Firstnamed Plaintiff Secondnamed Plaintiff v Defendant

Supreme Court of Victoria|2012-05-04|Before: CROFT J

UNCONSCIONABLE CONDUCT - Damages for unconscionable conduct for borrowing expenses and other costs reasonably incurred in maintaining investments and management fees.

COSTS - Discretion of the Court to award costs - Plaintiffs' nominal success at trial - Court's evaluation of the real degrees of success and failure of the parties at trial - whether Plaintiffs or Defendant has a prima facie entitlement to costs - effect of Offers of Compromise and Calderbank offers - whether Defendant entitled to indemnity costs - whether it was unreasonable for Plaintiffs' to refuse settlement offers in all the circumstances - payment of costs by non-party - (Vic), - (Vic), Order 26 - - ; - - ; -

1 Judgment in these proceedings was delivered on 25 November 2011[1] determining all outstanding matters, apart from the quantum of the plaintiffs' entitlement to damages for unconscionable conduct for borrowing expenses and other costs reasonably incurred in maintaining their investments, and management fees paid in respect of the period 17 October 2000 to 16 November 2000 and in relation to the question of costs. For convenience, this is referred to as "the 2011 judgment".

2 In relation to damages, it was contemplated that the quantum of these damages would be an amount agreed between the relevant plaintiff and the defendant or, in default of agreement, as determined by an Associate Justice.[2] As the parties were unable to agree all elements of these damages, in terms of quantum or otherwise, determination by the Court became necessary. The parties requested that I determine this matter, rather than referring the matter to an Associate Justice. Accordingly, I agreed to do so.

3 Most elements of the damages claim, made up of borrowing costs and management fees, were agreed at or prior to the hearing on these issues. Left for determination was the question whether establishment fees and stamp duty with respect to the Prosperity Bond policies should be allowed for each of the plaintiffs and, if so, whether the establishment fees and stamp duty should be allowed in full or on some pro rata basis, having regard to the period of one month which the plaintiffs are entitled to damages.

4 Considering the nature and term of the Prosperity Bond policies, which was over ten years, a pro rata approach appeared to hold some attraction. However, as none of the parties was able to advance any basis for calculating the establishment fee and stamp duty pro rata which took account of the position that these expenses would be incurred regardless of the period of operation of the Prosperity Bond policies, I determined that these sums should be allowed in full; to the extent that they were to be allowed at all.

5 In relation to the establishment fee, I determined that no establishment fee should be allowed for the secondnamed plaintiff, Pegela Pty Ltd ("Pegela"), in the absence of any documentary evidence in support of its payment. The firstnamed plaintiff, ACN 074 971 109 Pty Ltd ("Argot"), made no claim for an establishment fee. In relation to stamp duty, I determined that stamp duty should be allowed for Argot and Pegela on the basis of their claims in this respect. Accordingly, I will allow stamp duty of $20,000 for each of Argot and Pegela.

6 In summary, the position reached was that the parties agreed the quantum of borrowing costs and management fees for both plaintiffs for the period of one month between 17 October and 16 November 2000, as follows:

To these sums, the sum of $20,000, representing stamp duty paid, must be added to both the total sum payable to Argot and to the total sum payable to Pegela. Consequently, the total sums payable by way of borrowing expenses, management fees and other costs reasonably incurred in maintaining their investments are $55,521 in favour of Argot and $50,792 in favour of Pegela, plus any interest granted.

7 In relation to interest, the plaintiffs submitted that interest should commence from 10 November 2003, which was the date upon which the plaintiffs first advanced any claim for the damages which were ultimately awarded to them.[3]

8 This position reflected the alternative submissions by the defendant that, if interest were to be allowed, it should only be awarded from the date of commencement of the proceedings. In relation to the period for which interest, if it were to be allowed, should be allowed, the plaintiffs accepted that the period should end early in terms of the date of the 2011 judgment, namely on 6 May 2009. Again, this date reflected the position put by the defendant in the event that interest were to be allowed, namely that entitlement should terminate on 6 May 2009, by which time Argot had redeemed its Prosperity Bond policy (in March 2009) and the defendant had renewed its settlement offer to the plaintiffs - offering them what amounted to a superior offer with respect to damages for the period 17 October 2000 to 30 September 2001 than that which the plaintiffs ultimately obtained at trial.[4]

9 In relation to the question of whether interest ought to be allowed at all with respect to these damages in favour of the plaintiffs, the defendant submitted that no interest should be allowed at all because the reason why the plaintiffs were kept out of their money was that they chose to litigate, rather than accept a reasonable and generous offer that was made by the defendant, openly, to all the Investment Club investors before the 2002 proceedings were commenced.

10 In general terms, the defendant relied upon the principle that interest is awarded to compensate a successful plaintiff for having been kept out of its money while the matter was before the court, and also to encourage early resolution of litigation. Thus, in Grincelis v House, the High Court said:[5]

"[16] As was noted in Gogic (MBP (SA) Pty Ltd v Gogic)[6]:

'The function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period: Batchelor v Burke[7].'

There is no doubt that this is a very important purpose of statutory provisions providing for the award of interest on the amount of a debt or damages in respect of the period between the cause of action accruing (or, in some statutory provisions, the commencement of the proceedings) (see, for example, Supreme Court Act 1986 (Vic) s 60(1)) and the date of judgment. It may be, however, that statutory provisions for interest serve not only that purpose, but also a purpose of encouraging early resolution of litigation (see, for example, Supreme Court Act 1986 (Vic) ss 58-60, and Penalty Interest Rates Act 1983 (Vic)). That statutory awards of pre-judgment interest may have such a purpose may be more readily understood in relation to claims for debts or sums certain than in personal injury cases where it will often be in the interests of the plaintiff to wait until injuries have stabilised before bringing the action to trial. For present purposes, however, it is sufficient to have regard to the compensatory purpose of interest." [Emphasis added.]

11 Applying the principle to the present proceedings, the defendant submitted that no interest should be awarded to the plaintiffs for the reasons referred to previously and having regard to the offer made prior to the commencement of the 2002 proceeding. This offer was made by letter dated 19 October 2001 to each plaintiff,[8] whereby the defendant offered a return of 15.9% per annum for the period 17 October 2000 to 30 September 2001 on their 17 October 2000 balances (reinstated to their original values inclusive of all arbitrage gains earned while the defendant used historic pricing).

