mr Smallbone and Mr Edney, who appear for Peter, submit and I accept that the relief under s 1322(4)(a) of the Corporations Act should be framed as a declaration and the relief under s 1322(4)(c) as an order, consistent with the terms of those paragraphs. I will make orders in that form.

8. Both parties accepted that Peter’s Notice of Motion filed 14 May 2019 should be dismissed and that there should be judgment for Peter on the Second Cross-Claim. Peter also sought an order that the Second Cross-Claim “otherwise be dismissed” although it is not apparent that any part of that Second Cross-Claim would survive the judgment in his favour. I can see no need for that further order.

Costs of the application before Brereton J

9. As I noted above, I addressed the Plaintiffs’ claim for costs of their application before Brereton J in the Principal Judgment, where it had comprised a large part of the substantive relief that was then pressed by the Plaintiffs. I referred to the circumstances in which Brereton J had been erroneously informed by the Plaintiffs’ Counsel, in the course of that application, that all of the relevant correspondence was in evidence and had declined an adjournment to allow Peter to lead further evidence, plainly on that basis. I observed (at [45]–[46]) that:

“Had the Plaintiffs taken a different approach at the hearing before Brereton J, and not informed his Honour that all relevant correspondence was in evidence, but instead informed him that it was a matter for Peter to tender the correspondence on which he relied, I readily infer that his Honour would have adjourned the matter to allow Peter an opportunity to lead that evidence rather than determine the application on incomplete evidence. Conversely, it is apparent that Brereton J in fact determined the application before him on the basis that all relevant correspondence was before him, where that was what he was told by the Plaintiff’s Counsel, and that regrettably was not the case.

My preliminary view is that these matters have the result that an order for costs of and incidental to the application before Brereton J should not be made in the Plaintiffs’ favour and there should be no order as to the costs of and incidental to that application. I am not satisfied that the Court should go further to make an order for indemnity costs of that application against the Plaintiffs, where they had succeeded in that application and that result was not set aside, and where it is not established that they had deliberately misinformed Brereton J as to the completeness of the evidence before him. I will allow the parties a brief opportunity to make further written submissions before making a final order in that respect, limited to any matter that was not addressed in their earlier submissions as to this issue.”

10. I now address the parties’ further submissions in that respect, on the basis that I am doing no more than determining a question of costs of an interlocutory application. I largely do not repeat the matters which I addressed in the Principal Judgment in reaching the preliminary view that I there set out, and this judgment should be read together with the Principal Judgment in respect of this issue.

11. The Plaintiffs seek an order that Peter pay their costs of the application for prayers 1–3 of the Originating Process and Amended Originating Process, heard before Brereton J on 13 November 2017, on the indemnity basis. Peter seeks an order that each party pay its own costs of prayers 1–3 of the Originating Process and Amended Originating Process heard before Brereton J, up to and including 11 December 2017. Mr Smallbone and Mr Edney point out that that is the date on which Peter’s Interlocutory Process seeking to set aside Brereton J’s orders was made returnable and then adjourned to the final hearing for the determination of costs. I will address the costs of that Interlocutory Process separately below.

12. The relevant principles are well-established, although the parties paid limited attention to them in their submissions as to costs. The Court has discretion to determine by whom, to whom and to what extent costs are to be paid, and s 98(1)(c) of the Civil Procedure Act 2005 (NSW) permits the Court to order costs on an ordinary or an indemnity basis. Costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). UCPR r 42.2 provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis, and UCPR r 42.5 deals with an order for costs on an indemnity basis. A successful party has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced, and the underlying principle is that costs should be paid in a way that is fair, having regard to what the Court considers to be the responsibility of each party for the incurring of the costs: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [44], [134]; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]; Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98]; Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [9].

13. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v State of New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]. Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Westpac Banking Corporation v Ollis [2007] NSWSC 1008 at [6]; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6].

14. Mr Grant, who appears for the Plaintiffs, now makes further submissions as to the content of the transcripts of the hearing and directions hearing before Brereton J, which may infringe the limitation in scope which I noted in paragraph 9 above. I consider that it is preferable to address them on their merits rather than investigate that question further. I also observe, without further comment that Mr Grant indicates that he had not reviewed the transcripts of the application before Brereton J during the hearing before me, notwithstanding that they had been tendered and were the subject of submissions at that hearing and that I had addressed their implications in the Principal Judgment. Mr Smallbone and Mr Edney submit that it is not open to the Plaintiffs to reargue issues as to the costs of the hearing before Brereton J that were already “determined” in the Principal Judgment, where those matters were addressed in the parties’ closing submissions, and all parties had the relevant transcripts which had been tendered by Peter. It seems to me that it is open to the Plaintiffs to reagitate that issue, where I had accepted their submission that I should allow the parties an opportunity to make further submissions (limited as noted in paragraph 9 above) if they wished, and had therefore not “determined” the matter in the Principal Judgment, but only reached and expressed a preliminary view. I am not persuaded, for the reasons noted below, that I should now take a different view to that which I had expressed as a preliminary view in the Principal Judgment.

