See also: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31] - [36].
424 In Macdonald (No 11) I identified 10 issues: the Draft ASX Announcement, the DOCI Disclosure, the DOCI Execution, the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement, the 21 March 2001 ASX Announcement, the Scheme of Arrangement, the Roadshow Presentations and the cancellation of the partly paid shares.
425 ASIC produced a table in which it identified 13 issues. It divided the DOCI Disclosure issue into Failure to advise on Disclosure and Failure to Disclose. It divided the Scheme of Arrangement issue into Scheme of Arrangement - Final IM and Draft IM, Draft Court Letter and Final Court Letter and it divided the Roadshow Presentations into the Edinburgh Representations and the London Representations on the one hand and ASX Slides on the other.
426 In either event, it seems to me that there were in the proceedings issues or groups of issues that were separable or discrete. They related to different fact situations and differing participants. The defendants against whom the issues were raised were not uniform across the issues.
427 ASIC's table of issues showed that many witnesses gave evidence on more than one issue. It was submitted that it was impractical to divide the evidence between issues.
428 For example, ASIC alleged that Mr Macdonald was in breach of Section 181(1) in making the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement.
429 ASIC also alleged that Mr Macdonald was in breach of s 181(1) of the Corporations Act in June 2002 when he made the statements in the Edinburgh Representations and the London Representations and approved the release of the ASX Slides. The provision was then in identical terms to Section 181(1).
430 I found that ASIC had failed to make out any of those charges. ASIC submits, however, that they should not be differentiated from the charges under Section 180(1) because the same evidence was tendered with respect to both sets of charges.
431 A similar submission was made with respect to JHIL and the 21 March 2001 ASX Announcement. I found that ASIC had made out its claim that by issuing the 21 March 2001 ASX Announcement, JHIL contravened Section 995(2). But I found that ASIC had failed to establish that it had also breached Section 999. ASIC submitted that the same evidence was tendered with respect to both alleged contraventions.
432 ASIC failed to establish that Mr Morley was in breach of Section 180(1) when he executed the DOCI. ASIC concedes that this was a distinct issue but apart from William Koeck and Jeremy Kriewaldt who gave evidence solely on this issue, the remainder of the witnesses whose evidence went to this issue also gave evidence in support of other aspects of the proceedings.
433 ASIC alleged that the Draft IM to be sent to members of JHIL as part of the members' scheme of arrangement containing a statement to the effect that the partly paid shares enabled JHIL to call upon JHINV to pay if it was required to meet any liabilities of JHIL was false or misleading. ASIC also claimed that the Draft Court Letter containing the statement to the effect that JHIL would have, through existing reserves and access to funding in the form of the partly paid shares, the means to meet liabilities that it might incur in the future whether in relation to asbestos claims or otherwise, was false or misleading. The Final Court Letter contained a statement with respect to the partly paid shares to similar effect. ASIC alleged it was false or misleading. The Final IM containing the same statements with respect to the partly paid shares was dispatched to the shareholders of JHIL. With respect to all these documents ASIC failed to establish any contravention.
434 While accepting that these allegations constituted a distinct issue, with the exception of the evidence of Mr Hutley SC and the affidavit of Ms Laidler, ASIC submitted that the remainder of the witnesses relied upon to support these allegations were also relied upon to support aspects of the case in which ASIC was successful.
435 ASIC failed to establish a breach of Section 1041E(1) with respect to the Edinburgh Representations and the London Representations by JHINV or a breach by Mr Macdonald of Section 181(1). ASIC submitted, however, that the evidence was substantially the same as the evidence relied upon successfully in support of findings that JHINV was in breach of Section 1041E(1) with respect to the ASX Slides and Mr Macdonald's breach of Section 180(1) with respect to the Edinburgh Representations and the London Representations.
436 ASIC submitted that the costs payable by the defendants should be determined as a percentage of the whole of the plaintiff's costs rather than determining that the defendants pay costs of certain issues. Reliance was placed upon Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2008] NSWSC 7 at [36]:
"The approach favoured by Alamdo, if its principal contention is not accepted, is that it should have a fixed percentage of its costs rather than some mathematically calculated portion - in other words, that it should simply be deprived of a portion of its costs on the basis of a general assessment of respective degrees of success. Such an approach is consistent with that taken in a number of cases where issue-by-issue treatment has been considered impracticable or inappropriate. I need only mention, by way of example, the decision of the Court of Appeal in South Sydney Council v Royal Botanic Gardens and Domain Trust (No 2) [2000] NSWCA 242."
