Winpar Holdings Lmiited v Austrim Nylex Limited (No 2)
[2005] VSCA 301
•14 December 2005
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 4908 of 2001
| WINPAR HOLDINGS LIMITED | |
| Appellant | |
| v. | |
| AUSTRIM NYLEX LIMITED (No.2) | Respondent |
| (Plaintiff below) |
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JUDGES: | CHARLES, BUCHANAN and EAMES, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 10 and 11 May 2004 | |
DATE JUDGMENT HANDED DOWN: | 25 August 2005 | |
DATE OF JUDGMENT: | 14 December 2005 | |
MEDIUM NEUTRAL CITATION: | [2005] VSCA 301 | |
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Compulsory acquisition of preference shares on just terms – Appeal – Costs – Whether cause to depart from general rule – Costs awarded to successful respondent – Corporations Act 2001 (Cth.) s.667F(4)
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr N.A. Cotman, S.C. | Stephen Blanks & Associates Frenkel Partners |
| For the Respondent | Mr J.G. Santamaria, Q.C. And Mr. J.P. Moore | Clayton Utz |
CHARLES, J.A.:
BUCHANAN, J.A.:
EAMES, J.A.:
When the Court dismissed this appeal on 25 August 2005 the unsuccessful appellant (“Winpar”) requested the Court to reserve the question of costs, its senior counsel not then being available to argue the issue. The parties thereafter made written submissions on the question of costs.
Section 664F(4) of the Corporations Act 2001 (Commonwealth) provides that –
“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.”
In the context of the present case, Winpar relies on this section as showing the apparent intent of Parliament to alter what might otherwise be the ordinary incidence of costs in legal proceedings in two respects:
(a)to provide for the costs of the party resumed to be paid by the acquirer, subject to an exception; and
(b)to provide that the acquirer bears its own costs in any event.
Winpar submits that the purpose of the provision is clearly that persons subject to compulsory acquisition of property should not be discouraged from seeking to have their objections determined by a court by the prospect of bearing the costs of their own proceedings (subject to the prospect of such costs disallowed in limited circumstances) or the potential for costs orders being made against them at all. It is argued that if s.664F(4) did not apply to appeal proceedings, objectors would be discouraged from seeking to have their objections determined by an appellate court by the prospect that the Court would apply the normal rules as to costs in a case where a 90% holder failed at first instance and itself appeals and has reasonable prospects of success on appeal. Winpar accordingly submits that s.664F(4) applies to this appeal with the consequence that Austrim should pay its costs unless the Court were to take the view that Winpar acted improperly, vexatiously or otherwise unreasonably in the appeal, and secondly that the respondent (“Austrim”) should bear its own costs in any event.
The Queensland Court of Appeal has determined, on four separate occasions, that s.664F(4) does not apply to an appeal: Pauls Ltd. v. Milly Elkington[1]; Pauls Ltd. v. Dwyer[2]; Energex Ltd. v. Elkington[3]; and Bromley Investments Pty. Ltd. v. Elkington[4]. Furthermore the High Court in the special leave application in Elkington v. Pauls Ltd. & Ors; Winpar Holdings Ltd. v. Energex Ltd. & Ors[5] dismissed the applications for special leave brought by Dr and Mrs Elkington and Winpar “with costs”. In Pauls Ltd. v. Milly Elkington, the first of the decisions of the Queensland Court of Appeal referred to above, the Court said[6] -
“[3] The provision in question [s.664F(4)] gave effect to a recommendation in a report by the Legal Committee on Compulsory Acquisitions for the Companies and Securities Advisory Committee in January 1996. Section 664F(4) corresponds to a similar provision in s.430C of the Companies Act 1985 (U.K.). In Elkington v. Shell Australia Ltd.[7], the Court of Appeal considered the corresponding practice, as it was then said to be, with respect to the costs of applications under section 664F or its equivalent at the time. Sheller, J.A., with whom Kirby, A.C.J. and Meagher, J.A. agreed, said that there was no reason to follow the practice on the appeal in that case, when the appellant had already had the opportunity in court to ventilate his objection to the compulsory acquisition of his shares. His application had failed below and he had not been ordered to pay costs on that occasion. The appeal had failed for the same reason that the objection had failed at first instance.
[4] Sheller, J.A. said … that the costs of appeal raised considerations different from those raised at first instance. … The reference to ‘legal proceedings’ in section 664F(4) is capable of comprehending any and all legal proceedings; but it plainly has reference primarily to the application identified in section 664(1), which is the application by the 90% holder to the Court for approval of the compulsory acquisition. There is no compelling reason for regarding it as extending to an appeal brought from an order at first instance approving the acquisition.” (Case references omitted.)
