Australian Securities and Investments Commission v Mitchell

Do I have power to now order indemnity costs? 5 Now it is not unusual that a court makes an order for costs in the usual form and then later a party applies either to vary that order to seek indemnity costs or seeks an additional order that such costs in the earlier order be paid on a particular basis. Moreover, if liberty to apply has been formally reserved, as I so reserved in this case, there should usually be no difficulty. 6 But ASIC says that the Court's power to allow the present application lasted only until my order was entered on 3 August 2020. ASIC accepted that until then the Court retained a general, if constrained, discretion to vary the previous costs order, both at common law and under r 39.04 of the Federal Court Rules 2011 (Cth). But ASIC says that that power came to an end on 3 August 2020 when my order was entered. From that point, it says that the Court could vary that order only if it fell within one of the exceptional categories set out in r 39.05, which rule states: The Court may vary or set aside a judgment or order after it has been entered if: (a) it was made in the absence of a party; or (b) it was obtained by fraud; or (c) it is interlocutory; or (d) it is an injunction or for the appointment of a receiver; or (e) it does not reflect the intention of the Court; or (f) the party in whose favour it was made consents; or (g) there is a clerical mistake in a judgment or order; or (h) there is an error arising in a judgment or order from an accidental slip or omission. 7 Now there has been reference to invoking the slip rule to justify a modification. But I agree with ASIC that the slip rule does not apply. It is not there to rectify or deal with the slip or mistake of a solicitor as such for one of the parties where that slip or mistake concerns a failure to apply for a discretionary order. In that respect, I am not inclined to follow what was said in Notaras v Barcelona Pty Limited (No 2) [2019] FCA 617 at [34] or in Allergan Australia Pty Limited v Self Care IP Holdings Pty Limited (No 2) [2021] FCA 185 at [42]. 8 The preferable analysis is that of the Full Court in Endresz v The Commonwealth (2019) 273 FCR 286 at [80] to [82]. Adopting but adapting their reasoning, even if there had been a slip or omission here, its correction would require me to exercise an independent discretion since the question whether to award indemnity costs is within my discretion. Now if the discretion could only be exercised one way, as the Full Court in Endresz referred to at [80] and [81], it might be exercised under the slip rule. But if there is any room for debate, the slip rule is inapposite. Clearly, in the circumstances before me there is room for debate. So in my view, any discretion, if it now exists, to award Mr Healy indemnity costs cannot be exercised by a variation sought to be justified under the slip rule which has a different function. 9 Now during argument this morning, Mr Healy's counsel sought to rely upon r 39.05(f), which says that the Court may vary an order if "the person in whose favour it was made consents". Mr Healy says that he consents to the variation. 10 But r 39.05(f) does not assist Mr Healy. Rather, that paragraph is dealing with the inverse position, where another party has applied to vary an order and the person who has the benefit of the order consents to that variation. That is the ordinary and sensible operation of that particular subparagraph. 11 Let me then put r 39.05 to one side as not being a relevant source of power in the present circumstances. 12 In my view, putting to one side the question of variation, I have power to make an additional order for indemnity costs of the type sought by Mr Healy. Indeed, my grant of liberty to apply is fully consistent with the existence of that power, notwithstanding ASIC's protestations to the contrary. 13 As to the power to make an additional order, I should set out rr 40.01 and 40.02 which provide: 40.01 If an order is made that a party or person pay costs or be paid costs, without any further description of the costs, the costs are to be costs as between party and party. 40.02 A party or a person who is entitled to costs may apply to the Court for an order that costs: (a) awarded in their favour be paid other than as between party and party; or (b) be awarded in a lump sum, instead of, or in addition to, any taxed costs; or (c) be determined otherwise than by taxation. 14 I agree with Mr Healy that I can make an additional order under r 40.02(a), which provides that: "A party or a person who is entitled to costs may apply to the Court for an order that costs: (a) awarded in their favour be paid other than as between party and party". By its express terms, that is, the phrase "awarded in their favour", this specific rule contemplates that costs have already been awarded in favour of the party making the application and that an application for costs other than on a party/party basis may be made after costs have been awarded in their favour, that is, by a prior order. 