Anderson v Canaccord Genuity Financial Ltd - [2022] NSWSC 649 - NSWSC 2022 case summary — Zoe

NSWNSWSC

Anderson v Canaccord Genuity Financial Ltd

[2022] NSWSC 649

Supreme Court of NSW|2022-04-05|Before: Ward CJ, Giles J, Corporation Pty J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2022-04-05

Before

Ward CJ, Giles J, Corporation Pty J

Source

Original judgment source is linked above.

Judgment (41 paragraphs)

[1]

ily Restaurants Pty Ltd v Chief Commissioner of State Revenue (NSW) (No 2) [2020] NSWSC 519 Form-Quip Ltd v Trafalgar Properties Ltd (Supreme Court (NSW), Giles J, 19 July 1991, unrep) Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 202 FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429; [2002] FCAFC 354 Habrok (Dalgaranga) Pty Ltd v Gascoyne Resources Pty Ltd (No 2) [2021] FCA 72 Hamod v New South Wales [2011] NSWCA 375 Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 Hazeldene's Chicken Farm Pty Ltd v WorkCover Authority (Vic) (No 2) (2005) 13 VR 435; [2005] VSCA 298 Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 Huon Shipping and Logging Co Ltd v The South British Insurance Co Ltd (1923) 29 ALR 174; [1923] VLR 216 ICM Investments Pty Ltd v San Miguel Corporation & Ors (No 3) [2013] VSC 621 Idoport Pty Ltd v National Australia Bank [2005] NSWSC 1273 Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 Immer (No 45) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 In the matter of C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199 Ipex ITG Pty Ltd (in liq) v Victoria (No 2) [2014] VSCA 315 Jin Lian Group Pty Ltd (in Liq) v ACapital Finance Pty Ltd (No 2) [2021] NSWSC 1202 Jones v Bradley (No 2) [2003] NSWCA 258 Kebaro Pty Ltd v Saunders [2003] FCAFC 5 King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 Knight v FP Special Assets (1992) 174 CLR 178; [1992] HCA 28 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Leichhardt Municipal Council v Green [2004] NSWCA 341 Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (FCAFC, 29 August 1995, unrep) May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236; [1996] FCA 862 Mid-City Skin Cancer and Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 Morbidelli v Resourceco Pty Ltd [2010] SASC 107 Motium Pty Ltd v Arrow Electronics Pty Ltd [2011] WASCA 65 (S) Mutual Shipping Corporation v Bayshore Shipping Co Ltd ("The Montan") [1985] 1 WLR 625 Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group, Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 Nexus Minerals NL v Brutus Constructions Pty Ltd [1997] FCA 926 Ng v Chong [2005] NSWSC 385 Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 Ohn v Walton (1995) 36 NSWLR 77 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 Re Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1589 Refina Pty Ltd v Binnie [2009] NSWSC 1098 Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No 3) [2017] FCAFC 102 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Seafolly Pty Ltd v Madden (No 6) [2015] FCA 1369 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Smoothpool Nominees Pty Ltd v Pickering [2001] SASC 131 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 State of New South Wales v Stevens (2012) 82 NSWLR 106; [2012] NSWCA 415 Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 211 Sydney City Council v Geftlick [2006] NSWCA 280 Sze Tu v Lowe (No 2) [2015] NSWCA 91 Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166 Vagg v McPhee (No 2) [2013] NSWCA 126 Vale v Eggins (No 2) [2007] NSWCA 12 Vestris v Cashman (1998) 72 SASR 449 White Constructions ACT Pty Ltd (in liq) v White [2004] NSWSC 303 WLD Practice Holdings Pty Ltd v Stockham [2020] NSWSC 1354 Yates Property Corporation Pty Ltd v Bolan (No 2) (1997) 147 ALR 685; [1997] FCA 760 Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 Category: Costs Parties: Daniela Alejandra Anderson (Plaintiff) Canaccord Genuity Financial Ltd (First Defendant) Nicola Lesleigh Garrett (Second Defendant) Samuel Mark Renauf (Third Defendant) PPB Pty Ltd (Fourth Defendant) Acorn Capital Ltd (Fifth Defendant) Albany Capital Investors Pty Ltd (Sixth Defendant) Ashington Capital Pty Ltd (in liquidation) (Seventh Defendant) Ashington Management Pty Ltd (in liquidation) (Eighth Defendant) Representation: Counsel: PS Braham SC with N Kabilafkas and A Bhasin (Plaintiff) JA Redwood SC with E Bathurst (First Defendant) M Painter SC with TC Bagley (Second and Third Defendants) G Ng with R Sud (Fourth Defendant) AS McGrath SC with JD Williams (Fifth Defendant) JE Sexton SC with AA Cameron (Sixth Defendant) A Edwards (Seventh and Eighth Defendants)

[4]

Overview

By way of overview, there were some agreement between the plaintiff and the relevant defendants as to some of the orders sought (relevantly, as to the incidence of indemnity costs orders - variously from 8 January 2020 in the case of Patersons and for the period after 22 March 2021 in the case of various other defendants such as PPB; and as to payment of interest on costs from the date on which they were paid) and broad agreement as to the release of moneys paid into Court as security for costs (albeit a dispute as to the timing of the release and as to how the security paid in respect of the costs of the second and third defendants, Ms Garrett and Mr Renauf, was to be dealt with, if those defendants were or remained liable to pay the plaintiff's costs).
Interest on any costs awarded to the defendants is sought, such interest to be calculated at the rate prescribed under rule 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) from the date or dates on which the costs concerned were paid in accordance with ss 101(4) and 101(5) of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act). This was not opposed.
Release of the amounts paid into Court by the plaintiff as security for the defendants' costs, together with any accrued interest, is sought pursuant to rr 41.3 and 41.8 of the UCPR by way of a partial discharge of the plaintiff's (and if so ordered, any third party's) liability to pay the defendants' costs. As noted, this was not opposed other than pending the filing of a notice of appeal and any stay application.
There was no agreement as to the claims for third party costs orders and gross sum costs orders; nor as to the orders sought to facilitate claims by the defendants on a Deed of Indemnity dated 12 January 2021(the Lloyd's Deed) provided to the defendants by way of security for costs. There are also more discrete issues as to the date from which the plaintiff should pay indemnity costs in respect of Patersons, PPB and Acorn (the first, fourth and fifth defendants, respectively). The only issue in which there is a dispute between the plaintiff and Albany (the sixth defendant) is as to the third party costs orders.

[5]

Orders sought

Specifically, the orders sought by the respective defendants (and the evidence on which they rely) are as follows.
Patersons filed a notice of motion on 28 February 2022 and an amended notice of motion on 28 March 2022. It relies on an affidavit sworn by its solicitor, Mr David Michael Benson, on 28 February 2022 (the exhibit to which was marked Ex 4 in the hearing). Patersons seeks orders: 1. for indemnity costs (from one of three alternative dates: 30 June 2017, 17 May 2018 and 7 January 2020) (proposed orders 1-3) (the plaintiff consents to the third of these alternatives); 2. interest (to which the plaintiff consents) (proposed order 4); 3. release of the security paid into Court in respect of its costs ($314,877.20) (agreed other than as to the timing of the release) (proposed order 5); 4. an order in relation to the Lloyd's Deed (proposed order 6); 5. gross sum costs orders (on three alternative bases corresponding to the alternatives put forward in respect of the indemnity costs orders) (proposed order 7); 6. release of a proportionate amount in respect of the security for costs paid into Court in respect of Ms Garrett and Mr Renauf's costs ($229,000) (in the event that those defendants do not obtain an order for their costs) (proposed order 8); and 7. third party costs orders against Mr Anderson.
Ms Garrett and Mr Renauf filed a notice of motion on 29 March 2022 and rely upon two affidavits sworn by their solicitor, Ms Angelina Kozary, on 28 February 2022 and 28 March 2022 respectively, (the exhibits to which were marked Ex 1 and 2 in the hearing). They seek orders: 1. varying the costs orders made on 7 February 2022 in respect of Ms Garrett such that she have an order for costs in her favour (as did Mr Renauf on the orders as made) and both seek indemnity costs from two alternative dates (from one of three alternative dates: 13 February 2020 or 22 March 2021), otherwise on the ordinary basis (proposed order 1); 2. interest (to which the plaintiff consents) (proposed order 2); 3. that Mr Anderson be jointly and severally liable for the costs ordered (i.e., a third party costs order) (proposed order 3); 4. gross sum costs orders (on the alternative bases corresponding to the alternatives put forward in respect of the indemnity costs orders) (proposed order 4 or as foreshadowed in submissions); 5. release of the security paid into Court in respect of their costs ($229,026.50) (again, agreed other than as to the timing of the release) (proposed order 5); 6. an order in relation to the Lloyd's Deed (proposed order 6 and see proposed notation 9); and 7. costs of the motion (proposed order 7).
PPB, by its notice of motion filed on 1 March 2022, relying on an affidavit affirmed by its solicitor, Mr Mark Wilks, on 1 March 2022, seeks orders: 1. for ordinary costs until 17 May 2018 and indemnity costs from 17 May 2018 (proposed order 1) or alternatively (which is consented to) from 22 March 2021 (proposed order 2); 2. interest (to which the plaintiff consents) (proposed order 3); 3. release of the security paid into Court in respect of its costs ($171,474.50) (agreed other than as to the timing of the release) (proposed order 4); 4. an order in relation to the Lloyd's Deed (proposed order 5); 5. gross sum costs orders (on two different calculations) (proposed order 6); and 6. an order that Mr Anderson be jointly and severally liable for the costs ordered (proposed order 7) 7. an order that the plaintiff pay the PPB's costs of the notice of motion (proposed order 8).
In submissions, PPB also sought an order (akin to that sought by other defendants) for the release of an amount in respect of the security for costs paid into Court in respect of Ms Garrett and Mr Renauf's costs (in the event that those defendants do not obtain an order for their costs).
PPB proffered an undertaking (acceptable to the plaintiff - see T 6.25-40) not to use the sum released to it out of the funds paid in Court until disposal of any appeal, which resolves the issue that the plaintiff had as to the timing of the release of the security.
Acorn filed an initial notice of motion on 28 February 2022 and an amended notice of motion on 25 March 2022, relying on affidavits sworn by its solicitor, Mr Michael Polorotoff, on 28 February 2022, 22 March 2022 and 1 April 2022 (the exhibit to Mr Polorotoff's 1 April 2022 email was marked Ex 3 in the hearing). Acorn seeks orders: 1. for indemnity costs with Mr Anderson to be jointly and severally liable from 13 December 2019 (proposed order 1) (consented to other than the reference to Mr Anderson); 2. gross sum costs orders (proposed order 2); 3. release of the security paid into Court in respect of its costs ($159,413.40) (agreed other than as to the timing of the release) (proposed order 3); 4. an order in relation to the Lloyd's Deed (proposed order 4); 5. release of an amount in respect of the security for costs paid into Court in respect of Ms Garrett and Mr Renauf's costs ($229,026.50) (in the event that those defendants do not obtain an order for their costs) (proposed order 5); 6. third party costs orders against Mr Anderson (proposed order 6).
In communications between the solicitors for Acorn and the plaintiff during February 2022, the following costs orders (proposed to be made by consent) have been agreed: the plaintiff pays Acorn's costs on an ordinary basis until 13 December 2019 and thereafter on an indemnity basis; and pursuant to ss 101(4) and 101(5) of the Civil Procedure Act, the plaintiff pays interest on any costs awarded to Acorn with such interest to be calculated at the rate prescribed under r 36.7 of the UCPR from the date or dates on which the costs concerned were paid.
Finally, Albany, by notice of motion dated 28 February 2022 and filed 2 March 2022, seeks a third party costs order against Mr Anderson (relying on an affidavit of its solicitor, Mr James Melvin, sworn on 1 March 2022). There is agreement as to the balance of the orders sought by Albany.

[9]

Special costs orders

Special costs orders will be warranted in certain circumstances, including where the special costs procedure for offers of compromise is validly invoked) or the Calderbank principles (see Calderbank v Calderbank [1975] 3 All ER 333) apply, and where the conduct of the case by the party against whom costs are sought is plainly unreasonable or amounts to "relevant delinquency" by the party as a litigant (see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 202 per Woodward J; Sydney City Council v Geftlick [2006] NSWCA 280 at [90] perTobias JA, Mason P and Hodgson JA agreeing; Dunstan v Rickwood (No 2) (2007) 38 Fam LR 491; [2007] NSWCA 266 at [44] per McColl JA, Beazley JA, as Her Excellency then was, and Ipp JA agreeing; Leichhardt Municipal Council v Green [2004] NSWCA 341 (Leichhardt v Green) at [57] per Santow JA, Bryson and Stein JJA agreeing; Oshlack at [44] per Gaudron and Gummow JJ).
In that context, "relevant delinquency" does not mean moral delinquency or some ethical shortcoming but delinquency bearing a relevant relation to the conduct of the case (see, for example, White Constructions ACT Pty Ltd (in liq) v White [2004] NSWSC 303 at [11] per McDougall J). It is within the discretion to award costs on an indemnity basis where a plaintiff has failed to prove that any loss has been suffered (see for example Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199 (Ingot) at [65] per McDougall J).
In the present case, the plaintiff accepts that indemnity costs may be awarded in cases commenced or continued where there is no chance of success, the claim is "without substance", "groundless", "fanciful or hopeful" or so weak as to be futile (referromg to Vagg v McPhee (No 2) [2013] NSWCA 126 (Vagg) at [31] per Tobias AJA; with whom Basten JA and I agreed) but says that "mere weakness of a case will not be sufficient to warrant the exercise of the discretion to award indemnity costs" (referring to Vagg at [32] per Tobias AJA). His Honour there said that "[s]omething more is required, which generally involves some form of wilful conduct which, in effect, justifies the conclusion, in the present context, that the [proceeding; there an appeal] should never have been instituted let alone pursued".
The plaintiff also refers to the observation by Brereton J, as his Honour then was, in Refina Pty Ltd v Binnie [2009] NSWSC 1098 at [6] to the effect that what is intended by the concept of a proceeding being doomed to fail "is to ask whether the proceedings were obviously or manifestly hopeless at the outset, or at some earlier stage".
It has been said that there will not lightly be a departure from awarding costs on the ordinary basis (see Vagg at [30] per Tobias AJA).

[10]

Non-acceptance of Calderbank offers

As to the consequences of non-acceptance of a Calderbank offer, in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 (Miwa) Basten JA (McColl and Campbell JJA agreeing) summarised at [8] the principles involved, noting that there were two questions, namely, whether there was a genuine offer of compromise and whether it was unreasonable for the offeree not to accept it. Whether a rejection of a Calderbank offer (or other offer of settlement) was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances (King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11] per Young JA, with whom Hodgson and Campbell JJA agreed). It has been said that a finding of unreasonableness should not be made other than on clear grounds (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113] per Basten JA with whom Young CJ in Eq, as his Honour then was, and Giles JA agreed).
The factors to which regard is to be had when considering whether the rejection or non-acceptance of an offer was unreasonable (referred to in Miwa at [12]) include those identified in Hazeldene's Chicken Farm Pty Ltd v WorkCover Authority (Vic) (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA, namely: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success, assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see also Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (NSW) (No 2) [2020] NSWSC 519 (Favotto); Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA).
Factors that have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, have included: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22] per Beazley JA, as her Excellency then was, with whom McColl JA agreed); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192] per Allsop P, as his Honour then was, Beazley JA, as Her Excellency then was, and McColl JA agreeing); the offeror's case changing after the making of the offer (South Eastern Sydney Area Health Service v King [2006] NSWCA 2 (South Eastern Sydney Area Health Service) at [85] per Hunt AJA, Mason P and McColl JA agreeing); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (FCAFC, Spender J, French J (then sitting in the Federal Court) and Lee J, 29 August 1995, unrep); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236; [1996] FCA 862 at 242D per Lindgren J).