[1][2001] Q.C.A. 414 at [4] per McPherson and Williams, JJ.A. and Jones, J.
[2][2004] 2 Qd.R. 176 per Davies, J.A. at [60], Jerrard, J.A. at [64] and Jones, J. at [70].
[3](2003) 47 A.C.S.R. 442 per de Jersey, C.J. at [32], per Jerrard, J.A. at [47] and per Helman, J. at [49].
[4](2003) 47 A.C.S.R. 273 per Williams, J.A. at [30], per Jerrard, J.A. at [47] and per Holmes, J. at [48].
[5][2004] HCA Trans 230.
[6][2001] Q.C.A. 414 at [3].
[7](1993) 32 N.S.W.L.R. 11.
There is obviously a stronger argument to be made that the rule embodied in s.664F(4) should apply if an objector in a case such as the present were successful at trial and a question later arose as to the costs of an appeal by the acquirer, in the event that the acquirer succeeded. But that is not this case. In Pauls Ltd. v. Milly Elkington, the Court ordered the costs of the appeal to be paid by the unsuccessful objector in circumstances where it was said[8] that “the submissions on appeal simply repeated the points which for cogent reasons had failed before Douglas, J. and which have since been considered with the same result by Warren, J. in comparable proceedings in Victoria in Austrim Nylex Ltd. v. Kroll”, and that “In these circumstances, for Mrs Elkington to appeal against the decision of Douglas, J. was certainly to act unreasonably, if not improperly or vexatiously, within the meaning of s.664F(4).” Similarly, in Energex v. Elkington[9], the Queensland Court of Appeal ordered the unsuccessful objector to pay the costs of an appeal being an appeal against the refusal of a stay. On the other hand in Pauls Ltd. v. Dwyer[10] the unsuccessful objector’s appeal was dismissed with no order as to costs, Davies, J.A. considering that some of the questions in the appeal which had to be resolved were novel and others had been the subject of conflicting decisions by judges at first instance. In Bromley Investments Pty. Ltd. v. Elkington[11] also no order was made against the unsuccessful objector in an appeal, Williams, J.A. taking the view that there were issues relating to the weight which should have been given by the judge at first instance to the report of the experts which warranted further consideration by this Court.
[8][2001] Q.C.A. 414 at [4]-[5].
[9]47 A.C.S.R. 442, esp. at 446-448.
[10][2004] 2 Qd.R. 176 at 197-198.
[11]47 A.C.S.R. 273 at 281.
In the present case there were three principal issues: first, the constitutional validity of Part 6A.2 of the Corporations Act 2001; secondly, whether the terms proposed by Austrim in its compulsory acquisition notice gave a fair value for the shares covered by the notice; and thirdly, whether there had been compliance with the requirements of s.664C(2) in relation to the disclosure by Austrim in its compulsory acquisition notice. Reference to the reasons for judgment delivered by the Court on 25 August shows that no novel questions of law were raised or considered by the Court; and insofar as questions of fact were raised the arguments of the appellant retraced in one form or another most, if not all, of the arguments which had previously been rejected in Pauls Ltd. v. Dwyer, Energex Ltd. v. Elkington, and Capricorn Diamonds Investments Pty. Ltd. v. Catto[12]. Furthermore on the issue of fair value (which was the main factual issue in question) the appellant relied substantially on the evidence of Wayne Lonergan, whose approach had previously been rejected in a number of other cases. Winpar failed on every issue in this appeal.
[12](2002) 5 V.R. 61; 168 F.L.R. 146.
It should also be noted that the Court, in its reasons for judgment[13] was very critical of Winpar’s conduct of the appeal, in relation to matters such as the contents of the notice of appeal, Winpar’s failure to comply with the Court’s procedural rules and the ambiguous and repetitive nature of the arguments raised, all of which caused considerable inconvenience and delay.
[13][2005] VSCA 211 at [38].
This Court should follow the decisions of other Australian appellate courts in the interpretation of Commonwealth legislation such as the Corporations Act 2001, unless convinced that they are plainly wrong: Australian Securities Commission v. Marlborough Goldmines Ltd.[14]. In our view the conclusion of the Queensland Court of Appeal in the cases already cited that s.664F(4) does not apply to an appeal is not plainly wrong, and we should accordingly apply that approach. In the case of an ordinary civil appeal, such as the present, costs would follow the event. Having regard to the matters referred to in pars [5] and [6] above we conclude that the costs of the appeal should be borne by Winpar.
[14](1993) 177 C.L.R. 485 at 492.
The Court will therefore order that Winpar’s appeal be dismissed with costs.
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