12 In the case of the Argot Unit Trust, the offered return was $789,954.68 in addition to the reinstated amount; in the case of Pegela, the offered return was $772,275.75 in addition to the reinstated amount.[9] These pre-litigation offers to the plaintiffs were open for two months, until 19 December 2001. It was submitted by the defendant that they were genuine attempts to resolve possible litigation before it began, but that the plaintiffs chose not to accept the offer and instead issued the proceeding on 25 March 2002. It was also submitted that the "evident unreasonableness" of the pursuit of this proceeding by the plaintiffs was demonstrated by the fact that the offer was accepted within that two month period by all but four other holders of the Prosperity Bond policies, issued with identical terms; as well as by the eventual outcome of these proceedings.

13 Thus, it was submitted that each plaintiff had the means of obtaining, in 2001, immediately upon tender of its Prosperity Bond policy to the defendant, a return from the defendant vastly in excess of any entitlement that they ultimately proved after ten years of litigation. It was said that the event which kept the plaintiffs out of their money was the plaintiffs' own action in pursuing the litigation. Additionally, it was said that the damages that the Court has awarded arise out of the fact that the defendant failed to give notice of their intention to stop historic pricing arbitrage. If the defendant had given such notice, then there would have been no damages entitlement. The defendant submitted that the offer which they made gave the plaintiffs significant arbitrage profits and that the offer went to the precise loss that the damages contemplated.

14 The plaintiffs' claim for interest was on the basis that interest ought ordinarily to follow on the award of damages in the usual course. True it was that some concession was made in that the claim was made from the time the plaintiffs first notified their claims upon which these damages were awarded and it was accepted that interest would not be claimed for the period after 6 May 2009. Nevertheless, a basis for resisting the application of principles enunciated in Grincelis was neither established, nor seriously advanced. Accordingly, I am of the opinion that for the reasons submitted by the defendant, both in terms of the application of the principles enunciated in Grincelis and having regard to the offers made by the defendant, no interest should be awarded in favour of the plaintiffs on the damages which have now been determined in their favour.

15 The 2002 proceeding commenced following the plaintiffs' rejection of the general offer of settlement made by the defendant to all policyholders in October 2001. The plaintiffs rejected this offer on the basis that it was inadequate. The rate of return of 15.9% referred to in this offer in 2001 represented an approximate rate of return that the Investment Club policyholders had earned while the historic pricing arbitrage was being carried out by Dr Keller. The effect of the offer made by the defendant was, to give the plaintiffs the benefit of almost a year of historic price arbitrage. Viewed from another perspective, it represented the benefit of almost a year's notice for each policyholder that historic pricing was to cease. It has now been held that one month's notice to this effect would have been sufficient.

16 In the 2002 proceeding, the plaintiffs claimed relief principally directed to obtaining damages or other orders which were intended to reflect the benefits they claimed to be obtainable by profitable arbitrage under the Prosperity Bond policies for the duration of the lives assured. The claim contemplated either historic price arbitrage, through orders declaring that daily historic pricing was required on the part of the defendant, or arbitrage under the provisions of clause 1.8 of the Prosperity Bond policies.

17 As the litigation unfolded, the plaintiffs completely failed to establish that the defendant was required to use daily historic prices, pricing which had been the foundation of the arbitrage actually conducted by Dr Keller on their behalf. Their case on daily historic pricing was dismissed by Redlich J at trial and this was affirmed on appeal. The primary reason for the plaintiffs' loss on this issue was that the express terms of the Prosperity Bond policies said exactly the opposite, namely that the defendant could publish prices as frequently or infrequently as it wished and that it could set the price for a particular day after business hours; thus after any instruction had been given to switch portfolios.

18 In relation to arbitrage under clause 1.8 of the Prosperity Bond policies, the plaintiffs lost, before Redlich J, on the issue whether these provisions allowed the defendant to complete a notified switch within the three day notice period. Although the plaintiffs won on that issue on appeal, the Court of Appeal stated repeatedly, as I noted in the 2011 judgment, that the obtaining by the plaintiffs of special terms in their Prosperity Bond policies did not entitle them to make arbitrage profits out of those special terms. The Court of Appeal awarded costs of 75%/25% in favour of the defendant, which reflected the position that although the plaintiffs won the interpretation point in relation to clause 1.8, they lost every other point before the Court of Appeal. The Court of Appeal also made orders which remitted certain questions to the Trial Division for determination, questions which were the subject of the 2011 judgment.[10]

19 Before the 2002 proceeding returned to the Trial Division, the 2009 proceeding had been commenced, a proceeding founded upon notices given by Argot earlier in that year. In both the 2002 proceeding and the 2009 proceeding, the plaintiffs, or plaintiff in the latter, pursued their contractual claims for damages consisting of alleged loss of arbitrage profits. Despite pursuing these claims, they resisted repeated attempts by the defendant to require them to quantify the claims and to identify the switch notices they claimed that they would have given as the basis for those claims. The first actual detailed quantification of the contractual damages claim was provided in August 2010 in the form of spreadsheets. The spreadsheets were amended on two subsequent occasions, in November 2010 and January 2011, and on a third occasion, the spreadsheets were delivered only a week before the damages hearing commenced, with the claims previously made having been halved. The spreadsheets were still the subject of adjustment when the plaintiffs' own witness in support of the calculation and quantification of this claim, Mr Richard Lyon,[11] gave his evidence. As a result of the hearing of the questions remitted by the Court of Appeal in the 2002 proceeding and in the trial of the 2009 proceeding, the plaintiffs failed on every issue with respect to damages, apart from an entitlement to damages for management costs and borrowing costs calculated in respect of a period of one month, between 17 October 2000 and 16 November 2000, as contended for by the defendant. This issue has already been addressed, above.

20 The plaintiffs twice rejected offers by the defendant to pay them amounts in excess of $750,000 each, which represented more than 10 times any amount of damages to which either plaintiff could possibly have been entitled. The first offer was made by the defendant in October 2001, prior to the commencement of the 2002 proceeding, and was open for a period of two months. The second was made by way of a Calderbank letter in May 2009, following the Court of Appeal's orders, but before the further hearing in the Trial Division. Both offers were rejected. In addition, the defendant made a formal Offer of Compromise to the plaintiffs in March 2008. On this occasion, the defendant offered each plaintiff damages and interest to March 2008 of $3,750,000. As a formal Offer of Compromise, the plaintiffs would have been entitled, upon its acceptance, to party and party costs. The plaintiffs both rejected this offer.

