Wellington v Hutchison

[2024] NSWCA 54

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Wellington v Hutchison [2024] NSWCA 54

Hearing dates:

12 March 2024

Date of orders:

12 March 2024

Decision date:

12 March 2024

Before:

Ward P; Simpson AJA

Decision:

1.   Extend the time for the filing of the summons for leave to appeal to the date on which it was filed.

2.   Dismiss with costs the summons for leave to appeal.

Catchwords:

APPEALS – Leave to appeal against costs order – Where proceeding had led to a mixed result – Where two alleged Calderbank offers had been made by applicant – Where applicant asserted that the practical outcome of the proceeding aligned with the compromise proposed in the Calderbank offers – Whether the reluctance to grant leave in relation to orders as to costs only should be overcome by the alleged serious risk of injustice – Whether House v The King error not to grant indemnity costs

Legislation Cited:

Corporations Act 2001 (Cth), ss 181, 236

Supreme Court Act 1970 (NSW), s 101

Uniform Civil Procedure Rules, r 51.10(2)

Cases Cited:

Calderbank v Calderbank [1975] 3 All ER 333

CJZ Pty Ltd v Giant Dwarf Pty Ltd; CJZ Pty Ltd v Morrow [2023] NSWCA 135

Dalma Formwork (Australia) Pty Limited v Maricic (No. 3) [2008] NSWCA 209

Fordham v Fordyce [2007] NSWCA 129

Gibson v Drumm [2016] NSWCA 206

House v The King (1936) 55 CLR 499

In the matter of Carbon Copies Composites Pty Ltd [2022] NSWSC 1762

In the matter of Carbon Copies Composites Pty Ltd [2023] NSWSC 1039

In the matter of Carbon Copies Composites Pty Ltd [2023] NSWSC 911

Category:

Procedural rulings

Parties:

Vaughan Stanley Wellington (in his capacity as Director of Carbon Copies Composites Pty Ltd ACN 630 633 126) (Applicant)
Colin James Hutchison (Respondent)

Representation:

Counsel:

A Bulley (Applicant)
S Bell (Respondent)

Solicitors:

Access Law Group (Applicant)

File Number(s):

2023/00432526

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity Division, Corporations List

Citation:

[2023] NSWSC 1039

Date of Decision:

30 August 2023

Before:

Black J

File Number(s):

2022/327499

HEADNOTE

[This headnote is not to be read as part of the judgment]

The applicant sought leave to appeal from costs orders made in the Supreme Court on 30 August 2023, following the disposition of proceedings commenced by him, both in his personal capacity (for misleading and deceptive conduct) and on behalf of Carbon Copies Composites Pty Ltd (Receivers and Managers Appointed) (the Company) (relating to the development of certain intellectual property). The applicant also sought an extension of time to seek leave to appeal.

The applicant was unsuccessful in his personal claims, but had a measure of success of behalf of the Company. The primary judge declined the applicant’s application for special costs orders consequent upon the failure by the respondent (the second defendant in the proceedings below) to accept two offers said to be Calderbank offers. The applicant alleged that the practical outcome of the proceedings aligned with the compromise made in the offers, and that indemnity costs should be awarded.

The applicant sought leave to appeal against the costs orders, alleging that the primary judge erred in applying the principles of Calderbank v Calderbank [1975] 3 All ER 333 to the two offers.

The Court held (Ward P and Simpson AJA), granting the extension of time but dismissing the summons seeking leave to appeal:

There is a general reluctance to grant leave in relation to orders dealing only with costs (the Court at [46]). The primary judge was well aware that the proceedings had led to a mixed result; while the respondent’s assertion of an ownership interest in all of the intellectual property was unsuccessful, so too were the applicant’s personal claims, and various of the claims made by him on behalf of the Company (the Court at [50]). Even if both offers could properly be characterised as Calderbank offers (a proposition that itself was in doubt – the Court at [51]), the evaluative assessment made by the primary judge as to whether it was unreasonable for the respondent to reject them did not bespeak House v The King error, nor could it be said that the conclusion was not open to his Honour (the Court at [52]-[53]). In the absence of obvious House v The King error, leave to appeal should be refused (the Court at [55]).