437 That was a case for the costs of repair and remedial work and a loss of rent in a damages claim for breach of covenants contained in a lease of industrial premises. It was not a case in which discrete issues were identified.
438 I am told I should assume that the amount of costs in question are tens of millions of dollars. I am told that taxation of costs is likely to be protracted and expensive. ASIC foreshadows reliance upon the Civil Procedure Act, s 98(4). It provides, amongst other things, that at time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to a specified gross sum instead of assessed costs.
439 In a multi-party multi-issue proceeding such as this case, there is a problem about a costs order against defendants jointly. As already mentioned, some of the issues will not apply to some of the parties. For example, Mr Brown, Mr Gillfillan, Ms Hellicar, Mr Koffel, Mr O'Brien, Mr Terry and Mr Willcox were not charged with contraventions with respect to the DOCI Disclosure, the DOCI Execution, the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement, the 21 March 2001 ASX Announcement, the Roadshow Presentations or the cancellation of the partly paid shares. And Mr O'Brien and Mr Terry were not charged with contraventions in relation to the Scheme of Arrangement.
440 The allegations against Mr Morley were confined to his failure to advise the 15 February 2001 Meeting of the limited nature of the reviews of the Cashflow Model by PwC and Access Economics, the allegation that he failed to advise the meeting that the best estimate in two Trowbridge reports was too uncertain to be used as a basis to assess the adequacy of Coy and Jsekarb's funding which ASIC failed to establish and Mr Morley's alleged failure to obtain legal advice concerning the Put Option before executing the DOCI in which ASIC again failed.
441 Another deficiency in an order that defendants jointly pay costs is the unfairness of the liberty ASIC would have to proceed against any defendant. As Austin J observed in Vines 58 ACSR at 367 [268]:
"… First, I agree with the submissions made on behalf of the defendants that the costs order should be expressed severally. It would be unfair to the defendants to put ASIC in the position of being able to recover the whole of its costs against one of the defendants, when the hearing related to separate allegations of contravention by each defendant..."
442 The solution to this problem is going to rely very much on impression. Mathematical accuracy is impossible.
443 In my view, there were two major subjects of evidence in the proceedings and other lesser issues. One subject was constituted by a group of discrete issues, the other by one discrete issue, or a group of two discrete issues if ASIC's identification of issues is preferred.
444 On the one hand we had the evidence in relation to the Draft ASX Announcement and the announcements that followed it in the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement.
445 By and large the same witnesses gave evidence in relation to each of those discrete issues. According to ASIC's table there were 28 witnesses who addressed the Draft ASX Announcement, 28 who addressed the Final ASX Announcement, 29 who addressed the Press Conference Statements, 26 who addressed the 23 February 2001 ASX Announcement and 25 who addressed the 21 March 2001 ASX Announcement. There was a core of 24 witnesses who addressed each of those issues.
446 The evidence was concentrated on the Draft ASX Announcement with far less attention given to the other announcements.
447 With the exception of the allegations that Mr Macdonald, Mr Shafron and Mr Morley failed to advise the 15 February 2001 Meeting that the Trowbridge reports were too uncertain to be used to assess funding for Coy and Jsekarb ASIC was successful in its charges relating to the Draft ASX Announcement.
448 With the exception of its charges against Mr Macdonald under Section 181(1) and its charge against JHIL under Section 999 with respect to the 21 March 2001 ASX Announcement, ASIC was successful in its charges with respect to the other announcements.
449 The other large subject was the Scheme of Arrangement. It was addressed by 13 witnesses. But it was largely a documentary case with extensive cross-examination covering the period from 1998 to 2003 of those non-executive directors who gave evidence in a failed attempt to establish that the management of JHIL had proposed to the board that after the completion of the restructure through the members' scheme of arrangement, the Put Option would be exercised, the partly paid shares would be cancelled, the shares would be transferred to another trust, or JHIL would be liquidated, and the board either endorsed those proposals and intended that the steps be taken or had assumed that they would occur.
