Frazer v Macquarie Airports Management Ltd

CATCHWORDS : EQUITY - equitable remedies - injunctions - application to restrain company meeting from considering resolutions - serious question to be tried - significance of absence of undertaking as to damages - balance of convenience favours rejection of the application - indemnity costs awarded

Kerridge v Foley [1968] 1 NSWR 628 CASES CITED : Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 ENT Pty Ltd v Sunraysia Television Ltd [2007] NSWSC 270; (2007) 61 ACSR 626

TEXTS CITED : Young, Croft & Smith, On Equity (2009)

1st Plaintiff: Scott Frazer PARTIES : 2nd Plaintiff: Kjeld Binger 1st Defendant: Macquarie Airports Management Limited 2nd Defendant: Macquarie Airports Limited

COUNSEL : Plaintiffs: T Jucovic QC & N Bender Defendants: I Jackman SC & N Kidd

SOLICITORS : Plaintiffs: Atanaskovic Hartnell Defendants: Allens Arthur Robinson

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

4691/09 Scott Frazer & Anor v Macquarie Airports Management Ltd & Anor JUDGMENT 1 HIS HONOUR: This is an application to restrain the holding of meetings of holders of stapled securities in what is loosely called an investment vehicle known as Macquarie Airports ("MAp"). The meetings have been convened to be held tomorrow to consider resolutions to approve a proposal for the internalisation of the management of MAp. 2 The plaintiffs are the holders of stapled securities. These consist of shares in Macquarie Airports Ltd ("MAL"), and units in Macquarie Airport Trust Number 1 ("MAT1") and Macquarie Airport Trust Number 2 ("MAT2"). 3 MAT1 and MAT2 are registered managed investment schemes. The responsible entity for those schemes is Macquarie Airports Management Ltd ("MAML"). It is a wholly owned subsidiary of Macquarie Capital Group Ltd ("Macquarie"). 4 The stapled securities are listed for quotation on the Australian Securities Exchange ("ASX"). MAp is described as an externally managed fund. By this it is meant that Macquarie provides resources such as premises and staff to MAML. It also provides such resources to another wholly owned subsidiary, Macquarie Capital Funds (Europe) Ltd ("MCFEL"), which in turn provides advice to Macquarie Airports Limited. MAL is one of the three entities whose securities are stapled and which together carry on business as Macquarie Airports. 5 The services Macquarie provides to MAML and the advice which MCFEL provides to MAL are provided for a fee. The fees are substantial. Between 2002 and 30 June 2009, Macquarie Airports paid fees in the order of $546.6 million for the management services provided. 6 On 24 July 2009 MAML issued a press release advising that MAp had reached agreement with Macquarie to internalise the management of MAp. It was announced that the internalisation would be implemented by, it was said, MAp acquiring all the issued capital of MAL, and by Macquarie being issued with 150 million new MAp stapled securities at a price of $2.35. The securities, as at 23 July 2009, had a value of $345 million. Macquarie's management rights were to be terminated. It was projected that with the elimination of the management fees, the earnings of Macquarie Airports would increase. 7 The proposal was modified on 28 August 2009 when it was announced that instead of Macquarie's being issued with 150 million new stapled securities, it would be paid $345 million in cash. MAML announced that it would fund the payment to be made to Macquarie by a one-for-eleven renouncible pro rata entitlement offer to security holders at $2.35. It announced that Macquarie had indicated its willingness to subscribe for 150 million securities. 8 The independent directors of MAML advised that they considered Macquarie's co-operation was essential for transition to their preferred internal management model. They advised that Macquarie Airports needed the co-operation of Macquarie and its managed funds to avoid triggering change of control and pre-emptive rights clauses in debt facilities and shareholder arrangements, in particular the Brussels and Copenhagen Airports debt facilities. 9 Section 601LA of the Corporations Act 2001 (Cth) ("the Act") provides that Chapter 2E (dealing with related party transactions) applies to registered management investment schemes with various modifications to reflect the difference between a public company and a managed investment scheme. Because Macquarie and MAML are related parties, and because MAML, together with MAL, is to pay $345 million to Macquarie under the proposed internalisation, a resolution approving the proposal is required to be submitted to unitholders. Such a meeting is also required in respect of MAL as one of the companies whose securities are quoted on the Australian Securities Exchange as part of the stapled securities, as a result of Listing Rule 10.1. 10 At the meeting, Macquarie, which holds 21 percent of the securities and controls the votes of 22.8 percent of the securities, will not be permitted to vote. 11 Notices convening the meeting were sent on 7 September 2009. Security holders were asked to consider a number of resolutions, in particular, resolutions in respect of each of the entities to approve the "Internalisation as outlined in the Explanatory Memorandum accompanying the Notice of Meeting for the purposes of Listing Rule 10.1 and for all other purposes." 12 The notice convening the meetings included a lengthy explanatory statement. 13 Section 219(1) of the Act required that the proposed explanatory statement to be lodged with ASIC under s 218 set out, amongst other things: " (b) the nature of the financial benefits; and ... (e) all other information that: (i) is reasonably required by members in order to decide whether or not it is in the company's interests to pass the proposed resolution; and (ii) is known to the company or to any of its directors. " 14 Subsection 219(2) provides: " (2) An example of the kind of information referred to in paragraph (1)(e) is information about what, from an economic and commercial point of view, are the true potential costs and detriments of, or resulting from, giving financial benefits as permitted by the proposed resolution, including (without limitation): (a) opportunity costs; and (b) taxation consequences (such as liability to fringe benefits tax); and (c) benefits forgone by whoever would give the benefits. " 15 The potential that internalisation of the management of Macquarie Airports might trigger change of control provisions in its debt facilities, which was adverted to in the announcement to the ASX on 28 August 2009, was elaborated upon in the Explanatory Memorandum. Of particular significance on the present application is the way in which the Explanatory Memorandum addressed the potential for change of control clauses in relation to debt facilities for the Brussels and Copenhagen Airports to be triggered, with adverse consequences. The Explanatory Memorandum stated: " Change of control clauses In addition, Map needs the co-operation of Macquarie and its managed funds to avoid triggering change of control and pre-emptive rights clauses in debt facilities and shareholders' arrangements that could otherwise give rise to substantially higher financing costs (in particular in debt facilities relating to Brussels and Copenhagen airports). " 16 The Explanatory Memorandum stated that the potential adverse repercussions so described were addressed in the following way: " * To address the potential for change of control clauses in relation to the debt facilities at Brussels and Copenhagen airports to be triggered, Macquarie and its managed funds have agreed to modify the shareholding arrangements so that there is no change of control. In relation to Brussels Airport, under the debt documents, a Macquarie entity cannot cease to control the relevant holding company and therefore the shareholders of the holding company have agreed to change the shareholding arrangements to ensure that this condition is not breached following the Internalisation. In relation to Copenhagen Airports, under the debt documents, a Macquarie