JUDGMENT

1. THE COURT: In this matter the applicant, Mr Vaughan Wellington, a director of Carbon Copies Composites Pty Ltd (Receivers and Managers Appointed) (the Company), seeks leave to appeal from costs orders made by Black J on 30 August 2023 following the disposition of proceedings that had been commenced by Mr Wellington (both on behalf of the Company, by leave granted on 2 December 2022, and also in his personal capacity). Leave is necessary pursuant to s 101(2)(c) of the Supreme Court Act 1970 (NSW). An extension of time (for just over two months) for the seeking of leave to appeal is also sought pursuant to r 51.10(2) of the Uniform Civil Procedure Rules (UCPR), the delay in making the application being explained in an affidavit sworn by the applicant’s solicitor, Mr James Welch, on 29 November 2023. The respondent, Mr Colin Hutchison, opposes both an extension of time and the grant of leave to appeal.

2. Relevantly, the primary judge declined Mr Wellington’s application for special costs orders consequent upon the failure by the second defendant in those proceedings (Mr Hutchison) to accept offers said to have been made in accordance with the principles in (Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank offers)) that had been made on 23 June 2022 prior to the commencement of the proceedings and on 20 December 2022 after the proceedings had been commenced and leave had been granted to Mr Wellington to proceed on behalf of the Company in those proceedings (see In the matter of Carbon Copies Composites Pty Ltd [2023] NSWSC 1039 (the costs judgment)). Mr Hutchison was a co-director and also a shareholder of the Company from its incorporation. Mr Wellington, as already noted, was also a director of the Company and held shares in the Company through a family company.

3. The primary judge’s principal reasons were handed down on 3 August 2023 (In the matter of Carbon Copies Composites Ply Limited [2023] NSWSC 911) (the principal judgment). In essence, Mr Wellington was unsuccessful in his personal claims for misleading or deceptive conduct but had a measure of success on behalf of the Company in relation to claims concerning certain intellectual property developed concerning an all-electronic carbon fibre aircraft (the Aircraft) which the Company had been incorporated to develop and sell commercially. A distinction was drawn in that regard between intellectual property in design drawings completed prior to the incorporation of the Company (in respect of which the Company was held to have no right by way of ownership but an exclusive irrevocable licence for use) and intellectual and other property developed by Mr Hutchison after the Company’s incorporation (which the Company was entitled to use to the exclusion of Mr Hutchison doing so for his own benefit) (see [244] of the principal judgment).

4. His Honour found that Mr Hutchison’s conduct in asserting a legal and equitable interest in the intellectual property of the Aircraft from December 2018, at least without recognising the Company’s right to use that intellectual property to develop the Aircraft for the Company’s benefit (rather than for his own benefit), breached s 181 of the Corporations Act 2001 (Cth) (Corporations Act) (see [228] of the principal judgment) and that Mr Hutchison was also in breach of the conflict of interest rule (see [233]; [239] of the principal judgment).

5. The final orders made by his Honour included an order that Mr Hutchison be permanently restrained from, inter alia, commercially exploiting the Property (as defined in Order 7) other than in his role as a director and for the purposes of the Company (Order 1). His Honour declared that the Property, insofar as it was created on or after 17 December 2018, was and is the Property of the Company and that, insofar as the Property was created prior to the incorporation of the Company on 17 December 2018, the Company was entitled to an irrevocable licence for the use of that Property to the exclusion of Mr Hutchison (Order 2).

6. As to costs, those orders being the subject of the proposed appeal for which leave is here sought, his Honour ordered that: Mr Wellington pay Mr Hutchison’s costs of and incidental to the misleading and deceptive conduct claim as agreed or as assessed (Order 5); and that Mr Hutchison pay Mr Wellington’s costs incurred on behalf of the Company (that is, not his personal costs) of and incidental to the balance of the proceedings as agreed or as assessed (Order 6).