15. Mr Grant submits that his review of the transcripts of the proceedings before Brereton J confirms that his Honour was not “misled” and, in substance, he repeats (despite the limitation noted in paragraph 9 above) the submission that he had previously made (apparently without reviewing those transcripts) at the hearing before me and which I had noted and addressed in paragraph 44 of the Principal Judgment as follows:

“Mr Grant responds that the Court was not misled, and refers to the steps taken prior to the hearing before Brereton J and the basis on which orders were made by his Honour. It seems to me that that submission does not assist the Plaintiffs, where Brereton J had been told that all relevant correspondence was before him; that was not the case; and his Honour later observed that he had acted on the basis that what he had been told was correct. I also do not accept Mr Grant’s submission that the Court should act only on affidavit evidence of what occurred at the hearing before Brereton J, or that it is relevant that Ms Maureen Joseph was not cross-examined as to that matter, where the transcript of the proceedings before Brereton J was tendered by Peter. Mr Grant also seeks to justify the fact that Brereton J was not provided with all of the relevant correspondence, and was misinformed as to the completeness of the correspondence that was provided, by pointing out that the application was not brought ex parte and, implicitly, Counsel then briefed for Peter (who does not now appear for him) could have corrected the incorrect representation made by the Plaintiffs to Brereton J. I am not persuaded by that submission, which seems to me to give much too little weight to the Plaintiffs’ and their legal representatives’ responsibilities to the Court in that regard.”

16. I continue to take the view, for the reasons noted in the paragraph quoted above, that this submission does not answer the obstacles to making an order for costs in favour of the Plaintiffs, which I address further below. Mr Grant also submits that Brereton J was not asked to, and did not, vacate his orders of 14 November 2017, but that only indicates that Peter did not seek to resist the appointment of directors nominated by the Plaintiffs to the Company or the creation of a share register, and does not advance the question whether the orders would have been made had all the correspondence disclosing the parties’ positions been put before Brereton J. Mr Grant also submits that Peter had the opportunity to lead evidence on the application before Brereton J. It is not necessary to address that submission, because the difficulty which arose before Brereton J was, as I noted in the Principal Judgment, that he was misinformed as to the completeness of the evidence before him and, as I noted in paragraph 45 of the Principal Judgment, I infer that his Honour would have adjourned the matter to allow Peter an opportunity (or further opportunity) to lead further evidence had that not occurred.

16. Mr Grant also seeks to have me draw further inferences as to what was or was not significant in Brereton J’s decision at the hearing before him, and as to what Counsel who then appeared for Peter might or might not have done in response to the incorrect information provided to Brereton J, and as to the relevance or otherwise of the evidence which Peter wished to lead at that hearing. It seems to me that the Plaintiffs here invite a speculation that matters would have proceeded in the same way to the same result had Brereton J not been misinformed. I do not consider that I can draw that conclusion, although I do infer (as I noted in the Principal Judgment) that his Honour would likely have acceded to Peter’s request to be allowed the opportunity to lead further evidence had he not been misinformed, and the Plaintiffs and Peter would then have had to address the position that emerged from that further evidence. It is not possible to know what would have occurred beyond that point, although it is at least a possibility that orders would not then have been made, where there was an available alternative that the parties would themselves complete the appointment of directors to which they had agreed and the Plaintiffs would then establish a share register as they ultimately did.

17. It seems to me that, but for the difficulties which arose in this respect, the Plaintiffs would ordinarily have had their costs of the application before Brereton J, because costs would have followed the event. I do not consider that I am in a position now to determine what would have occurred, had the Plaintiffs not misinformed Brereton J as to the completeness of the evidence before him, beyond the inference that his Honour would likely have permitted an opportunity for Peter to complete the evidence before him. Had that occurred, it may be that, as the Plaintiffs contend, they would have succeeded at a further hearing before Brereton J; however, it is also possible that it would then have been apparent that such a hearing was unnecessary, because there was little or no dispute between the parties as to what should occur, and no further costs would have been incurred. The uncertainties introduced by these matters displace the ordinary position that the Plaintiffs should have the costs of the application before Brereton J. There should be no order as to the costs of and incidental to the Plaintiffs’ application for prayers 1–3 of the Amended Originating Process before Brereton J.

