Ten Sixty Four Ltd v Vitrinite Holdings Pty Ltd - [2023] WASC 105

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   TEN SIXTY FOUR LTD -v- VITRINITE HOLDINGS PTY LTD [2023] WASC 105
CORAM:   TOTTLE J
HEARD:   22 MARCH 2023
DELIVERED          :   30 MARCH 2023
FILE NO/S:   COR 191 of 2022
BETWEEN:   TEN SIXTY FOUR LTD
Plaintiff
AND
VITRINITE HOLDINGS PTY LTD
First Defendant
VITRINITE PTY LTD
Second Defendant
VITRINITE HOLDINGS LLC
Third Defendant

Catchwords:

Costs - Costs order when no decision on the merits - Appropriate costs orders - Where consent orders made after exchanges with the Judge and conferral at the hearing - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 249F, s 1322(4)(d), s 1324

Result:

Application dismissed
The defendants pay the plaintiff's costs of the application

Category: B

Representation:

Counsel:

Plaintiff	:	S Penglis SC
First Defendant	:	R R Joseph
Second Defendant	:	R R Joseph
Third Defendant	:	R R Joseph

Solicitors:

Plaintiff	:	Hayes Legal
First Defendant	:	DLA Piper Australia - Perth
Second Defendant	:	DLA Piper Australia - Perth
Third Defendant	:	DLA Piper Australia - Perth

Case(s) referred to in decision(s):

Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99; (2000) 156 FLR 453
Jordan v Avram (1997) 141 FLR 275
Re Western Australian Planning Commission; Ex parte Solomon [2010] WASCA 236 (S)
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396
Woolworths Ltd v GetUp Ltd [2012] FCA 726; (2012) 90 ACSR 670

TOTTLE J:

Introduction

These reasons concern the defendants' application for costs following the compromise (without a determination on the merits) of the plaintiff's application for urgent injunctive relief under the Corporations Act 2001 (Cth). The plaintiff had applied for orders postponing the holding of a general meeting of the plaintiff's members which had been convened by the defendants. The hearing of the application was adjourned shortly after it had begun to enable the parties to confer. The conferral resulted in a compromise that was embodied in consent orders and costs were reserved.
The defendants contend the plaintiff acted unreasonably in commencing and pursuing the application and that even if the plaintiff acted reasonably the application was doomed to failure. By an amended minute of orders filed on 10 February 2023 the defendants seek orders that the plaintiff pay their costs to be determined on various alternative bases, first, on an indemnity basis fixed in the amount of $119,284, secondly, on an indemnity basis, thirdly, on the basis of a 'special costs order', and fourthly, on a party and party basis.
The plaintiff contends that the usual approach with respect to costs of matters concluded without a determination on the merits should be followed, that is, there should be no costs order.

