Noble Investments Pty Ltd ACN 007 998 914 v Southern Cross Exploration NL ACN 000 716 012
[2009] FCA 396
•24 April 2009
FEDERAL COURT OF AUSTRALIA
Noble Investments Pty Ltd ACN 007 998 914 v Southern Cross Exploration NL ACN 000 716 012 [2009] FCA 396
NOBLE INVESTMENTS PTY LTD (ACN 007 998 914) IN ITS OWN CAPACITY AND AS THE TRUSTEE FOR THE NOBLE INVESTMENTS AND CONSULTING SERVICES TRUST AND THE NOBLE INVESTMENTS SUPERANNUATION FUND, LEADENHALL AUSTRALIA LIMITED (ACN 007 997 248) and CHI INVESTMENTS PTY LTD (ACN 064 569 035) v SOUTHERN CROSS EXPLORATION NL (ACN 000 716 012)
SAD 10 of 2007
FINN J
24 APRIL 2009
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 10 of 2007
BETWEEN: NOBLE INVESTMENTS PTY LTD (ACN 007 998 914) IN ITS OWN CAPACITY AND AS THE TRUSTEE FOR THE NOBLE INVESTMENTS AND CONSULTING SERVICES TRUST AND THE NOBLE INVESTMENTS SUPERANNUATION FUND
First PlaintiffLEADENHALL AUSTRALIA LIMITED (ACN 007 997 248)
Second PlaintiffCHI INVESTMENTS PTY LTD (ACN 064 569 035)
Third Plaintiff
AND: SOUTHERN CROSS EXPLORATION NL (ACN 000 716 012)
Defendant
JUDGE:
FINN J
DATE OF ORDER:
24 APRIL 2009
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.There be no order as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 10 of 2007
BETWEEN: NOBLE INVESTMENTS PTY LTD (ACN 007 998 914) IN ITS OWN CAPACITY AND AS THE TRUSTEE FOR THE NOBLE INVESTMENTS AND CONSULTING SERVICES TRUST AND THE NOBLE INVESTMENTS SUPERANNUATION FUND
First PlaintiffLEADENHALL AUSTRALIA LIMITED (ACN 007 997 248)
Second PlaintiffCHI INVESTMENTS PTY LTD (ACN 064 569 035)
Third Plaintiff
AND: SOUTHERN CROSS EXPLORATION NL (ACN 000 716 012)
Defendant
JUDGE:
FINN J
DATE:
24 APRIL 2009
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
While the usual rule applied in the making of costs orders is that costs follow the event, such has been the plaintiff’s measure of success in this matter – a measure qualified by other features of the proceeding – that I intend making no order as to costs. As if anticipating this was the likely costs outcome, the plaintiffs’ submission has been that the Court, “wielding a broad axe”, should make no costs order. The defendant in turn has been emboldened to seek, optimistically but unsuccessfully, an order that the plaintiff pay its costs of the proceeding. In taking the course I propose, I have designedly not attempted to adopt an “issue” by “issue” approach. It would have been quite inappropriate given the nature of the proceeding as it evolved, its history, and the manner of its conduct.
The controversy which gave rise to the proceedings had its genesis in attempts made by a Mr Lebbon, a director of the three plaintiff companies, to obtain information about aspects of the affairs of the defendant, Southern Cross Exploration NL, relating to an investment it made in Fiji, from a Mr Ganke who was a director of, and the principal shareholder in, Southern Cross. The plaintiffs had a substantial minority shareholding in the company. Those attempts took place across a year. Notwithstanding the defendant’s submission that it substantially answered Mr Lebbon’s requests for documents and, inferentially, that it acted reasonably in the circumstances, Mr Ganke’s responses were, variously, obfuscatory, patronising, delayed and in significant respects incomplete. The understandable frustration his responses engendered led to this proceeding being instituted. I should interpolate that, save in relation to two procedural matters mentioned below, at no stage did Southern Cross put on evidence that might have assisted in my understanding of any aspect of this matter.
The initial point to be made is that, if Mr Lebbon was to obtain further information from Southern Cross, it would need to be by instituting proceedings. This the plaintiffs did under s 247A of the Corporations Act 2001, but the originating process itself was not limited to an application by a member to inspect books of the company. Indeed, the principal claim made was under s 232 and s 233 of the Corporations Act. It alleged the conduct of Southern Cross’ affairs was oppressive to, unfairly prejudicial to, or unfairly discriminated against the plaintiffs. Amongst the orders sought was that Mr Lebbon be appointed a director of Southern Cross. He had recently convened a meeting for the purpose of proposing his appointment. The board successfully opposed his motion.
