Lion Nathan Australia Pty Ltd v Coopers Brewery Limited (No 3)
[2006] FCA 1023
•2 AUGUST 2006
FEDERAL COURT OF AUSTRALIA
Lion Nathan Australia Pty Ltd (ACN 008 596 370) v
Coopers Brewery Limited (ACN 007 871 409) (No 3) [2006] FCA 1023COSTS – interlocutory relief granted in favour of plaintiff – where interlocutory relief effectively resolves application for final relief
Corporations Act2001 (Cth): s 140(2)
Trade Practices Act1974 (Cth): s 52
Federal Court of Australia Act1976 (Cth): s 43J T Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122, cited
Australian Securities Commission v Aust‑Home Investments Limited (1993) 44 FCR 194, applied
O’Keeffe Nominees Pty Limited v BP Australia Limited (No 2) (1995) 55 FCR 591, discussed
Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, applied
One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548, citedLION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370) v COOPERS BREWERY LIMITED (ACN 007 871 409), GLENN ANDREW COOPER, DONALD RONALD KINGSTON, WILLIAM THOMAS COOPER, TIMOTHY JAMES COOPER, CAMERON JOHN PEARCE AND JAMES McANDREW COOPER
VID 1196 of 2005
GOLDBERG J
2 AUGUST 2006
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1196 of 2005
BETWEEN:
LION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370)
PlaintiffAND:
COOPERS BREWERY LIMITED (ACN 007 871 409)
First DefendantGLENN ANDREW COOPER
Second DefendantDONALD RONALD KINGSTON
Third DefendantWILLIAM THOMAS COOPER
Fourth DefendantTIMOTHY JAMES COOPER
Fifth DefendantCAMERON JOHN PEARCE
Sixth DefendantJAMES McANDREW COOPER
Seventh Defendant
JUDGE:
GOLDBERG J
DATE OF ORDER:
2 AUGUST 2006
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The plaintiff have leave to discontinue the proceeding.
2.The defendants pay the plaintiff’s costs of and incidental to the application for interlocutory relief filed on 27 September 2005, including the costs of and incidental to the hearings on 3 and 5 October 2005 and 11, 17 and 18 November 2005 which costs were reserved for further consideration.
3.The defendants pay the plaintiff’s costs of and incidental to the motion filed on 25 July 2006.
4.Otherwise the parties bear its and their own costs of and incidental to the proceeding.
5.The plaintiff be discharged from its undertaking given by its counsel on its behalf on 11 October 2005.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 1196 of 2005
BETWEEN:
LION NATHAN AUSTRALIA PTY LTD (ACN 008 596 370)
PlaintiffAND:
COOPERS BREWERY LIMITED (ACN 007 871 409)
First DefendantGLENN ANDREW COOPER
Second DefendantDONALD RONALD KINGSTON
Third DefendantWILLIAM THOMAS COOPER
Fourth DefendantTIMOTHY JAMES COOPER
Fifth DefendantCAMERON JOHN PEARCE
Sixth DefendantJAMES McANDREW COOPER
Seventh Defendant
JUDGE:
GOLDBERG J
DATE:
2 AUGUST 2006
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
There is before the Court a motion filed on behalf of the plaintiff, Lion Nathan Australia Pty Limited (“Lion Nathan”), seeking orders that it have leave to discontinue the proceeding and that the defendants pay its costs of the proceeding. The defendants do not oppose an order that the plaintiff have leave to discontinue the proceeding and in due course that order will be made. However, the defendants contest an order that they pay the plaintiff’s costs of the proceeding and submit that the most appropriate order in the circumstances of the case is for each party to bear its own costs.
The initiating process in this matter was an application filed on 27 September 2005 by Lion Nathan against the defendants, the second to seventh defendants of whom are directors of the first defendant, Coopers Brewery Limited (“Coopers Brewery”). In that application two general areas of relief were sought. First, declarations were sought in relation to the effect of certain proposed modifications to the constitution of Coopers Brewery, having regard to the provisions of s 140(2) of the Corporations Act2001 (Cth) (“the Act”). Secondly, injunctive relief was sought in respect of alleged contraventions of s 1041H(1) of the Act and s 52 of the Trade Practices Act1974 (Cth).
The injunctive relief that was sought was firstly an injunction restraining Coopers Brewery from taking any further steps pursuant to a notice of meeting issued by it on 21 September 2005, including the conducting of the meeting proposed to be held on 20 October 2005. Secondly, an injunction was sought requiring Coopers Brewery and its directors to send a notice in writing to the shareholders of Coopers Brewery containing certain material relating to the effect of the proposed modifications to the constitution and certain other matters that were set out in detail in the application. The interlocutory relief which was sought was an order that until the hearing and determination of the application or further order, the defendants be restrained from taking any further steps pursuant to the notice of meeting issued on 21 September 2005, including the conducting of the meeting proposed to be held on 20 October 2005.