[11]

Gross sum costs orders

As to the circumstances where gross sum costs orders may be made, the plaintiff takes no issue as to the summary of the relevant principles in Bassett v Cameron (No 2) [2021] NSWSC 419 (at [28]), namely that: 28. … the power to make [a gross sum costs] order "should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available" (Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (Harrison v Schipp) at [22] per Giles JA). A gross sum costs order is appropriate where it is desirable to avoid the expense, delay and aggravation likely to be involved in a costs assessment or where a party's conduct has unnecessarily contributed to the costs of the proceedings and "especially where the costs incurred have been disproportionate to the result of the proceedings" (Hamod v New South Wales [2011] NSWCA 375 at [817]-[818] per Beazley JA with whom Giles and Whealy JJA agreed).
As to the considerations material to the exercise of the discretion, these principally include the following (see Hamod v New South Wales [2011] NSWCA 375 (Hamod v New South Wales) at [813]-[820] per Beazley JA (as her Excellency then was) with whom Giles and Whealy JJA agreed, and Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [5]-[7] per Campbell AJA): the complexity of the proceedings in relation to their cost; whether the assessment of costs would be "protracted and expensive"; whether there is a risk that the unsuccessful party would not be able to meet a liability of the order likely to result from the assessment; and the relative responsibility of the parties for the costs incurred, especially where the costs incurred are disproportionate to the result of the proceedings. As emphasised by the plaintiff in the present case, Giles JA in Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 (Harrison v Schipp) said (at [22]) that: 22. … The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson at 123; Hadid v Lenfest Communications Inc at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA).
The purpose of a gross sum costs order is to avoid the expense, delay, and aggravation involved in protracted litigation arising out of assessment (Hamod v New South Wales at [29]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 (Idoport) at [9] per Einstein J; Beach Petroleum NL v Johnson (1995) 57 FCR 119; [1995] FCA 350 (Beach Petroleum) at 120 per von Doussa J).

[12]

Third party costs orders

As to the making of third party costs orders, it is accepted that the power under s 98(1) of the Civil Procedure Act extends to making a costs order against a non-party (see Knight v FP Special Assets (1992) 174 CLR 178; [1992] HCA 28 (Knight v FP); Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 (Yu) at [137] per McColl JA with whom Sackville AJA and Adamson J agreed). An order of this kind may be made "where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation" (Yu at [137], citing Knight v FP). The decision to grant non-party costs is an exercise of the Court's discretionary power, which again must of course be exercised judicially.
It is noted that there has been said to be no onus of proof (see Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd [2015] VSC 644 at [13] per Elliott J) and that matters that will be relevant in determining whether it is appropriate to make such an order include: where the non-party has provided the funds for the litigation (FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 (FPM) at [210] per Basten JA, Beazley JA, as Her Excellency then was, and Giles JA agreeing); where the non-party has a direct interest in, and entitlement to, a substantial part of the fruits of the litigation (Carter v Caason Investment Pty Ltd (2016) 341 ALR 154; [2016] VSCA 236 (Carter v Caason) at [38] per Weinberg JA, Ferguson JA (as her Honour the Chief Justice then was) and Kaye JA); FPM at [210]); where the non-party has a right to information and involvement in decision making in relation to the litigation (Carter v Caason at [38] per Weinberg, Ferguson and Kaye JJA); and where the unsuccessful party proves to be a person of straw (FPM at [210]). Ultimately, the question is whether the interests of justice require such an order to be made (being a departure from the general rule that costs orders are made only against parties to the litigation) (see Knight v FP at 192-193, 202; Carter v Caason at [12]-[13]; Brand2Content t/as Franchise Works v Dalby [2019] NSWCA 16 (Brand2Content) at [12]-[13] (Simpson AJA).
As explained by Basten JA in FPM at [210], referring to Knight v FP and the judgment of the Full Court of the Federal Court of Australia in Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429; [2002] FCAFC 354, the categories of case in which a non-party costs order may be made are not closed but they tend to satisfy at least some, if not the majority, of the following criteria: the unsuccessful party to the proceedings was the moving party and not the defendant; the source of funds for the litigation was the non-party or its principal; the conduct of the litigation was unreasonable or improper; the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest; and the unsuccessful party was insolvent or could otherwise be described as a person of straw. Similarly, it was recognised that a non-party costs order might be made (provided the interests of justice required it) where a party to litigation was impecunious, a non-party had played an active role, and the non-party has an interest in the litigation (Capital Securities XV Pty Ltd (in liquidation) v Calleja (No 2) [2020] NSWSC 688 (Calleja) at [13] per Adamson J).
In Brand2Content at [12]-[13], Simpson AJA (citing May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 at [96] per Sackville AJA), emphasised that these five criteria do not comprise a checklist or an exhaustive statement of relevant factors; nor is it necessary that any or all of the factors be present before a non-party costs order can be made; and said that the overriding consideration (as noted above) is whether it is in the interests of justice to make the order.
Relevantly, the Full Court of the Federal Court (Beaumont, Sundberg and Hely JJ) in Kebaro Pty Ltd v Saunders [2003] FCAFC 5 at [103] said that, whilst the categories of cases in which a non-party costs order will be made are not closed, to warrant exercise of the discretion, a sufficiently close connection with the principal litigation must be demonstrated so that "the non-party can fairly be liable if adjudged by its conduct, to be a real party to the litigation, even if not the real party". In this context, Albany notes that judicial findings made in the original proceeding can be used in an application for a non-party costs order if there is a close connection between the party and the non-party (Yu v Cao at [147]).

[14]

Costs in relation to Ms Garrett and Mr Renauf

The first issue that arises is as to the costs orders that were made on 7 February 2022, which included (in order 2) an order for the dismissal of the claims made "with costs" in the case of the third defendant (Mr Renauf) (he being included in a group of defendants not including the second defendant, Ms Garrett).
The plaintiff submits that the same position should apply with respect to Mr Renauf as applies to Ms Garrett in relation to costs. It is noted that there is no substantive difference in the findings that were made in the principal judgment as between Ms Garrett and Mr Renauf: that each was employed by Ashington (at [1835]), each clearly occupied a senior position (at [1844]), and their roles were essentially equivalent in status (at [1849]), with Mr Renauf having been copied on most of the relevant communications, having been sufficiently involved to be part of the new management team, and having failed to give evidence that his role was materially different in scope or significance (at [1848]). It is noted that each was found to have breached the obligations to act honestly and in good faith by being actively engaged in a process to effect the removal of Ashington from its funds management business and to seek a role for himself or herself with a new manager (at [1962]-[1963]) and by facilitating the disclosure of Ashington's confidential information for an unauthorised purpose (which also amounted to a breach of their confidentiality agreements) (at [1965]). The plaintiff points to the observation made (at [1938]) that it was "impossible to see their conduct as other than a deliberate attempt to undermine the position of their employer for their potential personal advantage and that of third parties", which amounted to a dishonest and fraudulent design.
The plaintiff says that nor was there any difference in the manner in which those two defendants, who were jointly represented, conducted their defences. Complaint is made that this involved running "wholly unmeritorious and baseless defences", such as that Ms Garrett and Mr Renauf were not employees but were "independent contractors" (referring to the principal judgment at [110]), unsupported by any evidence, and contrary to deeds each had signed acknowledging their status as employees (see at [1800]-[1801]); and that this also involved (in the face of their own dishonest and fraudulent conduct against Ashington) making a series of serious allegations against Mr Anderson during prolonged and vigorous cross-examination over four days of trial in an unsuccessful attempt to discredit him (referring to the observations in the principal judgment at [1314], [1321]-[1326]).
The plaintiff does not seek a costs order in her favour (in recognition that all that was obtained was a vindicatory award of nominal damages) but says that there should be no costs awarded in favour of either Mr Renauf or Ms Garrett, given that the plaintiff successfully made out causes of action involving very serious allegations against them which had "serious, if not precisely quantifiable consequences", and which were vigorously defended; reference here being made to what was said in Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2001] WASCA 166 (Thiess) at [9] per Steytler and Wheeler JJ.
For Ms Garrett and Mr Renauf, emphasis is placed on the narrow basis on which the plaintiff succeeded against Ms Garrett and Mr Renauf (namely, the claim for breach of a common law contract of employment, and only to the extent of an award against each of them of nominal damages of $100). It is argued that this aspect of the claim was contained in a single paragraph of the plaintiff's closing submissions (see the complaint made at trial, as noted in the principal judgment at [1245]). Ms Garrett and MR Renauf emphasise that all other claims against them were dismissed.
Ms Garrett and Mr Renauf accept (at least in this forum) the findings made against them but point to the observation in the principal judgment at [2789] that nominal damages are no longer a "peg on which to hang costs" (and see the authorities referred to above). Ms Garrett and Mr Renauf say that where, as here, a party seeks $140 million in damages and receives a nominal award of $100, that party is not to be regarded as the successful party. It is submitted that although the plaintiff retreated from the claim for the full $140 million by the end of the trial, nevertheless what was sought throughout the course of the six weeks of the trial was damages in a substantial amount. In that regard, it is noted that the plaintiff's claim for $140 million in damages was outlined in the plaintiff's various expert reports and reflected in her opening submissions (see T 95.1-5); and that the plaintiff maintained in closing submissions a claim for substantial damages (see plaintiff's closing submissions at [291]), where the range for the continuing Ashington business was stated to be between $3.9 million and $91.5 million. Ms Garrett and Mr Renauf emphasise that at no time did the plaintiff ever articulate her claim as one for nominal damages; rather, it is said that money was her driving consideration, not vindication.
Ms Garrett and Mr Renauf point out that the plaintiff was a stranger to the underlying controversy, having purchased the causes of action from the liquidators of Ashington Capital and Ashington Management (for a significant sum, namely $250,000 - see Ms Kozary's affidavit sworn 28 February 2022 at [6]). Ms Garrett and Mr Renauf say that the plaintiff had no interest, other than a financial interest, in the outcome of the case; and noted that at no time was it suggested that the plaintiff's claim was simply to vindicate some legal right or to obtain an apology irrespective of whether any substantial remedy were to be obtained (cf Ng v Chong [2005] NSWSC 385 at [8] per Hamilton J).
Ms Garrett and Mr Renauf further say that the fact that the plaintiff was funded (for at least part of the case) by a third party litigation funder provides a strong basis to confirm the inference that the plaintiff sought money, not vinidication. Pausing here, as I understand it the litigation funding did not ultimately eventuate (as I explain in due course), so the weight to be placed on this factor is perhaps moot.
Ms Garrett and Mr Renauf say that a nominal award of $100 against each of them was not success for the plaintiff; and that it was not "the event at which the plaintiffs were aiming" (to use the words in Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401 per Stephenson LJ, Griffiths and Purchas LJJ agreeing). It is submitted that it can be inferred from the six weeks of hearing time and the material provided that the plaintiff spent more than $100 to conduct this case (an inference that I would certainly draw).
Ms Garrett and Mr Renauf say that the difference beween the plaintiff's claim and the judgment is even more stark in this than in other cases where costs have been awarded against a plaintiff awarded nominal damges. It is noted that in Motium the appellant obtained a nominal award of $100 rather than $77,689.30 as claimed and that in ICM, the plaintiff obtained $10 rather than $5 million as claimed; whereas here, it is calculated that the award amounts to approximately 0.0000071% of the amount the plaintiff sought. Ms Garrett and Mr Renauf say that the award is of no real use to the plaintiff (as was the case in ICM at [43]); and that it would be contrary to modern notions of the efficient and cost-effective use of judicial resources to enable the plaintiff to recover its costs for a Pyrrhic victory, having substantively failed in the action (referring to Motium at [10]).
Ms Garrett and Mr Renauf thus contend that they are entitled to their costs from the plaintiff on the basis that, for the purpose of exercising any costs discretion, the plaintiff should be regarded as having failed against each of the defendants (Oshlack at [70]; ICM at [46]; Mid-City at [52]).
The plaintiff's response to this is that there is no invariable rule that an award only of nominal damages disentitles a plaintiff to an award of costs, let alone requires such a plaintiff to pay a defendant's costs (referring to Thiess at [9]). In the present case, the plaintiff says that there are significant factors which dictate that there should be no order as to costs in favour of Ms Garrett and Mr Renauf, those being the serious findings against them (involving dishonest and fraudulent conduct) and the manner in which they conducted their defences.
In this context (in addition to the matters referred to above), the plaintiff points out that this involved a failure by Ms Garrett and Mr Renauf to give evidence to answer the serious allegations made against them. It is said that factors of this kind were absent from the cases that have been cited by Ms Garrett and Mr Renauf in their submissions (at [17]), which submissions the plaintiff says incorrectly suggest that the exercise of the Court's discretion can be reduced to an arithmetical exercise comparing the quantum of damages sought and received.
Further, it is submitted that the attempt by Ms Garrett and Mr Renauf to obtain a costs order in their favour by characterising the plaintiff as a "stranger to the controversy" (while at the same time seeking orders that make Mr Anderson jointly and severally liable for those costs), should be rejected (though in one sense the proposition that the plaintiff is a stranger to the controversary seems to me consistent with the argument that Mr Anderson was the driving force behind the litigation).