The originating process was filed on 25 January 2007. At the first directions hearing, Southern Cross foreshadowed a motion for the transfer of the proceedings to the New South Wales registry of the Court. A notice of motion to that end was filed on 2 March 2007. On 17 April, a supporting affidavit of Mr Ganke was filed. Then on 20 April 2007 the plaintiffs’ lawyers wrote to Southern Cross’ advisers indicating they were intending to seek leave to amend the originating process to delete the claims under s 232 and s 233 and, additionally were narrowing both the scope and the period of the information to be sought. They requested that Southern Cross desist from pressing its transfer motion.
I would again note that the claims brought under s 232 and s 233 could only have been characterised as speculative at the time and were properly abandoned. It nonetheless was the case that they formed part of the case to which Southern Cross had to respond. While the period between the filing of the originating process and the indication that it was to be amended was brief, I accept that some additional costs were incurred by Southern Cross because of the nature of the additional claims made. I equally accept that the foreshadowed amendment to the process (for which leave to make was given on 7 August 2007) probably eliminated such need as Southern Cross may have felt to prosecute the transfer motion.
Between 15 May 2007 and 7 August discussions took place between the parties’ solicitors concerning the form and scope of the orders sought in relation to the inspection of documents and to the confidentiality regime that was to be part of the orders. In the event, the plaintiffs gave some ground; the orders were agreed; and they were made by consent on 7 August.
To digress again, notwithstanding that the orders in the event were negotiated and were made by consent, the plaintiffs had secured the end they ultimately sought to prosecute in the proceedings. This was the measure of their success.
However it did not bring the proceedings to an end. An inspection of the books took place in Sydney in September 2007. Objection was subsequently taken to the “small bundle of documents” that was produced; the manner in which documents were masked; to newly typed documents being provided rather than extracts from the original minutes; and the inability to advise on those produced without recourse to further documents (not covered by the orders made).
This in turn led to an application for orders for further production. A brief hearing was conducted on 4 December 2007 at which this application was discussed and it was agreed it be determined on the papers. I was to be supplied with a verifying affidavit of the “discovery” and with unmasked copies of the documents in respect of which masking complaints were made.
Later in December 2007 Southern Cross indicated that it would make available certain documents not caught by the 7 August order which were necessary for a proper understanding of the documents produced. Though Southern Cross hints at magnanimity on its part in so doing, the best that can be said is that it was highly prudent it did so.
For some time it appeared as though the further production issue may be settled. It was not. I finally ruled on the further production issue on 21 May 2008. I rejected the plaintiff’s application for further and better access to documents: Noble Investments Pty Ltd v Southern Cross Exploration NL [2008] FCA 718. But still the matter lumbered on.
On 7 July 2008, a further interlocutory application was made under s 247A seeking variations of the terms of undertakings made in the orders of 7 August 2007. One of these was to give new counsel access to the documents that had been inspected. This was agreed to by Southern Cross two days prior to the day scheduled for the mention of the interlocutory application. A second variation related to the period for which copies of the inspected document could be retained; a third, to allow for Mr Lebben to have access to them.
I heard the application on 16 July 2008. It became apparent at the hearing that the plaintiffs by then were foreshadowing an application for a preliminary discovery under O 15A r 6 of the Federal Court Rules and were seeking to use the variation application in aid of the proposed application. While I made necessary procedural variations to the 7 August 2007 orders, I refused to allow Mr Lebbon access to the copies of the inspected documents.
Again to digress while there may have been a need to have made the variation application absent agreement by Southern Cross, I am satisfied that but for the variation sought relating to Mr Lebbon and, possibly for the excessive time sought for which the inspected copies could be retained for the purposes of advising on an O 15A application (six months which I reduced to two months) this application at best would have been unnecessary and, at worst, would have resulted in a consent order. I am satisfied that it put Southern Cross to reasonably avoidable expense.
In the event I am satisfied that the interests of justice in this matter will be best served by depriving the plaintiffs of an order as to costs notwithstanding that they needed to institute and to prosecute proceedings to obtain the relief they sought. Their success, though, is significantly qualified by the needless expense they caused Southern Cross to incur and by the unsuccessful interlocutory applications they made. However, I am equally satisfied that the plaintiffs’ conduct of the proceedings has not been such as to warrant an order that they pay Southern Cross’ costs of the proceeding. Despite its protestation of having acted reasonably in the circumstances, I am satisfied Southern Cross’ conduct precipitated the application; it was in some degree the author of its own harm; and it put the plaintiffs to reasonably avoidable expense in providing the inspection in the manner it did.
Balancing the parties’ respective measures of success, their conduct and their respective responsibilities for the costs incurred, I am satisfied, as I foreshadowed, that the parties should each bear their own costs.
Accordingly, I will order that there be no order as to costs.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate:
Dated: 24 April 2009
Counsel for the Plaintiffs: Mr M Hoffman QC with Mr S Doyle Solicitor for the Plaintiffs: Cowell Clarke Counsel for the Defendant: Mr F Kune with Mr N Mattock Solicitor for the Defendant: Gadens Lawyers
Date of Hearing: 21 May and 16 July 2008 Date of Judgment: 24 April 2009
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