Costs of the balance of the proceedings

19. The parties took different views as to the costs of the balance of the proceedings. I had expressed a preliminary view in respect of that issue in the Principal Judgment (at [121]) as follows:

“At least since 4 December 2017, it should have been apparent to the Plaintiffs that they had no standing to pursue the bulk of the claims they brought against Peter on behalf of the Company, where they had not sought leave to do so by way of derivative proceedings, since Peter had expressly raised that matter in his Defence. The Plaintiffs have now abandoned the bulk of the relief they sought, and failed in obtaining the declaration that they sought, in proceedings that have occupied four hearing days. My preliminary view is that they should pay the Defendants’ costs of the claims that they did not press at the hearing, and should also pay the Defendants’ costs of the claims that they pressed and on which they failed at the hearing. It may also be appropriate that a costs order should also be made against the Plaintiffs, rather than against the Company, in respect of the unsuccessful claims pursued by the Company at the hearing, where those claims were initiated by the Plaintiffs although they lacked standing to bring them, and then taken up by the Company. I will, however, afford the parties an opportunity for brief further submissions in that respect.”

20. Mr Smallbone and Mr Edney submit that, other than as to prayers 1–3 of the Originating Process and Amended Originating Process determined by Brereton J, the claims against Peter have failed and he has substantially obtained the relief he sought. They submit that the starting point is that Peter should receive costs of the matters other than those determined before Brereton J, on the ordinary basis that costs follow the event.

21. The Plaintiffs respond by pointing to the chronology of the proceedings. They submit that, at the time they sought the relief claimed before Brereton J, there was no dispute as to their standing to seek such relief. That is not controversial, and I have addressed the position as to the costs of the application before Brereton J above. The reasons they were not allowed the costs of that application do not depend on any lack of standing to bring it. The issue as to the Plaintiffs’ standing or sufficiency of interest potentially arose as to the relief sought in paragraphs 4 and 5 of their Originating Process filed on 20 September 2017 and their Amended Originating Process filed pursuant to leave granted by Brereton J on 13 November 2017, which sought declarations that:

“4   A declaration that, as Sole Director of the [Company] since 24 September 2015, [Peter] has acted without the necessary quorum for the transaction of business by the board of Directors.

5   A declaration that all purported acts, matters and things done or suffered by [Peter] as such Director on behalf of the [Company] since 24 September 2015 without the consent of the Plaintiffs are null & void and of no legal effect.”

22. By their Points of Claim as to the relief claimed in prayers 4 and 5 of the Originating Process, filed on 24 October 2017, the Plaintiffs pleaded various acts taken by Peter, including several payments made by him, which they alleged were made without authority. They also sought orders in respect of a claim by the Company, and specifically “[a]n order that [Peter] repay to [the Company] all money taken from it by him without authorisation”, and maintained that pleaded claim at least until it was, at least implicitly, abandoned at the hearing before me. On 14 November 2017, Brereton J ordered that the proceedings continue on pleadings and the Plaintiffs’ Points of Claim filed on 24 October 2017 stand as their Statement of Claim.

23. Mr Grant points out that the Plaintiffs then became members of the Company on 22 November 2017 (I interpolate, after the Originating Process, Amended Originating Process and Points of Claim had been filed) and became two of five directors and obtained control of the Company on 30 November 2017, implicitly, through nominating a third director or acquiring the majority of its shares or both, and he refers to steps they subsequently took to seek to obtain information from Peter. Mr Grant in turn refers to Peter’s Defence filed on 4 December 2017, which responded that only the Company had standing to bring the claims sought to be made in prayers 4 and 5 of the Originating Process and points 2 and 3 of the Points of Claim, and to the First Cross-Claim which was then filed by Peter seeking, inter alia, relief under s 1322 of the Corporations Act.

24. Mr Grant submits that the Company “took over the claims for the unauthorised payments on 25 May 2018” from the Plaintiffs, when it filed its Second Cross-Claim Statement of Cross-Claim, and thereafter prosecuted them. The Second Cross-Claim pleaded loans made by the Company to Peter and his companies and, as it then stood, claimed that Peter was obliged to pay interest on the loans pursuant to Div 7A of Part III of the Income Tax Assessment Act 1936 (Cth). The Company also pleaded, by adopting the Plaintiffs’ claim rather than pleading a freestanding claim that:

“20.   … the plaintiffs (being the second and third cross-defendants) have alleged that [Peter] has withdrawn funds from [the Company] without authorisation.

21.   If the plaintiffs’ claim referred to in the preceding paragraph of the cross-claim is upheld, the [Company] says that it is the proper plaintiff for the claim and that any funds which the plaintiffs (being the second and third cross-defendants) do establish were removed from the [Company] without authorisation, are funds that should be paid to the [Company].”

That pleading plainly contemplated that the Plaintiffs, rather than the Company, would seek to establish that matter, although the Company claimed entitlement to the fruits of the Plaintiffs’ success in that claim.