7. Mr Wellington had instead sought orders (both on his behalf, despite acknowledging that he was not successful in the claims he had brought in his personal capacity, and on behalf of the Company) that Mr Hutchison pay the plaintiffs’ costs of the proceedings, and do so on an indemnity basis (relying on the making of the successive Calderbank offers which it was submitted it was unreasonable for Mr Hutchison not to accept).

Proposed grounds of appeal

8. The proposed grounds of appeal are as follows:

1.   That his Honour Black, J erred in applying the principles of Calderbank v Calderbank [1975] 3 All ER 333 to the offer of compromise made by the Appellant’s solicitors to the Respondent dated 23 June 2022; and/or

2.   That his Honour Black, J erred in applying the principles of Calderbank v Calderbank [1975] 3 All ER 333 to the offer of compromise made by the Appellant’s solicitors to the Respondent dated 20 December 2022.

Calder bank Offers

9. It is convenient at this point to set out the substance of the two Calderbank offers on which Mr Wellington relies.

10. The first Calderbank offer was made by letter dated 23 June 2022 headed “Without Prejudice Save as to Costs”. The letter, sent prior to the commencement of the proceedings, referred to correspondence in which it was said that Mr Hutchison had maintained an assertion to the legal and beneficial ownership of intellectual property rights concerning the models, aeroplane and other property (defined as the IP assets) which in the plaintiffs’ solicitors’ view was that of the Company; and set out some of the reasons why it was said that Mr Hutchison should abandon those claims and which the plaintiffs’ solicitors said demonstrated that Mr Hutchison’s position with respect to the ownership of the IP assets was not maintainable.

11. The letter demanded confirmation that, to the extent that Mr Hutchison alleged that he had any right, title or interest in the IP assets, he irrevocably and unconditionally assign them to the Company and he unconditionally release the Company from any claim that he had or might have now or in the future concerning the same. Such confirmation was sought within 28 days, failing which legal proceedings were foreshadowed for declarations and orders to vest the IP assets in the Company. The letter also foreshadowed reliance thereon to seek costs on an indemnity basis. The costs then anticipated were said to be not less than $60,000.

12. The second Calderbank offer was made by letter dated 20 December 2022, similarly headed “Without Prejudice Save as to Costs”. This offer was made after the commencement of the proceedings and after leave had been granted pursuant to s 236 of the Corporations Act by Black J on 2 December 2022 for Mr Wellington to pursue a derivative claim on behalf of the Company. That leave was granted following a hearing which took place across 4 days in November and December 2022. Leave to bring the derivative suit had been opposed by Mr Hutchison. The costs of the application for leave to bring a derivative claim were reserved (see In the matter of Carbon Copies Composites [2022] NSWSC 1762 at [26]).

13. Mr Wellington says that at the time this second Calderbank offer was made a statement of claim had been served and the plaintiffs’ substantive evidence is said to have been “practically complete” (see [33] of the applicant’s submissions dated 29 November 2023).

14. After setting out the assertions made by Mr Wellington as to the merits of the claims made in the proceedings, and responding to a suggestion that there might exist an implied licence between Mr Hutchison and the Company, the 20 December 2022 letter made the following offer in full and final resolution of the proceedings:

a.   You consent to orders 1 to 4 in the Statement of Claim [in summary, orders that Mr Hutchison be permanently restrained from commercially exploiting the Property other than as a director of the Company; a declaration that the Property belonged to the Company; an order that Mr Hutchison transfer the Properly to the Company; and an order that Mr Hutchison restore the Property to the condition that it was in as at 12 April 2022].

b.   You pay to our client the amount of $140,000.

c.   You undertake to comply with your director duties to act in the best interests of the Company. (This would include commercialising the E75 Electron [the Aircraft].)

d.   All undertakings given to the Court to date in the Proceedings are released and/or discharged.

e.   The Proceedings otherwise be dismissed with no order as to costs to the effect that each party pays their own costs.