The background

The events leading to the hearing

The defendant convened a general meeting of the members of the plaintiff to be held on 26 October 2022. The meeting was convened pursuant to s 249F of the Corporations Act. The business of the meeting was the consideration of resolutions for the removal of one of the existing directors of the plaintiff and the appointment of three directors nominated by the defendants.
The notice of meeting was dated 12 September 2022 but sent to members of the plaintiff on 20 September 2022. The notice described the meeting as a hybrid meeting, that is, there would be a physical meeting at the Sydney office of the defendants' solicitors and a 'virtual meeting' using technology known as the 'Lumi meeting platform'.
In addition to describing the business of the meeting the notice described the arrangements for the meeting. In particular, the notice referred to the participation of a registry services company, Boardroom Pty Ltd, that had been retained by the defendants. The notice recorded that Boardroom had been retained to receive proxies and deliver them to the plaintiff or its share registry. The explanatory materials accompanying the notice recorded that to attend the virtual meeting using the Lumi platform members would be required to login using a 'Meeting ID' number and a 'Voting Access Code' (VAC) provided to members with the notice.
The notice of meeting generated a considerable volume of correspondence between the parties' solicitors commencing with a lengthy letter from the plaintiff's solicitors (Lavan) to the defendants' solicitors (DLA Piper) on 5 October 2022.
In summary the parties' positions were as follows:
(a)Lavan contended that Boardroom could and should have no role in the conduct of the meeting and that the meeting should be conducted by the plaintiff and its share registry services company, Computershare Investor Services Pty Ltd. In addition, Lavan identified practical problems that would arise if Boardroom was involved in the conduct of the meeting. Lavan proposed that the meeting be postponed for a short period to allow for the appointment of Computershare to conduct the virtual meeting using the Lumi meeting platform and for that change in the meeting arrangements to be announced to members.
(b)The practical problems identified by Lavan included that on the date of the meeting neither the defendants nor Boardroom would have access to what was referred to as the 'meeting register', that is, a copy of the register of members as at the eligibility cut-off time (7.00 pm on 24 October 2022). Without the updated register Boardroom would not be able to verify whether those members voting at the virtual meeting were entitled to vote. This practical problem was later described as the 'access issue'. A second practical problem was that members who had purchased shares after the notice of meeting was sent out on 20 September 2022 would not have a VAC required to vote at the virtual meeting and they might thus be disenfranchised. This was later described as the 'VAC issue'.
(c)DLA Piper contended that the plaintiff's opposition to Boardroom's involvement in the meeting would, in a practical sense, prevent a shareholder from exercising the right to 'call, and arrange to hold a general meeting' under s 249F of the Corporations Act. The defendants acknowledged that the plaintiff and an independent chairperson should conduct the meeting and were open to co‑operating with Computershare in the facilitation of the virtual meeting. DLA Piper contended that the plaintiff had not identified how Boardroom's facilitation of the meeting would undermine the power of the chairperson to conduct the meeting. The defendants were not prepared to agree to a postponement of the meeting.
On 10 October 2022 DLA Piper sent a letter to Lavan in which they summarised the defendants' position as follows:[1]
[1] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-27', 313 - 314.
6In your 5 October Letter (at paragraph 3) you set out the issues the Company seeks to resolve. Vitrinite advises the following:
6.1Noting the Company's express intention to appoint an independent Chairperson (5 October Letter, paragraph 32.1), Vitrinite accepts that the Company intends to and should conduct the meeting.
6.2In general terms, Vitrinite has no issue with Computershare (and/or Lumi Global (Lumi)) conducting the EGM to ensure it is properly run by the duly appointed independent chairperson. However, Vitrinite does not accept at this point in time that Boardroom must therefore have no involvement in the EGM.
6.3Vitrinite is concerned that changes to the details for the EGM risks confusing shareholders as to how to attend the meeting. Given the paramount importance of the shareholders' right to vote at the EGM, this should be avoided at all costs. As such:
(a)Computershare (and/or Lumi) must have adequate capacity to conduct the meeting on 26 October 2022; and
(b)every effort must be made to preserve Lumi Meeting ID 328 376 305 for the EGM.
6.4Vitrinite will not accept any proposition which results in a delay to the EGM. The Company has had ample time to consider how it should conduct the EGM. You have not provided any substantive reason why a postponement is necessary.
7In these circumstances Vitrinite seeks to explore and collaborate to ensure the Company can be satisfied that the EGM will be properly conducted, and also ensure the risk of confusion is avoided.
8You have not indicated in your correspondence whether the Company has investigated what can be done to preserve the date of, and details for, the EGM. Your 5 October Letter identifies numerous technical details as to how Boardroom will utilise Lumi's meeting software. Vitrinite is investigating how the EGM can be conducted to meet your client's concerns. Vitrinite asks that the Company take no further action, including commencing legal proceedings, until our client has had an opportunity to do so.
9Vitrinite's position is that a proper collaboration, including as necessary directly between Boardroom and Computershare and/or Lumi, should resolve the Company's key concerns. As such, Vitrinite does not, by this letter, intend to address every point raised within your recent correspondence. Vitrinite will deal with those matters if they remain outstanding issues between the parties during the course of, or at the conclusion of, any conferral.
On 12 October 2022 DLA Piper sent a letter to Lavan addressing what the defendants understood were the plaintiff's concerns and making various proposals for dealing with them. DLA Piper addressed the issue that Boardroom would be unable to provide a VAC to new members as follows:[2]
8Your 5 October Letter raises an additional issue, that Boardroom will be unable to provide a VAC to new shareholders, and as a result it will not be able to verify when those shareholders come onto the Company's register between now and the proxy cut‑off time. It is our understanding that at the conclusion of the EGM, Boardroom will provide all votes, including shareholder information as at the prescribed cut‑off time and the respective VAC for each vote, to Computershare to conduct their veracity check of the votes cast against those entitled to be cast at the EGM based on the shareholder register as at the voting entitlement cut‑off time.
[2] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-30', 337 - 338.