entity cannot cease to control the relevant holding company and therefore Macquarie has agreed to acquire a shareholding in the company to ensure that this condition is not breached following the Internalisation. These modifications avoid the adverse consequences that could arise if a refinancing was required as a result of a change of control. * Additionally, other Macquarie managed funds have agreed to waive their pre-emptive rights on a change of control of MAML. * Macquarie has entered into a Facilitation Deed Poll for a period of six months following completion of the Internalisation. Under this deed, subject to MAp and the entities through which it invests undertaking or participating in any reasonable mitigation strategies to the maximum extent possible, Macquarie has agreed to make an adjustment to the payment MAp is to make to Macquarie under the Internalisation of up to $100 million if costs are incurred in relation to the change of control arrangements contained in the debt facilities of Brussels Airport and in respect of the holding company through which Macquarie managed funds invest in Copenhagen Airports as a result of the Internalisation. If required, Macquarie will assist MAp in managing any potential issues arising from these change of control arrangements as a result of the Internalisation. " 17 On 21 September 2009, MAML issued a release to the ASX which stated: " Following discussions between Macquarie and the Indpendent Board Committees (IBCs) of MAp, following feedback from MAp security holders, Macquarie has agreed to increase the maximum adjustment to the internalisation payment under the Facilitation Deed Poll referred to on page 18 of the Explanatory Memorandum to A$345m from A$100m previously. This potential payment adjustment relates to any costs including potential diminution of the value of MAp's investments which may be incurred in relation to the change of control arrangements contained in the debt facilities of Brussels Airport and the holding company for Copenhagen Airports, as a result of the internalisation. The payment adjustment applies to increased costs for the full term of the existing facilities if the change of control provisions in the debt documents are triggered in the first six months following completion of the internalisation. Mr Trevor Gerber, Chairman of the Macquarie Airports Management Limited IBC, said, 'We are pleased that Macquarie is prepared to demonstrate its faith in the assistance that it is providing to MAp to ensure that the internalisation does not result in increased debt costs by placing its entire internalisation payment at risk. This further strengthens the view of the independent directors that the internalisation proposal is in the best interests of security holders. ' Security holders will vote on the internalisation proposal at Special General Meetings scheduled for 30 September 2009. " 18 The plaintiffs commenced these proceedings on 24 September 2009. They seek what they characterise as interlocutory relief in the following terms: " 5. Interlocutory orders pending final hearing: a. restraining the First and Second Defendants (by themselves, their officer, employees, agents or assigns) from proceeding without the leave of the Court with any business at the General Meetings scheduled on 30 September 2009 in relation to the Impugned Resolutions other than by the taking of such steps as are necessary or appropriate to adjourn the meeting; b. restraining the First and Second Defendants from putting any of the Impugned Resolutions to any Meeting on 30 September 2009, including upon resumption of that Meeting after adjournment and/or any other Meeting of the First or Second Defendants without the leave of the Court; c. An order pursuant to section 247A(1)(a) of the Corporation[s] Act 2001 that the plaintiffs are authorised to inspect the books of the First and Second Defendants referred to in Schedule A to this Originating Process (the ' Books '). d. An order pursuant to section 247A(1)(b) of the Corporation[s] Act 2001 that the persons referred to in Schedule B to this Originating process are persons authorised to inspect the Books of the First and Second Defendants as agents of the plaintiffs. " 19 I will deal with the claim for inspection of documents later in these reasons. 20 The second plaintiff, Mr Kjeld Binger, is a member of a consortium of individuals who have formed a company called Global Airports Pty Ltd to advance a proposal that they take over the management of Macquarie Airports. Another member of that team is a Mr Mike Fitzpatrick. 21 On 11 September 2009 Mr Fitzpatrick wrote to Mr Trevor Gerber, the chairman of the Independent Board Committee of MAML, advising that the individuals in question (who all have experience in the operation of airports), including Mr Binger, were prepared to assume the management of Macquarie Airports at the same cost as it would pay for its own management team after implementation of the proposed internalisation, plus half of the savings which would be derived from not paying Macquarie Capital the $345 million (subject to upper and lower limits). 22 One of the possibilities adverted to in the Explanatory Memorandum (but rejected by the independent directors) was the possibility of MAML being removed as the responsible entity. That proposal was not considered with favour by the independent directors. 23 The proposal made for the company now called Global Airports was rejected by the Independent Board Committee of MAL and MAML. It is not a proposal before the meeting of security holders convened for tomorrow. 24 Mr Fitzpatrick entered into an agreement with both plaintiffs, (that is, with Mr Frazer and Mr Binger), with a view to meeting the costs they would incur in these proceedings and for which they might be liable. Legal costs would be met by Global Airports Pty Ltd, or by Mr Fitzpatrick if that company was unable to do so. It was a condition of those arrangements with Mr Fitzpatrick that each plaintiff agreed with him not to give any undertaking as to damages in connection with these proceedings without his prior agreement, unless he and Global Airports had no liability in respect of that undertaking. 25 Both plaintiffs, Mr Frazer and Mr Binger, gave evidence that they expected that Mr Fitzpatrick would agree to their providing an undertaking as to damages, in respect of which he and Global Airports would then be liable to provide an indemnity if the undertaking were called on. 26 There is no evidence that Mr Fitzpatrick has provided such an agreement. I am told that the plaintiffs now do not proffer their own undertakings as to damages. This substantially changes the way in which the present application is to be considered. 27 Even if undertakings as to damages had been proffered, there would still have been a serious question whether the potential losses which might be suffered by the defendants or by third parties if an interlocutory injunction were granted would be adequately compensable by those proffered undertakings. 28 In the absence of undertakings as to damages from the plaintiffs, the plaintiffs face a well-nigh insuperable hurdle in obtaining interlocutory relief. It is well established that an undertaking as to damages is, except in special circumstances, required in every case of an interlocutory injunction. It is the price that a plaintiff pays to obtain such an injunction (Kerridge v Foley [1968] 1 NSWR 628 at 630). In Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249, Gibbs J said at 311 that an undertaking as to damages was a "very important, if not an essential, means of preventing injustice from being done by the court when it makes an order at an interlocutory stage, before the rights of the parties have been finally determined." (at 311). 29 In Young, Croft & Smith, On Equity (2009), the learned authors say (at [16.420]): " While is it sometimes said that [an undertaking as to damages] will not be necessary in special circumstances, it is difficult to find any case where such circumstances have occurred. " (Citations omitted.)

