Pauls Ltd v Dwyer

[2001] QSC 103

SUPREME COURT OF QUEENSLAND

CITATION:              Pauls Limited v Dwyer & Ors [2001] QSC 103

PARTIES:                 PAULS LIMITED ABN 2300698015

(applicant)

v

JENNIFER MARY DWYER & ORS

(respondents) FILE NO/S:  S 8241/00

DIVISION:               Trial

DELIVERED ON:    11 April 2001

DELIVERED AT:     Brisbane

HEARING DATE:     15 January 2001

JUDGE:  Douglas J

ORDER:1)  As between the applicant and Milly Elkington, that the applicant pay the costs of the respondent Milly Elkington, of and incidental to the application including reserved costs, to be assessed on the standard basis, but that the respondent Milly Elkington not recover any costs:

(a)  of and incidental to the application determined on 10

November 2000;

(b)  of and incidental to the application determined on 11

December 2000; and

(c)   of and incidental to seeking disclosure of documents by the applicant that it was a 90% holder in Pauls Victoria Limited.

2)  As between Dr Gordon Elkington and Mr Robert Catto that there be no orders as to costs in respect of the application.

CATCHWORDS:       PROCEDURE – COSTS – JURISDICTION – GENERAL

Corporations Law s 664F(4)

PROCEDURE  –  COSTS  –  GENERAL  RULE  –  COSTS FOLLOW  THE  EVENT  –  COSTS  OUT  OF  A  FUND  – WHEN COSTS ALLOWED OUT OF A FUND – OTHER CASES – whether this is a case where the 90% shareholder must bear the costs that a person incurs on legal proceedings in relation to an application under the Corporations Law

PROCEDURE  –  COSTS  –  DEPARTING  FROM  THE GENERAL    RULE    –    CONDUCT    OF    PARTIES    – MISCONDUCT – VEXATIOUS PROCESS AND ISSUES – whether   the   respondent’s   application   to   transfer   the

2

application to the Supreme Court of New South Wales was improper and vexatious

COUNSEL:                K N Wilson for applicant

S Wheelhouse and S Benson for respondent

Mr R. Catto self-represented respondent

Dr Elkington self-represented respondent

SOLICITORS:          Biggs and Biggs Solicitors for applicant

Stephen Blanks and Associates for respondent

[1]     DOUGLAS J:   I gave judgment in this matter on 13 March 2001 (2001 QSC 67). At that time I reserved the question of costs and directed that the parties forward to me written submissions in relation to that matter.  I received written submissions from all of the parties represented at the Trial.

[2] The regime for costs in a matter such as this is governed by s 664F(4) Corporations

Law (“the Law”) which provides:

“The 90% holder must bear the costs that a person incurs on legal proceedings in relation to the application unless the Court is satisfied that   the   person   acted   improperly,   vexatiously   or   otherwise unreasonably.  The 90% holder must bear their own costs.”

[3]     In the ordinary case costs would follow the event unless it was otherwise ordered. The applicant does not argue that the respondent, Milly Elkington, should not recover her costs, in the main, with respect to the application.  The applicant argues that  she  should  not  recover  certain  reserved  costs.    They  are  with  respect  to applications heard on 20 October 2000, 10 November 2000, 11 December 2000, and 14 December 2000.

[4]     The first such order for reserved costs was made on 20 October 2000 in relation to

the respondent’s unsuccessful application to transfer the application to the Supreme

3

Court of New South Wales.  The argument for the applicant is that the respondents acted  improperly,  vexatiously  or  otherwise  unreasonably  in  making  such  an application.  They point out, correctly, that it was clear that the Supreme Court of Queensland has jurisdiction to determine this matter and argue that the balance of convenience did not favour transferring the matter to Sydney.

[5]     In my view it was not unreasonable, vexatious or improper for such an application to be made.  It was not without some chance of success.  Therefore Mrs Elkington should have her costs reserved on 20 October 2000.