[15]

Determination as to costs orders in relation to Ms Garrett and Mr Renauf

First, as to the disconformity between the costs order made on 7 February 2022 in favour of Mr Renauf (included as he was in the group of defendants against whom the plaintiff's claims have been wholly unsuccessful) and the absence of such an order in favour of Ms Garrett, this is a paradigm instance falling within the so-called "slip rule" (see Mutual Shipping Corporation v Bayshore Shipping Co Ltd ("The Montan") [1985] 1 WLR 625 at 633 per Donaldson MR, where the distinction was drawn between "having second thoughts or intentions and correcting an award or judgment to give true effect to first thoughts or intentions").
In Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446, McHugh JA (as his Honour then was) with whom Clarke AJA agreed, (at 453) postulated the test for what amounts to an accidental slip or omission (capable of correction under the slip rule or the inherent jurisdiction of the Court) as being whether the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist (see, to similar effect, what was said in Brew v Whitlock (No 3) [1968] VR 504 at 506-507 by Winneke CJ, Little and Gowans JJ), posing the relevant question (at 453) as being whether, had the matter been drawn to the attention of the court at the time, the correction would "at once have been made".
Applying that test, there is no doubt in my mind that this was an accidental slip on my part. I had no intention of drawing a distinction between Ms Garrett and Mr Renauf in this regard (as can be seen from the reasoning in the principal judgment to which reference has been made above); and, relevantly, I did not regard Mr Renauf as being in the same category as the other defendants who had been wholly successful in the proceeding. Further, while, in the context of the slip rule, it has been accepted that what is sought is to ascertain the objective intention of the court (and that subjective evidence of intention is not necessarily admissible) (see Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group, Inc (2007) 70 NSWLR 411; [2007] NSWCA 195 (Newmont Yandal) at [91] and [95] per Spigelman CJ (with whom Santow JA and Handley AJA agreed), it is also accepted that some account may nevertheless be taken of the trial judge's ex post facto observations (see, for example, Form-Quip Ltd v Trafalgar Properties Ltd (Supreme Court (NSW), Giles J, 19 July 1991, unrep). Indeed, in Newmont Yandal, Spigelman CJ said (at [182]) that: Satellite litigation and delay should be avoided with respect to both the inherent jurisdiction and the slip rule. I agree with Handley AJA that the judge who made the orders is overwhelmingly the preferable person to make the corrections. That s/he may be influenced by, and even express, her or his subjective intention is not a ground for disqualification.
Thus, I will here exercise the slip rule to delete the reference in Order 2 of the orders made on 7 February 2022 to the third defendant (Mr Renauf).
That, however, does not dispose of the issue in relation to costs in respect of Ms Garrett and Mr Renauf. Rather, the issue now is as to whether (as the plaintiff contends) there should be no order as to costs in relation to those defendants or (as Ms Garrett and Mr Renauf contend) there should be an order that the plaintiff pay their costs, on the basis that the plaintiff was the unsuccessful party in the litigation as against them.
I accept that there is not an invariable rule that a plaintiff who succeeds only in obtaining an award of nominal costs should bear the defendant's costs; and that the costs discretion must be exercised having regard to the circumstances of the particular case; and that an arithmetical comparison of the damages awarded as against the amount claimed is not determinative. Nevertheless, when one looks at the circumstances of the present case, it is impossible to regard the plaintiff as being the successful party. There can be no doubt that the plaintiff was seeking a very substantial monetary award and that there was no vindication of any personal interest of the plaintiff in issue in the proceeding.
Further, I accept that serious allegations were made against Ms Garrett and Mr Renauf (though the ultimate findings against them were limited in scope) and that their conduct was found to have been such as to amount to amount to a dishonest and fraudulent design (see at [1938]) against the Ashington companies (although I did not find that Ms Garrett nor Mr Renauf owed fiduciary obligations to the Ashington entities, and therefore nothing turned on this conclusion). However, the purpose of costs orders (as noted above) is compensatory not punitive.
As to the complaint in relation to the unsuccessful maintenance of the "independent contractor" defence, it is difficult to see that this would have involved much additional cost (and would not to my mind amount to a "relevant delinquency") even though I accept it seemed doomed to fail in light of the deeds in which Ms Garrett and Mr Renauf had expressly acknowledged their status as employees. As to the cross-examination of Mr Anderson, prolonged and vigorous as it was, this did not to my mind overstep acceptable boundaries; and, as to the fact that Ms Garrett and Mr Renauf did not make themselves available for cross-examination, that was a legitimate forensic decision on their part which should not sound in costs consequences against them.
Having regard to the above matters, and placing weight on the ultimate question - namely, who was in truth the successful party in the litigation as between the plaintiff on the one hand and Ms Garrett and Mr Renauf on the other, I am driven to the conclusion that it is the latter. The unfortunate reality for the plaintiff is that a very substantial amount seems to have been expended on claims that resulted in no more than an award of nominal damages; and, in the absence of a personal right for which vindication was sought, this means that the plaintiff was not the successful party. In those circumstances, I do not consider that an order that each of those parties bear his or her own costs is consistent with the rationale underlying the costs jurisdiction nor would it promote the statutory objective of the just, quick and cheap resolution of the real issues in dispute.
Thus, I will order that the plaintiff pay the costs of Ms Garrett and Mr Renauf of the proceeding (on what basis is to be dealt with in the second of the issues here to be determined - see below).

[17]

15 June 2017 - Calderbank offer (by Patersons)

As noted above, the first date from which Patersons seeks indemnity costs is 30 June 2017, this being on the basis of the plaintiff's rejection of an offer contained in a letter dated 15 June 2017 and expressed to be "without prejudice save as to costs" that was sent to the plaintiff's solicitors (McLachlan Thorpe) from Patersons' solicitors (Clayton Utz) (see Ex 4) (the 15 June 2017 Offer).
The 15 June 2017 Offer, which remained open until 5.00pm on 30 June 2017, proposed that the proceeding be dismissed with no order as to costs, subject to the plaintiff and the liquidator of Ashington Capital and Ashington Management releasing and discharging Patersons (and its directors, officers, employees, representatives and related bodies corporate) from any and all claims of any nature against those parties. In the letter, Patersons expressly reserved the right to rely on this letter in support of an application for an appropriate costs order should the offer contained therein be rejected and Patersons ultimately succeed in the proceeding. The letter stated in particular that Patersons would submit that the unreasonable rejection of the offer contained in the letter entitled it to its costs on an indemnity basis, pursuant to the Calderbank principles.
The 15 June 2017 Offer expressed the view that, for the reasons set out in an open letter dated 8 June 2017 from Patersons' solicitors (the 8 June 2017 letter), the plaintiff's claims against Patersons were without merit. The reasons set out in the 8 June 2017 letter (Ex 4 Tab 18) included: that the assignment to the plaintiff of the causes of action was not valid (at [2.1]-[2.7]); that Patersons did not owe any fiduciary duties to Ashington Capital or Ashington Management (at [3.1]-[3.20]); that Patersons played no part in any breach of confidence (at [3.21]-[3.25]); that Patersons did not knowingly assist Ms Garrett and Mr Renauf in any breach of the fiduciary duties they allegedly owed (at [3.26]-[3.31]); and that Ashington Capital and Ashington Management either were, or would likely become, insolvent such that the plaintiff would unlikely recover any substantial damages in the proceedings (at [4.1]-[4.11]). Patersons says that all of these reasons were ultimately reflected in the reasons set out in the principal judgment (pointing to the summary at [1240]-[1264]).
In particular, Patersons points to the following findings in the principal judgment.
First, that the causes of action for breach of fiduciary duty, insofar as those duties were owed to Ashington Capital in its capacity as trustee, were not assignable by the liquidator since, by then, the proper plaintiff in whom any such cause of action reposed was Parissen; and, similarly, the causes of action for breach of contract and for equitable duties of confidence were not assignable insofar as they relate to obligations owed to Ashington Capital in its capacity as trustee and not in its own right (see at [1241]). Patersons says that, while the knowing assistance claims were found to be assignable, nothing turned on that conclusion (referring to [1243]).
Second, that it was held that Patersons did not owe fiduciary duties to the Ashington entities; rather, the relationship was a conventional commercial relationship governed by the contract entered into with Ashington Capital as trustee for ADF2, and Patersons was not in the position of a trusted financial adviser giving rise to fiduciary obligations (see at [1247]).
Third, that the various breach of contract claims relating to the alleged confidential information were not made good (see at [1254]).
Fourth, as to the knowing assistance claims, that (even assuming that Ms Garrett and Mr Renauf were in breach of fiduciary duties - and assuming that such causes of action were assignable by the liquidator to the plaintiff) it was found that they were not made good in respect of Patersons because Mr Carolan's knowledge was not attributable to Patersons (see at [1252], [1255]).
Finally, that, as to the quantification of loss, it was concluded that, as at 30 September 2009, the Ashington companies (and relevant sub-trusts) were not a going concern and, if not already insolvent, then bordering on insolvency (see at [1259]).
Patersons argues that, having regard to the conclusions reached in the principal judgment and the symmetry as between them and the difficulties outlined in the 8 June 2017 letter, it should be concluded that the 15 June 2017 Offer was a genuine offer of compromise and that it was unreasonable for the plaintiff not to accept it.
It is submitted by Patersons that the factors identified by Basten JA (with whom McColl and Campbell JJA agreed) in Miwa at [12] tend in favour of an award of indemnity costs having regard to the plaintiff's rejection of the 15 June 2017 Offer. In particular, reference is made to the following matters.
First, as to the timing of the offer, it is said that although the 15 June 2017 Offer was made early in the proceeding (following the filing of the amended Statement of Claim, but before defences were filed), this was not a case where there was only a bare pleading and a limited set of documents available at that time. Rather, it is submitted that the plaintiff had the ability properly to assess the prospects of the proceeding at that early stage, noting that much of the dispute the subject of the present proceeding had its genesis in an earlier Supreme Court of New South Wales proceeding prosecuted by the plaintiff (the Mapeline Proceeding, to which reference was made in the principal judgment) which was discontinued approximately a week before the commencement of the trial (see Anderson v Patersons Securities Ltd [2019] NSWSC 852 at [196]). Moreover, Patersons says that many of the difficulties with plaintiff's case raised in the 8 June 2017 letter were expressed at a level of legal principle (which difficulties it says were borne out in the principal jdgment and should have been apparent to the plaintiff and her advisers at the time of the 15 June 2017 Offer). It is submitted that this was not a case where the difficulties with the plaintiff's case emerged after the service of lay and expert evidence; rather, Patersons says that the logical flaws in the plaintiff's case that were identified in 8 June 2017 letter were readily apparent.
Second, it is said that the fact that Patersons had not filed its defence at this time is of little import since the 8 June 2017 letter explained what Patersons contended were the fatal flaws in the plaintiff's claim. It is noted that the position taken in that letter was replicated in Patersons' defence, which was filed on 5 July 2017, five days after the expiration of the 15 June 2017 Offer.
Third, that a reasonable time was allowed for the plaintiff to consider the 15 June 2017 Offer (noting that it remained open for 15 days until 5.00pm on 30 June 2017).
Fourth, Patersons says that while the compromise offered was essentially a "walkaway" offer, such a compromise was reasonable in the circumstances and having regard to the serious difficulties associated with the plaintiff's case (all of which it says were ultimately revealed in the principal judgment) and the costs that had already been incurred in relation to the proceeding (which had been on foot for some 15 months by that time).
Fifth, it is said that the 15 June 2017 Offer was expressed simply and with clarity; and (as indicated above) foreshadowed an application for indemnity costs in the event of its rejection.
The plaintiff argues that the rejection of the 15 June 2017 Offer should not entitle Patersons to indemnity costs from 30 June 2017, noting that failure to accept a Calderbank offer does not create a presumption as to indemnity costs, even where the party making the offer receives a result more favourable than that offered (see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 (SMEC Testing Services) at [37] per Giles JA; Jones v Bradley (No 2) [2003] NSWCA 258 (Jones v Bradley) at [7]-[9] per the Court (Meagher JA, Beazley JA (as her Excellency then was) and Santow JA); South Eastern Sydney Area Health Service (at [28], [90] per Hunt AJA, Mason P and McColl JA agreeing; Chief Commissioner of State Revenue (NSW) v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9] per the Court (Campbell and Macfarlan JJA and Handley AJA)) and that the party making the Calderbank offer bears the onus of satisfying the court that the costs discretion should be exercised in its favour (see County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 (County Securities) at [32] per McColl JA with whom Spigelman CJ and Beazley JA (as her Excellency then was) agreed), including demonstrating that the rejection of the offer was "unreasonable" in all the circumstances of the case (see Leichhardt v Green at [19] per Santow JA with whom Bryson and Stein JJA agreed; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per the Court (Giles, Ipp and Tobias JJA)).
The plaintiff contends that the 15 June 2017 Offer was not a genuine offer of compromise and that its rejection was not unreasonable. The plaintiff points out that an offer with no real element of compromise, designed merely to trigger the costs sanctions, will not be treated as a genuine offer of compromise (citing County Securities at [32]). While the plaintiff accepts that a "walk-away" offer may, in some circumstances, reflect a genuine offer of compromise, the plaintiff says that it is more likely to do so when made late in the proceeding where both parties will be fully aware of the strengths and weaknesses of their cases (referring to Evans v Braddock (No 2) [2015] NSWSC 518 at [57]-[60] per Hallen J).
The plaintiff points out that the 15 June 2017 Offer was made at an early stage of the proceeding (the amended statement of claim having only been filed on 26 May 2017; none of the defences having yet been filed (those being filed in July 2017); no lay or expert evidence having been served, and no discovery having taken place). It is said that at this early stage of the proceeding Patersons was not offering to sacrifice substantial recoverable costs and, hence, there was no genuine element of compromise involved in making the offer.
As to the plaintiff's rejection of that offer, it is noted that the reasonableness of rejection is to be assessed based on relevant circumstances known to the parties at the time, and not with the benefit of hindsight (the plaintiff here citing Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 at [49]); and maintains that the early stage of the proceeding at which the offer was received, and the minimal (if any) compromise offered in it, weigh heavily against any finding that its rejection was unreasonable (cf A v N [2012] NSWSC 549 at [19]).
The plaintiff says that in significant respects the arguments put forward in the 8 June 2017 letter as to why the plaintiff's claim would fail at trial did not mirror the way Patersons' case was put at trial, nor the reasons why the plaintiff's case did not ultimately succeed. In particular, the plaintiff notes that Patersons had argued in the open letter that the consortium allegation was flawed because Patersons had no need to join the consortium, had nothing to gain from it, and its membership was not supported by the documents (see the 8 June 2017 letter at Ex 4 Tab 18 at [3.2]-[3.7]); whereas it was not until trial that Patersons disclaimed responsibility for Mr Carolan's knowledge and conduct (reference being made to T 144.33-50, 146.1-2, which it is noted led to non-attribution being included in Patersons' amended defence filed 17 March 2021 at [260(b)]). The plaintiff attaches some significance to this, arguing that, but for the non-attribution of Mr Carolan's conduct to Patersons, breach of the good faith term of the Patersons Mandate (see the principal judgment at [1985]) and breach of the Confidentiality Term of the Patersons Mandate (see at [2405]) would have been found; and the elements for the knowing assistance claim would have flowed therefrom (see at [2088]).
It is noted that, at trial, Patersons also abandoned its arguments concerning non-satisfaction of conditions precedent to the Patersons Mandate (which the plaintiff says it was bound to do in the face of Mr Shorrock's evidence, referring to the principal judgment at [482], [1967]).
Thus, the plaintiff contends that, at the time of the 15 June 2017 Offer, it was not unreasonable for the plaintiff to continue with the proceeding (rather than to capitulate prior to any defences, lay or expert evidence, or discovery), when the plaintiff had correctly identified that Mr Carolan, who was employed by Patersons and tasked with advancing the Patersons Mandate, had instead knowingly assisted two of Ashington's employees to advance and execute a plan to take over Ashington's business (see at [2088]).
The plaintiff argues that the arguments made by Patersons in its 8 June 2017 letter concerning damages (many of which it is said ultimately proved irrelevant or failed) similarly did not demand immediate surrender nor make it unreasonable for the plaintiff to pursue the claim.