There is a commercial background to the application which was the announcement by Lion Nathan of a proposal to make takeover offers for all the shares in the capital of Coopers Brewery. The application for interlocutory relief came on for hearing on 3 and 5 October 2005, and on 11 October 2005, upon Lion Nathan proffering the usual undertaking as to damages, I ordered that Coopers Brewery and its directors be restrained from proceeding further with the conduct of the meeting of shareholders convened by notice dated 21 September 2005 and proposed to be held on 20 October 2005, other than to adjourn it to a date and time to be fixed. I also reserved liberty to the defendants to apply on 24 hours’ notice in writing, to apply to vary or discharge the order. I reserved the costs of the application for further consideration.
The reasons for judgment published on 11 October 2005 set out in considerable detail the background to the application and the reasons why I granted the injunctive relief. Without intending to be comprehensive, the reason was that the explanatory memorandum which had been sent out to shareholders was deficient in the information which was contained in it. A further explanatory memorandum which had been propounded by the defendants in the course of the hearing did not cure all the defects and deficiencies to which I referred in my reasons for judgment.
What subsequently occurred was that the defendants, pursuant to the liberty which I had reserved, came back to the Court with a modified explanatory memorandum and on 18 November 2005 I made an order that, upon the defendants’ undertaking to post to shareholders a modified explanatory memorandum in the form which was handed up to the Court, the injunction granted on 11 October 2005 be discharged. I reserved the costs of the application for further consideration. The meeting of shareholders was held, modifications were made to the constitution of Coopers Brewery and ultimately the takeover offer that had been propounded by Lion Nathan lapsed.
There is considerable authority which deals with the issue of the appropriate order to make as to the costs of proceedings where the proceedings are either sought to be discontinued or do not proceed to a final hearing. I have been referred to a number of those authorities, in particular J T Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122; Australian Securities Commission v Aust‑Home Investments Limited (1993) 44 FCR 194; O’Keeffe Nominees Pty Limited v BP Australia Limited (No 2) (1995) 55 FCR 591; Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; and One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548.
It is a trite proposition that the power to order costs by the Court is in the Court’s discretion: see s 43 of the Federal Court of Australia Act1976 (Cth). In Australian Securities Commission v Aust‑Home Investments Limited (supra) at 201, Hill J, having referred to a number of cases including Stratford v Lindley (No 2) (supra), set out a number of propositions which he considered were supported by the authorities. In particular, as to the fifth proposition to which he referred, Hill J said:
“Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd [1973] 1 NSWLR 603 at 606, a case which, however depended upon the specific wording of the statute under consideration.”
His Honour then went on to say:
“Where interlocutory relief has been granted, that fact carries no implication as to the ultimate merits of the case but does ordinarily suggest that the Court granting interlocutory relief has accepted or found that there is an arguable issue to be tried between the parties and that the balance of convenience favours the grant of that relief.”
In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (supra), McHugh J held that there should be no order for the costs of the proceeding. His Honour said at 624‑625:
“In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a Court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties.
…
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.
…
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.” (footnotes omitted)I am prepared to accept, as indeed is the fact, that notwithstanding my findings on 11 October 2005, both parties have acted reasonably in the conduct of the prosecution and their defence in this proceeding. Although I granted interlocutory relief the directors of Coopers Brewery were not acting unreasonably in my view, albeit they may have been mistaken in a number of respects, in relation to the submissions they made as to the contents of the initial explanatory memorandum and the subsequent explanatory memorandum.
In a number of cases there has been reference to the fact that costs should normally follow the event and that if a party is successful in proceedings that party should ordinarily obtain its costs.
But as Spender J pointed out in O’Keeffe Nominees v BP Australia Ltd (No 2) (supra) at 594:
“It seems clear that the ‘success’ which is referred to is directed to success in the principal proceedings. As Gummow J noted in New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549, ‘the event’ can be considered as the commercial result, so that a successful applicant may recover all his costs where the objective sought by litigation is achieved, even though the applicant does not succeed on every issue in the litigation.”
His Honour also said at 598:
“As earlier indicated, the primary basis, [for an award of costs] rests on the proposition that a successful party should have its costs. In my opinion, that general proposition is directed to a consideration of the litigation as a whole and it is going too far to say that it necessarily applies to every interlocutory step in the principal proceedings.
…
The primary concern that an order for costs reflect the justice of the situation is the reason that on many interlocutory questions the costs are reserved. In most cases, when an order for costs of the principal proceedings is made, no specific reference is made to costs which are reserved and they are, by the order for costs which is made, picked up in favour of the party that has been successful in the litigation. This circumstance reinforces the not uncommon position that in respect of the payment of costs of an interlocutory application, it is not necessarily just that the costs of an interlocutory application should follow the result of that interlocutory application but rather should be determined by the result of the principal litigation of which the interlocutory application forms but a part.”Mr Strong, who appeared on behalf of Lion Nathan, submitted, in substance, that Lion Nathan should have its costs of the proceeding excepting the costs relating to the s 140(2) Corporations Act issue on the basis that there was a probability or an almost certainty, adopting the words of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, that Lion Nathan was almost certain to have succeeded if the matter had been fully tried.
