Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union

Solicitor for the First Respondent: Ashurst Australia

Counsel for the Second Respondent: The Second Respondent did not appear

ORDERS NSD 632 of 2019 IN THE MATTER OF BOART LONGYEAR LTD (ACN 123 052 728) BETWEEN: SNOWSIDE PTY LTD (ACN 003 924 025) AS TRUSTEE FOR THE SNOWSIDE TRUST First Applicant

MAURICI NOMINEES PTY LTD (ACN 068 620 986) AS TRUSTEE FOR THE A.P. MAURICI & ASSOCIATES PTY LIMITED SUPERANNUATION FUND Second Applicant

AND: BOART LONGYEAR LTD (ACN 123 052 728) First Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Second Respondent

JUDGE: GLEESON J DATE OF ORDER: 20 December 2019

1. The application for leave to appeal be dismissed.
2. The applicant pay the first respondent's costs of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GLEESON J: 1 The applicants (Snowside parties) seek leave to appeal from the Court's judgment on costs in connection with their participation in the proceeding below: Boart Longyear Limited, in the matter of Boart Longyear Limited (No 2) [2019] FCA 1058 (Boart (No 2)). 2 In that proceeding, the first respondent (BLY), sought approval of a scheme of arrangement. The Snowside parties had been granted leave to be heard in the proceeding under r 2.13 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules). 3 By order 1 made on 8 April 2019 (costs order 1), the Court ordered BLY to pay the Snowside parties' reasonable costs: (1) of and incidental to the hearings on 26 November 2018, 29 November 2018 and 3 December 2018; and (2) in the period between 3 December 2018 and 21 December 2018 inclusive, of finalising the form of an undertaking to be proffered by BLY. 4 Pursuant to order 2 made on 8 April 2019 (costs order 2), the Court further ordered BLY to pay one third of the Snowside parties' costs of and incidental to five hearings from 17 December 2018 to 3 April 2019. 5 If granted leave to appeal, the Snowside parties would seek an order that costs order 2 be set aside and, in lieu thereof, it be ordered that BLY pay the Snowside parties' reasonable costs of and incidental to the five hearings referred to in costs order 2, as well as the hearing on 25 October 2018 (in respect of which no order was made). 6 The Snowside parties estimated total solicitor/client costs of and incidental to the 25 October 2018 hearing at $98,000 plus GST, and the total solicitor/client costs of and incidental to the five hearings referred to in the costs order at $270,000 plus GST. The Snowside parties already have an order in their favour in respect of one-third of the latter amount by costs order 2. Accordingly, and recognising that there is no suggestion that costs should be ordered on other than a party/party basis, the amount in issue will be some percentage of the total solicitor/client costs. 7 In Snowside Pty Ltd as trustee for the Snowside Trust v Boart Longyear Ltd [2018] NSWCA 75, Basten and Leeming JJA refused an application for leave to appeal against a costs judgment in another circumstance where the first applicant had been granted leave under r 2.13. At [8], Leeming JA (speaking for the Court) noted that an aspect of the grant of such leave is that there is no presumptive entitlement to costs, citing Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681 at [20]. In the latter case, Barrett J stated: Someone who seeks and is granted leave under r 2.13(1) chooses a course entailing the limited costs exposure described in r 2.13(2). Such a person can have very little expectation of being awarded costs. 8 Once this starting point is understood, an issue necessarily arises as to whether, if the costs discretion was re-exercised in the event of a successful appeal, the Snowside parties would achieve a better outcome than they obtained from the primary judge. There is no reason to assume that a successful appeal would result in them obtaining an order for the total costs not awarded, or even orders for party/party costs in respect of those total costs. As explained below, in my view, it is very unlikely that an appeal court would award any additional costs to the Snowside parties. Accordingly, there must be real doubt as to whether substantial injustice would result if leave were refused, supposing the primary judge's decision to be wrong. This issue is considered in more detail below. 9 As to whether the primary judge's decision is attended by doubt, the Snowside parties contended that her Honour's judgment involved error in several respects. BLY contended that the proposed grounds of appeal do not enjoy sufficient prospects of success to warrant the grant of leave to appeal.