[19]

17 May 2018 - service of Mr Halligan's report

Each of Patersons (in the alternative to the above) and PPB seeks costs on an indemnity basis from 17 May 2018, the date on which the expert's report on which the plaintiff relied to quantify its loss (that of Mr Halligan) was served.
Patersons says that from that time there was a "higher degree of certainty concerning the deficiencies" in the plaintiff's case on loss and damage; and the deficiencies were sufficiently manifest and clear such that it can be inferred that the plaintiff would or should have appreciated them when the action was continued beyond 17 May 2018 (had the plaintiff given proper consideration to, or been properly advised about, the merits of her case on loss and damage), invoking what was said by Wigney J in Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) (2021) 151 ACSR 26; [2021] FCA 246 (Colgate-Palmolive) at [11] (reference also here being made to Dwyer v Volkswagen Group Australia Pty Ltd t/as Volkswagen Australia (No 2) [2021] NSWSC 1137 at [15] per Stevenson J).
Patersons points out that none of the key assumptions upon which Mr Halligan's valuations were based was made good and that Mr Halligan's opinions were inadmissible (referring to the principal judgment at [1477]-[1504]).
Patersons says that the unrealistic assumptions upon which Mr Halligan's reports were based must have been apparent to the plaintiff, at the time Mr Halligan prepared his report, noting that the information and documents underpinning each of the key assumptions which was not made good at trial were available to the plaintiff at the time Mr Halligan was instructed. It is said that it would have been apparent on receipt of Mr Halligan's first report on 17 May 2018 that he did not engage in any real independent valuation exercise but, rather, "unwaveringly" applied the unrealistic assumptions given to him (reference here being made to the criticism made of Mr Halligan's approach in the principal judgment at [1475]). (Pausing here, I note that the criticism made at [1475] was in the context of Mr Halligan's refusal to engage in debate, during the expert conclave, on issues arising out of Mr Hall's expert report; whereas as at 17 May 2018 there was no report yet to hand from Mr Hall. Hence, the unwavering adherence to assumptions had not at that stage manifested itself.) Patersons, however, says that it is not to the point that, as at 17 May 2018, the defendants had not served their expert valuation report of Mr Hall, nor had the joint report been completed. Rather, Patersons says that the fundamental problems with Mr Halligan's report were at the level of the assumptions provided to him and his application of them; not dependent on Mr Halligan's opinions being reviewed and criticised by Mr Hall.
Thus, it is submitted that the plaintiff (at all times well-advised) ought to have been aware from the date of Mr Halligan's first report that the case in respect of loss and damage could not have been made good; and the failure to do so demonstrates some "relevant delinquency" in support of an order for indemnity costs from that date.
Similarly, PPB says that the first report issued by Mr Halligan on 17 May 2018 (which formed the basis of the plaintiff's case on loss and damage) was founded on assumptions which were so unrealistic as to be fanciful. It is noted that Mr Halligan expressly disavowed any responsibility to assess the reasonableness of the assumptions he was asked to make, including as to whether the Ashington companies were a going concern, even though he acknowledged that he had the expertise and experience to provide an opinion on the matter; and that the plaintiff effectively abandoned Mr Halligan's evidence at trial.
PPB says that the plaintiff should have been aware from 17 May 2018 that the case on loss and damage could not be established; and that the failure to grapple with this issue and the continued prosecution of the proceeding from that date demonstrates "some relevant delinquency" on her part. Hence, PPB seeks an order for its costs assessed on the ordinary basis until 17 May 2018 and on an indemnity basis thereafter. PPB otherwise adopts the submissions of Patersons in relation to its application for costs to be awarded on an indemnity basis from 17 May 2018.
The plaintiff says that the ultimate failure of the claims against Patersons and PPB does not support a conclusion that the claims were so hopeless that they should not have been pursued following the receipt of Mr Halligan's first report. It is noted that, at the time that Mr Halligan's first report was received, there was no opposing report served by the defendants; and the plaintiff says that no defendant then asserted that Mr Halligan's report was or would be held to be inadmissible. The expert report of Mr Hall was not served until April 2019 and the joint report of Mr Halligan and Mr Hall was not completed until 30 July 2020. The plaintiff says that there is no basis for any suggestion that the pursuit of the proceeding following receipt of Mr Halligan's first report involved wilful misconduct.
The plaintiff points out that the authorities make clear that there must be a high degree of certainty concerning the deficiencies in a losing party's case, such that it plainly had "no chance of success", was pursuing a "hopeless case", was "always clearly foredoomed to fail" or was "wholly untenable and misconceived", which are readily apparent at the date from which an exceptional award of indemnity costs is sought (Colgate-Palmolive at [10] per Wigney J); and that caution has been expressed as to the risks of considering the question of prospects with the benefit of hindsight "after the matter has been fully argued and has enjoyed the considerable attention of experienced solicitors and senior and junior counsel" (Colgate-Palmolive at [12] citing Re Kingsheath Club of the Clubs Ltd (in liq) [2003] FCA 1589 at [5] per Goldberg J). It is submitted that even if some sufficiently grave deficiency in evidence is identified, indemnity costs do not simply flow from the date at which that evidence is produced (cf Ingot at [67]-[72]).
The plaintiff maintains that Patersons and PPB have failed to demonstrate that the receipt of Mr Halligan's first report revealed such obvious deficiencies in the plaintiff's claim on loss that to continue it beyond that point involved relevant delinquency entitling them to indemnity costs from that date.
First, the plaintiff says that Mr Halligan's evidence was not admitted because the assumptions upon which it was based were not made good (referring to the principal judgment at [1461], [1504]). It is noted that even Mr Hall did not criticise Mr Halligan's calculation (reference here being made to the plaintiff's closing submissions at [243]). It is said that the acceptance or rejection of those assumptions turned upon the Court's assessment of the prospects of the Ashington business succeeding in the counterfactual scenario, which fell to be determined based on the totality of the evidence led at trial. It is said that no defendant asserted at the time that Mr Halligan's report was served that the assumptions upon which it was based were so obviously flawed that the report was, or would be, inadmissible and the plaintiff's case on loss clearly doomed to fail (cf Ingot at [78]).
Second, that the rejection of Mr Halligan's report was not determinative of the plaintiff's case on loss. It is said that the case on loss ultimately fell to be determined based on the Court's own assessment of the counterfactual scenario, and the value to be ascribed to the opportunity which the Court found was lost by Ashington, taking into account the various contingencies and probabilities (referring to the principal judgment at [2777]); that assessment undertaken on the basis of all of the evidence led at trial. The plaintiff says that the outcome of this could not be said to have been revealed as fatal to the plaintiff's claim upon receipt of Mr Halligan's report.
Third, it is said that the criticisms of the position subsequently adopted by Mr Halligan during the expert conclave (in December 2019) and preparation of the joint report (dated 30 July 2020) (principal judgment at [1464]-[1476]) cannot support a conclusion that the plaintiff's case was obviously hopeless from the date upon which Mr Halligan's report was served in May 2018 (cf Patersons' costs submissions at [21]). Rather, it is said that those observations emphasised the fact that there were substantial and complex issues in dispute concerning the quantification of loss, in relation to which the Court considered it may have benefited from further assistance from Mr Halligan.

[22]

13 February 2020 - offer by Ms Garrett and Mr Renauf

Ms Garrett and Mr Renauf seek an order for their costs on the ordinary basis up to 13 February 2020 (or in the alternative 22 March 2021) and on an indemnity basis from that date, based on the rejection by the plaintiff of Calderbank offers that were made to her by Ms Garrett and Mr Renauf on 6 February 2020 (following what is said to have been a lengthy mediation on 10 December 2019) (and on 19 March 2021 by all of the defendants during the trial). The gist of each offer was for the proceeding to be dismissed with no order as to costs).
Ms Garrett and Mr Renauf say that the giving up by a party of an entitlement to costs, following a lengthy proceeding, is considered a genuine offer of compromise. It is noted that, in the present case, the pre-trial processes had included applications for security for costs, which disclosed to the plaintiff that Ms Garrett and Mr Renauf had incurred at least $40,000 in costs and Ms Garrett and Mr Renauf had already obtained several interlocutory costs orders against the plaintiff (see the affidavit of Ms Kozary sworn 28 February 2022 at [14]). It is submitted that the plaintiff acted unreasonably in rejecting that offer; on the basis that the plaintiff must have known by that point that her evidence of loss would not be accepted. It is noted that, by April and June 2019, Mr Gothard and Mr Hall had provided their reports on the valuation and solvency of the Ashington group (see Ms Kozary's affidavit sworn 28 February 2022 at [13]) and that those reports identified the flaws in the reports of Mr Wist and Mr Halligan.
Ms Garrett and Mr Renauf accept that the plaintiff's refusal of the Calderbank offer made to her on 6 February 2020 is a relevant consideration but that it is not of itself determinative that the plaintiff, as a matter of substance, did no better than the Calderbank offer (referring to SMEC Testing Service at [37]; Jones v Bradley at [9]; Commonwealth v Gretton at [43]); rather, the exercise of discretion is based on fairness, which involves considering the responsibility of parties in incurring the costs (Commonwealth v Gretton at [85]).
Ms Garrett and Mr Renauf note that a walk-away offer, such as the Calderbank offer made in the present instance, is accepted as a genuine offer of compromise if it is seen as a genuine attempt to reach a negotiated settlement, rather than an attempt to trigger cost sanctions (Commonwealth v Gretton at [44] (Beazley JA, as her Excellency then was; Mason P agreeing); Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]-[5] per the Court (Handley JA, Beazley JA (as her Excellency then was) and Basten JA); Leichhardt v Green at [21]-[24], [36] per Santow JA with whom Bryson and Stein JJA agreed).
Ms Garrett and Mr Renauf say that, as at 13 February 2020, the proceeding was substantially advanced and the plaintiff was well placed to consider the strength of her case; and they contend that the offer was a genuine offer of compromise, which it was unreasonable for the plaintiff not to accept. In particular, they point to the following matters.
As to the stage of the proceeding when the offer was made, by this time the plaintiff had most or all of the key evidence on which the defendants proposed to rely, the defendants' expert evidence (that proved critical to the failure of the plaintiff's case) having been served on 17 May 2018. It is noted that the defendants' key reports had been served in April and June 2019 (see Ms Kozary's 28 February 2022 affidavit at [13]).
As to the time afforded to consider the offer, Ms Garrett and Mr Renauf say that allowing one week for the offer to be accepted was sufficient time given the parties had just attended a lengthy mediation. It is said that it can be inferred that the plaintiff (and her advisers) would have been carefully considering her position during that mediation and in the period afterwards.
As to the offeree's prospects of success, it is said that the key issue for the plaintif was that there was no prospect of proving loss. It is said that the plaintiff's expert report was based on wildly optimistic assumptions (which were identified as such by the defendants' experts) and it is noted that the plaintiff had abandoned reliance on Mr Halligan by the end of the case (referring to the principal judgment at [1459]).
As to the extent of the compromise, it is noted that, by the time of the offer, the plaintiff knew that Ms Garrett and Mr Renauf had spent at least $40,000 on legal costs (Ms Kozary's affidavit of 28 February 2022 at [17]); the plaintiff had paid $215,169.50 into court in respect of all of the defendants' costs and, under the terms of the offer, that money was to be released to the plaintiff; and Ms Garrett and Mr Renauf had received four interlocutory costs orders (see Ms Kozary's affidavit at [14]) and under the terms of the offer the plaintiff would not have to pay those costs.
As to the clarity with which terms of offer were expressed, it is said that the offer sets out the terms of the offer clearly. As to whether the offer foreshadowed an application for indemnity costs in the event of refusal, it is noted that the offer specified that it was made by the defendants on the basis that, while it was without prejudice, "it will be referred to the ultimate decision maker on the question of costs".
Ms Garrett and Mr Renauf say that, even if the plaintiff's refusal is not found to be unreasonable, the refusal may be relevant to the exercise of discretion in relation to costs (citing Commonwealth v Gretton). It is submitted that even if the fact of nominal damages does not by itself justify an order for costs, that together with the failure to accept two walk away offers, at least justifies an order for costs on the ordinary basis (either for the whole of the proceeding or from one of two dates of non-acceptance).

[25]

Release of security paid into court

Patersons, PPB, Acorn and Ms Garrett and Mr Renauf have sought orders releasing to them funds paid into Court by the plaintiff as security for their costs (plus accrued interest) in partial discharge of the plaintiff's costs liability to them. The relevant amounts, as noted earlier, are $314,877.20 (Patersons), $229,026.50 (Ms Garrett and Mr Renauf), $171,474.50 (PPB), $159,413.40 (Acorn), $125,320 (Albany).
As adverted to above, the plaintiff consents to orders to this effect, subject to such orders taking effect after the expiration of the period within which the plaintiff is entitled to file a notice of appeal and subject to any application the plaintiff might make for a stay pending appeal. (A notice of appeal appears to have been filed on 5 May 2022, within the requisite time following a notice of intention to appeal having been filed on 18 February 2022.)
The plaintiff says that the balance of convenience favours making any release of security subject to such terms. It is said that in the event that no stay is granted or sought (or no appeal commenced), the defendants will still obtain the benefit of an early payment of a portion of their costs (prior to the costs assessment process being finalised) with interest, after a modest additional delay; whereas the immediate release of security will render nugatory the plaintiff's right to seek a stay pending appeal (to the extent of such amounts), in circumstances where a view cannot yet be formed by the Court on the merits of any prospective stay application.
In particular, the plaintiff understands that PPB is no longer trading, following the acquisition of its business by PricewaterhouseCoopers, which the plaintiff says puts in issue its ability to repay any security released should the plaintiff ultimately succeed on any appeal (referring to correspondence dated December 2018 to March 2019 and 25 February 2022 at [4]). In its submissions, PPB accepted that it is no longer trading and proffered the undertaking referred to earlier (which is acceptable to the plaintiff).
As noted above, the plaintiff consents to the release of security paid into Court to PPB upon it undertaking to the Court that it will not distribute or dispose of the security released to it until any appeal filed by the plaintiff is determined. (The plaintiff would also consent to the release of security to any other defendant with a costs order in its favour upon an undertaking in like terms being given to the Court.) Hence there is now no issue with the release of the security to PPB and it is unnecessary further to consider the submissions made by PPB in support of its contention that the moneys should be released without delay.
As to the balance of the defendants who have sought a release of the security, Patersons seeks an order that the sum of $314,877.20 paid into Court by the plaintiff for Patersons' security for costs, together with any accrued interest, be released to Patersons pursuant to rr 41.3 and 41.8 of the UCPR by way of a partial discharge of the plaintiff's (and if so ordered, any third party's) liability to pay Patersons's costs. Patersons says that it should have the benefit of the security that has been ordered and is available and should not be required to wait until the outcome of any appeal pursued by the plaintiff is known. This is so, Patersons says, given: the significant costs incurred by Patersons in its successful defence of the claims made against it by the plaintiff; that security will cover a mere fraction of Patersons' costs incurred in the proceeding between March 2016 and May 2021, totalling $3,621,504.55 (see Mr Benson's affidavitsworn 28 February 2022 at [20]-[23]); it cannot be (and has not been) suggested that Patersons would not be in a position to meet any costs orders which may be made against it at some stage in the future; and what Patersons contends are the plaintiff's poor prospects on appeal given the findings in the principal judgment with respect to, at least, loss and damage.
Patersons says that even in the event that the plaintiff is able to establish on appeal that she is entitled to the highest figure referenced in the principal judgment ($960,000), Patersons would be entitled to its costs on an indemnity basis given the timing of the offers made and costs incurred in the proceeding.
Acorn, by prayer 3 of its notice of motion, seeks an order to the effect that the sum of $159,413.40 paid into Court as security for Acorn's costs in the proceedings (Mr Polorotoff's affidavit sworn 28 February 2022 at 6) be released to Acorn, together with any accrued interest, pursuant to rr 41.3 and 41.8 of the UCPR by way of a partial discharge of the plaintiff's liability to pay Acorn's costs. Acorn submits that, despite the filing of the notice of appeal, it is appropriate that the security and any accrued interest be released to Acorn now for the following reasons.
First, there is no issue that Acorn's costs to date have materially exceeded the total amount of the security and any accrued interest. Up until 28 February 2022 Acorn has been billed and has paid legal fees and disbursements in the sum of $2,764,765.04 (Mr Polorotoff's affidavit sworn 28 February 2022 at [4]-[5]). Accordingly, it is said that there is no risk that Acorn's costs would be reduced following agreement, assessment or other order, to below the total sum of the security and any accrued interest. In those circumstances alone, it is said that it is appropriate that the security and any accrued interest be released to Acorn (reference being made to 123 259 932 Pty Ltd v Cessnock City Council (No 4) [2021] NSWSC 1598 at [6]-[9] per Adamson J; Jin Lian Group Pty Ltd (in Liq) v ACapital Finance Pty Ltd (No 2) [2021] NSWSC 1202 at [74] per Stevenson J).
Second, that no issue has been raised concerning the ability of Acorn to repay any or all of the security and the accrued interest if ordered to do so, including if any appeal filed by the plaintiff is ultimately successful (referring by way of example to Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 211 (Equititrust) at [29] per McColl JA). Acorn says that if the plaintiff wishes to do so, the plaintiff can apply for a stay of any orders made pursuant to the principal judgment pending the final determination of any appeal, which would be dealt with on conventional principles.
Third, that should it be considered necessary as a condition of the release of the security and accrued interest to Acorn, Acorn is prepared to give an undertaking that it will repay the security and any accrued interest to the plaintiff in the event that the principal judgment in favour of Acorn is set aside or varied on any appeal ruling that Acorn is not entitled to its costs in whole or in part in an amount exceeding the total of the security and any accrued interest (see Mr Polorotoff's affidavit sworn 28 February 2022 at [8]).
The plaintiff says that Acorn's submission that the plaintiff can apply for a stay pending the final determination of any appeal (see its submissions at [12]) misses the point that the immediate release of security would render the plaintiff's right to seek a stay nugatory. It is said that at this stage, the plaintiff only seeks a modest deferral of any order releasing security so that the plaintiff can, if necessary, make such an application for a stay. It is said that Acorn's proposed undertaking to repay security if required to do so as a consequence of a successful appeal (see its submissions at [13]) is simply an undertaking to abide by a future order of the Court, and is therefore of no value.
The release of security paid into Court in respect of Albany's costs was the subject of an agreed order (pending appeal).