15 Moreover and, if I might say so, unsurprisingly, this is all consistent with the prior form of the rule. The prior order 62, rule 4, under the old Federal Court Rules, stated: (1) Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to any person, that person shall be entitled to his taxed costs. (2) Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to: (a) a proportion specified in the order of the taxed costs; or (b) the taxed costs from or up to a stage of the proceedings specified in the order; or (c) a gross sum specified in the order; or (d) a sum in respect of costs to be ascertained in such manner as the Court may direct. (3) The Court may make an order under subrule (2) at any time, whether or not an order that costs be paid to a person has previously been made or entered. 16 It is worth noting the words "or entered" in subrule (3). That is directly at odds with the contentions put to me this morning by counsel for ASIC, in terms of the distinction and the short period between when an order is made and when it is entered. Clearly under the prior rule, an additional order could be made, even if an earlier order had been made or entered. 17 Further, the extrinsic material, being the explanatory statement to the present rules, did not indicate that any relevant change was intended by the modernised version of the now r 40.02(a). 18 Further, although ASIC contended that r 40.02(a) only operated between the pronouncement of an order and its entry, the rule does not state that. Further, there is no relevant rationale to such a limitation. Further, it would make little sense concerning, for example, r 40.02(b), at least. Further and as I have said, it is not consistent with what was expressly provided for under the prior rule. 19 Further, ASIC said that under any liberty to apply, one cannot effect a substantial variation to a prior order. But again I am dealing with an additional order. Moreover, strictly, I am modifying the effect of r 40.01 itself, not textually my prior order. It is obvious that r 40.02, if it is invoked, is designed to vary the operation of r 40.01. Both the text and context of those two rules do not demand any other conclusion. 20 In summary, I have power to make an additional order. 21 But alternatively, if the matter is to be analysed as one of variation, to the extent that an order, namely, that an existing costs order be paid on an indemnity basis, is a variation of an entered order, in my view r 40.02(a) may be seen as a necessarily implicit exception to any otherwise applicable general principle of the type asserted by ASIC, that an order cannot be varied after entry except under r 39.05. Rule 39.05 is to be read subject to the express r 40.02 dealing with costs. 22 For these reasons, ASIC's point on the question of an absence of power fails. The real question before me is not one as to the existence of power, but rather as to the exercise of such power. 23 Let me first deal with a potential discretionary bar to Mr Healy's application. Prima facie, there has been very substantial delay by Mr Healy in bringing the present application. But considering the relevant chronology, I am not inclined to hold this delay against Mr Healy, even though my earlier order was entered on 3 August 2020 and he did not file his present application until 29 July 2021. 24 First, although my judgment was handed down on 31 July 2020, the appeal period did not expire until 28 August 2020, and shortly thereafter on 21 September 2020, Mr Healy wrote to ASIC reserving his right to seek indemnity costs. I should say here, for what it is worth, that at no stage did ASIC prior to the filing of Mr Healy's present application assert that there was any absence of power to apply for or for me to make an indemnity costs order. That argument of ASIC seems to have only recently been advanced. 25 Second, in the period between February 2021 and July 2021, Mr Healy and ASIC engaged in without prejudice correspondence with a view to reaching a commercial resolution on the costs issues between them. That was a commendable approach by all concerned. 26 Third, in my view, no prejudice has been occasioned to ASIC by any delay on Mr Healy's part.

Should I order indemnity costs? 27 Let me then turn to the question of whether ASIC unreasonably refused the Calderbank offer. I should note that this also relates to the other limb of Mr Healy's arguments concerning the strength of ASIC's case. 28 In terms of the Calderbank offer, there are two principal questions to determine. First, did the offer constitute a genuine offer of compromise? Second, was it unreasonable for the offeree not to accept the offer? 29 Let me address the first question. 30 In Barnes v Forty Two International Pty Limited (No 2) [2015] FCAFC 19, Siopis, Flick and Beach JJ considered that a walk away offer with each party bearing their own costs may be a genuine offer of compromise where there is a substantial element of compromise involving the forgoing of a potential entitlement to costs that had already been incurred by the offeror up to and on the date of the relevant offer. It was said that (at [18]): In the present case, for the appellants to offer to "walk away" with each party bearing their own costs involved a substantial element of compromise in forgoing a potential entitlement to recover the substantial costs that had been incurred to the date of the relevant offer (or thereabouts) by the appellants. The Barnes' affidavit setting out the costs incurred (albeit solicitor/client) up to November 2012 indicates that, even taking a substantial percentage thereof on a party/party basis, something of significant value was offered to be given up. It is also to be remembered that the offers were made close to trial, when significant costs had already been incurred. There is little doubt that each offer involved a genuine element of compromise. 