25. In opening submissions prior to the hearing, Mr Grant variously submitted that, prayers 4 and 5 of the Amended Originating Process were directed to “recovery of the funds taken from the Company by [Peter] without authorisation”; that, when the Company was under Peter’s control, the Plaintiffs had concerns that he was “misappropriating Company funds”; that, by June 2017, they were concerned that he was “withdrawing Company funds for his own (personal) purposes (without authorisation)”; that amounts remained outstanding of “the monies taken by [Peter] from the Company without authorisation”; and that a declaration should be made as sought in prayers 4 and 5 of the Amended Originating Process “such that [Peter] is liable to repay the relevant sums to the Company”.

26. In these circumstances, Mr Grant’s submission that the Company “took over the claims for the unauthorised payments on 25 May 2018” from the Plaintiffs requires significant qualification, so far as the Plaintiffs continued to advance that claim in their opening submissions; the Company’s then pleaded claim assumed that the Plaintiffs would conduct and establish the claims as to unauthorised transactions, as distinct from the claim for interest on loans to Peter; the Plaintiffs continued to seek to establish (possibly unpleaded) allegations of impropriety and breach of duty against Peter; and Mr Grant’s and Mr Tyson’s openings indicated that it was intended that Mr Grant for the Plaintiffs would make the primary submissions as to those claims and Mr Tyson had prepared for the hearing on that basis. The same difficulty arises in respect of Mr Grant’s further submission that:

“Accordingly, as to the Court’s preliminary views (Reasons [121]), the [Plaintiffs] respectfully submit that, after 4 December 2017, they did not, in fact, prosecute the unauthorised payments claims against [Peter] (pursuant to Prayers 4 & 5). They accepted that [Peter] had taken the point in his Defence (and thereafter the Company brought these claims).”

27. I do accept the Plaintiffs’ further submission that it was not necessary for them to bring a derivative (or, I interpolate, any) claim in respect of the Company’s causes of action, after the point at which the Company adopted, by cross-reference, the claims pursued by the Plaintiffs in the Second Cross-Claim and, a fortiori, after Mr Tyson accepted on the first day of the hearing that the Company would need to lead evidence and he would need to make substantive submissions to establish the Company’s claims.

28. Mr Grant also submits, possibly inconsistently with the submissions to which I have referred above, that the Plaintiffs did not “abandon” the bulk of the relief they sought (Principal Judgment [121]), relying on the proposition that prayers 4 and 5 of their Amended Originating Process were “taken over” by the Company. It seems to me that the Plaintiffs’ retreat from these claims in opening oral submissions at the hearing before me, on the basis they lacked standing, and the Company’s acceptance that it would have to establish them, amounts in substance to the Plaintiffs’ abandonment of the claims. That position was confirmed by the Plaintiffs’ closing oral submissions. Had the Plaintiffs not abandoned those claims and the relief sought on the Company’s behalf in prayer 2 of their Points of Claim, I would have dismissed those claims, because the Plaintiffs had no standing to bring them and for the further reasons the corresponding claims brought by the Company were dismissed.

29. By reference to these matters, Mr Grant submits that it would not be appropriate that any costs order be made against the Plaintiffs (rather than the Company) concerning prayers 4 and 5 in their Amended Originating Process and, presumably, the corresponding claims in their Points of Claim. I do not accept that submission. It seems to me that, where the Plaintiffs pursued those claims to the point of the opening of the hearing before me, they should be ordered to pay Peter’s costs of and incidental to their application for prayers 4–6 of the Amended Originating Process and their Points of Claim. I recognise that although there will be some overlap between those costs and the costs attributable to the parallel claim by the Company in the Second Cross-Claim, which may complicate the assessment process.

30. The Plaintiffs and the Company submitted that Peter’s costs in respect of the winding up sought by his First Cross-Claim should be taxed and paid in accordance with s 466 of the Corporations Act, as costs in the winding up, in accordance with prayer 3 sought by him in that First Cross-Claim. I accept that a costs order is properly made substantially in this form, where that is the order that Peter sought, subject to an amendment to reflect the process of assessment rather than taxation in respect of orders for costs made in this Court.

31. The Plaintiffs submit that they should otherwise pay 50% of Peter’s costs of the First Cross-Claim. They submit that Peter was unsuccessful on several claims brought in the First Cross-Claim, including that the Company had suspended business for a year and an indemnity under article 114 of the Company’s articles of association, and that there were several claims contested by the parties which the Court has not found necessary to decide. Mr Grant submits, and I accept, that a significant amount of the affidavit evidence went to the oppression claim which was also the basis of the winding up claim on the just and equitable ground. I do not accept this further submission, made without evidentiary support, that the bulk of the parties’ costs were spent on that matter. Mr Grant also submits that Peter “essentially abandoned” the other claimed grounds of winding up, and I accept that Peter plainly placed primary weight on his submissions as to a failure of substratum, as to which he was successful. Mr Grant submits that, in these circumstances, Peter should not have all of his costs of the First Cross-Claim, given the “limited bases” on which he has been successful and his failure on the suspension of business claim.