[27]

Proportionate release to other defendants of security paid in relation to Ms Garrett and Mr Renauf's costs

An issue was also raised as to the amount paid into Court for the costs of Ms Garrett and Mr Renauf (in the event that there be no order in their favour in respect of their costs). The plaintiff contended that in that event the amounts paid into Court as security for their costs should immediately be released to the plaintiff (with no question of discretion arising), citing Huon Shipping and Logging Co Ltd v The South British Insurance Co Ltd (1923) 29 ALR 174; [1923] VLR 216 (Huon). It is noted that this amounts to $229,026.50, which was paid in three tranches ($59,615.50; $155,554.00; and $13,857).
As to the plaintiff's submission based on Huon (to the effect that the amounts paid into Court as security for the costs of Ms Garrett and Mr Renauf (in the sum of $229,026.50) be immediately released to the plaintiff, and that no question of discretion arises in the circumstances), Acorn notes that in Huon, Irvine CJ, in ordering the release of security for costs to a successful plaintiff at the conclusion of the trial, stated (at 217): This appears to be an important point of practice; that it is I think governed by authority. It is not a question of discretion but of what is the proper effect of an order that the Plaintiff do pay into Court the sum of a hundred pounds as security for costs of the defendant in this action. At first I was disposed to think that the order should be construed to include the costs of the action, and the costs of any proceeding that might subsequently be taken by way of appeal. I think however that that is not so, and the Plaintiff having secured a judgment in his favour has complied with the terms of the order.
Acorn says that that reasoning and the considerations of justice which arise are plainly distinguishable in the present case. It is noted that Huon concerned a case where the plaintiff was successful against a single defendant in whose favour security had been paid into Court and in respect of whom there was no sufficient reason demonstrated why that sum should not be released.
Acorn says that the interests of justice that should guide the Court's discretion in determining to whom security should be released are vastly different in this case compared to Huon.
In particular, it is said that the considerations in Huon did not involve any of the following circumstances which are present in this case, where: there are multiple defendants (Patersons, PPB, Acorn and Albany) against whom the plaintiff was not successful for the reasons given in the principal judgment; the Court has already indicated that the plaintiff will be ordered to pay the costs of those defendants; the costs to date of those defendants total $9,751,104.03 (as outlined in the affidavits filed by the said defendants in support of their costs submissions) far exceeding, either singularly or cumulatively, the sum of security held for the benefit of Ms Garrett and Mr Renauf ($229,026.50); no issue has been raised by the plaintiff in the submissions as to the ability of Patersons, PPB, Acorn and Albany to repay any security so released to them (and, while PPB is no longer trading following the acquisition of its business by PricewaterhouseCoopers, PPB submits that it is prepared to provide an undertaking to the Court that it will not distribute or dispose of the security until any appeal is determined, and that this sufficiently resolves any potential prejudice to the plaintiff arising from the fact of its non-trading); and the plaintiff is impecunious, as found in the judgments deciding the defendants' applications for security for costs in the proceedings (see above; at [155] and [40], respectively) such that it is said that there is a severe risk that any security which is released to her is unlikely to be available to be paid to any of the defendants to whom she has been ordered to pay costs. Acorn says that the reasoning in Huon cannot be taken as intending to apply in such divergent circumstances.
In these circumstances, Acorn says that the principles outlined in its submissions governing the release of security apply equally to the release of the security held on behalf of Ms Garrett and Mr Renauf. Accordingly, Acorn submits the outcome which is in the interests of justice is that the sum of $229,026.50 which has been paid into Court by the plaintiff should be released in equal parts to Patersons, PPB, Acorn and Albany.
Patersons adopts and supports the making of a special costs order iof that kind, relying on Mr Benson's seccond sworn on 18 March 2022 and referring to Mr Wilks' affidavit affirmed on 1 March 2022. Patersons also relies on the submissions made in [4]-[9] of Acorn's reply submissions on costs dated 4 March 2022, submitted that it is in the interests of justice that if no order is made as to the costs of Ms Garrett and Mr Renauf, then the sum of $229,026.50 which has been paid into Court by the plaintiff for Ms Garrett and Mr Renauf's costs should be released in equal parts to Patersons, PPB, Acorn and Albany as part payment of the plaintiff's costs liability to those parties.
In reply submissions, the plaintiff argues that the submission as to the proportionate release to other defendants (in the event there is no order as to the costs of Ms Garrett and Mr Renauf) of the amounts paid into Court as security for Ms Garrett and Mr Renauf's costs (rather than returned to the plaintiff) is based upon a misconception as to the nature of funds paid into Court as security and presupposes that the Court is at liberty to deal with such funds as it sees fit in the exercise of its discretion.
The plaintiff reiterates that the finding of Irvine CJ in Huon that the issue is not one of discretion but, rather, of the proper effect of an order that funds be paid into Court as security for costs. The plaintiff says that property in funds paid into Court remains with the person providing the funds (citing Equititrust at [24] per McColl JA); and says that, pending the resolution of the dispute and the making of a costs order, that property is subject (at best) to a right of the party's whose interest is secured (ie the second and third defendants) in the nature of an equitable charge or lien "giving a right of recourse to the fund to satisfy the terms of the judgment, that is, to secure reimbursement if an order for costs be made in his or her favour" (see Equititrust). The plaintiff thus says that if there is no order as to costs in respect of Ms Garrett and Mr Renauf, there is no competing claim to the plaintiff's proprietary right to those funds to support their retention by the Court.
It is noted that Patersons, PPB, Acorn and Albany obtained orders for security for their own costs in fixed amounts, following contested applications, including an unsuccessful application for additional security heard by Rees J in December 2020 (Anderson v Canaccord Genuity Financial Ltd [2020] NSWSC 1852) (which the plaintiff notes included an unsuccessful application by Acorn for an additional $185,000 in security due to a change in senior counsel and the promotion of a solicitor working on the matter, referring to [3], [44] of the second security decision). The plaintiff says that there is no reason why those defendants should now be entitled to additional security in the event that Ms Garrett and Mr Renauf do not obtain an award of costs.
In the event (as I interpose to note has now transpired) that an award of costs is made in favour of Ms Garrett and Mr Renauf, the plaintiff adopts the same position regarding the release of security to those defendants as it does to the release of security to other defendants (see above).

[29]

Lloyds Deed of Indemnity

By Deed dated 12 January 2021 (the Lloyds Deed), Lloyds Syndicate 4000 (Hamilton) (Lloyds) agreed to indemnify the defendants in the amounts identified in the Schedule to the Lloyds Deed, in order to enable the plaintiff to provide security for costs in the sum of AUD$2,087,235 in the proceeding. The Schedule to the Lloyds Deed set the limit of the indemnity available to each of the respective defendants (Patersons, for example, at $535,000 PPB at $425,00, Acorn at $262,735 and Albany at $318,500) (see annexure E to the affidavit of Mr Polorotoff sworn 28 February 2022). This was referred to as the relevant Indemnified Sum.
Clause 2 of the Lloyds Deed provided that "… Lloyds hereby unconditionally and irrevocably undertakes to pay the [defendants] any sum or sums which the [plaintiff] is legally liable to pay to the [defendants] in respect of the [defendants'] costs in the [proceedings]". The Lloyds Deed provided for the making of an Indemnity Demand under the deed in order to request payment of the Indemnified Sum (cll 1 and 3).
On 22 February 2022, Acorn's solicitors made an Indemnity Demand on Lloyds pursuant to the Lloyds Deed for payment of the Indemnified Sum (see Mr Polorotoff's affidavit of 28 February 2022 at [14] and annexure F). On 24 February 2022, Lloyds asserted that the Indemnity Demand was not valid as there is no identified sum which is due from the plaintiff as required under the Lloyds Deed (Mr Polorotoff's affidavit at [15] and annexure G).
Patersons, PPB and Acorn seek orders to the effect that, for the purpose of each being able to make an Indemnity Demand (as defined) under the Lloyds Deed (and without prejudice to the other orders sought by them), that costs in the sums corresponding to the relevant Indemnified Sum are due from the plaintiff to the said defendants.
Acorn makes clear in its submissions that it seeks this order to avoid wasted costs disputing the accuracy of that construction of the Lloyds Deed, namely an order from the Court, for the purposes only of being able to make an Indemnity Demand under Lloyds Deed and without any prejudice to the other orders sought by Acorn, that costs in the sum of $262,735 are due from the plaintiff to Acorn.
Acorn submits that the order sought is just and equitable. It is noted that on 8 May 2020 orders were made for the provision by the plaintiff of third and fourth tranches of security (the fourth tranche of security in favour of Acorn being in the sum of $262,735 - see Mr Polorotoff's affidavit at [9]-[10]); and that, subsequently, on 11 November 2020, those orders were amended to order instead that "the fourth tranche of security is to be provided by way of Deed of Indemnity executed by Lloyd's Syndicate (Hamilton) 4000 in favour of the defendant in the form annexed to this notice of motion and marked "A" with the following amendments" (see Mr Polorotoff's affidavit of 28 February 2022 at [11]).
Acorn says that, but for the amended orders and the provision of the Lloyds Deed, the fourth tranche of security would have been paid into Court by the plaintiff in accordance with the orders made on 8 May 2020 (lest the proceeding be stayed). In those circumstances, it is submitted that the reasons put forward by Acorn in support of the release to Acorn of the security paid into Court are equally applicable to the security provided pursuant to the Lloyds Deed and Acorn should be able to obtain the security by making demand under the Lloyds Deed.
The plaintiff opposes the making of such an order, the plaintiff's position being that the defendants have the benefit of the Lloyds Deed in accordance with its terms, such that no question of its "release" arises and says that the deed was provided on the basis that it was an adequate means of providing security, following a detailed consideration of its operation and terms (which included the amendment of some terms during the course of the hearing to address concerns raised by the defendants, see T 45ff). The plaintiff thus says that the defendants have the benefit of the Lloyds Deed in accordance with its terms and subject to the process set out therein for making a demand under it. The plaintiff argues that the orders now sought by Patersons, PPB and Acorn are plainly directed towards circumventing that process so that those defendants can obtain accelerated payments to their benefit (and the plaintiff says, to Lloyd's detriment).
Insofar as Acorn seeks an order that costs in a specified sum "is an amount due to be paid by the plaintiff to the fifth defendant in partial discharge of the fifth defendant's costs of the proceedings" (see prayer 4 of its motion), with a notation that the order is sought "solely for the purposes of enabling the fifth defendant to make an Indemnity Demand (as defined)" under the Lloyds Deed, the plaintiff says that there is no extant liability of the plaintiff to Acorn to support making a declaratory order in these terms. Further, it is said that such an order would not be made in the exercise of the costs discretion in the proceeding (to which Lloyd's is not a party) in order to avoid a potential dispute as to the proper construction of the Lloyds Deed.
The plaintiff says that there are deficiencies in the form of orders sought by these defendants but that in any event orders should not be made that have as their intent and effect the acceleration of payments due by Lloyd's to those defendants under the Lloyds Deed. The plaintiff maintains that the position in respect of those amounts is not analogous to moneys paid into Court; rather, that, unlike the release of moneys paid into Court, the making of orders that accelerate payments due under Lloyds Deed would affect the rights of Lloyd's as a third party, which proffered a form of deed that was accepted as adequate security following a contested application. The plaintiff says that no reason has been advanced as to why the interests of Patersons, PPB and Acorn should be favoured over Lloyd's by making orders (in Lloyd's absence) that would entitle those defendants to payments earlier than otherwise contemplated under the Lloyds Deed.

[31]