31 Now applying what the Full Court said in Barnes, I should also note that the Full Court in Verrocchi v Direct Chemist Outlet Pty Ltd (No 2) [2016] FCAFC 162 per Nicholas, Murphy and Beach JJ at [8] stated: … a "walk away" offer with each party bearing their own costs may be a genuine offer of compromise where there is a substantial element of compromise in forgoing a potential entitlement to recover substantial costs that had been incurred by the offeror to the date of the relevant offer… 32 Now in the present case, as at the date the Calderbank offer lapsed, Mr Healy had incurred costs in the amount of $1.525 million or so. In the Calderbank offer, Mr Healy relinquished his right to pursue an entitlement to recover some or all of these costs. Moreover, the Calderbank offer was made close to trial, indeed about one month before the trial was due to commence. In my view, that proffered relinquishment by Mr Healy of his entitlement to pursue, at the least, those costs, which relinquishment was set out in the Calderbank offer, represented a substantial compromise. Further, it is obvious that judged in the result, in terms of the judgment that I handed down in these proceedings, Mr Healy has substantially bettered the Calderbank offer. 33 Let me turn to the next question then. Was there an unreasonable refusal of the Calderbank offer? Now it is well established that a court considering a submission that the rejection of a Calderbank offer was unreasonable should usually have regard to at least the following matters: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it. 34 Further, and I think it important to note in the present context, the unreasonableness calculus may include other factors such as the public interest and any public policy considerations that might apply where one of the parties is, as in the present case, a regulator responsible for enforcing the corporations and associated legislation in the public interest. 35 Now in terms of dealing with this question of unreasonableness in terms of the rejection of the offer, it is appropriate for me to set out a little more of the chronology. 36 By 4 September 2019, ASIC had filed and served 18 witness affidavits and outlines of evidence. 37 On 25 September 2019, a failed mediation took place. I note that the Calderbank offer had been made the day before that mediation. As is apparent, the Calderbank offer was not accepted by ASIC and it expired on 4 October 2019. 38 On any view, the Calderbank offer was made close to trial. Further, at the time the offer expired, Mr Healy had not filed and served his evidence. Further, and this is not a criticism, Mr Healy's defence that he had filed to that point was hardly forthcoming on the detail of his real forensic defence that he was going to advance at trial. Of course, he was quite entitled to keep his powder dry. But it could fairly be said that many aspects of his meaningful defence only became apparent after the trial had started and during cross-examination. 39 Now the trial involving ASIC's evidence took place over 3 weeks in November 2019 through and until 22 November 2019. 40 At that point in time, Mr Healy then elected to go into evidence and ultimately he provided an affidavit on 27 November 2019. The trial continued after that point with the cross-examination of Mr Healy and then there were closing submissions in early December. 41 In my view and in fairness to ASIC, the real strength of Mr Healy's defence only became apparent during the trial and particularly when Mr Steven Wood was cross-examined and then, of course, when Mr Healy elected to go into evidence. But I must assess what was known or ought to have been known by ASIC at the time the Calderbank offer lapsed, being at the earlier point in time of 4 October 2019. In other words, any asserted unreasonableness as to ASIC's refusal to accept the Calderbank offer must be assessed at that earlier point in time and not with 20/20 hindsight. 42 Let me at this point say something about ASIC's case against Mr Healy, what Mr Healy has now said before me as to its weaknesses and ASIC's response. 43 Now I accept that many of the allegations of non-disclosure against Mr Healy were dismissed on the grounds that ASIC's case suffered from certain defects. First, ASIC seems to have misread some of the key documents. Second, ASIC did not have a complete understanding of the commercial drivers of some of the relevant transactions. But accepting that in context, that does not entail that at the time the Calderbank offer was refused, ASIC knew or ought to have known that it had no reasonable prospects or insufficient prospects of success. The trial was after all a major witness action. And the fact is that some of ASIC's witnesses, particularly Mr Wood, added to or departed from their written evidence in cross-examination in various significant ways. Moreover and as a result, in closing submissions ASIC quite properly abandoned several of its allegations against Mr Healy but only after all the evidence was in and as it was entitled to do. 44 Let me go through some of Mr Healy's main points. 