In their letter of 12 October 2022 DLA Piper put forward alternative solutions on behalf of the defendants. First, they proposed that a Computershare employee operate the Lumi software to 'run' the virtual meeting. DLA Piper described the effect of this proposal as Boardroom relinquishing the running of the meeting to Computershare. The alternative proposal was that Computershare provide Boardroom with an updated share register as at the eligibility cut‑off time to enable Boardroom to ascertain those members who were entitled to attend and vote at the meeting. Further, DLA Piper stated:[3]
24In addition, our client remains open to an alternative proposal which it considers will address and resolve the Company's concerns, without delaying the EGM. Our client is prepared to take steps to ensure that Boardroom:
24.1in preparation for and on the day of the EGM, acts on the instructions of the independent chairperson;
24.2explains and demonstrates how the virtual meeting software is configured; and
24.3adjusts any configurations that the independent chairperson might require so as to ensure the EGM is conducted properly and in accordance with the Company's constitution.
[3] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-30', 339 - 340.
In a further letter to Lavan sent on 14 October 2022, DLA Piper pressed for a response to the proposals contained in their letter of 12 October 2022 and referring to the plaintiff's threat of legal proceedings. DLA stated:[4]
13Our client's position is that any proceedings commenced by your client are, given the potential for amicable resolution, entirely unnecessary. Our client reserves the right to seek its costs on an indemnity basis if your client commences any action without taking proper action to avoid that step.
[4] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-33', 350.
On 17 October 2022 Lavan responded to the proposals contained in DLA Piper's letter of 12 October 2022. The plaintiff's principal objection to the proposal was that Boardroom had been engaged by the defendants and not by it - subsequently termed 'the retainer issue'. Lavan expressed concern that the defendants' proposal would involve the plaintiff's confidential information being made available to both the defendants and Boardroom. Further, Lavan stated:[5]
14The Company also considers that any form of 'hybrid' arrangement between Boardroom and Computershare - such as Boardroom simply handing over votes cast via the Lumi platform at the conclusion of the EGM for Computershare to reconcile - introduces unnecessary risk, delay and complexity to the meeting process and procedures.
[5] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-37', 369.
In their letter of 17 October 2022 Lavan set out the plaintiff's proposal as follows:[6]
[6] Affidavit of Andrew Charles Hunt sworn 19 October 2022, 'Attachment ACH-37', 370 - 371.
18As it stands, your clients' current position with respect to the running of the EGM is untenable. Unfortunately, your clients' proposal does not rectify the issues we have identified.
19It is not appropriate for Boardroom to control the Lumi Meeting ID. As set out above, the solution for a Computershare representative to operate the Lumi software during the EGM does not alleviate our client's concerns. The Company would require nothing less than the full transfer of the Lumi Meeting ID and all control over it to Computershare, which would have to occur well in advance of the EGM - not, as you seem to contemplate, temporarily on the day of the EGM. That has not been offered by your clients and, at this stage, we do not consider that it could be achieved in time to give the Company sufficient comfort in respect of its control of the EGM.
20As set out above, our client has retained Computershare to provide both registry services for the running of the in‑person and virtual components of the EGM. Computershare will use its own proprietary online software platform to facilitate the virtual component of the EGM. Conveniently, this platform will allow shareholders to log in using their SRN/HIN information, which resolves the issues we have identified with respect to the VAC information.
21The Company proposes to prepare an announcement to be uploaded to the ASX Market Announcement Platform confirming the new details for online attendance at the EGM. That way, new shareholders coming on to the register will be made aware of the EGM, and their ability to vote online using their SRN/HIN. Existing shareholders will also be apprised of the updated information as to how to access the EGM. Although we note your clients' position that no announcement to the market will be necessary, our client's position is that an announcement is required in any event, to inform shareholders of:
21.1the current issues pertaining to the VAC information; and
21.2the handling of their personal information by Boardroom, in a manner contrary to that as set out in the Replacement NOM.
22Therefore, the Company considers that the appropriate course is for all issues as to the conduct at the EGM to be addressed by one substantive announcement, which will also direct shareholders to Computershare's online platform. Given the EGM is next week, the Company also proposes that it be postponed by three weeks, to ensure that shareholders have sufficient time to receive the announcement (including by post) and familiarise themselves with the new arrangements for online attendance. The Company considers this essential to ensuring shareholders are properly informed about how to exercise their right to vote at the EGM.
23In light of the above, please confirm by no later than 4:00 pm (AWST), 18 October 2022 that your clients:
23.1consent to the postponement of the EGM by three weeks;
23.2will decommission Lumi Meeting ID 328-376-305; and
23.2will make no further attempts to run and/or control any aspect of the EGM, including the online component.
On 20 October 2022 the defendants' solicitors served a request on the plaintiff for a copy of the plaintiff's register of members as at 7.00 pm (Sydney time) on 24 October 2022 pursuant to s 173(3) of the Corporations Act.[7]The plaintiff was obliged to provide the register within seven days.
[7] Affidavit of Jethro Jesse Schoeman sworn 24 October 2022, 'Attachment JJS-1', 6.
On 20 October 2022 the plaintiff filed its originating process that relevantly provided:
This application is made under sections 249F, 1322 and 1324 of the Corporations Act 2001 (Cth) (Act).
The defendants issued a notice under section 249F of the Act (Notice) calling a general meeting of the plaintiff to be held on 26 October 2022 (Meeting).
On the facts stated in the supporting affidavits, the plaintiff seeks orders that:
1.The Meeting be postponed until 16 November 2022 or such other date as the Court thinks fit.
2.Unless by 3 November 2022 the plaintiff (or its share registrar, Computershare Investor Services Pty Limited (Computershare)), is assigned for its use to conduct the virtual component of the Meeting the Lumi software licence for Meeting Identification Number 328-376-305, to be accessed by the plaintiff's members at the Meeting shall proceed on the basis of the plaintiff (by its share registrar, Computershare) using Computershare's software to conduct the virtual component of the Meeting.
Conferral between the parties' solicitors continued after the proceedings had been commenced. In a letter from Lavan to DLA Piper sent on 24 October 2022 Lavan proposed that the plaintiff engage Boardroom to run the meeting and act as the returning officer with those services to be provided by a separate Boardroom team from the team that handled the proxy forms for the defendants. Computershare would then provide Boardroom with the information required to enable Boardroom to run the meeting. Lavan noted that this proposal might 'still require a short postponement to put all necessary arrangements in place'.[8]