Gross sum costs orders

Patersons, PPB and Acorn have brought applications for gross sum costs orders (and Ms Garrett and Mr Renauf sought similar orders in prayer 4 of their amended notice of motion filed 29 March 2022). The plaintiff submits that the appropriate order at the present time is for costs to be as assessed or agreed, with liberty to the defendants to apply for a gross sum costs order within 28 days of the making of orders for costs in the proceeding.
Patersons agrees with the position adopted by PPB in its submissions on costs dated 28 February 2022 that it would be appropriate in this proceeding for gross sum costs orders to be made pursuant to s 98(4)(c) of the Civil Procedure Act. Accordingly, in the event that the Court makes orders in the terms of prayers 1 to 4, and/or prayer 7 of Patersons' notice of motion dated 28 February 2022, Patersons seeks an additional special costs order that Patersons' costs be assessed on a gross sum basis, pursuant to s 98(4)(c) of the Civil Procedure Act, and fixed in the amount of: $3,131,879.89 (or such other amount as the Court may determine) in the event that an order is made in terms of prayer 1 of Patersons' motion; in the alternative, $3,090,063.72 (or such other amount as the Court may determine) in the event that an order is made in terms of prayer 2 of Patersons' motion; or in the further alternative, $2,999,924.28 (or such other amount as the Court may determine) in the event that an order is made in terms of prayer 3 of Patersons' motion.
Patersons relies on PPB's submissions (at [36]-[39]) regarding the principles that govern the making of a gross sum costs order and the circumstances of this proceeding that necessitate such an order; and to the reasons set out in [14]-[16] of Mr Benson's second affidavit sworn 18 March 2022 which describe why this is a proceeding in which a gross sum costs order is appropriate.
In summary, Patersons says that a gross sum costs order is justified in this case given the complexity of the proceeding and the likely complexity of a costs assessment. It is said that Patersons' costs reflect the length and scale of the proceeding to date, its role as the first defendant, the breadth of the claims made against it (which were broader than many, if not all, of the other defendants) and the part that it played in the conduct of the trial. It is submitted that it is appropriate that Patersons recover its costs now, rather than having to wait for a further, complex, contested costs assessment process involving multiple defendants.
Mr Benson has estimated (at [18] of his second affidavit) that, in a costs assessment, Patersons could reasonably expect to receive: 70% of the professional fees rendered by Clayton Utz until the time from which costs would be payable on an indemnity basis, and 90% thereafter; 90% of the counsel's fees incurred by Clayton Utz; and 75% in respect of other disbursements incurred by Clayton Utz.
Patersons considers those recovery rates to be reasonable, noting that they reflect the recovery rates I had anticipated in the decision dated 11 July 2019 with respect to the defendants' applications for security for costs in the proceeding. Moreover, it is noted that the recovery rates for professional fees and other disbursements (or contingencies) used to calculate the above amounts are lower than those that I considered appropriate in determining the amount payable pursuant to a gross sum costs order in Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; In the matter of Combined Projects (Arncliffe) Pty Ltd (No 3) [2021] NSWSC 1537. In that case, recovery rates of 75% were used for professional fees and rates of 80% were used for contingencies.
Adopting the recovery rates put forward by Mr Benson, it is said that Patersons would recover: $3,131,879.89, if indemnity costs were payable from 30 June 2017; in the alternative, $3,090,063.72, if indemnity costs were payable from 17 May 2018; or in the further alternative, $2,999,924.28, if indemnity costs were payable from 7 January 2020.
Patersons has also noted that it would be possible of the Court's own motion (pursuant to r 20.14 of the UCPR) to refer to an independent professional with costs assessment expertise (to act as a court appointed referee) any issues on which costs assessment expertise would be of assistance in evaluating, on a broad brush basis, the gross sum costs to be awarded.
PPB says (and I readily accept) that the costs assessment process in the present proceeding is likely to be lengthy, expensive and hard fought. It is noted that the proceeding was complex; that the proceeding was commenced on 30 September 2015; and that the plaintiff amended the pleadings four times. Reference is made to the length of the second further amended statement of claim dated 11 May 2020 (which was amended again during the course of the hearing) and the fact that it made allegations about events spanning over a year, which required analysis of the circumstances surrounding four property developments conducted by Ashington Capital as trustee for the Ashington Development Fund. The plaintiff served six lay witness affidavits and nine expert witness affidavits. The Court Book, as supplemented during the course of the hearing, comprised 38 volumes consisting of 22,278 pages; and, in addition, there further bundles that were tendered by the parties at hearing.
PPB submits (and again it can hardly be disputed) that the assessment process in the proceeding is likely to be longer and more complex than in the ordinary case having regard to the length of the proceeding, the several amendments to the pleadings and the volume of evidence. It is noted that the proceeding also involved a number of interlocutory steps, which will add to the complication of an assessment. PPB's solicitor, Mr Wilks, has estimated that the costs assessment process could take up to 12 months, noting that the assessment process will involve the preparation of a substantial bill of costs by PPB, as well as each of the other defendants, a detailed response from the plaintiff, and the costs of a costs assessor in reviewing those materials, and making further requests in terms of transcript and document review.
Mr Wilks has estimated the amount that PPB could reasonably expect to receive in a costs assessment on the alternative bases that: the plaintiff is ordered to pay PPB's costs as assessed on an ordinary basis until 10.00am, 22 March 2021, and on an indemnity basis thereafter; and the plaintiff is ordered to pay PPB's costs as assessed on an ordinary basis until 17 May 2018, and on an indemnity basis thereafter. In so doing, Mr Wilks has assumed that PPB would recover: 70% of the professional fees rendered by Corrs until the time from which costs would be payable on an indemnity basis, and 90% thereafter; 90% of the counsel's fees incurred by Corrs; and 75% in respect of other disbursements incurred by Corrs.
On this basis, Mr Wilks has estimated that PPB would recover $1,437,031.83 if indemnity costs were payable from 10.00am, 22 March 2021 and $1,605,537.90 if indemnity costs were payable from 17 May 2018.
PPB submits that a gross sum costs order is justified given the complexity of the proceedings and the likely complexity of a costs assessment. It is said that PPB's costs have been modest in the scheme of litigation of this scale and this length; and that it is appropriate that PPB be made whole now, rather than having to wait for a further contested costs assessment process involving multiple defendants.
Acorn seeks by prayer 2 of its notice of motion filed on 28 February 2022 a gross sum costs order under s 98(4) of the Civil Procedure Act in respect of its costs in the proceeding, in support of which Acorn reads the affidavit of Michael Polorotoff sworn 22 March 2022 and relies on the documents annexed to it. Mr Polorotoff estimates (at [18] of his 22 March 2022 affidavit) that Acorn would be entitled to a gross sum costs order in the vicinity of $2.53 million.
Acorn relies on the submissions made in [36]-[39] of PPB's submissions on costs dated 28 February 2022; and [6]-[12] of Patersons' reply submissions on costs dated 18 March 2022, regarding the principles that govern the making of a gross sum costs order and the circumstances of this proceeding that necessitate such an order.
In Acorn's submission, this is plainly a matter when a gross sum costs order is appropriate, for the reasons outlined in Mr Polorotoff's costs affidavit at [7]-[9]. In addition to the authorities identified in the submissions by Patersons and PPB, Acorn notes the decision in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 (at [14]-[18] of which the Court of Appeal (Meagher, White and Brereton JJA) summarised the principles relevant to the exercise of discretion under s 98 of the Civil Procedure Act in respect of a gross sum costs order).
Mr Polorotoff has estimated in his costs affidavit that in a costs assessment Acorn could reasonably expect to receive (at [18]): 70% of the professional fees rendered by Moray & Agnew until the time from which costs would be payable on an indemnity basis, and 85% thereafter; 90% of the counsel's fees incurred Moray & Agnew until the time from which costs would be payable on an indemnity basis, and 95% thereafter; and 70% in respect of unbilled costs and 90% of unbilled disbursements incurred by Moray & Agnew. It is submitted that these recovery rates are reasonable and accord with the estimation of recovery by Patersons and PPB, respectively. Recovery at this rate would mean that Acorn would be entitled to a gross sum costs order in the sum of $2.53 million.

[32]

Determination as to the gross sum costs orders

As noted above, the principles relevant to the exercise of the discretion to make gross sum costs orders were stated in Hamod v New South Wales (at [813]-[820]). The power conferred by s 98(4)(c) of the Civil Procedure Act is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in contested costs assessment (and which may arise from the likely length and complexity of the assessment process (see Beach Petroleum at 120; Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006 per Burchett J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 per Mansfield J). The assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to: the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; and the preparation for final hearing and the final hearing (Smoothpool Nominees Pty Ltd v Pickering [2001] SASC 131 per Lander J).
It has been said that the specification of a gross sum is not the result of a process of taxation or assessment of costs but, rather, that the sum is to be fixed by taking a broad-brush approach, having regard to the information before the Court and that the exercise will be necessarily be impressionistic. Nevertheless, as noted in Hamod v New South Wales, and as emphasised above, the approach taken to estimate the costs to be ordered must be logical, fair and reasonable. Reference was made in submissions to the summary of the relevant principles by Sackar J (at [8]-[11]) of WLD Practice Holdings Pty Ltd v Stockham [2020] NSWSC 1354.
It is also relevant to note that, ordinarily, where a gross sum costs order is made it will be appropriate to apply a discount to reflect the contingencies that may otherwise have arisen on a costs assessment. In Seafolly Pty Ltd v Madden (No 6) [2015] FCA 1369 (at [38]), Tracey J said that: The discount is intended to take into account, not only of the inevitable reduction in the amount awarded as a result of a taxation on a party/party basis, but also to recognise that no such taxation has occurred and that any estimate of its outcome is just that and that a furher allowance may be necessary in order to ensure fairness to the party against whom the order is made. Both underestimation and overestimation are, to the extent possible, to be avoided.
In my opinion, there is little doubt that this is a case where the discretion to make gross sum costs orders would appropriately be exercised, in that the proceeding involved claims against multiple parties and raised complex issues; the litigation was long-running and hard-fought; and the likelihood of expense, delay and aggravation in a contested costs assessment seems to me to be inevitable. I consider that the assessment of costs in this proceeding would likely be protracted and expensive (see Idoport Pty Ltd v National Australia Bank [2005] NSWSC 1273 (Idoport (2005)) at [9] per Einstein J).
Thus, I cannot see that the just, quick and cheap resolution of the real issues in dispute will be served by declining to exercise the gross sum costs discretion. Nevertheless, there must be confidence that the power can be exercised fairly between the parties and I have some concern that the information before me may be incomplete.
I have concluded that the appropriate way to deal with the issue of costs is to adopt the procedure that I had contemplated in the Broadway proceeding (to which Patersons has here referred) i.e., for all of the costs orders (other than those relating to Albany in respect of which there is no such application and since I cannot see that Albany should be lumbered with further costs in submissions and the like in the Court proceeding if it is in a position simply to agree to costs with the plaintiff or to prepare a bill of costs in taxable form) to be fixed on a gross sum basis in an amount yet to be determined and for the Court of its own motion (pursuant to r 20.14 of the UCPR) to appoint an independent professional with costs assessment expertise to act as a court appointed referee to provide a report as to any issues on which costs assessment expertise would be of assistance in evaluating, on a broad brush basis, the gross sum costs to be awarded. The costs of that referee should be borne by the parties proportionately to the outcome of the costs awarded in the respective parties' favour or as assessed by the referee.
For that purpose, I will set a timetable for submissions identifying the issues contemplated to arise on the gross sum assessment process and which would be appropriate for referral to the proposed court appointed expert (as well as any submissions as to the identity of the independent expert); and for any submissions as to those issues, together with a timetable for any further evidence as to the costs incurred. This is not intended to be a quasi costs assessment process (which would defeat the real purpose of such an application - see Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 per O'Louglin J; Idoport (2005) at [9]); rather, it is an attempt to deal expeditiously and fairly with the need to finalise the costs in accordance with the statutory objective for the just, quick and cheap resolution of the real issues in dispute.

[33]

Patersons submissions on third party costs orders

Patersons maintains that a third party costs order against Mr Anderson is in the interests of justice for the following reasons.
First, that Mr Anderson stood to benefit from the fruits of the proceedings, if successful. Patersons notes that but for being an undischarged bankrupt at the time of the Deed of Option Agreement dated 29 September 2015 between the plaintiff and the liquidator of Ashington Capital and Ashington Management, Mr Anderson would have taken the assignment of Ashington Capital's and Ashington Management's causes of action from the liquidator, referring to the letter dated 11 June 2019 from the plaintiff's solicitors (sent in the context of the defendants' application for security for costs) (see the enclosures to the letter dated 11 February 2022 from Acorn's solicitors, Moray & Agnew, at Ex 4 Tab 1). Reference is made to Mr Anderson's affidavit of 14 June 2019 at [2]-[4], in which Mr Anderson deposes that he stood to benefit from the litigation. Relevantly, Mr Anderson there deposed that: 4. … I am therefore willing to be joined as a plaintiff to the proceedings in order to ensure that the Court is able to make adverse costs orders against me should my wife's claim not be successful. Alternatively, I am prepared to offer an undertaking to similar effect to the Court, namely that I will abide by and make any assets I may then have, available in respect of any adverse costs orders against the plaintiff… Reference is also made in this context to the plaintiff's affidavit affirmed on or about 20 June 2019 at [2], [43]-[48].
Second, it is said that Mr Anderson is the "real party" to the proceedings (see principal judgment at [11] where his position is described and he is noted as the principal protagonist in the proceeding). It is noted that Mr Anderson was present throughout the entirety of the trial in February and March of 2021, and was frequently observed conferring with the plaintiff's legal representatives. It is said that he plainly had a right to information and involvement in decision-making in relation to the litigation (reference here being made to what was said in Carter v Caason at [38] per Weinberg, Ferguson and Kaye JJA).
Third, that the unsuccessful party (the plaintiff) was a "person of straw". Patersons points out that her impecuniosity was noted in the security for costs judgments (Anderson v Patersons Securities Ltd [2019] NSWSC 852 at [155] and Anderson v Canaccord Genuity Financial Limited [2020] NSWSC 1852 at [40] per Rees J).
Fourth, it is said that the inference can be drawn that Mr Anderson provided at least some of the funds for the prosecution of the litigation, including the plaintiff's costs of the trial, by reference to: the plaintiff's impecuniosity; Mr Anderson's express admission that if the plaintiff is successful he would stand to benefit from the litigation; the fact that Mr Anderson deposed (at [8]) of his 19 June 2019 affidavit that in the 2018 financial year he received $725,000 for his consulting services to Princeton Mortgages (which he expected to increase to $800,000 in the 2019 financial year) (see Ex 4 Tab 21); the fact that the plaintiff's litigation funder, Darcy Jones Capital Limited (DJCL), defaulted on its obligation to provide funding and therefore the plaintiff terminated the funding agreement with DJCL on 21 January 2021, before the commencement of the trial in these proceedings (see email from McLachlan Thorpe to Moray & Agnew dated 14 February 2022, a copy of which is at Ex 4 Tab 2); and the fact that the plaintiff has refused to date to respond or provide requested information in relation to the funding.
In particular, Patersons says that the information requested was as to: whether the plaintiff personally funded the litigation from the point in time when DJCL defaulted under the litigation funding agreement and, if so, how; to indicate whether anyone aside from the plaintiff contributed to funding the litigation from the point in time when DJCL defaulted under the litigation funding agreement; and, in relation to any such person, whether (and how) they stood to benefit if the plaintiff had been successful in the proceeding; or to provide the defendants with documents recording any funding arrangements between the plaintiff and anyone who contributed to funding the litigation from the point in time when DJCL defaulted under the litigation funding agreement) (see the letter dated 21 February 2022 from Clayton Urz at [26], at Ex 4 Tab 6; response by McLachlan Thorpe at [5], at Ex 4 Tab 11; and the further letter from Clayton Utz of 24 February 2022 at Ex 4 Tab 14).
Fifth, it is noted that Patersons' lawyers (Clayton Utz) wrote to the plaintiff's lawyers (McLachlan Thorpe) on 24 February 2022 seeking confirmation that, notwithstanding that Patersons had foreshadowed its third party costs application, neither the plaintiff nor Mr Anderson would provide the answers to its enquiries or the documents which would assist to reveal the source of the funds that the plaintiff used to fund the proceeding; and putting the plaintiff and Mr Anderson on notice that, should the plaintiff and Mr Anderson continue to decline to provide the answers and documents sought, Patersons would invite the inference that Mr Anderson had funded the litigation, and stood to share in its proceeds had it been successful (see Ex 4 Tab 14). It is noted that the response did not provide an indication that the answers and documents sought would be provided (see letter dated 25 February 2022 from McLachlan Thorpe, Ex 4 Tab 16).
In those circumstances, Patersons says that the inference which arises is that Mr Anderson funded the litigation and stood to share in its proceeds had it been successful; and Patersons submits that the interests of justice require that Mr Anderson be jointly and severally liable with the plaintiff for Patersons' costs of the proceedings, thereby bearing the consequences of the plaintiff's wholly unsuccessful case against Patersons. It is said that such a finding is not precluded by granting during the course of the proceeding of orders that the plaintiff provide security for costs (reference being made to FPM at [209]; [214] per Basten JA, Beazley JA, as Her Excellency then was, and Giles JA agreeing; Calleja at [144] per Adamson J; Ipex ITG Pty Ltd (in liq) v Victoria (No 2) [2014] VSCA 315 (Ipex) at [49] per Neave, Santamaria and Kyrou JJA).