15. The letter had already noted that Mr Wellington had incurred in excess of $140,000 in legal costs to date (and that he would likely incur a further $100,000 from the date of the letter to when the final hearing occurred). Pausing here, if legal costs of $140,000 had by then already been incurred, then given that it was a term of the offer that Mr Hutchison pay the sum of $140,000 to Mr Wellington, this rather belies the stated intention in (e) that each party pay its own costs.

16. The letter expressly noted that it was a Calderbank offer made under the principles set out in Calderbank v Calderbank and that it was open to be accepted until such time as Mr Hutchison filed and served his defence (which was due by 13 January 2023).

17. As it transpired, Mr Wellington’s total costs of the proceedings are said to have exceeded $400,000 (see [36] of the applicant’s submissions dated 29 November 2023). Mr Wellington ascribes this as due, in part, to the late service of a substantive affidavit of Mr Hutchison which Mr Wellington says required a substantive response and had the effect of extending the trial by 2 or 3 days.

18. The hearing of the proceedings by Black J took place across a period of 6 days in July 2023.

Costs Judgment

19. Mr Wellington accepts that the primary judge identified the correct principles applicable when considering the import of a failure to accept a Calderbank offer (see [24] of the costs judgment) but says that the exercise of his Honour’s discretion miscarried in that no “special” order as to costs was made in respect of either Calderbank offer.

20. As to the first offer, the primary judge said (at [26] of the costs judgment) that he could not conclude that it was unreasonable for Mr Hutchison not to accept this where the evidence led in the proceedings established that at least some design drawings of the Aircraft had been done prior to the incorporation of the Company and the Company’s right to them was not a right of ownership but an entitlement to an irrevocable licence to use those drawings. His Honour said that an order for costs on an indemnity basis should not be made for that reason.

21. As to the second offer, his Honour noted the submissions made for Mr Hutchison (that Mr Wellington had failed to establish the allegations of misleading conduct and that Mr Wellington had not attained a more favourable result at the hearing) (see [27] of the costs judgment). His Honour again could not conclude that it was unreasonable for Mr Hutchison to accept the position in that letter “for both those reasons” and said that it also did not support an order for indemnity costs against Mr Hutchison.

Extension of time

22. Mr Hutchison submits that an extension of time should not be granted, in essence on the basis that there has not been a full and frank explanation for the delay. That complaint appears to turn on the assumption that Mr Wellington’s legal representatives would have advised him of the relevant date for the filing of the summons seeking leave and the absence of evidence that he was not so informed of relevant matters. Mr Hutchison submits that it is open to the Court to determine that Mr Wellington chose not to instigate proceedings in the relevant time period or was reckless in not doing so. That submission was not pressed in oral argument.

23. Mr Welch has deposed to various matters going to the issue of delay in institution of the proceedings in this Court, including Mr Wellington’s absence overseas for a period, that Mr Wellington was obtaining and considering the return of property by Mr Hutchison to the Company pursuant to the orders of the primary judge, Mr Welch’s hospitalisation and ill-health, Counsel’s absence overseas for part of the period and his further unavailability for family reasons, and that Mr Wellington was considering the likely cost of appeal and seeking advice on an appeal from the costs judgment.

24. What is required in this regard is a satisfactory explanation for delay; not that the legal practitioners should be held to a standard of excellence in case management (as is the implicit criticism in Mr Hutchison’s submissions). The explanation that has been proffered is sufficient and, in circumstances where no prejudice has been shown to arise from the two-month delay in this case, an extension of time for the filing of the summons seeking leave to appeal (to the date it was filed on 29 November 2023) should be granted.

Applicant’s submissions

25. Both of the proposed grounds of appeal relate to the decision of the primary judge not to make special costs orders in light of the Calderbank offers.