45 Dealing with the 3 December 2012 board meeting, Mr Healy says that at the time of the expiry of the Calderbank offer, ASIC's case concerning non-disclosures by Mr Healy at the 3 December 2012 board meeting had no reasonable prospects of success or insufficient prospects and that this should have been known to ASIC. 46 ASIC's allegations were to the effect that by failing to ensure that various documents were included in the board pack for that meeting, Mr Healy failed to exercise his powers or discharge his duties appropriately as a director of Tennis Australia. Shortly put, the documents were Seven's November offer, the first IMG offer and the Gemba report. 47 As to Seven's November offer, I found that it was not necessary for Mr Healy to put Seven's November offer before the board because Mr Wood had disclosed the substance of that offer and none of the directors, apart from the first defendant, wished to entertain it further at that point. Accordingly, I ultimately concluded that ASIC did not have a tenable case against Mr Healy on that question. Mr Healy says before me that the key facts which made the allegations untenable were already clear on the basis of ASIC's own evidence in chief and therefore should have been known by ASIC at the time it rejected the Calderbank offer. 48 As to the first IMG offer, I dismissed the allegation based upon non-disclosure of that offer on the basis of finding that Mr Wood in substance had disclosed details to the board, that it was in any event a strategic device being used by Mr Wood, and that it was not an offer that was capable of acceptance at that time. Now Mr Healy says that all of the relevant facts resulting in the failure of that case, again, should have been known to ASIC at the time of the Calderbank offer expiring. 49 As to the Gemba report, I found that Mr Wood disclosed to the board at the 3 December 2012 meeting the headline figure, which made the disclosure of the underlying detail largely superfluous. But in fairness to ASIC, Mr Wood's written evidence in chief did not state that he had disclosed the $40 million figure to the board at that meeting. 50 Further, Mr Healy says that ASIC's additional case that it was necessary to disclose all of the Gemba report, as opposed to Mr Wood just giving the ultimate conclusion, was based upon a misreading of that document. I agree. This should not have occurred. 51 Let me say something about the allegations concerning the 4 March 2013 board meeting. Mr Healy also says that at the time of the expiry of the Calderbank offer, ASIC's case concerning the non-disclosures by Mr Healy at that meeting had no reasonable prospects or insufficient prospects of success and, again, that this should have been known to ASIC. 52 Now as to the case made by ASIC concerning Mr Wood's 12 December 2012 email, I found that this email was not an appropriate document to include in a board pack, let alone to put it before the March meeting. It is said that the matters that I had set out in my reasons at [1298] and [1299] were known to ASIC at the time the Calderbank offer was made. Mr Healy says that any failure by ASIC to appreciate their significance was unreasonable, and based upon a failure to "understand key terms of commercial documents" and a failure to appreciate the significance of matters of timing. 53 As to ASIC's case concerning the Ayles paper, it was said that its case against Mr Healy could never succeed. Indeed, it was put that the case pleaded by ASIC against Mr Healy concerning the Ayles paper did not deal with the version sent to Mr Healy, and it was said that the version that Mr Healy saw was a version which had a recommendation that conflicted with Tennis Australia's obligation to afford to Seven an exclusive negotiation period. Further, it was said that many of the other matters in the Ayles paper that ASIC asserted required disclosure were already known to the board or were otherwise irrelevant. Again, it was said by Mr Healy that these were matters that should have been known or appreciated by ASIC at the time the Calderbank offer lapsed. 54 Further, as to ASIC's case concerning the first IMG offer and the question of its disclosure to the March meeting, it was said that that offer had by then been superseded by the second IMG offer. Moreover, criticism has been made by Mr Healy that ASIC continued to press its case concerning non-disclosure of the first offer, even though at trial it had abandoned its case concerning the second IMG offer. But in any event, it was also said that ASIC's case concerning the second IMG offer was flawed, because there was no evidence that Mr Healy had received a copy of it prior to the March board meeting. 