[6]     The orders for reserved costs on 10 November 2000 and 11 December 2000 are in a different category.  The first dealt with the failure of the respondents to deliver a proper and compliant statement of issues, and the second dealt with their failure to deliver expert reports and affidavits which were then outstanding.  I am of the view that the relisting of the matter on each of those occasions was caused by the default of the respondents.  Mrs Elkington should not have her costs of 10 November 2000 and 11 December 2000.

[7]     There remains the question of the reserved costs order made on 14 December 2000. This was in relation to an unsuccessful constitutional challenge made against the constitutional validity of the whole of Part 6A 2 of the Law.  It is argued by the applicant that the constitutional challenge was in respect of a much wider issue than the application to acquire the respondent’s shares.  It is submitted that it could not be said that the costs in that regard were entirely in relation to the application for compulsory acquisition.  It is submitted by the applicant that the respondent’s costs

4

of the constitutional challenge ought not be borne by the applicant, but in fact

should be paid by the respondents.

[8]     In  my  view  it  was  not  unreasonable  for  the  respondents  to  make  such  an application.  Nor was it vexatious or improper.  The fact that I thought the issue was clear is not determinative of the issue of costs.  If in fact, the application had succeeded the situation, with respect to value, would have been placed back where it was before the passing of Part 6A 2 of the Law.

[9] I see no reason why such costs should not fall within s 664F(4) of the Law.

[10]     There is a further argument that the respondents acted improperly, vexatiously or unreasonably in connection with the application itself in three respects.  The first submission goes this way:

“First, the respondents put in issue that the applicant was a 90% holder of shares in Pauls Victoria Limited (“PVL”).  This was so notwithstanding  the  applicant’s  initial  affidavit  material  which showed that the applicant was a 99.9% holder.  This necessitated the respondents  asking  for  and  the  applicant  giving  disclosure  of documents to demonstrate that it was a 90% holder.  This required the disclosure of documents dating back to the 1930s.  This involved considerable  effort  and  expense.    Then,  after  all  this  effort,  the respondents did not even raise as an issue on the final hearing of the application the fact that the applicant did not meet the threshold of being  a  90%  holder.    It  is  submitted  that  this  issue  was  raised unreasonably.  It is submitted that the respondents should not get any costs associated with seeking disclosure of documents regarding the applicant’s 90% ownership of PVL .”

[11]     Respectfully I agree with that submission.  The respondent, Milly Elkington, should

not have her costs in relation to that issue.

5

[12]     The second respect in which it is alleged that the respondents acted improperly, vexatiously or unreasonably is in the fact that Mr Catto and Dr Elkington were self represented when Mrs Elkington was represented by solicitors and counsel.  It is submitted that the interests of the three respondents who took an active part in the litigation were not discernibly different.

[13]     In my view it was appropriate that only one set of legal representatives appear for all respondents.  Mr Catto and Dr Elkington added nothing to the case and, indeed, the  bulk  of  Mr  Catto’s  evidence  was  ruled  out  by  me  as  being  inadmissible. Nothing that was said by either of those gentlemen assisted me in coming to the conclusions to which I ultimately came.  In my view Mr Catto and Dr Elkington should not be allowed any costs of representing themselves on the application.

[14]     The  third  respect  is  an  argument  that  Milly  Elkington  should  not  have  been represented by two counsel at the trial.  This, with respect, is a matter for the person assessing the costs, ultimately, when having regard to the degree of work done by both counsel engaged.  It is not appropriate that I give any indication in respect of this matter.

[15]     I therefore make the following orders:

1.As between the applicant and Milly Elkington, that the applicant pay the costs of the respondent Milly Elkington, of and incidental to the application including reserved costs, to be assessed on the standard basis, but that the respondent Milly Elkington not recover any costs:

6

(a)       of and incidental to the application determined on 10 November

2000;

(b)       of and incidental to the application determined on 11 December

2000; and

(c)       of and incidental to seeking disclosure of documents by the applicant

that it was a 90% holder in Pauls Victoria Limited.

2.        As between Dr Gordon Elkington and Mr Robert Catto that there be no

orders as to costs in respect of the application.