26. Mr Wellington emphasises that the relief sought in the proceedings included a claim for permanent injunctive relief in relation to the use or commercial exploitation of the intellectual property concerning the Aircraft except for the benefit of the Company and that he was successful in obtaining such relief. Mr Wellington says that, having regard to the practical outcome of the orders made by his Honour, he (on behalf of the Company) was wholly successful in ensuring that all of the resources that the Company expended to develop the Property were returned to the Company for the Company’s exclusive benefit.

27. Mr Wellington concedes that there is a general reluctance to grant leave in relation to an appeal dealing only with an order as to costs or in relation to an appeal which raises no particular issue of principle but merely the correct application of well-established principles (noting in this regard Dalma Formwork (Australia) Pty Limited v Maricic (No. 3) [2008] NSWCA 209 (Dalma Formwork) at [38]-[40] per Basten JA) but points out that in Dalma Formwork Basten JA recognised that there is a risk of injustice to a party if a not insignificant amount is involved and it fails to recover costs where it should have been allowed to do so (at [40]).

28. Mr Wellington also appears to accept (insofar as he quotes this proposition from Dalma Formwork) that “the power to award costs being inherently discretionary, it will always be necessary for the applicant for leave to establish an error of the kind described in House v The King (1936) 55 CLR 499 (House v The King) at 505.

29. Mr Wellington maintains that there is a serious risk of injustice in the present case if he fails to recover costs on the indemnity basis following on from the decision to reject the first Calderbank offer, noting that the proceedings involved two stages of hearing (over a total of 10 days).

25. Mr Wellington argues that his Honour’s discretion as to costs erred in that his Honour failed to have regard to three factors.

26. First, that Mr Hutchison did not reply to the first Calderbank letter at all (in circumstances where ultimately Mr Wellington successfully established that the vast majority of the IP which he had sought in the proceedings was ultimately found to have belonged to the Company by virtue of the fact that Mr Hutchison was a director of the company (rather than, as is said to be implied in the terms of the first Calderbank letter, that IP was or might have been owned by Mr Hutchison and the offer was made that it be assigned to the company)).

27. Second, that in relation to that IP in respect of which the Company only had an irrevocable licence to use, that made no difference from a practical perspective in the sense that the effect of that finding is that Mr Hutchison can assert no practical ownership of those drawings, whereas the Company is free commercially to use those drawings as it sees fit.

28. Third, that Mr Hutchison was permanently restrained from using or commercially exploiting the intellectual property concerning the Aircraft except for the benefit of the Company.

29. Mr Wellington submits that the effect of his Honour’s decision is to ignore the fact that, in respect of the ownership and use of the IP of the Company, Mr Wellington enjoyed complete success in establishing either ownership or an irrevocable right to use the entire IP of the Company to the exclusion of Mr Hutchison. Thus Mr Wellington argues that the end result of the principal judgment was better for him than the first Calderbank letter, which had only sought an assignment of that IP.

30. As to the second Calderbank letter, complaint is made that it is not clear from his Honour’s reasons to what “both those reasons” (at [27] of the costs judgment) refers.

31. Insofar as the first of the reasons would appear to be that the letter makes allegations of misleading conduct which Mr Wellington failed to establish in the proceedings, Mr Wellington says that the terms of the second Calderbank offer did not depend upon the misleading conduct part of the case which Mr Wellington personally sought to bring. Mr Wellington argues that, by paying regard to Mr Wellington’s personal failure in relation to the misleading and deceptive conduct part of the case, his Honour erred in the sense that he had regard to an irrelevant factor vis à-vis Mr Wellington (on behalf of the Company) as to whether or not it was unreasonable for Mr Hutchison to have rejected the terms of the offer contained in the second Calderbank letter. Further, it is submitted that his Honour erred in not having regard to the evidence and pleadings which Mr Hutchison then had available to him.

32. Insofar as the second of the reasons to which his Honour had regard is that Mr Wellington ultimately did not obtain a more favourable result than the terms of the offer in the end result, Mr Wellington maintains that the effect of the orders made by the primary judge was consistent with those terms of the second Calderbank offer.