55 Let me say something about the May 2013 board meeting. Mr Healy also says that at the time of the expiry of the Calderbank offer, ASIC's case concerning the non-disclosures by Mr Healy at the May board meeting had no reasonable prospects or insufficient prospects of success, and that this should have been known to ASIC. 56 Various points were raised in submissions before me concerning the Ayles paper, the second IMG offer, the board subcommittee paper, Gemba's cricket presentation, Seven's final offer and other matters. I will not rehearse the submission at this point of Mr Healy, but I have considered them. But there are two particular matters that I would note. 57 In relation to the interest by Network Ten, there were differing accounts of conversations which bore upon Mr Healy's knowledge on this aspect. ASIC's evidence was of vague conversations between Mr Wood and Network Ten representatives which Mr Wood had said he passed on to Mr Healy with, perhaps, further qualifications by Mr Wood. Further, ASIC's pursuit of this part of the case seems to have been affected by the evidence of Dr Young to the effect that Network Ten had sent a letter to Tennis Australia expressing interest, and that Mr Healy had made admissions in that regard. There was, of course, no such letter. 58 And as to the interest by the Nine Network, in my view there was never any reliable evidence that Mr Healy was ever informed by Mr Wood of Nine's interest, outside the board meetings, at the level of any particular figure. 59 Finally, in terms of the points made by Mr Healy as to the strength of ASIC's case and what ASIC should have known at the time the Calderbank offer was refused, Mr Healy's counsel made some submissions dealing with the question of foreseeable risk of harm. 60 Mr Healy says that ASIC was never in a position to prove that any of Mr Healy's alleged non-disclosures were causative of the broadcast rights not going to tender. Further, Mr Healy says that ASIC was never in a position to prove that it was foreseeable that Tennis Australia would suffer harm by it declining to put the broadcast rights out to tender. Further, Mr Healy has drawn attention to my finding that ASIC's harm theory was problematic at the start of the trial and not maintainable by its end. 61 Mr Healy has also raised other points that he says demonstrates that ASIC ought to have known at the time of the Calderbank offer lapsing that its case was fundamentally flawed. 62 Now I am not prepared to conclude that on the evidence that ASIC had in its possession at the time the Calderbank offer lapsed that ASIC knew or ought to have known that its case against Mr Healy had no reasonable prospects or insufficient prospects of success. 63 As I have already said, by 4 October 2019 ASIC had filed and served numerous affidavits and outlines of evidence that it expected to be given by witnesses. In relation to that evidence, I cannot say that at that time the case against Mr Healy had no reasonable prospects of success. 64 Further, I agree with ASIC that when assessing its prospects of success in terms of considering its response to Mr Healy's offer, ASIC did not know that Mr Wood's oral evidence would deviate significantly from his written evidence-in-chief. 65 Further, at that earlier point in time ASIC did not know what Mr Healy's evidence was going to be. 66 In my view, these two matters bear considerable significance. Mr Healy kept his powder dry in terms of the evidence that he was going to give. Fair enough. But in terms of considering the reasonableness of the refusal by ASIC of the Calderbank offer, I must look at what ASIC knew at the earlier time and not through any later lens of hindsight. Moreover and as I have said, it is clear that Mr Wood under cross-examination departed from significant aspects of his evidence-in-chief. Perhaps some of this could have been anticipated by ASIC, but not all or much of it. 67 Let me now just go through some of ASIC's submissions by way of answer to Mr Healy's criticisms of what ASIC knew or ought to have known at the earlier point in time. I should say that I largely accept what ASIC says on these questions. 68 Now as to Seven's November offer, I found that ASIC did not have a tenable case against Mr Healy that his failure to disclosure that offer at the relevant meeting(s) put him in breach of his director's duties. One reason for this was that it was Mr Wood's choice not to include the offer in the board pack. I tend to agree with ASIC that there had been some prospect that it might have been found that that had been Mr Healy's choice. For each board meeting, the agenda, having been drafted by the secretary and discussed with Mr Wood, would be sent to Mr Healy to see if there was anything else that he wanted included or removed. The draft agenda was signed off by Mr Healy. That would then result in the process of creating necessary board papers. In my view, there was some prospect that given Mr Healy's position as chairman that I might have found that Mr Healy, by including the offer in the agenda, could have included it in the board pack. 69 As to the first IMG offer, I found that ASIC's assertion that Mr Healy breached his duty by not disclosing the details of that offer to the board on 3 December 2012 had no substance to it. One reason for this was that it had been Mr Wood's decision not to include that offer in the board pack. But again, trying to put myself back in the position that ASIC would have been in on 4 October 2019, there was some prospect that it would have been found that that had been Mr Healy's decision. 