21 The 2002 proceeding has now lasted over ten years, clearly at significant cost and expense. The 2009 proceeding has only added to this position. The proceedings have also occupied an inordinate amount of Court time since the trial before Redlich J in 2002. On any view, the proceedings have been a complete failure for the plaintiffs, notwithstanding the nominal success on one question in relation to the interpretation of clause 1.8 of the Prosperity Bond policies and on the failure of the defendant to warn of its intention to cease historic pricing. On this basis, the defendant seeks orders for indemnity costs. In this context, it is necessary to consider the costs of the 2002 proceeding (including the costs of the original trial before Redlich J and costs of the hearing as to damages and other matters remitted to the Trial Division by the Court of Appeal), the costs of the 2009 proceeding and the question of joint and several liability for non-party costs of the 2009 proceeding. It is to these issues that I now turn.

22 The disposition of costs of the original trial before Redlich J were, at the request of the parties, held over pending determination of matters of quantum. Consequently, the costs of the original trial, between 31 October 2003 and 15 December 2006, are now before the Court for disposition, in addition to the costs of the hearing with respect to damages as remitted by the Court of Appeal to the Trial Division and the reserve costs with respect to interlocutory proceedings.

23 In summary, the position of the parties is that the defendant submits that after taking into account open offers of settlement and Calderbank offers and its formal Offer of Compromise, the plaintiffs should be ordered to pay all of their costs of the original trial on an indemnity basis or, alternatively, on a solicitor and client basis. It was also submitted that the plaintiffs should pay all of the defendant's costs of the damages hearing, that is of the matters remitted by the Court of Appeal to the Trial Division, on the same basis. The plaintiffs, on the other hand, submit that their conduct was not unreasonable in rejecting various offers made by the defendant. Further, they emphasised that there was a finding by the Court that the defendant had engaged in unconscionable conduct, that, consequently, it would be inappropriate for the Court to exercise its discretion to award the defendant any greater costs than it would have been entitled to under the rules in the ordinary course. In this respect, it was said that a finding of unconscionable conduct imports a "pejorative moral judgment";[12] and it has been said that "[u]nconscionability is a concept which requires a high level of moral obloquy".[13] In any event, the plaintiffs submitted that they had not unreasonably refused any settlement offers, in whatever form they were made, and that there was no basis upon which a special costs order should be made. Consequently, the plaintiffs submitted that the appropriate costs order was on a party and party basis only.

24 The usual rule is that costs in litigation follow the event, broadly construed, unless there are special circumstances justifying some other order; subject to adjustment for offers of compromise, Calderbank offers and the like.[14] As the authorities on costs issues indicate, the general rule is easy to state, but often more difficult to apply, particularly in circumstances where success and failure is not immediately obvious. In these circumstances, a court must have regard to "an evaluation of the real degrees of success and failure",[15] rather than proceeding on the basis that every plaintiff who is held to be entitled to any monetary sum is a "winner". Where a party succeeds only on a portion of its claim, the circumstances of the particular case may make it reasonable that it bear the expense of litigating that portion or issue upon which it has failed.[16] In this respect, the courts have approached "issue" in this context as meaning any disputed question of fact or law, rather than necessarily referring to a precise issue in a technical pleading sense.[17]

25 The plaintiffs have, in these proceedings, achieved nominal success on two issues. The first was on the issue of the failure of the defendant to give notice of the impending change to forward pricing. The second was the requirement for the defendant not to complete a switch within the three day notice period. The plaintiffs were also successful in establishing an entitlement to damages for unconscionable conduct for borrowing expenses and management fees paid in respect of the period 17 October 2000 to 16 November 2000 in the course of the proceedings remitted to the Trial Division by the Court of Appeal. As indicated previously, the plaintiffs claimed damages in this respect for a considerably longer period and were, in the context of their original claim, nominally successful in establishing an entitlement for one month. The quantification of these damages was the subject of the hearing on 22 March 2012, out of which these reasons arise. As indicated previously, the monetary value of the damages awarded is relatively low, well within the jurisdiction of the Magistrates' Court.

26 Additionally, the plaintiffs had success on appeal on one aspect of the interpretation of clause 1.8 of the Prosperity Bond policies, but success did not lead them to an entitlement to damages. As submitted by the defendant, these outcomes have been achieved by the plaintiffs after ten years or so of litigation, which was aimed at obtaining contractual damages of hundreds of millions and, at one stage, billions, of dollars.[18] In any event, the focus of the proceedings and the substantive relief sought by the plaintiffs was a monetary sum, damages - whether damages per se or damages in lieu of specific performance and whether or not the Prosperity Bond policies remained on foot. Consequently, in relation to the question of reasonableness of the rejection of settlement offers by the plaintiffs, it cannot be regarded as of significance that the settlement offers (other than the Offer of Compromise in March 2008) required the plaintiffs to terminate their Prosperity Bond policies. There are also other, more particular considerations, which, in my opinion, support the view that rejection of the offers by the plaintiffs was not reasonable because the offers required surrender of their policies:[19]

"... First, the plaintiffs have in fact left their policies invested in the cash portfolio (save during the period of the early 2009 switches), earning an ordinary cash return, which on the plaintiffs' own evidence was not a worthwhile investment: as both Messrs Tyne and Hawkins said in evidence, the returns of their Prosperity Bond policy without the Keller arbitrage returns were 'very unattractive'[20]. Secondly, in other words, the only point of having the policies extant was to bring the litigation; if it was reasonable to settle the litigation, it was reasonable to surrender the policies and pursue the attractive alternative investments which the plaintiffs claimed were available to them. Thirdly, the Argot policy was surrendered in due course any way."

27 In the context of the plaintiffs' claims, the success on their part can, in my view, only be regarded as nominal and of no consequence when one comes to determine success at trial in the overall balance. As indicated previously, the plaintiffs would seek to have the Court exercise its discretion against this view or, put another way, place in the balance the fact that they enjoyed a small degree of success on their misleading and deceptive conduct and unconscionability claims, which would weigh against an order for costs on other than the usual basis as a manifestation of the Court's "pejorative moral judgment" with respect to a claim of this kind.[21] In my opinion, success in this respect is, in the context of the overall claims made by the plaintiffs and the time spent on these claims in the course of ten years of litigation, of minimal significance and does not raise the sort of "moral judgment" issues that might be seen to arise in a proceeding where the unconscionable conduct was the main focus of that proceeding and substantially significant in the overall outcome of that proceeding.

28 Applying these principles in relation to the original trial, the prima facie position should, subject to adjustments for offers of compromise, Calderbank offers and other open offers, be that all of the costs of the trial before Redlich J should be ordered in favour of the defendant. In my opinion, the small degree of success achieved by the plaintiffs, which has been discussed, does not give them any prima facie entitlement to costs in the 2002 proceeding.

29 Having determined the prima facie position that the defendant is entitled to costs, its position must be considered in light of open offers of settlement, Calderbank offers and formal Offer of Compromise made by the defendant. It was submitted by the defendant that in both the 2002 and 2009 proceedings, these matters are of the highest relevance.

30 The defendant made three offers to each plaintiff which it now submits are relevant:

(a) An open offer in October 2001 - offering each plaintiff eleven and a half months' return at 15.9% per annum (more than $750,000);

(b) A formal Offer of Compromise in March 2008 - offering each plaintiff damages and interest of $3,750,000 plus costs;

(c) A Calderbank offer in May 2009 - offering each plaintiff eleven and a half months' return at 15.9% per annum (more than $750,000).

31 The defendant submitted that in light of the fact that on the issues on which the plaintiffs succeeded in the original trial, neither plaintiff can possibly quantify a loss of even one-twentieth of what was offered to them by the defendant both before the proceeding commenced and subsequently, the plaintiffs should not obtain any award of costs in their favour. Rather, it said, they should pay all of the defendant's costs of the trial on an indemnity basis (or, alternatively, on a solicitor and client basis).

32 The principles upon which a defendant who has made an Offer of Compromise or a Calderbank or an open offer should be entitled to indemnity costs, and the policy considerations governing those principles were discussed by the Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2).[22] As this and other authorities indicate, indemnity costs are awarded where it was unreasonable in all the circumstances for the plaintiff to refuse the offer. There are clear policy considerations justifying the rule, namely the saving of private costs and the avoidance of the uncertainties of litigation and the saving of public costs necessarily incurred in litigation. The rule also has regard to the appropriateness of indemnifying the party who made the offer, because the real cause of the litigation from the time the offer is refused is the decision of the other party not to accept the offer and to continue with the litigation.

33 The Court of Appeal in Hazeldene provided some helpful guidelines, but which are not exhaustive, as to the factors to be considered in assessing whether the refusal of an offer was unreasonable:[23]

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(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 an indemnity costs in the event of the offeree's rejecting it.

The plaintiffs made the point in their submissions that in considering the reasonableness of an offer, the Court must be careful to assess the position on the basis of the circumstances existing at the time of the offer. Hindsight is a wonderful thing, but should not be brought to bear on this assessment. Nevertheless, in the present circumstances the plaintiffs were, for the reasons indicated, in an unusually informed position from which to assess the likelihood of success of the proceedings, both prior to the commencement of the 2002 proceeding and subsequently.

34 The 2001 offer was relied upon by the defendant in support of its claim for indemnity costs. In this respect, it relied upon the fact that:

(a) the 2001 offer was received before the plaintiffs issued the 2002 proceeding;

(b) the plaintiffs had two months in which to consider and accept the offer;

(d) the amount offered was far in excess of any entitlement the plaintiffs have ultimately proved.

35 Additionally, the 2001 offer was made at the time of settlement of Federal Court proceedings brought by the manager of the Investment Club of which the plaintiffs formed a part.[24] There had, in the Federal Court, been a full trial of issues raised by Dr Keller, which largely foreshadowed the claims brought by the plaintiffs. The present plaintiffs were fully aware of the Federal Court proceedings, having been briefed about them by Dr Keller,[25] having themselves sat in the Federal Court during the case[26] and having retained solicitors to advise them about it.[27] Additionally, there had been discovery, evidence of the defendant's witnesses and full cross-examination. After completion of the case and while awaiting judgment, Dr Keller accepted the defendant's settlement offer and the defendant extended an offer to all others who held Investment Club Prosperity Bond policies. One hundred and seventy or so investors accepted the offer, but six did not.[28] On this basis, the defendant submitted that the present plaintiffs were therefore in a privileged and unusually advantageous position from which to form a view of the offer. They could have accepted it without incurring any cost or initiating proceedings, and they would have been in a far better position than that in which they now find themselves.

36 More significantly, each offer was vastly in excess of damages to which the plaintiffs have ultimately been held to be entitled. As indicated, and in my view very significantly in terms of the application of the guidelines in Hazeldene, this is not a case where the offer merely exceeded the damages; it is a case where the damages ultimately recovered by the plaintiffs are very small compared with the value of the offer. The defendant submitted, and in my view with much force, that it is also relevant that any entitlement that the plaintiffs ultimately recover could have been recovered in the Magistrates' Court, a factor that illustrates "just how wasteful and pointless this litigation has been - wasteful of not only the time and money of the defendant, but of the time, money and other resources of the Court".[29]

37 Additionally, I accept that the repeated failure of the plaintiffs even to quantify and justify the basis of their claims is a matter to be taken into account in considering the basis upon which costs are awarded. This failure has two aspects:

(a) First, there is the fact that the contractual damages claims, the plaintiffs' claims of substance and real value from their perspective, were only quantified after the defendant and the Court pressed them into quantifying them in 2010 - eight years after commencement. Furthermore, that quantification was clearly significantly defective, as is evidenced by the fact that it was halved only a week before trial, and by the concessions made by Mr Lyon in his evidence that he had failed to take important matters into account in arriving at his figures.[30]

(b) Secondly, there was the failure of the plaintiffs to quantify, even in advance of the 22 March 2012 hearing, the minimal damages to which they are entitled. This failure illustrates the fact that the plaintiffs have never been interested in such damages: they have only ever been concerned with the extravagant contractual claims that, as the history of the proceeding shows, never had any foundation.

In my view, these factors point, overwhelmingly, to the conduct of the plaintiffs in not accepting the defendant's offer in 2001 as being unreasonable. It follows that the defendant is entitled to costs on an indemnity basis for the whole of the 2002 proceeding, bearing in mind that the 2001 offer was made before these proceedings commenced.

38 The defendant submitted, in the alternative, that if the Court did not allow all of its costs of the 2002 proceeding, from commencement, then it should be awarded indemnity costs from 6 March 2008 as a result of the plaintiffs' failure to accept a formal Offer of Compromise made in March 2008.

39 The March 2008 Offer of Compromise followed immediately upon the conclusion of argument before the Court of Appeal. The Offer was made, formally, under rule 26 of the Supreme Court (General Civil Procedure) Rules 2005 ("the Rules"). Had the plaintiffs accepted this offer, they would each have received $3,750,000 plus their party and party costs to that point. Clearly, the limited success which the plaintiffs gained with respect to damages in the proceedings are absolutely insignificant in comparison with this offer. The effect of a formal offer of compromise under rule 26 is to entitle the defendant to its costs of the proceeding after the date of the offer of compromise in the event that it is reasonable and not accepted.[31] Rule 26 does not, however, exhaust the Court's discretion to order indemnity costs over and above this prima facie entitlement.[32]

40 The defendant submitted that in accordance with the principles in Hazeldene's case, if the Court does not accede to the submission with respect to the 2001 offer, the Court should award indemnity costs to the defendant from 6 March 2008 on the basis that:

(a) the offer was simple, straightforward and extremely generous, especially in comparison with the trivial amounts to which the plaintiffs may be entitled; and

(b) given the state of the litigation after a prolonged trial and full argument on the appeal, and given the plaintiffs' prospects of success, it was unreasonable of the plaintiffs not to accept the offer of compromise. The plaintiffs were seeking to overturn many issues which had been decided against them in the long and comprehensive judgment of Redlich J. In due course they lost all the appeal issues, except for one, and comprehensively. Their prospects of success should be judged as having been weak and their failure to accept the offer of compromise as having been unreasonable.

41 In my view, having regard to the previous history of the matter, particularly the plaintiffs' knowledge of the Federal Court proceedings, having had full argument in the Court of Appeal, the nature of their claims, their lack of success, the magnitude of the offer and their failure or inability to quantify their claims, it was unreasonable on the part of the plaintiffs to refuse the Offer of Compromise. It follows that, on the basis of the principles in Hazeldene's case, an indemnity costs order should follow and take effect from 7 March 2008 on the basis of the Offer of Compromise.[33] However, as I have already taken the view that this consequence should follow the plaintiffs' failure to accept the 2001 offer, this further finding is only of significance in the event that my views with respect to the 2001 offer were found to be in error.

42 For the sake of clarity, I should indicate that these findings with respect to the costs of the 2002 proceeding apply both to the trial and interlocutory costs in that proceeding, both before and after the appeal - and also with respect to the 2002 proceeding as they continued as a result of the remission of questions by the Court of Appeal to the Trial Division and with respect to the hearings and submissions following the remission of those questions to date. There are, nevertheless, some further matters that arose after the judgment of the Court of Appeal.

43 In substance, the defendant succeeded in all questions remitted to the Trial Division by the Court of Appeal which were required to be determined.[34] Secondly, the defendant made a Calderbank offer to the plaintiffs in May 2009,[35] offering each plaintiff, in effect, more than $770,000. This Calderbank offer proposed that each party should bear its own costs.

44 It was submitted by the defendant that the refusal by the plaintiffs to accept the 2009 Calderbank offer was unreasonable having regard to the guidelines in Hazeldene. In particular, it submitted that:

(a) the 2009 offer was made after the Court of Appeal's judgment had decided principal issues and narrowed the matters remaining for determination;

(c) the compromise offered was extremely generous, given that the defendant ultimately maintained that one month was a reasonable notice period;

(d) the offeree's prospects of success were not strong, given the terms in which the Court of Appeal had rejected extended periods of notice[36] (eg CA at [180]) and the emphasis that the Court of Appeal had placed on the plaintiffs' need, in order to identify specific breaches, to prove what pieces of paper were given and that the plaintiffs were ready, willing and able to make switch notices. As the Court noted in its reasons which accompanied its orders:[37]

"in the end the question of breach can only finally be determined on a case by case basis, involving a detailed consideration of the evidence relating to each alleged breach".[38]

(e) the terms of the 2009 offer were perfectly clear and plain; and

(f) the 2009 offer foreshadowed that, if it were not accepted, costs would be sought on an indemnity basis.

45 It was submitted that, in all the circumstances, the 2009 Calderbank offer was an entirely reasonable one for the defendant to make and an entirely unreasonable offer for the plaintiffs to refuse, for the following reasons:

(a) first, as already noted, insofar as this offer related to the costs of the Court of Appeal, it conferred a net benefit on the plaintiffs. The Court of Appeal had ordered the costs of the appeal to be apportioned 75%/25% in favour of the defendant, reflecting the fact that the plaintiffs lost all but one of the issues before the Court of Appeal;

(b) the sole issue which it won was whether clause 1.8 of the Prosperity Bond policy permitted NMLA to complete switches within the three-day notice period. That issue has produced no damages for the plaintiffs. The principal reason why it produced no damages was that, as the Court has now held, applying numerous remarks of the Court of Appeal to the effect that clause 1.8 does not confer any right to make arbitrage profits, the defendant was entitled to take action (within the terms of the policy) to prevent such profits being made;

(c) the particular action taken by the defendant to prevent arbitrage profits was "early conversion". That action had been foreshadowed in the witness statement of Mick O'Brien filed in the trial before Redlich J.[39] It thus ought to have been clear to any reasonable plaintiffs that substantial arbitrage profits, and thus substantial damages, were not obtainable;

(d) the letter of 6 May 2009, in effect, gave the plaintiffs a second opportunity to accept the original offer that had lapsed in December 2001. The principal sums offered were clearly far in excess of any damages that the plaintiffs could reasonably have expected, and would probably have covered their costs to that date; and

(e) having regard to those matters, it was not reasonable to expect the defendant to offer to pay the plaintiffs' costs up to 2009 as well as damages, and it was not reasonable for the plaintiffs to refuse such a generous "bear own costs" offer.

46 In my view it was, for these reasons, unreasonable for the plaintiffs to refuse this offer in 2009. In my opinion, the defendant's offer was entirely reasonable in the circumstances at this time and the fact that the offer proposed that each party should bear its own costs makes no difference in either respect. Consequently, if costs were not otherwise payable by the plaintiffs on an indemnity basis on the basis of the 2001 offer or, alternatively, the Offer of Compromise made in March 2008, the defendant's costs of the 2002 proceeding should be paid on an indemnity basis from the date of the expiry of the 6 May 2009 offer.[40]

47 The defendant has been wholly successful in the 2009 proceeding and seeks an order that it be paid all its costs of that proceeding, including reserved costs, on an indemnity basis. The defendant's submitted that the considerations that apply to the costs of the 2002 proceeding should apply with even greater force to the 2009 proceeding. However, the same considerations cannot automatically apply because the settlement offers did not at the time they were made necessarily contemplate the 2009 proceeding. Nevertheless, the Court has power to exercise its general discretion to award costs on an indemnity basis having regard to all of the circumstances of the 2009 proceeding.

48 In my view, the Court had already rejected the repudiation argument run by the plaintiffs in the 2002 proceeding, accepting the defendant's contention that any breach of the terms of the Prosperity Bond policies had been due to a bona fide belief as to the true meaning of the policy terms. The firstnamed plaintiff, Argot, ran essentially the same argument in the 2009 proceeding as had been rejected by Redlich J and the Court of Appeal previously, on essentially similar facts. For these reasons I order that the plaintiff pay the defendant's costs of the 2009 proceeding on an indemnity basis.

Joint and several liability of non-party for costs of the 2009 proceeding

49 The defendant seeks an order that its costs of the 2009 proceeding be paid by a non-party, namely, Pegela. Pegela was, of course, the secondnamed plaintiff in the 2002 proceeding; but it was not a party in the 2009 proceeding. The basis relied upon by the defendant in support of its application for such an order is that Pegela was a person directly interested in the 2009 proceeding and was actively involved in them being brought, while Argot was not a party of any substance. It was however, submitted against the defendants that this is not a case in which it would be appropriate for a non-party costs order to be made against Pegela.

50 The parties relied upon the leading authority on the making of costs orders against third parties, Knight v FP Special Assets Ltd.[41] In Knight, the receivers, who were non-parties, were held liable for costs brought by the company in receivership under their control. The relevant statement of principle, elements of which were relied upon by all parties, is as follows:[42]

"'For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where a party to litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.

51 The plaintiffs also relied upon a passage from the judgment of Dawson J in Knight that:[43]

"The cases therefore establish a long-asserted jurisdiction to award costs in appropriate cases against a person who is not a party to the proceedings where that person is the effective litigant standing behind an actual party or where there has been a contempt or abuse of the process of the court".

Dawson J did, however, consider that such an award would only be made in an exceptional case.[44]

52 Further, in Bischof v Adams, Gobbo J said:[45]

"... there may be cases where the connection is significant but not material to the issue of costs. Thus a person may benefit greatly from a particular proceeding but may not have any real part in supporting the proceeding.

The most convenient course is, in my view, to look at both factors in considering the connection between the proceedings and the non party, namely, the connection between the non party and the proceedings and secondly, the causal connection between the non party and the costs.

I have concluded that, without limiting myself to these two matters, I should take both factors into account in any exercise of discretion. The connection must be real and direct and I t must be material to the issue of costs. The mere fact that a person may benefit from the litigation will not, without more, suffice".

53 There are also authorities which indicate that a non-party should be warned of being at risk as to costs. Thus, in The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd, the Court said:[46]

"Generally, a non-party should be warned about being at risk as to costs, but such a warning, while relevant consideration is not a prerequisite to such an order".

54 The defendant submitted that the evidence is clear that Argot, which was the trustee of the Argot Unit Trust, was always a thing of straw. On the defendant's application for security for costs in December 2009, Mr Tyne deposed that:

(a) Argot was a bare trustee, with no assets other than a paid up capital of $2 and a right of indemnity out of the Argot Unit Trust.[47]

(b) The only asset of the Argot Unit Trust that was identified was its damages claim in the 2002 Proceeding.[48] The asset is now shown to be chimerical. Any amount awarded to Argot will be dwarfed by the costs payable by it.

Further, in answer to the notice of discovery given by the defendant, neither Argot nor the Argot Unit Trust produce any Australian income tax returns, indicating that the Trust had no income.

55 Pegela accepted that Mr Tyne's affidavit of 13 October 2009 with respect to the defendant's application for security for costs did state that "[ACN 074 971 109] is a bare trustee and has no assets other than its right to indemnity from the assets of the trust". It says that the only asset of the Trust that Mr Tyne referred to in this affidavit was its claim against the defendant. Nevertheless, Pegela submitted that the possibility that Argot may not have the means to meet a costs order against it was not a reason in itself for Pegela to be ordered to pay those costs.

56 Shortly prior to the 22 March 2012 hearing in these proceedings, it came to the defendant's attention that Argot had been deregistered, on 8 January 2012.[49] As a consequence, it ceased to exist and any property held on trust or owned immediately prior to deregistration vested in the Commonwealth of Australia or ASIC, as the case may be.[50] In any event, the company was reinstated prior to the hearing on 22 March 2012 and the evidence was that deregistration occurred due to an inadvertent failure to file ASIC returns in the preceding two years rather than for any more substantive reason.[51] As Argot is now reinstated, its deregistration does not, in my view, now bear upon any of the issues before the Court.

57 In terms of Pegela's role in the 2009 proceedings, the defendant submitted that it played an active role, despite being a non-party. In this respect, the defendant relied upon the following:

(a) Pegela took an approximately half-share in the outcome of the 2009 proceedings. Mr Hawkins confirmed this during the trial on matters remitted by the Court of Appeal.[52] Additionally, the AXA Litigation Deed[53] reflected their agreement, which Messrs Tyne and Hawkins confirmed;[54] and

(b) Pegela had been paying its share of the costs of the 2009 proceeding throughout.[55]

58 On this basis, the defendant submitted that, given the lack of means of Argot, there was always a serious risk that it would not pay the costs of the 2009 proceeding. The sum of $160,000 which Argot procured or provided by way of security for the defendant's costs will, the defendant says, not be adequate to meet the costs of the 2009 proceeding. In these circumstances, it submitted that the conditions to invoke the principles in Knight are satisfied and that the justice of the case requires that Pegela, as a co-beneficiary and funder of the 2009 proceeding, be liable to pay the costs of that proceeding.

59 Pegela, on the other hand, submitted that neither it nor Mr Hawkins, the only witness who gave evidence in the 2002 proceedings on Pegela's behalf, played any part in the 2009 proceeding. It said that Mr Hawkins filed no affidavits and gave no evidence in the 2009 proceeding. Under cross-examination by the defendant's counsel, the evidence of Mr Hawkins was to the effect that he had chosen to retain his Prosperity Bond policy with the defendant and abide the outcome of the 2002 proceeding. He had not terminated his policy in acceptance of what the plaintiff in the 2009 proceeding had considered a repudiation of its policy.[56]

60 Further, Pegela submitted that its only interest in the 2009 proceeding arose out of its costs and proceeds sharing agreement with Argot. It submitted that this agreement was no more than a sensible arrangement to fund the cost of the proceeding, which raised many similar issues with respect to identical policies issued by the defendant. It submitted that this did not lead to the defendant incurring any greater costs than would otherwise have been the case with the 2009 proceeding. In this respect, Pegela noted the statement of Gobbo J in Bischof v Adams[57] that the mere fact that a party may benefit from litigation is not in itself sufficient to warrant a non-party costs order against that party. There must be a causal connection between the conduct of the party and the costs incurred. Pegela submitted that there was no connection at all between the conduct of Pegela and the costs incurred by the defendant in the 2009 proceeding.

61 Finally, the plaintiff submitted that at no stage did the defendant warn Pegela that it would seek a costs order against it in the 2009 proceeding. The defendant made a successful security for costs applications against Argot, relying expressly on its lack of financial resources in support of that application. The defendant did not state that it would be seeking recourse against Pegela in the event that Argot was unable to meet a costs order against it. The first time the defendant informed the parties or the Court that it would be seeking a costs order against Pegela in the 2009 proceeding was in its closing submissions dated 2 May 2011.

62 In my opinion, there is not sufficient causal connection between the conduct of Pegela and the costs incurred by the defendant in the 2009 proceeding. True it is that Pegela stood to benefit from the 2009 proceeding had it been successful and, as part of the agreement giving rise to this benefit, it was obliged to contribute to the costs of the proceedings. Nevertheless, this does not, in my view, take matters higher than the type of situation which was considered by Gobbo J in Bischof v Adams. In my opinion, the point is certainly not reached where it could be said that Pegela is "the effective litigant standing behind the actual party" in the sense contemplated by Dawson J in Knight v FP Special Assets Ltd.[58]

63 The plaintiff in the 2009 proceeding, Argot, consented to the release of the amount paid into Court as security for costs on the defendant's undertaking that if the amount was greater than the defendant's agreed or taxed costs, then the defendant would repay such amount as may exceed its entitlement within seven days of the determination of the costs.

64 There will be orders in favour of the plaintiffs with respect to damages for unconscionable conduct for borrowing expenses and other costs reasonably incurred in maintaining their investments and management fees paid in respect of the period 17 October 2000 to 16 November 2000 as indicated in the preceding reasons. I will also make orders in favour of the defendant with respect to costs as indicated in the preceding reasons. These orders will not impose liability for costs on Pegela with respect to the 2009 proceeding.

65 In all the circumstances it is appropriate that the payment of the sums so ordered in favour of the plaintiffs be stayed pending agreement or determination of the plaintiffs' liability to the defendant for costs and then the sum ordered in favour of the plaintiffs be set off against their liability to the defendant for costs.

66 The parties should provide minutes of orders to give effect to the matters I have determined.

[1] ACN 074 971 109 Pty Ltd (as Trustee for the Argot Unit Trust) and Pegela Pty Ltd v The National Mutual Life Association of Australasia Ltd [2011] VSC 519.

[2] See ACN 074 971 109 Pty Ltd (as Trustee for the Argot Unit Trust) and Pegela Pty Ltd v The National Mutual Life Association of Australasia Ltd [2011] VSC 519, at [149].

[3] That is the claim for unconscionable or misleading or deceptive conduct, claims contained in paragraphs 11F to 11L of the statement of claim, which were first notified on 10 November 2003 at the end of the first week of the trial before Redlich J (see Transcript (10 November 2003), pp 244.26 - .27, 245.8 - .9, 247.8 - .10; and 248.12).

[4] The defendant's renewed settlement offer to the plaintiffs in the letter of 6 May 2009 was for: (a) a return of 15.9% per annum for the period 17 October 2000 to 30 September 2001; and (b) waiver of costs orders made by the Court of Appeal, with each side bearing its own costs (this offer conferred a net benefit on the plaintiffs: the Court of Appeal had ordered the costs of the appeal to be apportioned 75%/25% in favour of the defendant, reflecting the fact that the plaintiffs lost all but one of the issues before the Court of Appeal).

[5] [2000] HCA 42; (2000) 201 CLR 321 at 328-9, [16] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[7] [1981] HCA 30; (1981) 148 CLR 448 at 455 per Gibbs CJ.

[8] See letter of NMLA to Argot Unit Trust, 19 Oct 2001: OCB 1754- 1767; Exhibit A to Affidavit of John Myatt, sworn 21 February 2012. The defendant has unfortunately been unable to locate its file copy of the equivalent letter sent to Pegela, but Mr Myatt in the same affidavit gives evidence that such letters were sent to all Investment Club policy holders.

[9] Letter of Turks Legal to Eakin McCaffrey Cox, 6 May 2009, pp 2-3: Exhibit C to Affidavit of John Myatt, sworn 21 February 2012.

[10] ACN 074 971 109 Pty Ltd (as Trustee for the Argot Unit Trust) and Pegela Pty Ltd v National Mutual Life Association of Australasia [2011] VSC 519, noting that the questions remitted by the Court of Appeal for the Trial Division are set out at [6].

[11] Mr Lyon is the principal of a network based actuarial consulting firm called Professional Financial Solutions (PFS). Mr Lyon is a practising actuary with 30 years experience in the financial sector, particularly in relation to life insurance and retail funds management. See Ex A, PFS Expert Witness Statement for Lillas & Loel (25 January 2011), Annexure A.

[12] Qantas Airways Ltd v Cameron [1996] FCA 1483; (1996) 66 FCR 246 at 283-4, 284 and 298 (Lindgren J).

[13] Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557, at [121] (Spigelman CJ); and see generally the survey of the authorities by the New South Wales Court of Appeal in Canon Australia Pty Ltd v Patton [2007] NSWCA 246, [40]-[45] (Campbell JA).

[14] Ritter v Godfrey (1920) 2 KB 47.

[15] Haviv Holdings Pty Limited v Howards Storage World Pty Ltd (No 2) [2009] FCA 652 (Jagot J) at [17], approved on appeal in Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84; [2010] FCAFC 5 at [21] (Lindgren J), [67] (Edmonds J).

[16] Forster v Farquhar (1893) 1 QB 564; and see, generally, Hughes v Western Australian Cricket Association Inc [1986] FCA 382.

[17] See Cretazzo v Lombardi (1975) 13 SASR 4 at 12 (Bray CJ).

[18] See ACN v NMLA (No 2) [2008] VSCA 247; (2008) 21 VR 351 at 360, [21]; but the Court of Appeal noted that this was not an estimate of the plaintiff's damages claim (see (2008) 21 VR at 360, note 3); and see Defendant's Reply Submissions on Damages and Costs (19 March 2012), paragraph 12.

[19] Defendant's Reply Submissions on Damages, Interest and Costs (19 March 2012), paragraph 12(e).

[20] See for example, Tyne 2003 Witness Statement (D.02), paragraph 26 ("without the Coneview special terms I would never have contemplated investing in a Prosperity Bond policy"); Tyne 2003 Supplementary Witness Statement (D.03), paragraph 18: Argot would never have invested in a Prosperity Bond on 'standard terms' or if the proper construction of the policies was that a switching strategy could not result in arbitrage investments returns; Hawkins 2003 Witness Statement (D.04), of paragraphs 14, 15, 28; Hawkins 2003 Supplementary Witness Statement (D.05), paragraph 4(c), 10 ("indeed without the special conditions, the returns on Prosperity Bonds were such as to make them a very unattractive investment; ... I would not have recommended them to the [Pegela] Trust."); paragraph 18(b).

[22] [2005] VSCA 298; (2005) 13 VR 435 (CA) at 440-443, [17]- [29] (Warren CJ, Maxwell P and Harper AJA); and see Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability & Environment (No 2) [2010] VSC 513, [11]-[12] (Croft J).

[23] Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 (CA) at 442, [25] (Warren CJ, Maxwell P and Harper AJA) .

[24] Biofeedback Research Australia Pty Ltd & Ors v National Mutual Life Association of Australasia Limited (Federal Court of Australia Proceeding No. NSD1217/2000).

[25] See eg circular letters of Dr Keller (Coneview) to Coneview Investors, 16 November 2000, OCB 1525-1527 (AB vol 4 (HO5), pp 291-293); 25 November 2000, OCB 1528ff (AB vol 4 (H05), p 294-297.

[26] Tyne 2011 WS (C14), paragraphs 11-12.

[27] Tyne 2011 WS (C14), paragraph 11 "When the hearing of the Keller Proceedings commenced in February 2001, the Plaintiffs engaged Verekers, a Sydney based firm of solicitors ..."; Letter of Advice from Verekers Lawyers, 30 March 2001: 203 Exhibit M.

[28] Of those six, three have since settled with the defendant, two are those involved in these proceedings, and one has remained passively in the Cash portfolio for the last eleven years.

[29] Defendant's Submissions on Costs (February 2012), paragraph 34.

[30] See Written Closing Submissions of the Defendant (2 May 2011), Appendix B, passim.

[32] Cf Supreme Court Act 1986, s 24; Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 (CA) at 439 [13] (Warren CJ, Maxwell P and Harper AJA).

[33] See Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability & Environment (No. 2) [2010] VSC 513 (Croft J).

[34] See ACN 074 971 109 (as Trustee for the Argot Unit Trust) and Pegela Pty Ltd v The National Mutual Life Association of Australasia Ltd [2011] VSC 519, at [28], [144], [148] and [151].

[35] Letter of Turks Legal to Eakin McCaffrey Cox, 6 May 2009, pp 2-3: Exhibit C to Affidavit of John Myatt, sworn 21 February 2012.

[36] ACN v NMLA (No 2) [2008] VSCA 247; (2008) 21 VR 351 at 396, at [180].

[37] ACN v NMLA (No 2) [2008] VSCA 247; (2008) 21 VR 351 at 356, at [6].

[38] See also: Court of Appeal Transcript (10 December 2008), pp 38.12 - 39.9.

[39] See witness statement of Michael O'Brien, 18 November 2003 (D08), paragraphs 29, 30, 33.

[40] See Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability & Environment (No. 2) [2010] VSC 513 [16] (Croft J); Love v State of Victoria & Anor [2009] VSC 531 (Cavanough J); Foster v Galea (No. 2) [2008] VSC 331 (Byrne J).

[42] [1992] HCA 28; (1992) 174 CLR 178 at 192-3 (Mason CJ and Deane J).

[44] [1992] HCA 28; (1992) 174 CLR 178 at 203; see also Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 at 980 per Lord Goff); Symphony Group Plc v Hodgson [1994] QB 179 (CA) at 191 (Balcombe LJ); and Manderson M & F Consulting v Incitec Pivot (No 3) [2011] VSC 441, at [20]-[27] (Croft J) and the authorities to which reference is made.

[45] [1992] VR 198 at 205 (Gobbo J).

[46] [2009] QSC 84; [2009] 2 Qd R 356 at 376 [68] (Martin J). See also Yates v Boland [2000] FCA 1895; Gore v Justice Corporation (2002) 119 FCR 429; and Vestris v Cashman (1998) 72 SASR 449.

[47] Affidavit of Scott Tyne, 13 October 2009 (C09), paragraph 15.

[48] Affidavit of Scott Tyne, 13 October 2009 (C09), paragraph 18.

[49] Historical company search for ACN 074 971 109 Pty Ltd printed 13 February 2012: Exhibit T to the Third Affidavit of John Kenneth Myatt sworn 21 February 2012.

[51] See affidavit of James Beresford Loel sworn 23 February 2012 and Transcript (2012) pp 10-11.

[52] See Transcript (2011) pp 821 and 830.

[54] Hawkins 2011 Transcript 821.18 - .22; T825; T830.4 - .10.

[55] Hawkins cross-examination, Transcript p 826.1 - .3; T834.19 - 835.2.

[58] See [1992] HCA 28; (1992) 174 CLR 178 at 203 (the passage set out above at paragraph 49); and, in this respect see also the other authorities referred to above, paragraph 36.

Court (General Civil Procedure) Rules 2005

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