450 It is my impression that the evidence on each of these subjects was about equal.
451 In an alternative submission on costs, ASIC submitted that costs should be apportioned to 9 issues: Market announcement 15 February 2001, Market announcements 16 February 2001, Market announcements 23 February and 21 March 2001, DOCI - disclosure, DOCI - execution, Information memorandum for the 2001 scheme, Presentations to institutional investors: Macdonald - JHINV: Edinburgh, London and ASX, Cancellation of partly paid shares.
452 ASIC submitted that the costs of the market announcements were 51% of total costs with the costs of the 15 February 2001 announcement at 40%. On the other hand it estimated the costs of the information memorandum at only 12.5% of total costs.
453 The exercise upon which I am engaged cannot be determined with arithmetic precision. I doubt that if I had stood the question of costs over for further evidence and argument I would have been in any better position that I am now. Cross-examination would no doubt have challenged the method by which ASIC's estimations were made.
454 There was much more to the Scheme of Arrangement issue than the Draft IM or the Final IM. As I have said it involved extensive cross-examination of those non-executive directors who gave evidence of their intentions with respect to the partly paid shares.
455 I reject ASIC's estimation with respect to the Scheme of Arrangement issue and maintain my view that the costs of it were basically equal to the costs of the Draft ASX Announcement issue and the announcements that followed it.
456 In Australian Securities and Investments Commission v Whitlam (No 2) [2002] NSWSC 718; (2002) 42 ACSR 515 at 523 [29] I made no order as to costs in similar circumstances:
"In the substantive proceedings, the plaintiff was substantially successful with respect to the matters the subject of my first declaration and, notwithstanding the making of my second declaration, the defendant was substantially successful with respect to it because of the relief granted. The normal rule would be that the plaintiff is entitled to the costs associated with the first declaration and the defendant is entitled to the costs associated with the second declaration. Considerations of the time taken with respect to separate issues might be used to determine the outcome. In the circumstance, however, I consider it appropriate that each party bear its own costs."
457 It was submitted that I should take the same course in this case. That seems to me to be the appropriate order I should make in this case with respect to the two major subjects. It gives effect to success and failure and the basic equality of cost between the subjects. And it avoids the problems of taxation of costs with respect to each subject. It does not give rise to any liability for costs of a defendant against whom those issues were not raised and it recognises that with respect to the non-executive directors other than Mr O'Brien and Mr Terry ASIC raised a Scheme of Arrangement issue and the Draft ASX Announcement issue against each of them.
458 It is not a perfect solution because no charges were laid against the non-executive directors with respect to the announcements that followed the Draft ASX Announcement. But, as I have said, far less attention was directed to them in evidence.
459 I will make no order as to costs of the group of issues comprising the allegations with respect to the Draft ASX Announcement, the Final ASX Announcement, the Press Conference Statements, the 23 February 2001 ASX Announcement and the 21 March 2001 ASX Announcement.
460 I will make no order as to costs of the Scheme of Arrangement issue.
461 With respect to the DOCI Execution issue, Mr Morley having succeeded on it but failed on the Draft ASX Announcement issue sought an order that ASIC pay him 80% of his costs.
462 Since the DOCI Execution issue involved far less evidence than the Draft ASX Announcement issue and my order with respect to it has relieved Mr Morley from paying substantial costs, I will follow the same approach and make no order to costs of the DOCI Execution issue such that Mr Morley and ASIC will bear their own costs of that issue.
463 ASIC succeeded in its claims against JHIL, Mr Macdonald and Mr Shafron with respect to the DOCI Disclosure issue. ASIC seeks no order for costs against JHIL. In my view, ASIC should bear those costs and not have them passed on to Mr Macdonald and Mr Shafron.
464 I will order that Mr Macdonald pay one third of ASIC's costs of the DOCI Disclosure issue and that Mr Shafron pay one third of those costs.
465 ASIC succeeded in its claim with respect to the cancellation of partly paid shares issue that JHINV failed to notify the ASX of the ABN 60 Information. I see no reason why costs should not follow the event with respect to that issue and I will order JHINV to pay ASIC's costs of the cancellation of partly paid shares issue.
466 With respect to the Roadshow Presentations issue ASIC was successful with respect to the part of its charges that JHINV was in breach of Section 1041E(1) and Section 1041H(1) with respect to the ASX Slides. But it failed in its charge that JHINV breached Section 1014E(1) with respect to the Edinburgh Representations and the London Representations.
467 Since both ASIC and JHINV were partially successful with respect to this issue I will order JHINV to pay 50% of ASIC's costs of the Roadshow Presentations issue.