The Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd (No 2)

[2015] NSWCA 294

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	The Australian Special Opportunity Fund LP v Equity Trustees Wealth Services Ltd (No 2) [2015] NSWCA 294
Hearing dates:	On the papers
Date of orders:	29 September 2015
Decision date:	29 September 2015
Before:	Bathurst CJ; Macfarlan JA; Emmett JA
Decision:	Set aside Orders (3), (6) and (7) made by Black J on 25 August 2014. Order that: The costs referable to the determination of the cross-claim, dated 9 April 2014, filed by the appellant, be determined by the judge hearing the appellant’s claim for damages or equitable compensation referred to in Order (2) of the orders made by this Court on 11 August 2015. The respondent pay 50% of the appellant’s costs of the appeal.
Catchwords:	COSTS – appeal – costs on appeal where appellant successful on some grounds of appeal but not others – costs for proceedings below where proceedings remitted
Category:	Costs
Parties:	The Australian Special Opportunity Fund, LP (Appellant) Equity Trustees Wealth Services Limited (Formerly ANZ Trustees Limited) (Respondent)
Representation:	Counsel: IM Jackman SC / MR Hall SC (Appellant) CM Scerri QC / HNG Austin (Respondent) Solicitors: Squire Patton Boggs (Appellant) Ashurst Australia (Respondent)
File Number(s):	2014/00276461
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division – Corporations List Citation: [2014] NSWSC 813 Date of Decision: 19 June 2014 Before: Black J File Number(s): 2013/377450

Judgment

1. THE COURT: In a judgment in these proceedings, delivered on 11 August 2015 (the primary judgment), the appeal in this matter was allowed in part.

2. The appeal raised two issues. First, whether the respondent was liable in damages for failure to appoint a controller to Metal Storm Ltd (subject to a deed of company arrangement) (the company). Second, whether the respondent was required to comply with the direction given by the appellant in December 2013 to release the charge held by it over the assets of the company. The appellant was successful on the first issue, which included a number of subsidiary issues (primary judgment [55]-[57]), and its claim for damages was remitted to a judge of the Equity Division for hearing. The appellant failed on the second issue.

3. In the primary judgment, Bathurst CJ, with whom the other members of the Court agreed, expressed the preliminary view that the respondent should pay 50% of the appellant’s costs of the appeal, but the costs of the proceedings at first instance be left to the discretion of the primary judge who hears the appellant’s claim for damages or equitable compensation. The parties were given leave to make submissions on this issue.

4. In written submissions, the appellant submitted that an order that the respondent pay 50% of its costs would not accurately reflect the extent of its success on the appeal. It submitted that the reality was that the appeal focused on the first issue, pointing to the relative attention devoted to the various grounds raised by the notice of appeal and notice of contention. It emphasised the number of grounds on which it was successful, being the grounds on which it was necessary to succeed on the first issue. In those circumstances, it submitted that the appropriate order was for the respondent to pay 80% of the appellant’s costs of the appeal.

5. So far as the proceedings at first instance were concerned, the appellant submitted that, having regard to the fact that it prevailed on the argument that the failure to appoint a controller was a breach of trust or breach of contract, the costs should be costs in the cause.

6. The respondent pointed out that the second issue was pursued up to and including the final hearing and occupied a substantial amount of time and preparation. In these circumstances, it submitted that there should be no costs order made in respect of the appeal. It submitted that the costs of the proceedings below should be left to the discretion of the judge who hears the remitted proceedings.

7. We remain of the view that the appellant should have 50% of its costs of the appeal. It is correct that what we have described as the first issue ultimately had more significance to the parties and occupied a greater part of the hearing. However, an order that the respondent pay 50% of the appellant’s costs of the appeal takes that into account, in circumstances where no order was made in favour of the respondent on the issue on which it was successful. By contrast, we do not think that the position of the respondent, namely, that there be no order for costs, properly reflects the measure of success which the appellant had on the appeal.

8. Further, we remain of the view that the costs of the proceedings below should abide the determination of the judge who hears the damages claim. The result of the claim remains uncertain and its outcome could well be relevant to the overall costs order. It would not be appropriate, in these circumstances, to make the order sought by the appellant, which would deny the respondent any prospect of recovering its costs, irrespective of the outcome of the damages hearing.

9. In these circumstances, we would make the following orders in addition to the orders made on 11 August 2015:

1. Set aside Orders (3), (6) and (7) made by Black J on 25 August 2014.

2. Order that:

1. The costs referable to the determination of the cross-claim, dated 9 April 2014, filed by the appellant, be determined by the judge hearing the appellant’s claim for damages or equitable compensation referred to in Order (2) of the orders made by this Court on 11 August 2015.

2. The respondent pay 50% of the appellant’s costs of the appeal.

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Decision last updated: 29 September 2015