Background to decision below 10 In June 2017, the Snowside parties, shareholders in BLY, commenced oppression proceedings against BLY and others in the Supreme Court of New South Wales (Supreme Court). 11 On 23 August 2018, BLY announced a proposed members' scheme of arrangement. 12 On about 10 October 2018, BLY commenced the proceeding below, seeking approval of the scheme under s 411 of Corporations Act 2001 (Cth) (Act). 13 The first court hearing was listed on 25 October 2018. At the first hearing, in accordance with the conventional approach to proceedings of this kind, BLY applied to the Court to approve the convening of the scheme meeting and the explanatory statement to be sent to members concerning the scheme. The primary judge: (1) granted leave to the Snowside parties to be heard under r 2.13 of the Rules; (2) dismissed the Snowside parties' application to adjourn the first court hearing to allow them more time to consider BLY's evidence; and (3) made orders convening a shareholders meeting on 6 December 2018 for the purposes of considering the proposed scheme. 14 The Snowside parties contended that the scheme should not be approved because its implementation would deprive them of standing to maintain the oppression proceeding in the Supreme Court. In order to address that contention, the primary judge timetabled a separate hearing on 26 November 2018, that is, before the meeting of members. 15 On 29 October 2018, BLY sent its members a notice of the scheme meeting together with an explanatory statement. 16 On 14 November 2018, Anthony Maurici, the director of the Snowside parties, sent shareholders a letter (Snowside letter). The letter is set out in full in Boart Longyear Limited, in the matter of Boart Longyear Limited [2019] FCA 62 (Boart (No 1)) at [29]. 17 On 26 November 2018, the primary judge received evidence and heard argument about the effect of the proposed scheme on the oppression proceeding. As appears above, the Snowside parties were awarded costs in respect of this hearing. 18 At the hearing, BLY contended that the Snowside letter was misleading and sought to issue a "corrective" letter. The parties agreed on the wording of the letter; it was approved by the primary judge, sent to shareholders and announced to the Australian Stock Exchange (ASX) on 28 November 2018. In Boart (No 2) at [60], her Honour referred to the Court's approval of "corrective disclosures related to the Snowside letter". 19 The 26 November 2018 hearing was then adjourned for the parties to consider the feasibility of an undertaking by BLY to preserve the Snowside parties' standing in the oppression proceeding. 20 On 29 November 2018 and 3 December 2018, the matter was listed to address whether the standing issue could be resolved by way of an undertaking. The Snowside parties were awarded costs in respect of these hearings. A form of undertaking that would be acceptable to the Court emerged, but was not settled, on 3 December 2018. On 4 December 2018, BLY announced to the ASX that the standing issue would be resolved by the company giving an undertaking acceptable to the Court. 21 On 6 December 2018, the scheme meeting was held. The proposed scheme failed to achieve the statutory majority. Although 97.61% of the shareholders in value voted in favour of the proposed scheme, 68.88% of the shareholders in number voted against it (headcount vote). 22 On 12 December 2018, BLY's solicitors informed the Snowside parties that they intended to ask the Court to disregard the headcount vote and to instead approve the scheme under s 411(4)(a)(ii)(A) of the Act. 23 On 13 December 2018, BLY informed the Court that it intended to apply for orders under s 411(4)(a)(ii)(A). BLY submitted that the Court should make the orders sought as the vote at the scheme meeting had been unfairly influenced by the Snowside letter, which BLY contended was misleading. The application was subsequently listed for hearing on 19 December 2018. 24 On 17 December 2018, the Snowside parties sought an adjournment of the 19 December 2018 listing until early 2019. BLY's submissions regarding the alleged misleading nature of the Snowside letter and all of its evidence had not been served at this time, although an outline of evidence of Lucy Chiu had been served on the evening of Friday 14 December 2018, a draft outline of submissions was served on Sunday 16 December 2018 and an affidavit of BLY's solicitor was served on 17 December 2018 prior to the hearing. 25 The primary judge adjourned dealing with the substantive issues from 19-21 December 2018 but refused to adjourn the proceeding until early 2019. 26 On 18 December 2018, BLY served its submissions and most of its outstanding evidence. 27 On 19 December 2018, her Honour dealt with preliminary issues. 28 On 21 December 2018, BLY applied for approval of the proposed scheme under s 411(4)(a)(ii)(A). The application was opposed by the Snowside parties and the Australian Securities and Investments Commission (ASIC). 29 The undertaking in the approved form was proffered at this hearing. 30 On 1 February 2019, in Boart (No 1), the Court delivered its reasons for the decision to adjourn the proceeding. Relevantly, her Honour found that the Snowside letter contained statements that were misleading or had a tendency to mislead. However, her Honour was not persuaded that, based on the flow of proxies alone, the letter had unfairly influenced the vote at the scheme meeting (Boart (No 2) at [26]). In light of these findings, her Honour adjourned the proceeding to enable BLY to consider whether it wished to hold a second shareholder vote. 31 On 7 February 2019, BLY informed the primary judge that it was considering a further shareholder vote. The primary judge made directions as to the service of any proposed supplementary disclosure. 32 On 26 February 2019, BLY announced its 2018 results and an election not to proceed with a further vote. The reason identified in an email to the primary judge was that the board had determined that the chances of having a successful result in a further headcount vote were insufficient. 33 On 3 April 2019, the primary judge heard argument as to costs. Orders were made on 8 April 2019 and Boart (No 2) was published on 8 July 2019. 34 A notice of discontinuance was filed on 9 April 2019.