32. Mr Smallbone and Mr Edney responded, in respect of the issue of apportionment of costs generally, that the case law indicates that, unless a particular issue or group of issues is clearly dominate or separate, it will ordinarily be appropriate to award costs to the successful party without attempting to differentiate between the particular issues on which it succeeded and those on which it failed: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]. They submit that Peter was successful on the dominant issues, which were the subject of the overwhelming majority of evidence and argument, while recognising that he did not succeed on what they characterise as “alternative arguments”. They submit that those other arguments could not be characterised as raising “clearly dominant or separate” issues.

33. As I noted above, costs ordinarily follow the event although the Court may, in some circumstances, allow a portion of costs where a party has succeeded only on a distinct part of the claim. The scope of that principle has been addressed in the case law, in addition to the decision to which Mr Smallbone and Mr Edney referred. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], the Court of Appeal observed that, in relation to trials, it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party were unsuccessful took up a significant part of the trial, either by way of evidence or argument. In Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 at [6]–[7], the Court of Appeal in turn observed that:

“Section 98 of the Civil Procedure Act2005 (NSW) confers on the Court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the general rule is that the Court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the “event” refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per Ward, Emmett and Gleeson JJA. Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

The relevant principles for the determination of costs on an issue-by-issue basis were stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA:

“Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. 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: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported).

In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal.

If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27].

Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed).

A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.””

34. In Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5], the Court of Appeal noted that:

“There is no issue as to the relevant principles. The discretion under Civil Procedure Act 2005 (NSW), s 98 is ordinarily exercised by requiring that “costs follow the event”: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) “that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action” … But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least “unless a particular issue or group of issues is clearly dominant or separable” … And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff ...” [citations omitted]

35. I am not persuaded that I should apportion the costs ordered in Peter’s favour in respect of the First Cross-Claim in the manner proposed by the Plaintiffs. It does not seem to me that a particular issue or group of issues was clearly dominant or separable to support such an order. The evidence that went to matters of the Company’s history and shareholders’ dealings between each other was relevant both to the oppression claim and to a claim for the winding up on the just and equitable ground, by reason of the failure of the Company’s purpose and the failure of the shareholders’ relationship. I am not persuaded that a part of the costs of the First Cross-Claim can be separated from the costs of that Cross-Claim generally. I should therefore order the Plaintiffs pay Peter’s costs of the First Cross-Claim (other than the winding up as to which he seeks a separate costs order), without attempting to differentiate between those particular issues on which he was successful and those on which he failed.

36. The Plaintiffs also submit that Peter should pay the Company’s costs of the First Cross-Claim in relation to his claims under ss 1318 and 1322 of the Corporations Act, and the Plaintiffs and the Company also submit that there should be no order as to Peter’s costs of those applications. Mr Tyson submits that Peter sought an indulgence against the Company under s 1322 of the Act and that, given my observation that the relevant transactions were “unauthorised and imprudent” (Principal Judgment [96]) it was appropriate that Peter bear the Company’s costs of the application for relief, irrespective of the outcome. Mr Tyson also submits that the unauthorised transactions caused the Company to be drawn into the proceedings as a substantive party. I do not accept that submission as a matter of fact, where it is inconsistent with the fact that the Company brought a substantial claim against Peter in respect of interest on the loan accounts, as to which it failed. Mr Smallbone and Mr Edney point, in response, to the Court’s findings at Principal Judgment [98] and to the fact that, at the highest, the unauthorised transaction claims amounted to $20,098.35. He points out that Peter had offered to pay $15,896.85 in respect of that claim by way of an offer of compromise, although I will refer below to the issues as to the timing of that offer of compromise.

37. I do not accept the Plaintiffs’ and the Company’s submissions as to the costs of the claims under ss 1318 and 1322 of the Corporations Act. Those claims were defensive in character, in response to the Plaintiffs’ claims against Peter and the Company’s claims against Peter, and were resisted by both the Plaintiffs and the Company. It seems to me that their costs are properly borne by the Plaintiffs. There is no necessity for a separate order for costs against the Company in that respect, where those costs will be paid by the Plaintiffs as costs of the First Cross-Claim generally.

