- Ballam v Ferro

Supreme Court of NSW|2024-07-26|Before: Black J

Solicitors: Speed & Stracey (Plaintiffs) McCabes (First Defendant) File Number(s): 2024/205160

Background

By my judgment delivered on 19 July 2024, I determined several issues arising in proceedings brought by the Plaintiffs, Ms Richards and Mr Hooker, against Mr Kieran Turner ("KT") and others relating to the Heartland group of companies. The parties had accepted that those issues should be heard separately, and in advance of any Cross-Claim that may be filed by KT seeking relief for oppression on the basis that the determination of those issues was likely to narrow the issues in dispute in the oppression claim.
I observed, at paragraph 132 of my judgment that: "I am inclined to think that there should be no order as to costs as to the separate issues and this hearing, where each party has had a measure of success and a substantial measure of failure. However, I will allow the parties an opportunity to make short submissions as to costs."
I allowed the parties an opportunity to make short submissions as to costs and directed them to bring in Short Minutes of Order to give effect to the judgment. The parties now agree the form of orders to be made but take differing views as to costs. On 2 August 2024, after the parties had made submissions as to orders and costs, they submitted consent orders that provided for the balance of the proceedings to be dismissed with no order as to costs, other than the reserved costs of the separate questions.

Applicable principles

The applicable principles are well established and were not contested in this application. The Court has power to make an order for costs under s 1335(2) of the Corporations Act 2001 Cth ("Act") and s 98(1) of the Civil Procedure Act 2005 (NSW) ("CPA") and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). Section 98 of the CPA confers a discretionary power to determine costs on the Court and requires that that discretion be exercised judicially: Ballam v Ferro (No 2) [2022] NSWSC 1358 at [54]. Rule 42.1 of the UCPR in turn provides that: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
A successful party in proceedings has a "reasonable expectation" of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [134]. In Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with whom Mason P agreed) observed that: "… underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs."
That observation was cited, with apparent approval, by the Court of Appeal in Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98] and, in Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [7]-[14], McColl JA summarised the applicable principles as follows: "Section 98 of the Civil Procedure Act 2005 (NSW) confers a wide discretion on the court with respect to costs. The general rule is that court costs follow the event unless the court makes some other order pursuant to the discretion conferred by Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 42.1. As Beazley JA explained in Baker v Towle [(2008) 39 Fam LR 323; [2008] NSWCA 73 at [11] (Mathews AJA agreeing)], in most litigation, UCPR r 42.1 "operates in a straightforward way, 'the event' being readily identifiable as a judgment for the plaintiff or the defendant on the claim. In that sense, 'the event' to which the rule refers is the result of the proceedings, so that the party who succeeds on the claim before the court is awarded costs, unless the court, pursuant to the discretion conferred by r 42.1, makes 'some other order'". Underlying both the general rule that costs follow the event, and qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs."
Mr Izzo, with whom Mr Boyle appears for KT, also submits and I accept that "[t]he disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires": Gray v Richards [No 2] [2014] HCA 47 at [2] (French CJ, Hayne, Bell, Gageler and Keane JJ).
Mr Potts, who appears for the Plaintiffs in respect of costs, also points to Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], where the Court of Appeal noted that, where there are multiple issues in a case, the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. However, the Court also there pointed to several circumstances in which a different approach might be justified, and noted that: "Whether an order contrary to the general rule of costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the Court, which powers should be liberally construed."
In Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5], the Court of Appeal noted that: "There is no issue as to the relevant principles. The discretion under Civil Procedure Act 2005 (NSW), s 98 is ordinarily exercised by requiring that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action … But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least unless a particular issue or group of issues is clearly dominant or separable … And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff …" [citations omitted]