A synopsis of the parties' written submissions filed in the substantive application

[8] Affidavit of Jethro Jesse Schoeman sworn 24 October 2022, 'Attachment JJS-15', 48.

In its written submissions filed on 24 October 2022 the plaintiff emphasised its contention that the general meeting was to be conducted in the same way as any general meeting of the plaintiff and identified practical problems that would occur should Boardroom 'run' the meeting. The plaintiff described the arrangements put forward by the defendants as 'untenable'. It contended:[9]
First, the meeting must be run by X64 or agents engaged by, and with duties to, X64. X64 does not accept, and ought not be required to accept, the services of an agent who is not engaged by the company.
Second, it is impractical for Boardroom to undertake the necessary tasks. It will not have access to the share register information referred to above. That information, pursuant to the Corporations Act, is maintained and managed by the company. Without that information, Boardroom will not be able to undertake the basic necessary tasks to validly conduct the virtual component of the EGM. The Defendants sought this information, for the first time, on 21 October 2022 - without identifying any entitlement to it - and despite X64 first raising the issue on 5 October 2022.
A particular issue is that Boardroom provides access to the Lumi platform by allocating shareholders 'Voter Access Code' or 'VACs'. These were provided to shareholders with the NOM (or shareholders are instructed to contact an unidentified 'registrar', being Boardroom, to obtain a VAC). It remains unclear how all shareholders who have acquired shares since dispatch of the NOM can be allocated a VAC when Boardroom does not have up‑to‑date register information. By contrast, Computershare facilitates access to an online meeting using a shareholder's unique 'SRN' or 'HIN' information. Computershare does not have access to the VAC information for the EGM. It is unclear how X64 can be confident that all shareholders who are entitled to vote will have access to the virtual component of the meeting in these circumstances.
In short, the Defendants have not called, and arranged to hold, the EGM in a way that ensures the conduct of the meeting is properly in the control of X64 and the Chairperson.
[9] Plaintiff's outline of written submissions filed 24 October 2022 [18] - [21].