It seems to me, however, that the authorities to which counsel on both sides referred, and to which I have referred, have not specifically addressed the type of situation which occurred in this case. This was a situation which occurs from time to time where the application for interlocutory relief is in a sense an application for what I might call loosely, final relief.
As I noted earlier, the application sought an injunction restraining Coopers Brewery from conducting the meeting proposed to be held on 20 October 2005 which had been convened pursuant to a notice issued on 21 September 2005. Lion Nathan was successful in obtaining such an injunction. It also sought an injunction requiring the defendants to send to shareholders a notice or a memorandum setting out a number of matters. In the course of the interlocutory hearing a substantial number of matters were discussed, with Lion Nathan submitting that the explanatory memorandum should contain considerable further material. In some respects it did not succeed in those submissions. For example, one submission, which I paraphrase, was that the explanatory memorandum should contain substantially the material to be included in the Target’s Statement required to be sent out pursuant to the provisions of Pt 6.5 of the Act.
Nevertheless, I was satisfied on the material which was before me that the explanatory memorandum was deficient in a considerable number of respects and that the further supplementary explanatory memorandum propounded by Coopers Brewery in the course of the hearing did not cure all those deficiencies. For that reason an interlocutory injunction was granted. But having regard to what I considered to be the paramount consideration which was the interests of shareholders and the fact that shareholders should be put in a position to make decisions in respect of resolutions to be put before them, I gave Coopers Brewery the opportunity to come back to the Court to seek to vary the injunction to give it the opportunity to have the shareholders’ meeting convened and held on a date subsequent to 20 October 2005.
I consider that from a practical point of view, having regard to the primary relief which was sought on an injunctive basis, Lion Nathan succeeded in its application by having the meeting proposed to be held on 20 October 2005 restrained, and was also successful in having Coopers Brewery put out further supplementary information to shareholders in the form which I described in the order of 18 November 2005, a modified explanatory memorandum. In those circumstances it is fair to say that the issues which were resolved and determined, and which resulted in the orders of 11 October 2005 and 18 November 2005, were not likely to arise again in the litigation.
The initial meeting had been restrained; the relief sought in relation to propounding further more comprehensive information before the shareholders had been obtained. If the matter were to go to trial now across the board there would be no practical issue to be determined in relation to the injunctive relief which was sought in the final form in the application, because the interlocutory injunctive relief which had been granted effectively resolved that issue. It seems to me in those circumstances that this is a case which is one which is, in a sense, a gloss on the observation of McHugh J, in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin where he referred to the fact that a judge could feel confident that one party was almost certain to have succeeded if the matter had been fully tried. I consider that gloss is the situation where the grant of the interlocutory injunction effectively resolves the application for final relief.
As I said earlier the issues which were then determined were not likely to arise again if the proceeding had continued further. True it is, as Mr Blight who appeared for the defendants submitted, that ultimately the defendants succeeded in the outcome of the issues which had arisen between the parties. That is, they succeeded in the sense that the takeover offer which had been proposed by Lion Nathan, and which had been sent to shareholders, lapsed. From a commercial point of view the defendants succeeded. However, the proper analysis for the purpose of the costs question in my view is a legal analysis of what occurred in the proceedings before the Court and the nature of the orders which were made. To that extent I am satisfied that Lion Nathan succeeded.
In all of those circumstances, as an exercise of the costs discretion committed to me, I consider that the appropriate order to make is that the costs which were reserved in relation to the interlocutory application which was brought, should be costs to be awarded in favour of Lion Nathan and that the appropriate order to make is that Lion Nathan have its costs of and incidental to that interlocutory application.
Lion Nathan goes further and seeks the costs of the whole of the proceeding, excepting of course the costs in relation to the issues relating to the s 140 Corporations Act matter.
I consider in all the circumstances that the appropriate order to make, nevertheless, is that the costs of the interlocutory proceeding brought by Lion Nathan be paid by the defendants and that otherwise the parties bear their own costs of the proceeding. It seems to me in those circumstances that, having regard to the contested issues which have been raised today, Lion Nathan should have its costs of and incidental to this motion.
The orders of the Court will be:
1. The plaintiff have leave to discontinue the proceeding.
2.The defendants pay the plaintiff’s costs of and incidental to the application for interlocutory relief filed on 27 September 2005, including the costs of and incidental to the hearings on 3 and 5 October 2005 and 11, 17 and 18 November 2005 which costs were reserved for further consideration.
3.The defendants pay the plaintiff’s costs of and incidental to the motion filed on 25 July 2006.
4. Otherwise the parties bear its and their own costs of and incidental to the proceeding.
5.The plaintiff be discharged from its undertaking given by its counsel on its behalf on 11 October 2005.
I certify that the preceding twenty‑two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg J. Associate:
Dated: 8 August 2006
Counsel for the Plaintiff: R Strong Solicitor for the Plaintiff Mallesons Stephen Jaques Counsel for the Defendants: D Blight Solicitor for the Defendants: Piper Alderman Date of Hearing: 2 August 2006 Date of Judgment: 2 August 2006
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