[35]

Acorn's submissions on third party costs orders

By way of amended notice of motion filed 25 March 2022, Acorn seeks non-party costs orders against Mr Anderson to the effect that he be held jointly and severally liable with the plaintiff to pay Acorn's costs and any interest on those costs as ordered against the plaintiff. In support of the motion, Acorn relies upon the affidavits of Mr Polorotoff sworn 28 February 2022, 22 March 2022 and 1 April 2022 together with Ex 3; and Mr Benson's affidavit sworn 28 February 2022 and Ex 4.
In addition to submissions to the effect summarised above, Acorn places emphasis on the fact that Mr Anderson being joined as a party was something the plaintiff offered if the defendants withdrew their security for costs applications (referring by way of example to the letter dated 11 June 2019 from the plaintiff's solicitors to the defendants' solicitors - see Ex 4 at Tab 1). It is noted that the plaintiff's solicitors also advised the defendants that "[i]f your clients do not agree to withdraw, our client will make the application in any event, at the hearing of the security for costs applications, for Mr Anderson to be joined as a Plaintiff with his consent, and we will tender this letter to the Court" (Ex 4 at Tab 1) but that, as events transpired, this did not occur.
Acorn says that says that (although the defendants collectively rejected that offer), it is clear that, prior to the commencement of the hearing, Mr Anderson was willing to be named as a party to the proceeding and share the burden of any costs order that might befall the plaintiff; and Acorn argues that no injustice arisea from that now occurring.
As to Mr Anderson being the true plaintiff, Acorn notes that a financial interest may also be an indicator that the party is a real party to the litigation in important and critical respects (Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406; [2001] HCA 26 at 414 per Callinan J).
Acorn refers to Habrok (Dalgaranga) Pty Ltd v Gascoyne Resources Pty Ltd (No 2) [2021] FCA 72 (Habrok) where Beach J made costs orders against non-parties, observing that only "factors (a), (b), (d) and (e) to some extent" of the factors identified in FPM existed (Habrok at [19]). Key considerations in the outcome of the application were that the plaintiff was a person of straw with no assets (Habrok at [21]-[28]) and that the persons funding the litigation stood to benefit from the proceedings (Habrok at [19]) and had played an active role in them (Habrok at [29]-[51]) (see also Dwyer v Nel [2021] QCA 165 at [58]-[59] (Dwyer v Nel) per Williams J, Holmes CJ and Bond JA agreeing). Acorn submits that the same considerations are here applicable.
Acorn notes that on 29 March 2022 (pursuant to O 3 of orders made on 25 March 2022), Acorn's solicitors received trust account statements for the plaintiff's solicitors for the period 20 June 2019 to 31 March 2021 (referring to Mr Polorotoff's affidavit sworn 1 April 2022 and Ex 3 at 6-16); and that on 30 March 2022, pursuant to a notice to produce filed on 25 March 2022 (Ex 3 at 3), Mr Anderson produced a copy of a bank statement for a bank account held in the plaintiff's name (Ex 3 at 20-32).
Acorn notes that the notice to produce called for "bank statement entries evidencing any payments made by Craig Anderson or from an entity or account controlled by Craig Anderson between the period 20 June 2019 until 31 March 2021 for the purpose of paying any of the plaintiff's costs or disbursements incurred in relation to this proceeding …". Acorn has attached to its submissions a schedule (Schedule A) being a tabulation of the payments identified in the bank statement that was produced (which, I note, Mr Anderson says includes some double counting). Acorn says that this shows that a total sum of $533,500.00 was paid by Mr Anderson, or from an entity or account controlled by Mr Anderson, between the period 20 June 2019 until 31 March 2021 for the purpose of paying any of the plaintiff's costs or disbursements incurred in relation to this proceeding.
Acorn says that the majority of these payments came from Mendoza Holdings Pty Ltd (Mendoza Holdings), an entity that was deregistered on 22 November 2020, and of which the plaintiff was its sole shareholder and director (Ex 3 at 36). It is noted that Mr Anderson deposed in his 14 June 2019 affidavit that he provided consulting services through Mendoza Holdings to an entity called Princeton Mortgages and that Mendoza Holdings did not conduct any other business or have any other assets (Ex 3 at 21 [14]). Thus, Acorn says that a payment to the plaintiff from Mendoza Holdings is in substance a payment from Mr Anderson.
Acorn says that, along with providing funds to the plaintiff for the costs in the proceeding, it appears that Mr Anderson was also a source of funds for the security for costs payments which the plaintiff made into Court, referring to the following matters. First, that the trust account statements produced record a payment on 4 November 2019 from Mr Anderson of $104,778.60 as a "Part payment of security for costs…", which it is said comprised part of the first tranche of security which was paid into Court on the same date (Ex 3 at 47). Second, that on 28 February 2020 a payment of $150,000 with the description "DEPOSIT-OSKO PAYMENT 2971981 MENDOZA HOLDINGS PTY LTD" was made, which Acorn says was presumably used by the plaintiff to pay for part of the second tranche of security for costs which was paid by the plaintiff into the Court on the same date (Ex 3 at 50). Third, that the trust account statements record a payment on 10 June 2020 from Mr Anderson of $71,442 as "Payment of third tranche of security for costs …". Acorn says that this amount comprised the entirety of the third tranche of security which was paid into Court (Ex 3 at 53). Thus, it is said that Mr Anderson was a source of funds for the proceeding.
Accordingly, it is submitted that it is in the interests of justice that Mr Anderson should be ordered to be jointly and severally liable for Acorn's costs, thereby bearing the consequences of the plaintiff's unsuccessful outcome of the claims. against Acorn in the proceedings.

[37]

PPB's submissions on third party costs orders

PPB emphasises that the liquidators for the Ashington entities chose not to commence the proceeding on behalf of those companies but instead to grant the plaintiff an option to purchase all the rights, title and interests of Ashington Capital and Ashington Management in the causes of action pleaded (by Deed of Option Agreement dated 29 September 2015). It is noted that Mr Anderson was bankrupt at the time this deed was executed, and PPB says that it is almost certain that he would have purchased those options had he not been bankrupt at that time.
In the context of the application for security for costs by the defendants which led to the first security for costs decision, Mr Anderson affirmed an affidavit on 14 June 2019 in which he deposed that (at [2]-[4]) that: he would be the principal witness in the proceeding (which he ultimately was); he stood to benefit from the litigation if the plaintiff was successful; he was willing to be joined as a plaintiff to the proceedings to ensure that the Court was able to make adverse costs orders against him should the plaintiff not be successful; and because he was an undischarged bankrupt at the time the Deed of Option Agreement was signed on 29 September 2015, he was prevented from accepting the assignment of the causes of action from the liquidator and so the assignment was made to the plaintiff.
PPB notes that, in the context of the defendants' first application for security for costs, it was submitted for the plaintiff that she and Mr Anderson had been funding the litigation from their own resources, that they were borrowing to do so, and that there was substantial work in progress (WIP) which had not been billed to them (see Anderson v Patersons Securities Ltd [2019] NSWSC 852 at [175]). PPB says that, given the asserted impecuniosity of the plaintiff and Mr Anderson, the defendants' decision not to seek security for past costs was sensible.
PPB points to the fact that, following the first security decision, commencing with a letter dated 25 October 2019, the solicitors for Patersons wrote to the plaintiff's solicitors several times stating that, in the event that the plaintiff obtained litigation funding, that would constitute a material change in circumstance, enlivening the jurisdiction under 42.21(1)(e) of the UCPR and justifying an application for security for the defendants' past costs; and it is noted that on 21 August 2020, the plaintiff entered into a Funding Agreement with DCJL (the existence of which Funding Agreement was not revealed to the defendants until the matter was before the Court on 11 November 2021). A redacted copy of this agreement was provided to the defendants for the first time on 12 November 2021. The defendants then brought an application for security for past costs, which was heard and determined by Rees J on 15 December 2020. Her Honour found that "the fact that an impecunious plaintiff who is ordinarily resident outside of the jurisdiction obtains litigation funding amounts to a material change of circumstances warranting the defendants to approach the Court to re-exercise its discretion" (Anderson v Canaccord Genuity Financial Limited [2020] NSWSC 1852 at [35]) but her Honour refused the defendants' application for security for past costs, on the basis that the plaintiff would not be able to obtain further security in time for the trial, with the result that the trial date would likely be lost and costs would be wasted (see at [42]), and that substantial security had already been ordered in the proceedings (see at [43]).
PPB says that had the existence of the Funding Agreement been revealed on or around 21 August 2020, the defendants would have applied for security for their past costs promptly; and that, in circumstances where the risk of losing the trial date was a significant factor in the second security decision, the defendants would have had much improved prospects of obtaining an order for that security at that earlier date.
In such circumstances, PPB says that it is no answer to PPB's application for a special costs order against Mr Anderson that it had not sought security for its past costs in July 2019 and that it had failed to obtain that security in December 2020. It is said that both circumstances were brought about by the lack of candour on the part of the plaintiff (and Mr Anderson) in communications with the defendants. It is submitted that, in circumstances where the plaintiff has since funded very expensive litigation, putting six defendants to very substantial cost, without resort to external funding, it is open to infer that Mr Anderson was one significant source of that funding. PPB says that given that Mr Anderson stood to benefit from any success enjoyed by the plaintiff in this litigation, there is an ample basis for ordering that he be jointly and severally liable with the defendant for PPB's costs.
PPB also adopts the submissions made by Acorn in relation to its application for a non-party costs order against Mr Anderson; and refers to the affidavits of Mr Benson sworn 28 February 2022 (and Ex 4) and Mr Polorotoff sworn 1 April 2022 (and Ex 3).
As to the proposition put by the plaintiff that, insofar as such an application is in truth directed towards past costs, it would be perverse for a third-party costs order to be made when the defendants initially failed to seek security for those costs and their later application for security for costs (before Rees J) was rejected, PPB makes the following further observations.
First, PPB says that (as PPB submitted in writing at the time of the first security decision) there was then no basis for Mr Anderson to be joined to the proceedings as a plaintiff. It is noted that Mr Anderson did not advance any claim for relief in the proceeding; nor could he, given that the relevant causes of action were not assigned to him. PPB says that the proceeding engaged federal jurisdiction, the statement of claim initially pleading various statutory causes of action arising under Commonwealth law and that the fact that those causes of action were eventually abandoned does not produce the result that federal jurisdiction ceased to be engaged. It is said that the exercise of federal jurisdiction requires that there be a "matter", in the sense of "some immediate right, duty or liability to be established by the determination of the Court"; and that as there was, as between Mr Anderson and the defendants, no question or contest involving any such right, duty or liability; it was thus beyond the Commonwealth judicial power that the plaintiff invoked in the first iteration of her pleading to entertain a proceeding with the mooted joinder of Mr Anderson, then without a claim of the sort eventually advanced at trial. It is said that Mr Anderson did not have standing to sue.
Second, it is noted that in the affidavit Mr Anderson affirmed on 14 June 2019 in the context of the defendants' first security for costs application, Mr Anderson foreshadowed proffering an undertaking that he would make his assets available to meet any adverse costs order at the conclusion of the proceeding (at [4]) but, at that time, Mr Anderson was impecunious; he deposed that he had no assets of any material value. PPB points to the observation in Epping Plaza Fresh Fruit and Vegetables Pty Ltd v Bevendale Pty Ltd [1999] 2 VR 191; [1999] VSCA 43, by the Victorian Court of Appeal (at [24]) that "the court should not readily accept an undertaking to pay costs from impecunious individuals who, at least at the time when such an undertaking is given, have no chance of making it good". It is said that, in those circumstances, Mr Anderson's offer to make his assets available was of limited value to the defendants.
PPB says that, therefore, the defendants' partial success (and conversely partial failure) in the two security for costs applications is of little relevance to the present application for a special costs order. It is said that that outcome is not explicable only by reference to some forensic election, which would make it perverse for a special costs order now to be made.
Third, that the overriding consideration here is "whether it is in the interests of justice to make the order" (see Brand2Content at [12]). PPB says that it is unclear why it would be contrary to the interests of justice to refuse the defendants' application merely because they refused an offer from the plaintiff to be joined in lieu of an application for security for costs to have been made. PPB points out that the Court has twice accepted that the plaintiff is impecunious (see Acorn's submissions at [25]); and that the plaintiff has led no evidence to indicate that the position is any different now. It is submitted that the inference should be drawn that the plaintiff remains impecunious and is dependent on Mr Anderson for financial support.
Thus, it is submitted that Mr Anderson should be ordered to be jointly and severally liable for PPB's costs.

[38]

