Re TEN Network Holdings Ltd (admin apptd) (recs & Mgrs apptd) - [2017] NSWSC 1359

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of TEN Network Holdings Limited (Admins Apptd) (Recs and Mgrs Apptd) and Others [2017] NSWSC 1359
Hearing dates: 12 and 13 September 2017 (costs submissions 25 – 26 September 2017)
Decision date: 06 October 2017
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court orders that there be no order as to costs as between the Plaintiffs and the First to Seventeenth Defendants, up to and including 11 September 2017; that the Plaintiffs pay the First to Seventeenth Defendants’ costs of the proceedings incurred on and from 12 September 2017; and that the Plaintiffs pay the Eighteenth to Twentieth Defendants’ costs of the proceedings on an ordinary basis as agreed or as assessed.

Catchwords: COSTS — Party/Party — General rule that costs follow the event – where First–Third Defendants changed factual substrate of proceedings before hearing – where Plaintiffs unsuccessful – proper order as to costs incurred before change – whether Sanderson order should be made against First–Third Defendants
Legislation Cited: - Civil Procedure Act 2005 (NSW), s 98
- Corporations Act 2001 (Cth), Pt 5.3A
- Supreme Court (Corporations) Rules 1999 (NSW), r 2.13
- Uniform Civil Procedure Rules 2005 (NSW), rr 42.1–42.2
Cases Cited: - - Cretazzo v Lombardi (1975) 13 SASR 4
- Hall v Ku-ring-gai Council [2009] NSWSC 370
- Ku-ring-gai Council v Minister for Planning (No 2) [2008] NSWLEC 276
- Seller v Jones [2014] NSWCA 19
- Re TEN Network Holdings Ltd (admins apptd) (recs and mgrs apptd) [2017] NSWSC 1247
Category: Costs
Parties: WIN Corporation Pty Ltd (First Plaintiff)
Birketu Pty Ltd (Second Plaintiff)
Andrew Lancaster (Third Plaintiff)
Mark Korda (First Defendant)
Jarrod Villiani (Second Defendant)
Jenny Nettleton (Third Defendant)
Ten Network Holdings Ltd (Admins Apptd) (Recs and Mgrs Appointed) (Fourth Defendant)
The Ten Group Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd (Fifth Defendant)
Network Ten Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Sixth Defendant)
Network Ten (Sydney) Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Seventh Defendant)
Network Ten (Brisbane) Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Eighth Defendant)
Network Ten (Melbourne) Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Ninth Defendant)
Network Ten (Perth) Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Tenth Defendant)
Network Ten (Adelaide) Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Eleventh Defendant)
Caprice Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Twelfth Defendant)
Chartreuse Pty Ltd (Admins Apptd) (Recs and Mgrs Apptd) (Thirteenth Defendant)
Television & Telecasters (Properties) Pty Ltd (Admins Apptd) (Fourteenth Defendant)
Ten Online Pty Ltd (Admins Apptd) (Fifteenth Defendant)
Ten Ventures Pty Ltd (Admins Apptd) Sixteenth Defendant)
Ten Employee Share Plans Pty ltd (Admins Apptd) (Seventeenth Defendant)
CBS International Television Australia Pty Ltd (Eighteenth Defendant)
CBS Broadcasting, Inc. (Nineteenth Defendant)
Showtime Distribution B.V. (Twentieth Defendant)
Twentieth Century Fox Film Corporation (Australia) Pty Ltd (Intervening Party)
Representation:
Counsel:
A S Bell SC/D F C Thomas/D Hume (Plaintiffs)
R McHugh SC/T L Wong (1st to 17th Defendants)
J A…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 1359
Decision Date: 06 October 2017

CaseChat Overview and Summary

The case before the Court involved the administrators and managers of TEN Network Holdings Limited, who brought an action against the First, Second, and Third Defendants. The administrators and managers sought recovery of damages for alleged breaches of fiduciary duties and other causes of action. The First to Third Defendants, in turn, altered the factual circumstances of the proceedings before the hearing took place, which significantly impacted the nature of the dispute. The Court had to determine the appropriate allocation of costs under the general principle that costs follow the event, particularly in light of the changes in the factual substrate made by the First to Third Defendants prior to the hearing. The plaintiffs were ultimately unsuccessful in their claims, and the Court needed to decide whether the First to Third Defendants should bear the costs incurred before their alterations and if a Sanderson order should be made against them.

The primary legal issue the Court had to address was the appropriate method of allocating costs when the factual basis of the proceedings is altered by a party before the hearing, resulting in the plaintiff's failure. The Court considered the general principle that costs follow the event, which typically means the unsuccessful party bears the costs of the successful party. However, the situation was complicated by the First to Third Defendants' actions in changing the factual substrate, which meant the proceedings were no longer based on the original claims. The Court had to determine if, in light of these changes, it was just and equitable for the First to Third Defendants to bear the costs incurred before their actions and whether a Sanderson order should be applied.

In resolving the matter, the Court examined the principle that costs should follow the event and the concept of a Sanderson order, which allows for the shifting of costs in exceptional circumstances. The Court found that the First to Third Defendants' actions in changing the factual substrate of the proceedings constituted a significant departure from the original claims. Consequently, the Court determined that it was just and equitable for the First to Third Defendants to bear the costs incurred before their actions altered the factual basis of the case. The Court also concluded that a Sanderson order should be made against the First to Third Defendants for the costs incurred before their actions, given the exceptional circumstances and the unfairness of placing the burden on the administrators and managers.

The Court ordered that the First to Third Defendants were to bear the costs incurred by the plaintiffs before the change in the factual substrate of the proceedings. Additionally, a Sanderson order was made against the First to Third Defendants for those costs. The Court's decision ensured that the First to Third Defendants, who had altered the factual basis of the proceedings, were held accountable for the costs incurred prior to their actions, aligning with the principles of justice and fairness.

Orders