33. Mr Wellington submits that the failure to have regard to the terms of the second Calderbank letter and the outcome that he achieved means that his Honour’s discretion miscarried in concluding that it was not unreasonable for Mr Hutchison not to accept the position in that letter.

34. Mr Wellington contends that the failure to award indemnity costs in his favour in relation to either of the two Calderbank letters has had the effect of producing a harsh and unjust outcome. Mr Wellington submits that Mr Hutchison’s position as a director of the Company was not, and could never have been, contested; and that the vast majority of the IP was developed by him after the incorporation of the Company. Mr Wellington maintains that the IP was the property of the Company which could not be exploited by Mr Hutchison in any way other than as a director of the Company.

35. It is contended that, in those circumstances, the exercise of his Honour’s discretion in not awarding indemnity costs pursuant to either Calderbank letter produced a harsh and unjust result. Mr Wellington says that those costs were incurred by him on behalf of the Company and for the benefit of the shareholders of the Company (including Mr Hutchison).

Respondent’s submissions

41. Mr Hutchison maintains that the primary judge correctly identified the relevant principles and correctly applied those principles to the facts.

42. As to the first offer, Mr Huchison points out that the letter was sent several months before the commencement of the proceedings and that it demanded the assignment of all right and title to IP assets and the provision of unconditional releases. Mr Hutchison says that the orders made by the primary judge were fundamentally different from the demands made in the letter dated 23 June 2022.

43. As to the second offer, Mr Hutchison again points to the difference between the orders made and the conditions of the offer. Mr Hutchison notes that his Honour (at [27] of the costs judgment) noted that Mr Wellington had failed to make out the allegations of misleading and deceptive conduct; and also referred to the nature of the proposal in that letter and said that Mr Wellington had not attained a more favourable result at the hearing.

44. Mr Hutchison submits that there is no persuasive argument that the primary judge exercised his discretion other than in accordance with the correct application of the applicable legal principles.

45. Mr Hutchison seeks his costs of the summons seeking leave on an indemnity basis, arguing that the summons concerning a discretionary matter has been brought very late without a full and frank explanation of the reasons.

Determination

46. As Mr Wellington himself acknowledges, there is a general reluctance to grant leave in relation to orders dealing only with costs (see for example Dalma Formwork at [39]; Fordham v Fordyce [2007] NSWCA 129 at [7] per Ipp JA (Young CJ in Eq agreeing); CJZ Pty Ltd v Giant Dwarf Pty Ltd; CJZ Pty Ltd v Morrow [2023] NSWCA 135 at [327] per Adamson JA (Ward P and Mitchelmore JA agreeing)). As Mr Wellington also acknowledges, the exercise of discretion in relation to costs is one to which the House v The King standard of appellate review applies (see Dalma Formwork at [40]; Gibson v Drumm [2016] NSWCA 206 at [22] (Beazley P, Simpson JA)).

47. In the present case, the House v The King error identified in written submissions in relation to the first Calderbank offer (as summarised above) amounts in essence to an alleged failure to take into account the fact that the outcome of the proceeding was that Mr Hutchison was permanently restrained from asserting rights to use the Property other than for the benefit of the Company (and to the exclusion of him personally). Thus, the complaint appears to amount to asserted error in comparing the offer (which had sought an assignment to the Company of the intellectual property) with the end result of the litigation; and/or in not recognising that Mr Wellington had achieved practical success in relation to the issue as to Mr Hutchison’s ability to assert rights in relation to the Property.

48. In relation to the second Calderbank offer, the alleged error (not dissimilar to the first) identified in written submissions is in failing to have regard to the terms of the second Calderbank letter and the outcome that Mr Wellington achieved.

49. In oral submissions, reliance was squarely placed on the last limb of House v King, namely it was said that the result was so unreasonable and unjust as to bespeak error even though no particular error falling within the earlier limbs of House v King could be identified. It is sufficient to say that we do not accept the contention that the result was so unreasonable and unjust as to manifest appellable error.