70 As to the Gemba report, I found that ASIC had not made out its case concerning the non-disclosure of that report or the summary. But of course I was drawing that conclusion in terms of that part of ASIC's case not having succeeded. It does not follow from that that I was concluding that it had no reasonable prospect of success considered from the perspective of ASIC and what it knew on 4 October 2019. 71 As to the Ayles paper, I rejected ASIC's case concerning that paper. But again, this conclusion was drawn by me after considering all the evidence, the slightly conflicting versions of events and the different drafts of the document. It was not a conclusion that if ASIC was considering this matter on 4 October 2019 with the knowledge that it had then, that that part of the case had no reasonable prospect of success. Moreover, as to the Ayles paper and as drawn to my attention by ASIC this morning, Mr Wood's evidence at [142] to [145] and [162] of his 9 August 2019 affidavit had some significance for ASIC's case against Mr Healy. 72 As to the second IMG offer, I found that ASIC's case concerning non-disclosure of that offer at the May board meeting had no substance. One reason for that was that, contrary to Mr Wood's first affidavit, he ultimately accepted that he mentioned the second IMG offer at the March board meeting where he had given details that were more than adequate to indicate that the offer indicated a valuation point that was higher than the then prevailing Seven offer. Now all of this was at odds with Mr Wood's first affidavit where he had said that this offer was not mentioned at any board meeting. 73 Let me just say something about Ten's interest in terms of what ASIC has submitted to me in the present application and what I accept. As to my conclusion that I did not find any lack of care by Mr Healy in failing to pass on his knowledge of Ten's interest, this was a conclusion that was reached after a consideration and attempted reconciliation of the evidence of multiple witnesses, including Mr Healy. Again, this was not a conclusion that ASIC's case on this point had no reasonable prospect of success if considered at the earlier point in time. 74 As for my conclusion concerning Nine's interest, that is, that there was no sound basis for ASIC's allegation that Mr Healy was bound to disclose the level of Nine's interest at the May meeting and that that was because there was no evidence that Mr Healy knew of any particular figure attached to Nine's interest, I found that there was no reliable evidence that Mr Healy had ever been informed of Nine's interest outside the December and March board meetings. Now, of course, there was evidence given by Mr Wood in his first affidavit, where he had referred to being telephoned in late 2012 by the then managing director of Nine, who said, "We can do the tennis, and I will pay you what it's worth. A number with a four in front of it is not out of the question". Mr Wood said that he had then reported this conversation to Mr Healy. But at trial, the witness from Nine denied that he had given any number to Mr Wood, and I accepted that. And Mr Healy denied that he had been told anything at all about the conversation, and I accepted that denial. But none of this had been known to ASIC at the time the Calderbank offer lapsed. 75 Let me deal with one further aspect. 76 As to the question of the foreseeable risk of harm, Mr Tanner gave written evidence that if he had known in May 2013 that serious approaches had been made to Tennis Australia by other networks, he would have been more likely to support a recommendation to take the rights to tender. Now I did not accept that Nine's or Ten's approach had been serious, but as to the position of Ten, this was not the evidence in chief of either the CEO or the chief operating officer. They gave evidence of having formulated and pursued a plan to entice Tennis Australia away from Seven. I accept ASIC's position that there was at least some prospect that this evidence may have been accepted, if one puts oneself back in the perspective of what ASIC knew or ought to have known on 4 October 2019. 77 Further and as a corollary, there was also a reasonable prospect that if that evidence had been accepted, it may have been inferred that Mr Tanner would, if having been told of Ten's proposals or plan, have persuaded several other directors at the May meeting to agree to put the rights out to tender. Now, of course, Mr Wood, even armed with that information, urged that Seven's final order should be accepted. But it was a possibility that the board armed with the same information and with Mr Tanner's commercial experience, possibly may not have accepted that recommendation. That is all a roundabout way of saying that if I was to place myself in the position of ASIC on 4 October 2019, I could not say confidently, for the purposes of the context of the present application before me, that it had no reasonable prospects of success in establishing some form of case dealing with a foreseeable risk of harm that might be said to have flowed from Mr Healy's breaches of duties, if they had been otherwise established. 78 Let me now move to another matter, and that is to deal with ASIC's position and statutory responsibilities, which is a factor relevant to reasonableness. 