Mr Izzo in turn submits that, where there is a mixed outcome in proceedings, any question of apportionment is recognised as being very much a matter of discretion, the exercise of which "will often depend upon matters of impression and evaluation": Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ).
Mr Potts submits that KT should pay their costs of the separate questions heard by the Court on the basis that they have had "substantial success" and costs should follow the event. He provides a partial outline of the circumstances which gave rise to the dispute between the parties, including steps taken by KT to seek to appoint his brother, Mr Anthony Turner ("AT"), as a director of several Defendants by the purported exercise of the chair's casting vote for each of those companies. He also refers to the narrowing of the issues in the proceedings, shortly after they were commenced on 3 June 2024, by the Points of Defence filed by KT which accepted that KT was not the director of several companies and admitted that Ms Richards was a director of several companies. The Plaintiffs submit that that involved a "significant capitulation" in relation to a significant part of the proceedings. That submission does not advance the Plaintiffs' position as to costs where that position was taken promptly, before the parties were put to any significant costs of running the proceedings and was an appropriate and proper step to narrow the scope of the proceedings. Mr Potts also points to a further narrowing of the proceedings on 1 July 2024, when KT did not press an earlier position that Ms Hooker's appointments as a director of two corporate Defendants were invalid.
Mr Potts submits that, as a matter of substance, the outcome of the hearing of the separate question was that it was either conceded or established that AT was not validly appointed to many of the corporate Defendants; that Ms Richards was a director of many corporate Defendants; and Ms Hooker was a director of two corporate Defendants; and he submits that that amounted to the Plaintiffs' "substantive and substantial" success in the proceedings. That approach pays too little attention to the numerous questions which the parties sought to have the Court determine, as to which both parties had mixed results. Mr Potts also submits that the individual issues on which the Plaintiffs lost did not occupy the majority of the preparation time, evidence or hearing time; part of that proposition is assertion, so far as preparation time is concerned, and part turns upon an analysis which is difficult and uncertain so far as the allocation of hearing time is concerned. Mr Potts then submits that the Plaintiffs should be awarded costs because they have been "substantially successful" in the proceedings in the vindication of their rights. I do not accept that proposition, where the result in the separate questions that I was asked to determine was mixed.
Mr Izzo in turn submits that, consistent with the preliminary view expressed in paragraph 132 of my judgment, there should be no order as to costs to date with the intention that the parties should bear their own costs. He submits that that result would reflect a fair apportionment of responsibility for costs, in the light of the mixed outcome in the issues in the proceedings. He identifies the issues that were determined by the separate questions, including questions whether KT had been appointed chair of the Heartland group; whether the appointment of AT as director of several companies had expired, and issues as the application of ss 259C, 259D and 1322 of the Actin the relevant circumstances. Mr Izzo submits that KT had a measure of success on the "chair issue"; I do not accept that proposition, where, whatever his success in interim steps, I did not find that he had been appointed as chair of the Heartland group. However, I accept that KT was successful in respect of the issues as to the application of ss 259C, 259D and 1322 of the Act which had a degree of factual and legal complexity. I see little utility in assessing the outcome of the proceedings from a commercial perspective, where that is speculative; however, if I were to take that approach, there would also be force in KT's submissions that he was successful in establishing the position for which he contended in respect of control of Heartland Group Pty Ltd, which is a significant matter where it is the holding company for companies within the Heartland group.
For these reasons, I continue to take the view which I expressed, then as a preliminary view in the judgment, that there should be no order as to the costs of the separate questions.

Orders

Accordingly, I make the following orders: The Court declares that in the events which have happened:
The fourteenth defendant, Mr Anthony Turner is not, and has never been, a director of: a) the third defendant, Heartland Group Pty Ltd; b) the fourth defendant, Boyded Industries Pty Ltd; c) the fifth defendant, HMG Parts Pty Ltd; d) the sixth defendant, Heartland Motors Pty Ltd; e) the seventh defendant, Heartland Blacktown Pty Ltd; f) the eighth defendant, Heartland Penrith Pty Ltd; g) the ninth defendant, Chicago Properties Pty Ltd; h) the tenth defendant, T S Management Pty Ltd; i) the eleventh defendant, BGW Nominees Pty Ltd; and j) the twelfth defendant, Rossfield Nominees (A.C.T) Pty Ltd.
The first plaintiff, Ms Joanne Richards: a) is and remains a director of the fourth defendant, Boyded Industries Pty Ltd, and the purported board resolution of 30 May 2024 of the third defendant, Heartland Group Pty Ltd, purporting to remove Ms Richards as a director of Boyded Industries Pty Ltd, was invalid and of no effect: b) is and remains a director of the fifth defendant, HMG Parts Pty Ltd, and the purported board resolution of 30 May 2024 of the fifth defendant HMG Parts Pty Ltd, purporting to remove Ms Richards as a director of HMG Parts Pty Ltd was invalid and of no effect; c) is and remains a director of the seventh defendant, Heartland Blacktown Pty Ltd, and the purported board resolution of 30 May 2024 of the seventh defendant, Heartland Blacktown Pty Ltd, purporting to remove Ms Richards as a director of Heartland Blacktown Pty Ltd was invalid and of no effect; and d) is and remains a director of the eighth defendant, Heartland Penrith Pty Ltd, and the purported board resolution of 30 May 2024 of the eighth defendant, Heartland Penrith Pty Ltd, purporting to remove Ms Richards as a director Heartland Penrith Pty Ltd was invalid and of no effect.
The second plaintiff, Mrs Bernice Hooker: a) was validly appointed as a director of the second defendant, Bernley Corporation Pty Ltd, on 26 September 2022, and has remained a director since that time; b) is not, and has never been, a director of: i) the third defendant, Heartland Group Pty Ltd; and ii) the fourth defendant, Boyded Industries Pty Ltd. The Court orders that:
Pursuant to s 1322(4)(b) of the Corporations Act 2001 (Cth) ("Act"), the fourteenth defendant, ASIC: a) record that the fourteenth defendant, Mr Anthony Turner, is not and has never been a director of each of the third to twelfth defendants, as declared in order 1 above; b) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16430 in respect of the third defendant, Heartland Group Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; c) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16428 in respect of the fourth defendant, Boyded Industries Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; d) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16423 in respect of the fifth defendant, HMG Parts Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; e) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16415 in respect of the sixth defendant, Heartland Motors Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; f) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16425 in respect of the seventh defendant, Heartland Blacktown Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; g) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16416 in respect of the eighth defendant, Heartland Penrith Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; h) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16422 in respect of the ninth defendant, Chicago Properties Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; i) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16405 in respect of the tenth defendant, T S Management Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; j) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16431 in respect of the eleventh defendant, BGW Nominees Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; k) ensure that the form 484 lodged with ASIC on 23 February 2023, with document number 3EVB16409 in respect of the twelfth defendant, Rossfield Nominees (A.C.T) Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; l) record that the first plaintiff, Ms Joanne Richards, is and continued at all times from 30 May 2024 onwards, to be a director of each of: i) the fourth defendant, Boyded Industries Pty Ltd; ii) the fifth defendant, HMG Parts Pty Ltd; iii) the seventh defendant, Heartland Blacktown Pty Ltd; and iv) the eighth defendant, Heartland Penrith Pty Ltd; as declared in order 2 above; m) ensure that the form 484 lodged with ASIC on 30 May 2024, with document number 6ECKI4078 in respect of the fourth defendant, Boyded Industries Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; n) ensure that the form 484 lodged with ASIC on 30 May 2024, with document number 6ECKI4071 in respect of the fifth defendant, HMG Parts Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; o) ensure that the form 484 lodged with ASIC on 30 May2024, with document number 6EKI4058 in respect of the seventh defendant, Heartland Blacktown Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; p) ensure that the form 484 lodged with ASIC on 30 May 2024, with document number 6ECKI4066 in respect of the eighth defendant, Heartland Penrith Pty Ltd, be withdrawn from the registers kept by the fourteenth defendant, ASIC, under the Act and not appear on the public view; q) record that the second plaintiff, Mrs Bernice Hooker, was appointed as a director of the second defendant, Bernley Corporation Pty Ltd, on 26 September 2022, and has remained a director since that time, as declared in order 3 above.
There be no order as to the costs of the separate questions ordered to be heard separately and in advance of any cross-claim in these proceedings by order 4 of the Court's orders on 7 June 2024.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 August 2024

(2008) 39 Fam LR 323

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