In supplementary written submissions (filed after it had been established that Computershare would not act as the returning officer and provide the plaintiff with a tallied and verified voting result if Boardroom was involved in the meeting) the plaintiff proposed either that Boardroom accept a direct retainer to run all aspects of the meeting as the plaintiff's agent or that Computershare run all aspects of the meeting either in collaboration with Lumi or using its own online meeting platform.[10]
[10] Plaintiff's supplementary outline of written submissions filed 24 October 2022.
In their written submissions the defendants characterised the plaintiff's concerns, which they distilled to the retainer issue, the access issue, the control issue (that is, who would control the running of the meeting) and the VAC issue as hypothetical and entirely speculative and of the plaintiff's own making. In their submissions the defendants argued that the plaintiff had failed to demonstrate any irregularity in the process of convening the meeting and had failed to demonstrate any basis upon which it was entitled to interlocutory relief.[11]

The hearing on 25 October 2022

[11] Defendants' outline of written submissions filed 25 October 2022.

At the beginning of the hearing on 25 October 2022 senior counsel for the defendants asked the court to intercede in their attempts to obtain the updated register of members.
Shortly after that request and to the collective surprise of all counsel, the court and counsel were informed that the updated register of members had been sent to DLA Piper. It appears from evidence adduced by the plaintiff on the costs application that the register of members was sent by an employee of the plaintiff under the misapprehension that it should be sent, when in fact the plaintiff's position was that the register was not to be provided 'pending the issue being determined in Court'.[12] Senior counsel for the plaintiff described the effect of sending the updated register to DLA Piper as 'the carpet has been taken from under my feet'.[13]
[12] Affidavit of Menka Orellana sworn 17 February 2023 [8].
[13] ts 17.
At the time the updated register was sent to DLA Piper I was engaged in a dialogue with senior counsel for the plaintiff to ensure that I understood the practical issues raised by the application.
The provision of the updated register resolved the access issue. It also enabled an assessment to be made of the magnitude of the VAC issue. In that respect senior counsel for the defendant informed me that the updated register disclosed that seven members had acquired shares between 20 September 2022 and 7.00 pm (Sydney time) on 24 October 2022 and that they held shares representing 0.1% of the shares entitled to vote at the meeting.
I discussed with the plaintiff's senior counsel two other issues. First, the plaintiff's concern about the disclosure of the proxies to Boardroom, and in this respect, I queried whether disclosure of the proxies, or the result of the votes cast by proxies, to Boardroom was necessary. It seemed that it was only necessary for the proxies to be disclosed to the chairperson of the meeting, the 'returning officer' or scrutineers who needed to inspect the proxies and know the result of the votes cast by the proxies. Secondly, I queried whether, given Computershare would not be assisting with the running of the meeting, responsible individuals from, for example, the plaintiff's auditors, could not act as scrutineers. In effect, I asked senior counsel to consider whether the meeting could proceed on the basis that Boardroom's involvement in the meeting was limited to administering the virtual component of the meeting and that the chairperson, assisted by trustworthy scrutineers, could conduct the physical meeting and tally the votes cast by those members attending the physical meeting in person or by a representative, the proxy votes and the votes cast in the virtual meeting. I referred to this as the 'hybrid of the hybrid'. I adjourned the hearing to enable the parties to take instructions and confer.
As noted earlier the parties were able to reach an agreement that was expressed in the following orders:
1.The Second Defendant will instruct Boardroom Pty Ltd (Boardroom) to facilitate all arrangements as necessary for the online component of the meeting of members of the Plaintiff to be held on 26 October 2022 (Meeting), details of which are provided in the notice of meeting dated 12 September 2022.
2.The Second Defendant will instruct Boardroom to provide all reasonable assistance to the chair of the Meeting (Chair), proposed to be Hedley Roost of Thomson Geer, or any other person appointed Chair of the Meeting.
3.The Second Defendant will instruct Boardroom to act at the direction of the Chair at all material times.
4.The Second Defendant direct Boardroom to provide, in electronic format, to the Plaintiff, by 5:30pm (WST) on 25 October 2022, a document which identifies for each shareholder who has been issued with a 'Voting Access Code' (VAC) the name of each shareholder and the VAC assigned to them.
5.The Second Defendant shall provide to the Plaintiff by 3:00pm (WST), the name, email address and mobile phone number of the person at Boardroom to whom any inquiries by, or on behalf of the Chair, shall be directed.
6.The Second Defendant will instruct Boardroom to provide, in electronic format, the online votes cast at the Meeting to the Chair in a form that will enable the Chair to see the way in which the votes have been cast at the Meeting.
7.The Plaintiff, or such other person as directed by the Plaintiff, will provide all proxy information received by the Plaintiff in respect of the Meeting to the Chair.
8.The Meeting otherwise be run in accordance with the requirements of the Plaintiff's Constitution and the Corporations Act 2001 (Cth).
9.Costs reserved.