38. The Company accepts that Peter succeeded in his defence of its Second Cross-Claim and submits that it should be ordered to pay part of Peter’s costs of that Cross-Claim on the ordinary basis. Mr Tyson submits there should be some material apportionment of costs, or reduction in the costs otherwise payable, because of several matters. Mr Tyson refers to the fact that Peter’s Notice of Motion filed 14 May 2019 will be dismissed (Principal Judgment [120]) and refers to the nature of the allegations made by Peter in that application and to the evidence that was addressed by the Company in response to that application. I will address that Notice of Motion in dealing with its costs below. Mr Tyson also submits that Peter did not succeed on his claim against the Company for indemnity under article 114 of its articles of association, a matter that I have addressed above in respect of the First Cross-Claim.

39. Mr Tyson submits that the Company brought proceedings in its own name on the Second Cross-Claim; that success in those proceedings would have been for the benefit of all shareholders in the Company; and that it was inevitable that the Company be separately represented once Peter had taken the points that the Plaintiffs did not have standing to pursue the Company’s claim against him and that it was unfair of the Company to pursue the director’s loan against him but not the director’s loan against Marie’s estate. Mr Tyson submits that:

“In those circumstances, it is appropriate therefore, and [the Company] accepts, that subject to the qualifications expressed above, that it is the appropriate party to bear a substantial share of [Peter’s] costs of the second cross-claim.”

40. That submission, whether or not it is justifiable in principle, may be made against the Company’s economic interests and against the interests of Peter as its minority shareholder, so far as it has the consequence that he would bear part of the economic cost of his successful defence of the claim against him. The Company has not sought to pursue any claim against the Plaintiffs for indemnification of its costs which may otherwise have been available to it. I will return to that matter below.

41. The Plaintiffs and the Company contend that I should make an order limiting costs payable to Peter in respect of the Second Cross-Claim to 75%. Mr Tyson refers to a claim raised in Peter’s Defence to Second Cross-Claim that the Company had unfairly and unreasonably discriminated against him in not making any claim against Marie’s estate for an amount on a director’s loan account owed by Marie to the Company. That matter received little attention at the hearing and it does not seem to me that it supports a reduction in the costs that would otherwise be ordered against the Company. I am not persuaded that a part of the costs of the Second Cross-Claim can be separated from the costs of that Cross-Claim generally. I should again take the ordinarily appropriate course of ordering the Company pay the costs of the Second Cross-Claim to Peter as the successful party in it, without attempting to differentiate between the particular issues on which he was successful and those on which he failed.

42. Mr Grant submits that Peter should pay the Plaintiffs’ costs of his Interlocutory Process filed on 20 November 2017, which sought to set aside Brereton J’s judgment in respect of prayers 1–3 of the Amended Originating Process heard before him. Mr Grant variously submits that the application should not have been brought; that its grounds were without merit; that the application was adjourned to the final hearing, but not pressed or relisted; and that the Court would not alter an interlocutory order unless there has been a material change in circumstances. I was not asked by any party to determine the substance of the Interlocutory Process filed 20 November 2017 at the hearing before me and I have no view as to its merits. I will dismiss that Interlocutory Process on the basis that it was not pursued before me. The same reasons of public policy which generally have the result that the Court will not generally undertake a hypothetical trial of an application that parties have settled, in order to determine the costs of that application, have the result that the Court should not undertake a hypothetical trial of an application that neither party has pressed in order to determine its costs. There will be no order as to the costs of that application.

43. The Plaintiffs and the Company also contend that Peter should pay the Plaintiffs’ costs of the Notice of Motion filed on 14 May 2019 on an indemnity basis. As I noted above, Mr Tyson refers to the fact that the Notice of Motion filed 14 May 2019 will be dismissed (Principal Judgment [120]) and refers to the nature of the allegations made by Peter in that matter and to the evidence that was addressed by the Company in response to that application. Mr Tyson submits that aspects of the application had no proper basis. I should not make the costs order sought by the Plaintiffs and the Company where I did not determine aspects of that motion, because it was not necessary to do so given the results that I had reached on other grounds. There should be no order as to the costs of and incidental to that Notice of Motion.

44. The Plaintiffs and the Company also submit that costs orders should be set-off. Such an order is not necessary where the Plaintiffs and the Company have not established any entitlement to a costs order against Peter in respect of the proceedings. Such an order would not have been appropriate in any event, where it would have had the practical consequence that either party could delay meeting its obligations as to costs by delaying an assessment of the costs payable to it.

Peter’s submission as to a single order and as to whether the Plaintiffs should pay the Company’s costs

45. Mr Smallbone and Mr Edney submit that it is appropriate to order both the Plaintiffs and the Company to pay Peter’s costs, on the basis that the Plaintiffs bear the ultimate burden. They also submit that a single costs order should be made in respect of the proceedings, other than the matters before Brereton J, against both the Plaintiffs and the Company. I do not consider I can take that course, where the Plaintiffs pursued declaratory relief as to the number of directors required for the Company, which the Company did not pursue; at least from the first day of the hearing, the Plaintiffs did not pursue the claim for repayment in respect of the allegedly unauthorised transactions which only the Company had standing to pursue; and the Company pursued a substantial claim for interest on loans to Peter and his companies which the Plaintiffs did not pursue. While the separate costs orders that I will make will give rise to complexities in an assessment, they seem to me to be the proper orders in the circumstances.

