Capital Finance Corp (Australasia) Pty Ltd & Ors v Peter Pan Management Pty Ltd

10. The plaintiffs in the proceeding were Peter Pan Management Pty Ltd (in liquidation) ("PPM") and its liquidator. The defendants were two companies, Capital Finance Corporation (Australasia) Pty Ltd and Capital Finance Corporation Pty Ltd (collectively referred to as "Capital") and their sole shareholder and director, Kerrod Grant Park. The proceeding was instituted by PPM and its liquidator to recover what was alleged to be an undisclosed or unreasonable profit or fee derived by Capital in the course of certain transactions which Capital was engaged by PPM to undertake. Inter alia, the plaintiffs alleged that Capital had acted as PPM's agent in those transactions and had retained the amount in question either in breach of contract or in breach of fiduciary duty. Alternatively, the liquidator alleged that the transactions were voidable as "uncommercial" under the Corporations Law. The judge found that Capital was not appointed by PPM as its agent in relation to the transactions in question, that there was no sound basis for implying a term limiting Capital's remuneration in effectuating the transactions, and that the transactions were not "uncommercial" in a relevant sense.

13. The defendants then sought that costs follow the event and, indeed, that those costs be paid on an indemnity basis by reason of two Calderbank offers made by the defendants which had not been accepted. The plaintiffs sought an order that the

defendants pay their costs or, in the alternative, that there be no order as to costs - and it is this last which the judge preferred.

17. Initially the plaintiffs instituted an appeal against the judgment given below, but that appeal was subsequently abandoned. On 14 September 2001 the defendants sought and obtained leave to cross-appeal in order to challenge the order that each party bear its own costs. It is their contention that his Honour erred in the exercise of his discretion as to costs, mistaking some facts and failing to take account of some considerations that were relevant. They seek an order on appeal that the costs be theirs.

20. The notice of appeal filed on 27 September 2001 is commendably brief, containing two grounds of appeal. On 11 July last, the appellants served an amended notice of appeal which they sought leave to rely upon today, expanding those two grounds into some 14, but really doing little more, for the most part, than giving particulars of the arguments to be mounted as to the facts allegedly mistaken and relevant considerations allegedly left out of account. These points were all duly reflected in the appellants' outline of submissions, where detailed references were found to the transcript at trial, the documents and the transcript of the liquidator's examination which preceded the institution of this proceeding; and to add to the volume of material relied upon, the appellants filed recently what was called a "cross-appellants' book" containing fresh copies of every page relied upon in the Appeal Book, collected under each of the 14 grounds to be argued.

23. Despite the plethora of this material, it was soon apparent this morning that what the appellants were seeking to do was simply to re-argue the question of costs, notwithstanding that both parties had been heard by counsel on 20 July 2001. Before the trial judge plaintiffs' counsel had relied upon a set of submissions in writing, taking a number of specific points in aid of the submission that to some extent at least Mr Park had "brought this proceeding on his own head" by his failure to explain matters more fully at the appropriate time. These written submissions were quite brief but they were none the less detailed, giving chapter and verse for the various points which were made. For the defendants, counsel had not sought to answer the detail, relying instead upon a denial in general terms that Park's conduct had contributed to the litigation and a submission that costs should follow the event. To put it shortly, the judge accepted the several points made by counsel for the plaintiffs and so ordered that costs lie where they fall, declining to order costs against the defendants. Brief reasons were given.

26. On this appeal, the appellants were seeking to re-agitate the points taken against them below, as witness the amended notice of appeal which addresses in turn every point mentioned in the plaintiffs' written submissions, and as well the point made by the judge in paragraph 34 of the reasons for judgment in the main proceeding concerning the position in which, as the judge saw it, the liquidator had found himself. Suffice it to say that, for whatever reason, none of the submissions now sought to be made were put below, not even the argument now sought to be made about paragraph 34 of the judgment delivered on 5 July. Yet all the points now found in the notice of appeal could have been put below, and Mr Lucarelli (who was not counsel below) was unable to offer to us any reason why they were not. Perhaps defendants' counsel was to some extent taken by surprise by the detail within the plaintiffs' written submissions but, if so, he made no objection and sought no time. He was content, it seems, not to put the arguments now sought to be raised on appeal.

29. An appeal against the exercise of discretion is always difficult to sustain, and particularly so where the appeal is over costs. The appellant carries a heavy onus in seeking to establish error in such cases and where, as here, there is no matter of principle involved and the questions raised relate to the facts, the task is the more difficult. When the arguments could have been, but were not, put below to the judge during argument on costs, the task, in my opinion, is all but insuperable - and so it is in this instance.

32. Mr Lucarelli accepted that the arguments he now sought to raise should have been put below. Had they been, he might have had some cause on appeal to argue

his case again. But without that first step having been taken, I see no reason why he should be permitted on this appeal to raise the arguments for the first time.

36. It is true that the defendants sought and obtained leave to appeal, but as Mr Lucarelli frankly conceded, it was in the context of an appeal by the plaintiffs which was already on foot. It was leave to cross-appeal as to costs. Whatever justification there might have been for an argument over costs had the appeal on the merits remained on foot, it is altogether different with that appeal abandoned; that makes it appropriate for us to consider again the question of leave to appeal. For my part, given the nature of the arguments to be raised and the surrounding circumstances I would rescind the leave granted on 14 September 2001.

39. I should perhaps add that this morning Mr Lucarelli made a valiant attempt to support each of the 14 grounds of appeal, but for my own part I am far from satisfied that any of them was sufficient to demonstrate error below. As at present advised, I think that his Honour's order was the right one, but on that I need express no final opinion. In my view this is not an instance where we should permit a new case to be raised, such as is now sought to be made on this appeal.

57. The order of the Court therefore is that the leave to appeal granted by this Court on 14 September 2001 be rescinded.

63. The order will be that the cross-appellants pay the cross-respondents' costs of the cross-appeal, including reserved costs.