Applicable principles

The general principles governing the exercise of the discretion with respect to costs in circumstances in which the proceedings have not been determined on their merits were set out by the Court of Appeal in Re Western Australian Planning Commission; Ex parte Solomon:[14]
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 the particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 566 - 568 (McHugh J). However, when there has been no hearing on the merits, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 (McHugh J). The issue about costs cannot be resolved by the court trying a hypothetical action between the parties because this would burden the parties with the cost of a litigated action which, by the abandonment of the action, they have avoided: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (624). 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 costs discretion will usually mean the court will make no order as to costs of the proceedings: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (625). However, if after litigating for some time, one party effectively surrenders to the other, then the court may make a costs order against that party: One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, 552 - 553 (Burchett J); Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302. This might be justified where it was clear that the strength of the other side's case led to the surrender thereby allowing the inference to be drawn that the abandoning party had acted unreasonably in suing or defending in the first place.
[14] Re Western Australian Planning Commission; Ex parte Solomon [2010] WASCA 236 (S) [9].

The parties' contentions

In summary the defendants' contentions were to the following effect:
(a)The agreement expressed in the consent orders reflected the proposal put to the plaintiff in DLA Piper's letter of 12 October 2022. There was no action to be undertaken by Boardroom pursuant to the consent orders which was additional to the actions on the part of Boardroom contemplated by the 12 October 2022 proposal. In this respect the defendants relied on pars 8 and 18 to 24 of the 12 October 2022 letter.
(b)Contrary to the plaintiff's contention, at no stage had the defendants proposed that Boardroom should conduct the meeting thereby excluding or limiting the power of the chairperson to conduct the meeting. This was made clear not only in the 12 October 2022 letter but in other correspondence that preceded the commencement of proceedings.
(c)The court should infer from the plaintiff's ultimate acceptance of Boardroom's administration of the online component of the meeting that the plaintiff's earlier insistence that Boardroom should have no role in the facilitation of the meeting was unreasonable.
(d)That the practical issues - the access issue and the VAC issue -were resolved in part by the disclosure of the register of members and in part by the consent orders supports the conclusion that the issues were illusory and the plaintiff was unreasonable in raising them. Further, the access issue was resolved by the voluntary provision of the register of members rather than as a result of any exchange between the court and senior counsel for the plaintiff.
(e)Having regard to the matters referred to in (a) to (d) the defendants should be regarded as the successful party. This was evident from the fact that the meeting was not postponed and the plaintiff relented in its opposition to Boardroom's involvement in the administration of the meeting.
(f)The plaintiff had failed to identify any procedural irregularity that could form the foundation for an application for relief pursuant to s 1322 or s 1324 of the Corporations Act and thus the application was doomed to failure.
In summary the plaintiff's contentions were to the following effect:
(a)This is not a rare case in which the court could be satisfied that there was a high degree of certainty that if the proceedings had been determined on their merits the plaintiff would have failed to obtain the relief it sought. The court should not now embark on the exercise of trying to work out which party would have succeeded but should apply the general principle and order that there be no order for costs.
(b)The consent orders flowed from the exchanges between senior counsel for the plaintiff and the court. A party will give weight to a suggestion by the court that parties confer about the resolution of an issue on a certain basis.
(c)The agreement expressed in the consent orders did not reflect what had been proposed by DLA Piper in the 12 October 2022 letter. Specifically, the consent orders did not require the plaintiff to provide Boardroom with the proxies which was something proposed in the 12 October 2022 letter.
(d)The plaintiff was under no obligation to provide Boardroom or the defendants with the register of members as at the cut‑off eligibility time. The s 173 notice served by the defendants required production of the register of members by 27 October 2022. The plaintiff's resistance to the provision of the register to Boardroom could not be characterised as unreasonable if there was no statutory obligation on the plaintiff to provide it.
(e)Section 1322(4)(d) of the Corporations Act provided the court with the power to make an order postponing the holding of the meeting conditioned only by the requirement that no substantial injustice is likely to be caused to any person. There was no requirement for the plaintiff to establish procedural irregularity.
(f)The application of the general principle that there should be no order as to costs where proceedings are resolved without a determination of the merits is consistent with the principles of positive case flow management because it discourages 'satellite' litigation about costs exemplified by the defendants' application.