46. Mr Smallbone and Mr Edney submit that the Plaintiffs should pay the Company’s costs on an indemnity basis, including the Company’s costs liability to Peter. He rightly submits that such an order was foreshadowed by paragraph 13 of Peter’s Defence to Second Cross-Claim. They submit that, to the extent that the Company has incurred such costs or a costs liability, it is by reason of the Plaintiffs’ conduct and under their control and direction, and that course was undertaken over Peter’s objection. They also submit that, if that order is not made, Peter will in effect pay a portion of the costs of the Company’s unsuccessful claim against him, by diminution in the value of his shareholding. Mr Smallbone and Mr Edney also submit that the “reality of the matter” was that the proceedings were a dispute between the Plaintiffs and the Company, although that submission is significantly undermined by the fact that Peter had himself taken the point that the Plaintiffs did not have standing to pursue the Company’s claim against him. They point to the oddity that the Company has affirmatively sought that it, rather than the Plaintiffs, bear the costs of the unsuccessful claims it brought against Peter and submits that that amounts to the Plaintiffs using their control of the Company to benefit themselves (as executors of Marie’s estate) at Peter’s expense.

47. As I have noted above, the position taken by the Company in its submissions as to costs of the Second Cross-Claim appears to be inconsistent with its economic interests and may promote the interests of the Plaintiffs as its controlling directors and shareholders at the expense of Peter as a minority shareholder. Nonetheless, Peter has not identified any legal basis or authority for the order which he seeks, and I should not seek to formulate such a basis where the Plaintiffs and the Company would not then have an opportunity to respond to it. I am not persuaded that, in that situation, I should make the order that Peter seeks. It will, of course, be open to a liquidator appointed to the Company, if there is no resolution between the parties, to investigate whether the Company properly accepted a liability for costs of the Second Cross-Claim in submissions, rather than seeking to advance its economic interests by claiming an indemnity for those costs against the Plaintiffs.

Peter’s claim for indemnity costs based on an offer of compromise

48. Peter seeks an order for indemnity costs, in reliance on an offer of compromise sent by his solicitor on 20 December 2018, open for acceptance to 17 January 2019, which was alternatively expressed to take effect as an offer in accordance with Calderbank v Calderbank [1975] 3 All ER 333. I will refer to that offer in the singular, although, as I noted below, it contained several separate offers directed to each of the Plaintiffs and the Company.

49. Mr Smallbone and Mr Edney submit that the offer(s) made by Peter on 20 December 2018 were offers of compromise pursuant to Part 20 Div 4 of the UCPR and the making of separate offers in respect of different parts of the claim is permitted by UCPR r 20.26(2). They submit, and I accept, that Peter has achieved the same result or a better result than that provided by each of the elements of that offer. They also submit that the offers provided for the settlement of the then extant disputes in the proceedings and that Peter otherwise succeeded in respect of those disputes, and UCPR r 42.14 and 42.15A give Peter a prima facie entitlement to indemnity costs after 20 December 2018. They accept that the Court retains a discretion to “otherwise order”, but submits that that discretion is not to be lightly exercised, and that there are only limited circumstances in which the Court would refuse to make an indemnity costs order in that situation: Walker v Harwood [2017] NSWCA 228 at [22].

50. Mr Grant responds that this offer of compromise was sent shortly before the Plaintiffs’ solicitor went on Christmas leave; that the solicitor did not return until 14 January 2019, and was unable to obtain Counsel’s advice as to that offer of compromise before 17 January 2019. Mr Grant submits that the offer of compromise itself included six offers, with a degree of complexity as to which parties’ claims were affected by them. Mr Grant also submits that the timing of that offer of compromise is such that the Court could not conclude that it was unreasonable for the Plaintiffs to accept it (or that part of it that was relevant to the Plaintiffs). Mr Tyson also refers to an email from Peter’s solicitor on 20 December 2019 to the Company’s solicitor, attaching the offer of compromise, and points to the fact that the Company’s solicitors closed for the Christmas vacation on that day, returned to work on 14 January 2019 and first saw that email on that date (Barnes 11.9.19) just before the time for acceptance of the offer expired; and also points to the complexity of the offer and its several components. Mr Tyson submits that the timing of the offer and its complex form maximised the prospect that the Company would not be able to assess that offer within the time for which it was open.

51. Rule 42.14 of the UCPR provides that, if a plaintiff makes an offer of compromise under r 20.26 which is not accepted by a defendant and the plaintiff obtains an order or judgment no less favourable than the terms of the offer, the defendant is to pay the plaintiff’s costs on the ordinary basis up to and including the day of the offer and thereafter on an indemnity basis, unless the Court orders otherwise. The principles applicable to whether an order for indemnity costs should be made by reason of a Calderbank offer were summarised by Ward J (as her Honour then was) in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 at [9]–[15] and, in Re Alsafe Security Products Pty Ltd atf The Alsafe Trust (in liq) [2016] NSWSC 575 at [8], I summarised those principles as follows:

“[T]he fact that a party ultimately achieves a worse result than he or she would have achieved if he or she had accepted a Calderbank offer does not itself establish that the other party should be awarded indemnity costs, unless it can be said that it was unreasonable for the first party not to accept that offer, so as to warrant a departure from the general rule as to costs: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [above] at [9]–[15]; Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [14], [16]. In Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 1229 at [26], Stevenson J observed that:

“If a Calderbank offer is made, but not accepted, the court’s discretion to make a special order is enlivened. The court’s discretion is an open one, but is commonly enlivened if (a) the party that made the offer achieves a better result than the amount offered, (b) the offer was a genuine offer of compromise, and (c) it was unreasonable of the offeree not to accept: for example Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7]–[8].””

52. It seems to me that Peter’s offer of compromise was not particularly complex so far as it addressed the several discrete issues in the proceedings, but would likely have required both the Plaintiffs and the Company to be involved in any decision whether to accept it or relevant parts of it, and that emphasises the difficulty with the timing of the offer over the Christmas vacation period. It seems to me that the timing of the offer, both as to when it was made and the period for which it was left open, was calculated to (at least in the sense of likely to) have the result that it could not be accepted within that time. I am satisfied that the Court should otherwise order for the purposes of UCPR r 42.14, given the timing of the offer of compromise. I am also satisfied, for the purposes of the Calderbank aspect of that offer, that it was not unreasonable for the Plaintiffs and the Company not to accept the offer given its or their timing. An order for indemnity costs should not be made in Peter’s favour on the basis of that offer.

Orders

53. For these reasons, I propose to make the following orders after 4pm on 30 September 2019, unless any party advises, by email to my Associate and copied to all parties, of any technical error in them (as distinct from any further contest as to their substance) before that time:

Amended Originating Process and Points of Claim

1.   Prayers 4–8 of the Plaintiffs’ Amended Originating Process filed 13 November 2017 and the Points of Claim filed 24 October 2017 are dismissed.

2.   Order that the Interlocutory Process filed by the First Defendant on 20 November 2017 be dismissed.

First Cross-Claim

3. Pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth), order that the Second Defendant (“Hillsea”) be wound up.

4. Pursuant to s 532(2) of the Corporations Act, grant leave for the appointment of Andrew James Barnden as liquidator of Hillsea.

5.   Order that Andrew James Barnden is appointed liquidator of Hillsea.

6.   Orders 3 and 5 are stayed to 4pm on 21 October 2019.

7. Pursuant to s 1322(4)(a) of the Corporations Act, declare that the payments by Hillsea of the amounts the subject of paragraph 14 of the Second Cross-Claim Further Amended Statement of Cross-Claim (“Impugned Payments”) are not invalid by reason of any want of authority on the part of the First Defendant as director of Hillsea to enter into them.

8. Pursuant to section 1322(4)(c) of the Corporations Act, order that the First Defendant be relieved of civil liability in respect of the Impugned Payments.

Second Cross-Claim

9.   Judgment for the First Defendant on the Second Cross-Claim.

10.    Order that the Notice of Motion filed 14 May 2019 by the First Defendant be dismissed.

Costs

11.   There be no order as to the costs of and incidental to the Plaintiffs’ application for prayers 1–3 of the Originating Process and Amended Originating Process heard before Brereton J and the Interlocutory Process filed by the First Defendant on 20 November 2017 and the Notice of Motion filed on 14 May 2019 by the First Defendant.

12.   The Plaintiffs pay the First Defendant’s costs of and incidental to their application for prayers 4–6 of the Originating Process and Amended Originating Process and prayers 4 and 5 of their Points of Claim.

13. The First Defendant’s costs of and incidental to his application for the winding up of Hillsea, as agreed or as assessed, be paid in accordance with s 466 of the Corporations Act.

14.   The Plaintiffs otherwise pay the First Defendant’s costs of the First Cross-Claim as agreed or as assessed.

15.   The Cross-Claimant to the Second Cross-Claim pay the First Defendant’s costs of that Cross-Claim as agreed or as assessed.

**********

Decision last updated: 30 September 2019