The plaintiff's (and Mr Anderson's) submissions as to third party costs orders

Both the plaintiff and Mr Anderson resist a special costs order being made against Mr Anderson on the basis that the defendants made a forensic decision in June 2019 to pursue an application for security for costs and to decline Mr Anderson's offer to be made a party to the proceeding or to give an undertaking to be jointly and severally liable for any costs ordered against the plaintiff. In correspondence it was said that insofar as such an application was directed towards past costs, it would be perverse for a third party costs order to be made when the defendants initially failed to seek security for those costs and ultimately failed in such an application before Rees J.
Separate submissions were filed by Mr Anderson responding to the application by the defendants for an order that he be jointly and severally liable for any costs that the plaintiff is ordered to pay. Mr Anderson says that a non-party costs order should not be made against him for the following reasons.
First, that in June 2019, the defendants took a deliberate forensic decision "emphatically and unanimously" to reject an offer made by Mr Anderson that he be joined as a plaintiff to the proceeding (or give an appropriate undertaking) so that he could be made liable for adverse costs, arguing that it would be improper, would be futile, and was a waste of time and costs. It is said that he did so with full knowledge of the matters on which they now rely in support of a non-party costs order, in order to bolster their applications for security for costs. It is noted that this included evidence that the distribution to the Anderson family from the Princeton Mortgages business (via Mendoza Holdings) was about $725,000 in the 2018 financial year, was expected to be in the order of $800,000 in the 2019 financial year, and was expected to continue to increase and be used to reduce existing obligations and fund ongoing legal fees (see Acorn's submissions at [28]). Mr Anderson submits that, contrary to PPB's suggestion (in its supplementary submissions at [8]), the subsequent payments made by Mendoza Holdings (summarised in sch A to Acorn's submissions) are entirely consistent with that position and do not evidence any relevant change in financial position.
Mr Anderson says that it would be unjust for the defendants, having adopted that position and obtained the benefit of that security, to be permitted to turn around at the end of the trial and now seek costs against Mr Anderson. Mr Anderson says that when orders for security were made on that basis, the financial commitment required from the plaintiffs, and those supporting her, to allow the litigation to proceed was therefore established (referring to Yates Property Corporation Pty Ltd v Bolan (No 2) (1997) 147 ALR 685; [1997] FCA 760 at 695 per Branson J, cited in Vestris v Cashman (1998) 72 SASR 449 (Vestris) at 452 per Olsson J, Doyle CJ agreeing).
Mr Anderson says that, if the defendants intended to assert an entitlement both to security and to any of his assets, then they ought to have insisted on him being joined (or giving an equivalent undertaking) in June 2019, and made their applications for security on that basis. It is said that, having instead opposed Mr Anderson's offer in order to strengthen their applications for security, and having obtained the benefit of that security (raised by the plaintiff at significant cost and with great difficulty), it would be not be in the interests of justice for the defendants to be permitted to resile from that position following the trial.
Second, that Mr Anderson was not warned that the defendants would seek a costs order against him. It is said that the assertion by the defendants, on 19 March 2021 (at the end of the fifth week of a six-week trial), that they "may … be entitled to seek orders against one or more third parties for the payment of costs associated with part or all of the proceeding" and "reserve[d] their respective rights to do so" lacked specificity and came far too late, after almost all of the costs of the proceeding had already been incurred. Mr Anderson notes that the existence and timing of any warning to a non-party that a costs order against them may be sought will usually be a very relevant consideration to the exercise of the discretion to make a non-party costs order (referring to Morbidelli v Resourceco Pty Ltd [2010] SASC 107 at 13 per White J; Bleby and Kelly JJ agreeing). (Pausing here, this submission must be tempered by the fact that there was at least a clear intimation by Acorn in December 2020 that such an order might be sought - see above.)
Third, it is submitted that it is clear that the primary objective of these applications is for the defendants to seek from Mr Anderson their costs incurred prior to their June 2019 applications for security (as opposed to any shortfall in respect of the periods in which they obtained security). It is said that this serves to underscore the severe prejudice in the defendants' "volte-face" in now seeking orders against Mr Anderson which extend to make him liable for past costs. Reference is made to the observations of McHugh J in Knight v FP (at 217-218) that: As a matter of policy, provision of security for costs is a better remedy for protecting persons involved in litigation … than ordering a [non-party] to pay the costs of litigation after verdict. … If adequate security is sought and provided, no question of ordering a third party to pay the costs ought to arise. … It would be an odd result if, in the exercise of the Court's discretion, an application made before trial to provide security for costs was refused on the ground of delay but the court could make an order for costs against the [non-party] after verdict.
Mr Anderson says that those observations apply with equal force where, in making their applications for security in June 2019, the applicants pre-empted rejection for delay by limiting their claim to future costs and failed to obtain security for past costs in December 2020 (referring to the second security decision) but now seek a non-party costs order extending to past costs at the end of the trial.
Mr Anderson says that, following considerable effort and expense, the plaintiff was able to raise over $3 million in security for costs: three tranches totalling $1,000,111.60 in cash paid into Court, and a further $2,087,235 provided by way of the Lloyd's Deed (associated with the purchase of after-the-event insurance by the plaintiff), at a cost of $626,000 (second security decision at [9], [11], [14]). (I interpose here to note that I rather think that the issue is not so much past costs but costs overall.)
Fourth, it is said that (against the above background), the nature of Mr Anderson's connection to the proceeding (all of which was known to the defendants in June 2019) does not warrant a costs order being made against him.
Mr Anderson points to the recognition that the power to make a costs order against a non-party is only to be exercised in exceptional cases (FPM at [214] per Basten JA). It is submitted that, while it is possible to identify criteria that have tended to feature in previous cases where non-party costs orders were made, these should not be applied mechanically or treated as a checklist and careful evaluation is required in the context of each case (citing Brand2Context at [12]-[14] per Simpson AJA).
In answer to some of the specific points made by the defendants, Mr Anderson responds as follows.
As to the defendants' reference to the characterisation in the judgment of Mr Anderson as the "founder and driving force behind the Ashington group" and "the principal protagonist in the proceeding [who] was cross-examined at some length" in support of their applications, Mr Anderson says (and I accept, though I consider the comments have reliance also to the present applications) that these are introductory remarks (not findings of fact as to Mr Anderson's role relevant to the present applications). It is said that the defendants also assert (or ask it to be presumed), in the absence of any evidence, that Mr Anderson gave instructions about the running of the matter. (In that regard, I interpose here to note that it was evident during the course of the hearing itself that Mr Anderson was providing at least some instructions ot the legal representatives of the plaintiff). In any event, it is said that it is well-recognised that a director who is the "driving force" behind a company will often provide instructions and be the principal (or sole) witness in a claim brought by the company (or in this case, an assignee from the company), which are neutral factors and do not support of an order for third party costs (FPM at [207]-[208]).
Second, that while the defendants seek to characterise the plaintiff as a "person of straw" based solely upon her impecuniosity, it is noted that the plaintiff was not put up by a non-party with financial resources to shield themselves from liability to costs (see FPM at [209]); rather, Mr Anderson was unable to take the assignment of the causes of action as he was an undischarged bankrupt.
Third, that while Mr Anderson's income was a source of funding for the proceeding, it is said that he only funded a portion of the overall cost of the proceeding. Mr Anderson says that that funding totalled $533,500 by way of loans (it is said that the amounts in [34] of Acorn's submissions amount to double counting, the bank cheques of $104,778.60 and $71,442 being drawn from the plaintiff's account); and that the plaintiff also funded the proceeding by borrowing from friends and family (Ex 4 at [2]-[3], [5]; second security decision at [9], [11]). It is noted that the provision of financial support for litigation from friends and family, justified by social or family ties, and in particular the plaintiff's spouse, does not support the making of a non- party costs order absent exceptional circumstances (Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 (Citrus) at [22]-[23] per Collier J).
Fourth, Mr Anderson says that, while it may be accepted that Mr Anderson "stood to benefit" from the proceeding if it succeeded, he would do so only indirectly as a result of his spouse obtaining an award of damages or compensation (Ex 4 at [2]). (That may be the case. However, it is not disputed that Mr Anderson would, at least in that capacity, have stood to benefit from the proceeding.)

[39]

Determination of the third party costs issue

There is more than a little element of artificiality in my opinion in the submissions made against the third party costs application. That is because it is clear that (as noted in the principal judgment and as is unsurprising in the events that transpired) Mr Anderson was the principal protagonist in the proceeding. He was, in a very real sense, the party wronged by Ms Garrett and Mr Renauf (albeit that the claim was brought by the corporate entities by which they were employed) and, as the founder of the Ashington group and its managing director, he had a very real interest both in the vindication of its rights and, through his wife as assignee of the relevant causes of action, in any monetary vindication of those rights. Mr Anderson effectively accepted as such in the affidavit evidence to which various of the defendants have referred and by his offer made in June 2019 (which was rejected by the defendants in pursuit of their applications for security for costs). (In that regard, I consider that the reliance by the plaintiff on Citrus does not assist - the case is not analogous in my opinion.)
Nor is there any doubt that Mr Anderson funded at least part of the costs of the proceeding, and, while I accept that there is no direct evidence of who was responsible for the provision of instructions in relation to the conduct of the proceeding (albeit that one would think it likely that the managing director would have had more input than the plaintiff who was unconnected to the events in dispute), it was certainly my observation during the hearing that Mr Anderson was actively involved in giving instructions to the plaintiff's legal representatives.
Further, it cannot seriously be suggested that it would not have been apparent (having regard to the whole saga of this litigation - including the earlier abandoned proceeding) that the defendants were intent on vigorously defending their position, including to protect their position as to costs.
The real issue it seems to me is whether the deliberate forensic decision not to accept the offer made by Mr Anderson at the time of the first security for costs application counts against an award now being made of third party costs against him and whether (to some extent related to this issue) the lack of an express warning (and the fact that the orders sought would extend to past costs) somehow lulled Mr Anderson into a false sense of security or deprived him of an opportunity to withdraw from the funding of the litigation at an earlier time.
As to the first, the argument put forward by Acorn (supported by the other defendants and, in particular, PPB) was that the standing issue perceived at the time meant that the offer of Mr Anderson to be joined as a plaintiff was not capable of acceptance and that the undertaking was worthless. I did not need to decide the standing issue at the time of the first security decision, nor is it necessary in my opinion now to delve into it (with no disrespect to the cogent submissions put forward by Counsel for PPB on the issue). That is because, whether right or wrong, it was clearly the (not unreasonable) view of the defendants at the time (as noted in the first security decision and as made clear to the plaintiff and Mr Anderson at the time) that Mr Anderson lacked standing.
The rejection of an offer that the defendants clearly genuinely and not unreasonably believed could not be accepted cannot in my opinion amount to some sort of binding election by the defendants not later to pursue a third party costs order or not to do so in relation to past costs. The concept of election (see Sargent v ASL Developments Ltd (1974) 131 CLR 634; Immer (No 45) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26) requires a clear and unequivocal choice being conveyed between two inconsistent rights or mutually exclusive options (with the requisite knowledge of those alternative and inconsistent rights or courses of action). Here I do not accept that the decision by the defendants not to accept Mr Anderson's undertaking involved an unequivocal election to forego any claim for third party costs against him; nor di I consider that the rights or courses of action were necessarily mutually exclusive.
It is thus also not necessary to delve into the dispute as to whether there is or is not evidence to support the defendants' submission that there has been no relevant change in the plaintiff's financial circumstances. Whether the undertaking might or might not have been worth "powder and shot" by the end of the concluded hearing is beside the point; at the time it was proffered, the tenor of the evidence before the Court was that it was unlikely to provide adequate security for the defendants' costs.
As to the lack of warning, it is relevant to bear in mind (as Counsel for Acorn submitted) the rationale for such a warning; and also that it has been recognised that an express warning is not necessary in every case. I consider that there is no basis here to infer that, had Mr Anderson received an express warning of potential liability for costs (earlier than the 23 December 2020 warning from Acorn's solicitors) he would have taken the opportunity to cease funding the litigation or taken other steps to bring any potential costs exposure to an end at that earlier stage. It is simply not consistent with the steps that have been taken in the litigation to date (and there was no evidence from Mr Anderson to that effect). I consider that it would be artificial in the extreme to conclude that Mr Anderson was not fully aware of the prospect that the defendants would take every point available to them in the defence of the litigation (and in that regard I consider that although the warning came only from Acorn in December 2020 it should then have served to put Mr Anderson on notice of the risk that all the defendants would join suit).
As to the complaint that this amounts to an attempt to recover past costs in circumstances where there was no initial application for security for past costs and then only a late (and unsuccessful) one, apart from the fact that there is force to the complaint by the defendant as to lack of candour on the part of the plaintiff (and Mr Anderson) as to matters going to the issue of security for costs (to which reference was made in the first security decision and see above in relation to the second security decision), there is to my mind a distinction between applications for security for costs (where I accept that a conservative approach is ordinarily taken as to quantum) and applications for third party costs orders. I do not consider that the making of orders for security for costs that did not include past costs would reasonably have been understood to limit the potential for the defendants at the end of the trial to recoup those costs (it simply meant that those costs were at that point unsecured).
Balancing the matters referred to by all parties, I have concluded that a third party costs order should be made against Mr Anderson, not limited to the time after the 23 December 2020 warning given by Acorn. I gave some consideration to whether the third party costs order should only follow from the time of that warning but in the end it seems to me that the decision not to accept the undertaking and offer of joinder made by Mr Anderson in June 2019 was explicable and not unreasonable (and that the defendants should not be taken to have made some sort of binding election in that regard); and I do not accept that Mr Anderson should be seen as having been lulled into any false sense of security having regard to the conduct of the litigation throughout (and he certainly has given no evidence of any prejudice in this regard). Indeed, the offer that was rejected makes clear that Mr Anderson was prepared to play a role in the funding and conduct of the proceeding from the outset.
Thus, I consider that Mr Anderson's liability for orders should not be limited to the time after 23 December 2020. However, in circumstances where the Calderbank offer made by all the defendants was not one made to Mr Anderson (and not therefore strictly capable of acceptance by him, I would in the exercise of the costs discretion limit his liability to costs on the ordinary basis.

[40]

Orders

For the above reasons, I make the following orders: 1. As to the first defendant's costs, order that Order 2 of the orders made on 7 February 2022 be varied such that the plaintiff be ordered to pay the first defendant's costs on an ordinary basis until 7 January 2020 and thereafter on an indemnity basis. 2. Order that the sum of $314,877.20 paid into Court by the plaintiff as security for the first defendant's costs, together with any accrued interest, be released to the first defendant seven days after the making of these orders, pursuant to rr 41.3 and 41.8 of the UCPR by way of partial discharge of the plaintiff's liability to pay the first defendant's costs. 3. As to the second and third defendants' costs, order that Order 2 of the orders made on 7 February 2022 be amended pursuant to the slip rule to delete reference to the third defendant; and order that the plaintiff pay the second and third defendants' costs on an ordinary basis. 4. Order that the sum of $229,026.50 paid into Court by the plaintiff as security for the second and third defendants' costs, together with any accrued interest, be released to the second and third defendants seven days after the making of these orders pursuant to rr 41.3 and 41.8 of the UCPR by way of partial discharge of the plaintiff's liability to pay the second and third defendants' costs. 5. As to the fourth defendant's costs, order that Order 2 of the orders made on 7 February 2022 be varied such that the plaintiff be ordered to pay the fourth defendant's costs on an ordinary basis until 10.00am on 22 March 2021, and thereafter on an indemnity basis. 6. On the undertaking proffered by the fourth defendant to retain these moneys pending disposal of the plaintiff's appeal or otherwise by consent, order that the sum of $171,474.50 paid into Court by the plaintiff as security for the fourth defendant's costs together with any accrued interest, be released to the fourth defendant effective immediately, pursuant to rr 41.3 and 41.8 of the UCPR by way of a partial discharge of the plaintiff's liability to pay the fourth defendant's costs. 7. As to the fifth defendant's costs, order that Order 2 of the orders made on 7 February 2022 be varied such that the plaintiff be ordered to pay the fifth defendant's costs of the proceedings on an ordinary basis until 13 December 2019, and thereafter on an indemnity basis. 8. Order that the sum of $159,413.40 paid into Court by the plaintiff as security for the fifth defendant's costs of the proceedings, together with any accrued interest, be released to the fifth defendant seven days after the making of these orders, pursuant to rr 41.3 and 41.8 of the UCPR by way of a partial discharge of the plaintiff's liability to pay the fifth defendant's costs by: a cheque made payable to "Moray & Agnew Sydney Trust Account"; electronc funds transfer to the trust account of the fifth defendant's solicitors; or as otherwise directed by the fifth defendant (or its solicitors). 9. As to the sixth defendant's costs, by consent vary Order 2 of the orders made on 7 February 2022 such that the plaintiff be ordered to pay the sixth defendant's costs on an ordinary basis until 10.00am on 22 March 2021, and thereafter on an indemnity basis. 10. Order that the sum of $125,320 paid into Court by the plaintiff as security for the sixth defendant's costs of the proceedings, together with any accrued interest, be released to the sixth defendant seven days after the making of these orders, pursuant to rr 41.3 and 41.8 of the UCPR, by way of a partial discharge of the plaintiff's liability to pay the sixth defendant's costs. 11. Order that the plaintiff pay interest on each of the defendants' costs, such interest to be calculated at the rate prescribed under r 36.7 of the UCPR from the date or dates on which the costs concerned were paid in accordance with ss 101(4) and 101(5) of the Civil Procedure Act 2005 (NSW). 12. Pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW), order that Mr Craig Anderson (the respondent to various of the notices of motion referred to in these reasons) be jointly and severally liable with the plaintiff, Daniela Anderson, to pay the first, second, third, fourth, fifth and sixth defendant's costs of the proceeding (as ordered above) but only on the ordinary basis. 13. Order that the costs ordered in favour of each of the defendants (other than the sixth defendant) be fixed on a gross sum basis, that sum to be determined by the Court subsequent to the appointment by the Court, of its own motion, pursuant to r 20.14 of the UCPR of a referee with costs assessment expertise to report on the appropriate quantum of those costs (to be determined on a broad brush evaluative basis); the costs of such referee to be borne proportionately by the plaintiff and the said defendants as to the outcome of the referral process or as assessed by the referee. 14. Direct the parties (other than the sixth defendant) to file, within 14 days, any submissions identifying the issues contemplated to arise on the gross sum assessment process and which would be appropriate for referral to the proposed court appointed expert (as well as any submissions as to the identity of the independent expert). 15. Direct the parties to provide to the associate to Ward P, within 14 days, any proposed timetable as to the filing of additional evidence relevant to the gross sum assessment process. 16. List matter for directions on 7 June 2022.

Anderson v Canaccord Genuity Financial Ltd

At a glance

Court

Decision date

Before

Source

Judgment (41 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (108)

Cited By (9)