Disposition

I have concluded that the appropriate order is that there should be no order as to costs. My reasons for reaching this conclusion are as follows.
I accept that the power to make orders under s 1322(4)(d) is not conditioned by a requirement to establish a procedural irregularity.[15] It is conditioned only by a requirement that no substantial injustice is likely to be caused by any person.[16] In Woolworths Ltd v GetUp Ltd,[17] the power was exercised to extend the time for the holding of an extraordinary general meeting requested under s 249D of the Corporations Act to coincide with the times for the holding of the company's annual general meeting and thus avoid the cost and inconvenience of holding general meetings within three months of each other. Accordingly, I do not accept the defendants' submission that the plaintiff was required to establish a procedural irregularity before it was entitled to relief under s 1322(4)(d).
[15] See Austin R and Ramsay I, Ford, Austin and Ramsay's Principles of Corporations Law (16^th ed, 2015) [7.583] citing Jordan v Avram (1997) 141 FLR 275, 279; Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99; (2000) 156 FLR 453 [42] (subject to deed of company arrangement); Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [10], [63].
[16] Woolworths Ltd v GetUp Ltd [2012] FCA 726; (2012) 90 ACSR 670 [18].
[17] Woolworths Ltd v GetUp Ltd.
The compromise reached by the parties meant that it was unnecessary to hear submissions as to whether the concerns raised by the plaintiff about Boardroom's proposed participation in the meeting were sufficient to warrant the grant of relief pursuant to s 1322(4)(d) of the Corporations Act. It would be inconsistent with the general principles which guide the discretion as to costs in the present circumstances for the court to determine that issue in the context of the costs application without the benefit of argument from the parties.
The plaintiff's concerns about the conduct of a hybrid general meeting in which an important role was to be played by a service provider with whom it had no contractual relationship could not be described as frivolous or specious. That is not to say that the plaintiff's proposition that it was not open to the defendants to retain Boardroom would have been accepted had there been a determination on the merits. In my view that proposition was contestable. Rather, it is to say that the plaintiff's position could not be characterised as being so devoid of merit that its application was doomed to failure.
Turning to the defendants' contentions that the plaintiff acted unreasonably some general observations may be made. First, the very nature of a compromise is that it will generally be difficult to identify a 'winner'. This is especially so when success or failure cannot be measured in direct financial terms. Secondly, that a compromise involves a party moving from a position previously held by it does not compel the conclusion that the party was unreasonable in holding its earlier position. Thirdly, it must be borne in mind that it is much easier to find that a party acted unreasonably when the impugned conduct is viewed in the misleading light of hindsight. Taking these general observations into account, together with my conclusion that the plaintiff's application was not doomed to failure, in my judgment the plaintiff was not unreasonable in pursuing its application. This is so even if it is accepted that the consent orders embodied many of the proposals set out in DLA Piper's letter of 12 October 2022.
The correspondence evidences a process of negotiation between the parties. Each was advancing a defensible, if contestable, position. Having been required to consider the correspondence at some length, my impression is that each side was genuinely attempting to reach a compromise. That the plaintiff ultimately moved further than it was originally prepared to move is not an adequate justification for concluding that it was acting unreasonably by adopting its original position.
There is a further matter that favours 'no order as to costs'. Conformably with well-known case management principles, parties should not be discouraged from compromising their disputes especially when there is uncertainty as to the outcome. When there has been no determination of the merits of a dispute, making an order for costs, other than in the rare cases of the nature described in the authorities, may inhibit the making of settlements that it is in the parties' interests to make.

Conclusion

The defendants' application will be dismissed. The costs of the application for costs should follow the event. There will be an order that the defendants pay the plaintiff's costs of the application made by the defendants' amended minute of orders filed on 10 February 2023.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
OK
Associate to the Honourable Justice Tottle
30 MARCH 2023