Primary judge's reasons 35 The Snowside parties do not contend that the primary judge erred in her Honour's identification of the relevant principles concerning costs orders. Her Honour summarised those principles at [46]-[50] of Boart (No 2). 36 In particular, her Honour noted that: (1) the Court's power to make a costs order under s 43(2) of the Federal Court of Australia Act 1976 (Cth) involves the exercise of a broad discretion that must be exercised judicially: Boart (No 2) at [47]; (2) a person or entity granted leave under r 2.13 of the Rules has "no presumptive entitlement to costs", this being "an aspect of a grant of leave under r 2.13, with a concomitantly limited exposure to an adverse costs order": Boart (No 2) at [47] citing the two decision referred to at [7] above; (3) the Court must look at all relevant circumstances: Boart (No 2) at [48] citing Gas2Grid Limited, in the matter of Gas2Grid Limited (No 2) [2010] FCA 1006; (2010) 80 ACSR 179 at [15]; (4) there is no general rule that objectors to schemes of arrangement ought to have their costs paid by the company: Boart (No 2) at [49], although in many members' schemes of arrangement and applications for approval of reductions of capital, the Court has allowed objectors their costs where their intervention has assisted the Court by the provision of an effective contradictor on issues relevant to the Court's exercise of power; and (5) a broad-brush approach ought to be taken to questions of costs in these circumstances: Boart (No 2) at [50]. 37 The primary judge identified the primary basis of the Snowside parties' initial intervention in the proceeding to oppose orders to convene the scheme meeting as follows (Boart (No 2) at [5]): [T]heir contention [was] that they would be unfairly prejudiced if their shares were acquired under the scheme because they would lose standing to pursue proceedings commenced by them in the Supreme Court of New South Wales on 7 June 2017 against BLY and its directors (Oppression Proceedings) (OP standing objection). 38 At [54], the primary judge concluded that the Snowside parties were entitled to their reasonable costs of prosecuting the "OP standing objection", saying: [54] I am satisfied that the OP standing objection was an issue of substance which the Snowside parties properly raised in the context of BLY's application under s 411 having regard to (a) the [Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) [2013] WASC 143; (2013) 94 ACSR 151] line of authority; and (b) their need to clarify the position was occasioned solely by the manner of re-domiciliation chosen by BLY which involved compulsory acquisition of the Snowside parties' BLY shares. The fact that the Court ultimately found that the Snowside parties would not lose standing to prosecute the Oppression Proceedings does not change the view that the Snowside parties have an entitlement to their reasonable costs of prosecuting that issue, subject to any disentitling conduct. 39 Thereafter, her Honour considered other factors relevant to the exercise of the costs discretion. 40 At [56] to [58], her Honour stated: [56] The Court's overall impression of the Snowside parties was that they sought to delay the progress of the scheme proposal, "dragging it out", an impression which the Court made known to senior counsel for the Snowside parties at the case management hearing on 17 December 2018. The Court's impression was that the Snowside parties would rather have a fight than resolve material issues in an economical and efficient way so that the Court accepts that the Snowside parties did not conduct their appearance in a way that sought to contain costs. [57] The Snowside parties' requests for adjournment of the first and second court hearings to enable evidence to be gathered and submissions to be made were based on the proposition that the nature of the scheme did not require prompt action. While it must be acknowledged that there will usually be more urgency attached to schemes occasioned by pending insolvency or schemes designed to effect a takeover, BLY is a public company whose securities are traded on the ASX. It is highly desirable that issues which might affect decisions to buy, sell or hold those securities be resolved promptly, in the interests of an efficient market for those securities. [58] After the approach to determining the OP standing objection had been agreed at the first court hearing, the Snowside parties pressed for adjournment of that hearing so that they could examine the scheme booklet so that they could raise issues about the adequacy of disclosure. They had had the draft booklet for three business days and a weekend before the first court hearing. Since the Snowside parties had been shareholders of BLY for some time and they had taken an active part in the creditors' schemes of arrangement in 2017, material disclosure issues should have been obvious to them within that timeframe. Critically, the submissions made by the Snowside parties in relation to disclosure issues were not helpful to the Court in deciding whether to make orders under s 411(1). The issues identified by them at the first court hearing were addressed by disclosures already in the draft scheme booklet or in documents (such as the terms of issue of warrants) which had been on the public record for some time, some of which were attached to affidavits filed by the Snowside parties. The submission that the benefits to the major shareholders should be disclosed appeared to the Court to be fishing. The Court formed the impression that the Snowside parties' interest at the first court hearing was more in achieving delay in the dispatch of the scheme booklet than in securing full and fair disclosure. 41 At [60], her Honour concluded relevantly: The Court notes that no order as to costs should be made in relation to the Snowside parties' appearance at the first court hearing. This is on the basis that the costs of the days identified [being 26 and 29 November and 3 December 2018] represented a just allowance having regard to the Snowside parties' participation in the proceedings to 3 December 2018 (and later in relation to the undertaking) and taking into account that BLY also incurred costs in that period referable to seeking Court approval to corrective disclosures related to the Snowside letter. 42 At [61] and following, her Honour gave separate attention to the Snowside parties' costs incurred after 3 December 2018, other than the costs in respect of settling the undertaking given by BLY. Her Honour found that the Snowside parties "significantly altered the landscape of these proceedings by issuing the Snowside letter". 43 As noted earlier, the text of the Snowside letter is set out in Boart (No 1) at [29]. Concerning franking credits, the letter stated: Disadvantages of Redomiciliation The disadvantages to you are: … If you are an Australian resident taxpayer any franking credits from Australian income of the Company cannot be utilised by the new Canadian holding company or passed through to its shareholders. … 44 Concerning the oppression proceeding and the possibility of one or more class actions, the letter stated: Oppression Claim likely to be Defeated Snowside has commenced legal proceedings against the Company and the Board claiming that the actions of the Company and the Board in events leading up to the Restructure treated the minority shareholders unfairly and oppressively, including in failing to adequately consider ways to preserve more value for the minority shareholders, preferring instead the interests of the Controlling Stakeholders. It may be that the same arguments could be used to support a class action on behalf of the wider class of minority shareholders. Our claim and any potential class action claims based on oppressive conduct will likely be defeated by the redomiciliation because existing shareholders of the Company will cease to be Company shareholders. (Emphasis in original.) 45 At [62] of Boart (No 2), her Honour stated: In Boart (No 1), the Court ultimately found that the Snowside letter had a tendency to mislead or was misleading in the following respects: (1) The statement concerning loss of franking credits did not accurately reflect all of the relevant information in the scheme booklet, in particular, the qualifications in the independent expert's report (see [171]); (2) The statement that the Snowside parties' claims in the Oppression Proceedings were "likely to be defeated" by the re-domiciliation was wrong (see [173]); (3) It was misleading to suggest that the "same arguments" as raised in the Oppression Proceedings might be used as a basis for a class action when Mr Maurici had made no enquiries as to whether any such class action existed and he is not aware of any such proceedings or that anyone (including Snowside) has them in prospect (see [174]). 46 Paragraphs [171]-[174] of Boart (No 1) are as follows: [171] In my view the statement concerning loss of franking credits has the capacity to mislead because it does not accurately reflect all of the relevant information in the scheme booklet. While the language used in the Snowside letter concerning the loss of franking credits is both literally true and tracks some language used in the scheme booklet, it is stated in terms which suggest immediate disadvantage. However, it may have the tendency to mislead because it does not acknowledge the qualifications in the independent expert's report as follows: Given the Company's situation of financial distress discussed earlier with large debt outstanding and significant losses, the Company is unlikely to be able to pay a dividend until the debt level is significantly reduced and the financial performance improves significantly. In addition, any accumulated tax losses that can be used to offset against taxable income will further delay the creation of franking credits. In our opinion, the disadvantage due to lack of franking credits is mitigated due to the Company's inability to pay dividends in the medium term. [172] The primary matters of concern in the Snowside letter are its discussion of the Oppression Proceedings and the possibility of a class action on the basis of similar claims. [173] For reasons previously given, the statement that the Snowside parties' claims in the Oppression Proceedings were "likely to be defeated" by the re-domiciliation are wrong. Moreover, as at 14 November 2018, the Snowside parties knew that that very question was to be the subject of argument in this Court on 26 November 2018, a fact not mentioned. [174] Further, in my view it was misleading to suggest that the "same arguments" as raised in the Oppression Proceedings might be used as a basis for a class action when Mr Maurici had made no enquiries as to whether any such class action existed and he is not aware of any such proceedings or that anyone (including Snowside) has them in prospect. The fact that the Snowside parties were bringing their own proceedings added weight to the mention of a class action. In the context of a distressed company where the share price had fallen in the manner suggested by Mr Maurici over the period since the reconstruction (as he noted in the opening paragraphs of the Snowside letter), the suggestion that there might be a class action to which a shareholder might be joined is likely to be attractive. The statement that it was likely to be defeated by the re-domiciliation was therefore likely to have an impact. The Snowside parties now say that that statement could not have influenced the vote. I do not accept that: if they thought that, there was no point in putting this issue in the letter at all. 47 The reasons referred to at [173] are set out at [37]-[62] of Boart (No 1). In brief, the representation in the Snowside letter that the oppression proceeding was likely to be defeated by the re-domiciliation was based upon the contention that the Snowside parties must be members of BLY when the oppression proceeding is heard and judgment delivered. This proposition was based upon a series of decisions in the Supreme Court of Western Australia, referred to in Boart (No 1) as the Superior Lawn decisions, comprising Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd [No 2] [2012] WASC 169; Trafalgar West Investments Pty Ltd As Trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [No 2] [2013] WASC 143; (2013) 275 FLR 55; and Patrick Gerard Gladwyn Jebb As Trustee for the Trafalgar West Investments Trust v Superior Lawns Australia Pty Ltd [2017] WASC 335; (2017) 123 ACSR 388 (Superior Lawn decisions). After considering those decision in detail, at [58], her Honour concluded that the Snowside parties would not lose standing to prosecute the oppression proceeding to judgment if the scheme were implemented. At [61], however, her Honour acknowledged that the impact of the implementation of the scheme on the Snowside parties' standing and the Court's jurisdiction in the oppression proceeding could only be bindingly determined by the Supreme Court. 48 Returning to Boart (No 2), at [63] of her Honour's reasons, after referring to an acknowledgement by the Snowside parties that they did not cavil with the findings set out at [62], the primary judge rejected the Snowside parties' submissions to the effect that: (1) the Court could not be satisfied that the misleading statements had any causative effect on the vote at the scheme meeting; and (2) it was necessary for the Snowside parties to appear at the 21 December 2018 hearing to defend their conduct. 49 At [64]-[66], her Honour reasoned as follows: [64] The Court accepts that in Boart (No 1), it was made clear (at [175]) that it could not be satisfied, in the absence of evidence from BLY members who had received and relied on the Snowside letter, that any BLY shareholder had relied on it in deciding how to exercise their vote. However: (1) In Boart (No 1) at [175], the Court also made it clear that it could not be satisfied about the integrity of the vote having regard to its finding that statements in the Snowside letter were misleading and having regard to the proxy flows after the Snowside letter was sent to some BLY shareholders. It is for that reason that the Court accepted ASIC's submission that it might be appropriate to allow another vote before determining whether the headcount test should be dispensed with under s 411(4)(a)(ii)(A); and (2) The Snowside parties' conduct in issuing the Snowside letter with the misleading statements in it was wrongful. So was the statement in the Snowside letter that "it was likely" that it would lose standing in the Oppression Proceedings. That later statement was made at time when the Snowside parties knew that this Court was fully seised of that issue and would adjudicate on it before the scheme meeting and authorise disclosures accordingly with a view to there being an informed vote at the scheme meeting. [65] In the Court's view, any award of costs in relation to the hearings on 17, 19 and 21 December 2018 must take into account the causative role that the Snowside letter had in casting doubt on the integrity of the vote at the scheme meeting and creating a basis for BLY to make its application to dispense with the headcount test. Since the Snowside parties were not successful in defending their conduct which was wrongful, there is no basis for their suggestion that they are entitled to costs of defending it, albeit that BLY was not required to do so and it ultimately declined to take the opportunity to test the shareholders' will at a second meeting. [66] That said, the Court also recognises that: (1) In Boart (No 1) the Court found that there were areas in which disclosure in the scheme booklet could or should be improved if it were to seek a further shareholder vote, albeit that those areas were not such as would have prevented the Court making final orders had the statutory vote been achieved at the scheme meeting; (2) BLY did not get the relief for which it applied under ss 411(4)(a)(ii)(A) or 411(4)(b) because it did not establish reliance on the misleading statement in the Snowside letter and accordingly, the Snowside parties successfully resisted that relief; (3) The Court obtained some minor assistance from the Snowside parties' submissions in relation to dispensing with the headcount test, although the Court was assisted primarily by ASIC's submissions. 50 By these reasons, the primary judge drew a distinction between the question of whether the Snowside letter had influenced the vote at the scheme meeting (her Honour found that she could not make this finding) and the question whether the Snowside letter might have influenced the vote (her Honour found that this possibility could not be discounted). 51 In Boart (No 1) at [175], the primary judge said: BLY ask[ed] the Court to infer from the flow of proxies that the Snowside letter unfairly influenced the vote. In the absence of evidence from members who received and relied on the letter, I cannot make that finding and I am not minded to exercise the power to dispense with the headcount at this time. However, impact on the integrity of the vote cannot be discounted because of the statements in the Snowside letter concerning the availability of franking credits, the Oppression Proceedings, the possibility of a class action on a similar basis and the flow of proxies after the Snowside letter was sent, compared to the flow before that time.

Extension of time 52 The Snowside parties need an extension of time because the application for leave to appeal was filed one day late. BLY does not oppose the extension of time if the Court otherwise considers that leave to appeal should be granted.

Requirement for leave 53 The Snowside parties require leave for two reasons: firstly, because costs orders are an interlocutory judgment within the meaning of s 24(1A) of the Federal Court of Australia Act 1976 (Cth); and, secondly, because they were non-parties to the proceeding, granted leave to be heard pursuant to r 2.13 of the Rules: Australian Industry Group v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union [2002] FCAFC 386; (2002) 125 FCR 529 at [17] and [75].

Principles 54 The principles governing the grant of leave to appeal to a non-party are similar to those governing the grant of leave to appeal from an interlocutory judgment: Commonwealth v Construction, Forestry, Mining and Energy Union [2000] FCA 453; (2000) 98 FCR 31 at [20]. The relevant considerations are: (1) whether, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and (2) whether substantial injustice would result if leave were refused supposing the decision to be wrong: see, e.g., Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 (Samsung) at [28]. 55 In Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; (2010) 265 ALR 112 at [113], the Full Court stated: There is no doubt that appellate courts are loathe to overturn discretionary costs orders made by single judges. This reluctance reflects a history of caution expressed by appellate courts when asked to overturn discretionary judgments generally. 56 As the costs order involved the exercise of discretion, to succeed on any appeal the Snowside parties will be required to establish error of the kind described in House v The King [1936] HCA 40; (1936) 55 CLR 499 (House v The King) at 505-506: Cleland v Skycity Adelaide Pty Ltd [2017] FCAFC 222; (2017) 256 FCR 306 at [69]. 57 In Samsung, after referring to House v The King, the Full Court added at [39]: In later cases, justices of the High Court have said that, in respect of appeals against decisions involving discretionary judgment, there is a strong presumption in favour of the correctness of the decision appealed from and that that decision should be affirmed unless the appeal court is satisfied that it is clearly wrong (see Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621 at 627 per Kitto J; and Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 634 per Wilson J). 58 The correct approach to the evaluation of the prospects of a party's success on appeal is to consider the proposed grounds of appeal "at a reasonably impressionistic level and enquire whether a ground is 'sufficiently arguable' or 'has reasonable prospects of success'": EBT17 v Minister for Home Affairs [2019] FCA 200 at [4]. 59 In Bauer Consumer Media Ltd v Evergreen Television Pty Ltd [2019] FCAFC 71 at [167], Rangiah J noted: [T]he appeal from the judgment of the primary judge is an appeal by way of rehearing: see Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [20]. The powers of the appellate court are only exercisable where the appellant can demonstrate that the judgment is the result of some legal, factual or discretionary error: Allesch v Maunz (2000) 203 CLR 172 at [23]. The views and conclusions of the trial judge ultimately have to be shown to be wrong, and should not be laid to one side and a simple re-argument of the case take place: Branir at [30].

Whether decision below is attended by sufficient doubt 60 The alleged grounds of appeal raise House v The King errors in that they contend that the primary judge: (1) mistook the facts concerning whether the Snowside letter was misleading; (2) took into account extraneous or irrelevant factors in the exercise of her Honour's discretion by finding in Boart (No 2) at [65] that the Snowside letter had a causative role "in casting doubt on the integrity of the vote at the scheme meeting and creating a basis for BLY to make its application to dispense with the headcount test"; and (3) took into account extraneous or irrelevant factors in the exercise of her Honour's discretion by having regard to her Honour's impressions as to the conduct of the Snowside parties.

Alleged erroneous findings concerning Snowside letter being misleading (proposed appeal grounds 1 and 3)

Proposed appeal ground 1 61 The first proposed ground of appeal is that the primary judge erred in finding that the Snowside letter had a tendency to mislead or was misleading in the respects identified in Boart (No 2) at [62].

Franking credits statement 62 The Snowside parties submitted that the primary judge erred in finding that the letter's statement concerning franking credits was misleading for the following four reasons: (1) The letter does not indicate that any dividend would be payable or would likely be paid. It says "any" franking credits cannot be utilised by the new company or passed through. It does not "suggest immediate disadvantage" as held by the primary judge. (2) The relevant statement in the letter is no more than a paraphrase of BLY's own description of the potential disadvantage. (3) The primary judge's reasoning incorrectly presupposes an obligation on the part of the Snowside parties, as shareholders communicating to other shareholders about an upcoming vote, to ensure that their representations "accurately reflect all of the relevant information in the scheme booklet". (4) The information said to be omitted from the Snowside letter was contained in the material given to shareholders. They therefore had the so-called omitted information. Further, there is no obligation on shareholders communicating with other shareholders to reiterate information already available that might bear upon what is being communicated. 63 At the outset, I do not agree that the primary judge found that the letter's statement regarding franking credits statement was misleading. Her Honour's relevant findings were that the statement had "the capacity to mislead" and that it "may have the tendency to mislead". 64 Considering the matter at a reasonably impressionistic level, I do not consider that there is significant doubt about the correctness of her Honour's finding concerning the franking credit statements. Dealing with the Snowside parties' arguments above: (1) Points (1) and (2) ignore the context in which the statement is made, namely, as an argument as to disadvantages justifying a vote against re-domiciliation. Having regard to that context, it is unlikely that her Honour's finding of a suggestion of "immediate disadvantage" would be disturbed on appeal. (2) As to point (3), her Honour's reasons do not presuppose any obligation of the kind posited by the Snowside parties. The findings in Boart (No 1) at [171] were made in the course of her Honour's consideration of whether the integrity of the vote at the scheme meeting was impugned due to activities which unfairly influenced it (see Boart (No 1) at [157]). Thus, her Honour was not concerned with any question of obligation but only what was conveyed by the Snowside letter in the circumstances. (3) As to point (4), it is not necessarily reasonable to assume that the Snowside letter would be read by investors with reference to other material provided to them by BYL. Her Honour was entitled to assess the likely effect of the Snowside letter as a discrete communication. Again, her Honour's reasons do not presuppose the posited obligation.

Likely loss of standing 65 The Snowside parties seek to argue that the primary judge erred in finding that the statement that the oppression proceeding was "likely to be defeated" by re-domiciliation was "wrong" because it was an opinion or, alternatively, it was an opinion expressed on a reasonable basis. 66 "Whether a statement is a statement of past or present fact, a promise, a prediction, or an expression of opinion, the making of it constitutes conduct which is misleading or deceptive or likely to mislead or deceive if the statement contains or conveys a misrepresentation": Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88. 67 It is not inapposite to describe the "likely to be defeated" opinion as wrong if her Honour's analysis is accepted, regardless of whether the opinion was expressed on a reasonable basis or not. Her Honour's conclusion was that the Snowside parties would not lose standing if the scheme was implemented although, in recognition of the fact that the Supreme Court's jurisdiction in the oppression proceeding could only be bindingly determined by that court, her Honour considered that it was appropriate to mitigate the risk of a loss of standing where that was possible. The Snowside parties did not contend that her Honour erred in her analysis, arguing that the issue was whether there was a reasonable basis for the "likely to be defeated" statement at the time that it was made, namely, the Superior Lawn decisions. 68 Whether the "likely to be defeated" statement had a tendency to mislead or was misleading is a separate question from whether it was wrong. 69 As the primary judge observed, the "likely to be defeated" statement was made at a time when the Snowside parties knew, not only that the correctness of that statement was disputed by BLY, but also that the effect of the scheme, if approved, on the oppression proceeding would be determined by the court prior to the scheme meeting. Those matters were of obvious relevance to a shareholder's assessment of the statement and it was open to her Honour to find that the statement was misleading by its omission of that information. 70 In my view, it is very unlikely that an appeal court would find that her Honour erred in making that finding.

Possible class actions 71 The Snowside parties argued that the letter's statement concerning class actions was not misleading because the letter did not convey that a class action existed or that anyone had one in prospect. Rather, it states that "[i]t may be" that the argument in the oppression proceeding "could be used" to support a class action and that "any potential class action" will likely be defeated by the re-domiciliation. The Snowside parties contended that the letter is expressly framed as a statement as to the effect of the re-domiciliation on a hypothetical claim. 72 Again considering the matter at a reasonably impressionistic level, I do not consider that there is significant doubt about her Honour's finding that it was misleading to suggest that the "same arguments" as raised in the oppression proceeding might be used as a basis for a class action in the context in which that statement was made. Accepting that the letter may be construed as engaged in speculation about the possibility of a class action, it also identified the likely defeat of a potential class action by re-domiciliation as a reason to vote against re-domiciliation. This plainly suggested the prospective loss of a valuable right. Taking that latter feature of the letter into account, in my view, it is very unlikely that an appeal court would conclude that her Honour's finding involved error.

Conclusion 73 For these reasons, in my view, the prospects of the Snowside parties succeeding on proposed ground 1 are remote.

Proposed appeal ground 3 74 This proposed ground is that the primary judge erred in finding (at [64(2)] and [65]) that the Snowside parties' conduct in issuing the Snowside letter was "wrongful"; including the finding that the statement in the Snowside letter that "it was likely" that the Snowside parties would lose standing in the oppression proceeding was "wrongful". 75 The statement that the Snowside parties were likely to lose standing was "wrongful" was based upon her Honour's observation that: [T]he statement was made at time when the Snowside parties knew that this Court was fully seised of that issue and would adjudicate on it before the scheme meeting and authorise disclosures accordingly with a view to there being an informed vote at the scheme meeting. 76 The word "wrongful" is a word of wide and uncertain import, imputing an unspecified degree of culpability of an undefined character: cf. McCormick v John Fairfax & Sons Ltd (1989) 16 NSWLR 485 at 494. On a fair reading of her Honour's reasons for judgment, the word reflects an evident view that the Snowside letter should not have conveyed the "likely to be defeated" statement at a time when the correctness of that statement was disputed and was an issue that her Honour had determined to adjudicate prior to the scheme meeting, and in circumstances in which the Court was tasked with supervising the process by which the proposed scheme was presented to shareholders, for the purpose of ensuring that they were informed in accordance with the requirements of the Act. These matters provided ample basis for her Honour's assessment of the Snowside parties' conduct because the misleading letter created a risk that the integrity of the vote at the scheme meeting would be compromised or, at least, the risk that unnecessary costs would be incurred to neutralise the potential harm caused by the distribution of a misleading communication. There is no substantial doubt that her Honour would be found to have erred in that assessment. 77 It follows that the Snowside parties' prospects of succeeding on proposed ground 3 are also remote.

Alleged erroneous findings as to causation and reliance (proposed appeal grounds 2, 4, 5 and 6)

Proposed appeal ground 2 78 The second proposed ground of appeal is that the primary judge erred in finding (at [64(1)] and [65]) that "the Court could not be satisfied about the integrity of the vote at the scheme meeting having regard to its finding that the statements in the Snowside letter were misleading". Ultimately, the Snowside parties did not dispute that finding.

Proposed grounds 5 and 6 79 Proposed grounds 5 and 6 are that the primary judge erred in taking into account: (1) the findings the subject of proposed grounds 1 and 3 when making costs order 2 in circumstances where her Honour also found that BLY did not establish reliance on the misleading statements in the Snowside letter; and (2) that the Snowside letter was misleading when declining to order BLY to pay any of the Snowside parties' costs of the 25 October 2018 hearing. 80 In submissions, the Snowside parties argued that, where BLY had failed to prove that the Snowside letter unfairly influenced the vote at the scheme meeting, the primary judge erred in relying on the misleading statements in the letter when exercising the costs discretion. The argument was based on the following propositions: (1) Her Honour found that she could not be satisfied that any shareholder had relied on the Snowside letter in deciding how to exercise their vote. (2) It followed that BLY had failed to discharge its onus to prove that the Snowside letter had any effect on the vote. (3) It was not the Snowside parties' onus to demonstrate the absence of doubt about the effect on the vote. (4) It was erroneous for the primary judge to proceed on the basis that the result of the vote had been influenced by the Snowside letter. (5) Moreover, BLY had the opportunity to send its "corrective" statement in relation to the Snowside letter. 81 Proposition (4) is incorrect: her Honour did not proceed on that basis. Rather, her Honour proceeded on the more modest conclusion (at Boart (No 2) at [65]) that the Snowside letter had a role "in casting doubt on the integrity of the vote at the scheme meeting and creating a basis for BLY to make its application to dispense with the headcount test". 82 As to proposition (2), the Snowside parties submitted that the primary judge erred (at Boart (No 2) at [63]) in rejecting their submission that the Court could not be satisfied that the misleading statements had "any causative effect" on the scheme meeting vote. But her Honour explicitly acknowledged (at [64]) that the Court could not be satisfied that any BLY shareholder had relied on the statements in deciding how to exercise their vote. Her Honour's rejection of the Snowside parties' submission was based on a finding that the letter had a "causative role" to the extent that it cast doubt on the integrity of the vote, leading to the application to dispense with the headcount test. It was that "causative" effect which was of obvious significance for the purpose of considering the question of costs. 83 Dealing first with proposed ground 5, where the primary judge found that the Snowside letter cast doubt on the integrity of the vote and created the basis for BLY's application to dispense with the headcount vote, the findings the subject of proposed grounds 1 and 3 were plainly relevant to the question of costs. Accordingly, there is no prospect that her Honour would be found to have erred in taking those matters into account. 84 The Snowside parties did not put any separate argument in support of proposed ground (6). 85 The Snowside parties did not explain why the absence of a finding of reliance on the Snowside letter required the primary judge to assume that the letter had no effect. To the contrary, the primary judge was entitled to find that the letter had the effects which her Honour identified.