79 ASIC is charged with functions and powers to act as the regulator, in the public interest, including to pursue proceedings of the present type, proceedings which I note are complex and often difficult to prove. And that is sometimes more so in the context where individual defendants, that is, natural persons can exercise a privilege against self-exposure to a penalty and can keep their cards close to their chest until the last minute. 80 Now Mr Healy says that on the facts of the present case, the unreasonableness of ASIC's conduct is not ameliorated by reason of its position as a regulator. Indeed, Mr Healy says that ASIC's position as a regulator in the present case exacerbates the unreasonableness of its conduct. 81 Mr Healy points out that in the present matter ASIC conducted a very extensive investigation which occurred over approximately two years. There were multiple s 19 examinations and numerous notices to produce documents by the exercise of coercive statutory powers under ss 30 and 33 of the Australian Securities and Investments Commission Act 2001 (Cth), as well as further document production during the proceeding under various s 1317R notices. Further, the evidence served by ASIC by the time of the lapsing of the Calderbank offer was very detailed. In short, Mr Healy says that ASIC had at its disposal access to all of the relevant evidence that it needed to understand the detail of its case at or around the time that the Calderbank offer was not accepted. In elaboration, the following points were also made. 82 First, Mr Healy says that ASIC was in a better position than an ordinary litigant to resolve any uncertainties which might have otherwise arisen from witness evidence or documents at the time of the Calderbank offer lapsing. Indeed, he says that given its coercive statutory powers that I have mentioned, ASIC was in a position to obtain a full understanding of the relevant commercial transactions. Now this point has some force. But Mr Wood's written evidence assisted ASIC, and it was only later undermined by extensive cross-examination. Further, the real forensic scope and strength of Mr Healy's defence only became known during the running of the trial when he later disclosed his hand. 83 Second, Mr Healy says that it was not reasonable for ASIC to put forward a case based on witnesses such as Ms Pratt and Dr Young without testing their evidence, especially when there were objective reasons to doubt their evidence, and all in a context where ASIC could have examined and conferred with those witnesses to find out what the true position was. Moreover, it was said that various significant matters which Dr Young and Ms Pratt were cross-examined upon, and ultimately based upon which I found their evidence to be unreliable, were matters taken from contemporaneous documents that ASIC had in its possession by the time that the Calderbank offer was not accepted. Now that criticism of Mr Healy is not without some force, but their evidence, in my view, was largely peripheral if not a sideshow to the central allegations. And it cannot be said that at the time the Calderbank offer was refused ASIC had no reasonable prospects of success, even putting to one side the evidence of Dr Young and Ms Pratt. 84 Third, Mr Healy says that in comparison with other regulatory cases, in the case before me it could not be said that ASIC was bringing the proceeding against Mr Healy to obtain some ruling on an esoteric or important question of law. Rather, Mr Healy says that the case against him, in terms of the legal questions, involved plain vanilla asserted breaches of director's duties, and that I ultimately found ASIC's case to be flawed on factual grounds. But I do not think the matter is as simple as this. There were normative questions involving the position of a chairman of a board of directors in terms of his role and duties that needed to be considered. Further, the division of responsibilities between the chairman and CEO was also a broader normative question. So too, the division of responsibilities between different directors needed to be considered. 85 In summary, in my view given ASIC's position as the regulator, Mr Healy has a slightly higher bar to satisfy me that it acted unreasonably in pursuing action in the public interest by refusing the offer than if ASIC was a commercial enterprise. But Mr Healy has not so satisfied me. There are no compelling facts or circumstances which were known to ASIC on 4 October 2019 such that it ought to have realised that its case against Mr Healy had no reasonable prospects of success or insufficient prospects to continue to trial. 86 In summary, in my view, ASIC did not unreasonably refuse the Calderbank offer. 87 Further, as to Mr Healy's separate but related point that on the information known to ASIC generally it knew or ought to have known that it had no reasonable prospects of success or, to use the language of counsel for Mr Healy, a very weak case, I do not accept that proposition for similar reasons. 88 Accordingly, Mr Healy's application for indemnity costs will be refused. Moreover, Mr Healy should pay the costs of this part of his present interlocutory application, the balance of which will be disposed of by Registrar Edwards. I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach.