Bostik Australia Pty Ltd v Liddiard

'Some costs'

In the alternative, Primary pointed to a number of aspects of Aurora's claim which did not succeed, including its alternative claim for relief under section 237 of the Australian Consumer Law, Aurora's denial that its directors and auditors were sent the Notice of Meeting, and its basis for suggesting that the meeting was invalid by reason of not being convened at a reasonable time or place. Primary conceded, fairly, that these issues had not occupied substantial periods of time and Primary already had the benefit of an order for the costs thrown away by Aurora's amendment to add a claim for relief under section 237 of the Australian Consumer Law. Given how little these issues occupied the pleadings, evidence, hearing and submissions, I would not be minded to apportion Aurora's costs on the basis of these issues.
Of more significance, however, Primary submitted that Aurora's principal complaint as to the misleading quality of the Explanatory Memorandum, which occupied 8 of the 18 pages of the Statement of Claim, failed, not due to any exercise of discretion but because the Court of Appeal of the Supreme Court of Western Australia in Westralia Property Management Limited v Davison [2006] WASCA 203 had already confirmed some years ago that a member does not owe fiduciary duties of disclosure to other members when issuing an explanatory memorandum.
To this, I think, should be added Aurora's fixation on the arrangements which the members who stood behind Primary were said to have reached in breach of the takeover provisions in Chapter 6 of the Corporations Act. It was these two topics which occupied the bulk of Aurora's statement of claim and reply, Mr Patton's affidavits, Aurora's oral submissions and detailed final submissions and a substantial portion of the judgment. Aurora failed in respect of the misleading nature of the Explanatory Memorandum by reason of Westralia and also the content of the document (Aurora No 1 at [157]). Further, Aurora's focus on Chapter 6 was of little assistance to the court in determining the issues in the Originating Process: Aurora No 1 at [113], [167].
Aurora submitted that this was not an occasion for a costs apportionment, relying on the judgment of Macfarlan JA (Bathurst CJ and Beazley JA agreeing) in Dungowan Manly Pty Ltd v McLaughlin (2012) 90 ACSR 62; [2012] NSWCA 180 at [120]: … A plaintiff who succeeds in proving the core of his or her case will rarely be denied full recovery of costs even if many of the guises in which the case is clothed are unsuccessful. … that will ordinarily occur where there are clearly separable issues upon which the plaintiff failed. … Aurora submitted that the outcome had not been "mixed": no part of Aurora's claim failed; it was only that the Court was unpersuaded by some of the guises in which Aurora clothed its argument.
Recently, in Mobis Parts Australia Pty Ltd v Excel Insurance Co SE (No 2) [2019] NSWCA 19, the Court (comprising Beazley P, Meagher and Leeming JJA) noted at [5]: … 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": Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-331 (Mahoney JA); Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[64] (Campbell JA). And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [22] (Hodgson JA, Allsop P and Macfarlan JA agreeing). Aurora submitted that it should not be denied a portion of its costs on an issue if its failure on that issue did not change the overall outcome, relying on Mobis at [7] and [8]. I am not sure that the Court of Appeal, in those paragraphs, was stating a principle but rather recording the materiality of the issues on which the successful party failed in that particular case, and I do not think this detracts from the general principle stated by the Court.
Aurora also adopted the remarks of Jacobs J, who joined in the orders of Bray CJ and Zelling J, in Cretazzo v Lombardi (1975) 13 SASR 4 at 12: The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. … I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues. His Honour did not rule out apportionment, but indicated that it should not be expected in every case. I think that modern case management principles - which encourage parties to focus on the real issues in dispute in order to ensure that proceedings are just, quick and cheap - may also have a role to play.
Aurora submitted that the circumstances are not so exceptional as to justify any departure from the usual rule that costs follow the event. None of the arguments on which Aurora did not succeed were dominant or unreasonably advanced. The arguments as to the misleading nature of the Explanatory Memorandum were not clearly severable but were also relevant to Aurora's claim that it led to substantial injustice under section 1322 "on which the Court found in Aurora's favour on the Chapter 6 argument". With respect, the Court did not so find: Aurora No 1 at [113], [167]. Rather, I found that, while there was sufficient factual material to find that Mr Staermose, his clients and other members acted together in a concerted manner to remove the responsible entity, it was neither necessary nor appropriate for me to decide Aurora's contentions in respect of Chapter 6 in order to decide whether there substantial injustice for the purposes of section 1322. While relevant to the question of misleading and deceptive conduct, Aurora was not successful on this issue in any case.
As the Court (Beazley, Ipp and Tobias JJA) noted in Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]: It may be appropriate to order that a successful party be deprived of costs or a portion of the costs if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument. If the successful party loses on a separate issue which has increased the time taken in hearing the matter, then a special order for costs may be appropriate which deprives the successful party of the costs of that issue: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; Turkmani v Visvalingam (No 2) [2009] NSWCA 279 at [15].
It seems to me that, although Aurora obtained the declaratory relief it sought, it did not do so on the basis of the dominant issues which it pursued: Aurora's focus on Chapter 6 and the misleading Explanatory Memorandum comprised a significant part of the trial in terms of evidence and argument. The length of hearing would have been less if those issues had not been pursued by Aurora with such fervour, in the face of authority which stood clearly in its path, and, in respect of the Chapter 6 issues, where the relevant parties for the Court to determine any issues in respect of Chapter 6 were not joined and no Chapter 6 issues were pleaded. Given the dominance of these issues, I am minded to vary the costs order which I made in Aurora No 1.
Both parties agreed that, if I was so minded, then the method was that described in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2012) 86 ACSR 119; [2011] NSWCA 256 per Campbell JA (with whom Macfarlan and Young JJA agreed) at [84]: … where there is a mixed outcome in proceedings the question of apportionment of costs between issues on which the party who has overall been successful has succeeded, and those on which that party has failed, is very much a matter of discretion, and mathematical precision is illusory … .
I invited Aurora to identify an appropriate apportionment and, as I understand the affidavit of Aurora's solicitor, the work done on the misleading nature of the Explanatory Memorandum was directed to both the Westralia argument and also whether there was substantial injustice for the purposes of section 1322 of the Corporations Act. As I understand Ms Wright's apportionment - and I confess that I do not think I have understood it fully - some 5% to 7.5% was spent on these matters.
Such an apportionment does not accord with my impression. Evidence as to these matters dominated the proceedings. If the matter had been confined to whether sufficient notice had been given of the meeting, whether the meeting was held at an unreasonable time and place, and whether the notice of meeting was valid given that it failed to disclose the members who called it, then the hearing would, I think, have been shorter, as would have closing submissions and my judgment. I am, however, mindful that the position did not become clear in respect of the issues on which Aurora did succeed until shortly before the trial. Weighing all of these factors, I make the following orders, in which I have already made allowance for Primary's costs of its Interlocutory Process filed on 7 June 2019: 1. Vacate Order 5 made on 30 May 2019. 2. Order the first defendant to pay 65% of the plaintiff's costs of the proceedings on a party and party basis.

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