Proposed ground 4 86 It follows from the conclusions above that the Snowside parties have not identified any substantial doubt in relation to her Honour's consideration of the findings that are the subject of proposed grounds 1 and 3 when making costs order 2.

Alleged erroneous reliance on impressions formed by primary judge (proposed appeal grounds 7 and 8) 87 Proposed ground 7 is that the primary judge erred in forming the impressions that the Snowside parties: (1) sought to delay the progress of the scheme proposal, "dragging it out"; (2) would rather have a fight than resolve material issues in an economic and efficient way so that they did not conduct their appearance in a way that sought to contain costs; and (3) interest in appearing at the first court hearing was directed more towards achieving a delay in the dispatch of the scheme booklet than in securing full and fair disclosure. 88 The Snowside parties did not address this proposed ground of appeal separately. 89 Rather, their argument focused on proposed appeal ground 8, which is that the primary judge erred in taking into account her Honour's erroneous impressions in making the costs order and declining to order BLY to pay the Snowside parties' costs of the first court hearing. 90 I accept that it is arguable that the primary judge erred in having regard to her Honour's impressions in the exercise of the costs discretion. However, it is a separate question whether an error in taking into account an irrelevant consideration involves a miscarriage in the exercise of the costs discretion: Overton Investments Pty Ltd v The Minister administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439; [2001] NSWCA 137 at [67]-[68] and [73] (Stein JA, Powell JA and Ipp AJA agreeing). 91 I am not satisfied that there is any real likelihood that an appeal court would re-exercise the discretion differently if the Snowside parties were to succeed on this aspect of the appeal and, accordingly, there is little prospect that such a court would conclude that any error involved a miscarriage in the exercise of the discretion. 92 In particular, in relation to the 25 October 2018 hearing, I note that her Honour's decision not to award costs was made for reasons that included: (1) at [58], that the Snowside parties' submissions in relation to disclosure issues were not helpful to the Court in deciding whether to make orders under s 411(1) of the Act which, I interpolate, was an important issue at the 25 October 2018 hearing; and (2) at [60], that costs order 1 reflected a just allowance having regard to the Snowside parties' participation in the proceeding up to 3 December 2018, taking into account that BLY also incurred costs in that period referrable to seeking Court approval to corrective disclosures related to the Snowside letter. 93 The Snowside parties argued that her Honour's view that the Snowside parties' submissions were not helpful did not provide a proper basis for failing to award costs because it reflected the insufficient time afforded to them to consider the material and prepare submissions. Given the relevant principles concerning the exercise of the costs discretion in favour of a person granted leave to be heard under r 2.13 of the Rules, I do not accept that it would be a proper exercise of the costs discretion to award costs in favour of an unhelpful non-party merely because that party did not have sufficient time to make a helpful submission. 94 On that basis, I am not satisfied that there is sufficient doubt attending her Honour's decision not to award the Snowside parties the costs of the first court hearing in the context of costs order 1. 95 In relation to costs order 2, the primary judge gave ample reasons for her Honour's decision to award the Snowside parties only a portion of their costs of the proceeding from 17 December 2018.

Conclusion 96 For these reasons, I am not satisfied that any of the proposed grounds of appeal have reasonable prospects of success. Accordingly, I conclude that the primary judge's costs judgment is not attended by sufficient doubt to warrant it being reconsidered by the Full Court.

Substantial injustice would result if leave were refused, supposing the decision to be wrong 97 The Snowside parties raised the following two matters: (1) There are adverse financial consequences that would be suffered by them if leave was refused, supposing the decision to be wrong. (2) The costs order is based on "serious adverse findings" as to the Snowside parties' conduct. If leave is refused, they will be denied their only opportunity to challenge those findings. 98 I accept that the refusal of leave would deny the Snowside parties an opportunity to challenge the findings that the Snowside letter was misleading or had a tendency to mislead, and that the dissemination of the Snowside letter was wrongful. On this basis, I accept that there is the relevant substantial injustice. 99 However, I do not accept that even supposing her Honour erred in the exercise of the discretion, the re-exercise of the discretion would reach a different conclusion, having regard to the principles affecting the exercise of the power to award costs. Accordingly, I am not persuaded that the Snowside parties would suffer adverse financial consequences if leave was refused.

Conclusion 100 Although I accept that BLY will suffer substantial injustice by the refusal of leave supposing the primary judge's judgment to be wrong on the basis set out at [99] above, I am not satisfied that any of the proposed grounds of appeal 1 to 7 have substantial merit. As to ground 8, although I am satisfied that the Snowside parties have reasonable prospects of demonstrating error, I am not persuaded that they have substantial prospects of demonstrating that the primary judge's exercise of the costs discretion miscarried. 101 Accordingly, I refuse the application for leave to appeal. Costs should follow the event. I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.