50. Insofar as the complaint in relation to both offers is as to his Honour’s assessment of the overall outcome of the proceedings, his Honour was well aware that the proceedings had led to a mixed result (see at [254] of the principal judgment). While Mr Hutchison’s assertion of an ownership interest in all of the intellectual property was unsuccessful, so too were Mr Wellington’s personal claims and various of the claims made by him on behalf of the Company (including the claim, not pressed in closing submissions, for an account of profits; the claim for unquantified damages to the Company; and the claims for the transfer of the Property or restoration of the Property to the condition it was in as at 12 April 2022 (see his Honour’s consideration of the various claims for relief from [244] onwards of the principal judgment)).

51. The real complaint seems to be as to the finding that it was not unreasonable in the circumstances for Mr Hutchison to reject the offers that were made (which involved an evaluative assessment by the primary judge). In passing, the characterisation of the first Calderbank letter as an offer seems problematic. It is in terms expressed as a demand (for the assignment of any intellectual property in respect of which Mr Hutchison claimed an interest and an unconditional release) rather than a settlement offer. In any event what it called for was in essence the capitulation by Mr Hutchison to Mr Wellington’s claim. The only element of compromise in that letter seems to be that, if there was capitulation to Mr Wellington’s demands, court proceedings would not be commenced (and costs would not be incurred). As to the second offer, again it effectively required capitulation by Mr Hutchison (since the term for payment of $140,000 would have made whole the legal costs that had been incurred to that point).

52. Assuming, however, that both offers were properly able to be characterised as Calderbank offers, the evaluative assessment of whether it was unreasonable for Mr Hutchison to reject them is one as to which reasonable minds might well differ. As to the first offer, it was made at an early time (well before the evidence relied upon by Mr Wellington was before Mr Hutchison). The force of his Honour’s reasoning was that, having regard to the fact that there was ultimately a different outcome in relation to some of the property claimed by Mr Wellington on behalf of the Company, it was not unreasonable at that early stage for Mr Hutchison to reject the demand that had been made of him. That conclusion and reasoning was well open to his Honour and does not bespeak House v The King error.

53. As to the second of the Calderbank offers here relied upon, while it is true that it included a term equivalent to the order ultimately made as to a permanent restraint on Mr Hutchison commercially exploiting the intellectual property other than as a director of the Company, it went far beyond that (in particular a requirement that Mr Hutchison restore the property to the condition it was in as at 12 April 2022 (an order that his Honour noted was not pressed in closing submissions – see at [245] of the principal judgment)). In all the circumstances, it cannot be said that the primary judge’s conclusion that it was not unreasonable to reject that offer was not open to him or was infected by House v The King error.

54. The complaint is as to the failure to order indemnity costs (as opposed to party party costs) for that component of the proceeding other than the misleading or deceptive conduct claims. Therefore it is a narrow contention, albeit that the difference may be material. We have concluded that no basis has been shown to disturb the conclusions reached by his Honour in this regard.

55. Thus, the prospects of appeal are low. This is not a case where there is such disparity between the outcome of the proceedings in practical terms and the costs incurred such that there is any obvious or substantial injustice in the costs orders not being able to be the subject of appeal. The very fact that there was mixed success on the claims made by Mr Wellington both personally and on behalf of the Company makes an indemnity costs outcome unpalatable. The requirement for leave in order to bring appeals from costs orders is consistent with the finality of proceedings. In the absence of obvious House v The King error in the present case, leave to appeal is refused. Costs should follow the event. There is no warrant for the making of an indemnity costs order in favour of Mr Hutchison as he has sought. The delay in filing the summons was by no means egregious.

56. For those reasons, the orders of the Court are:

1. Extend time for the filing of the summons for leave to appeal to the date on which it was filed.

2. Dismiss with costs the summons for leave to appeal.

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Decision last updated: 14 March 2024