30 On the claim for an interlocutory injunction in this case the first question is whether there is a serious question to be tried that the plaintiffs are entitled to the final relief they seek. The final relief sought is substantially the same as the interlocutory relief in that it includes a final order restraining the defendants from proceeding without the leave of the Court with any business at a general meeting in relation to the impugned resolutions. It also seeks a declaration that the first defendant would breach s 219(1) of the Corporations Act and the general law, and the second defendant would breach the general law by failing to provide members with all information reasonably required by them in order to decide whether or not it is in the interests of the members to pass the resolutions set out in the notices of general meeting. 31 If there is a serious question to be tried that the plaintiffs are entitled to the final relief they seek, the Court asks whether the balance of convenience would favour restraining a meeting from considering the resolutions before the plaintiffs' claim is finally determined. 32 Because the plaintiffs' proceedings were not commenced until Thursday, 24 September 2009, it has not been possible to have a final hearing of the plaintiffs' claims. Where a decision whether to grant or refuse the interlocutory injunction would, in a practical sense, determine the substance of the matter, the Court will assess the strength of the plaintiffs' case for the purposes of seeing where the balance of convenience lies (Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536). 33 In this case an interlocutory injunction would be likely to resolve the substance of the dispute as to the adequacy of the information provided to security holders. If an injunction were granted it is more probable that rather than the parties seeking a contested final hearing, (assuming the time could be made available for that to occur within the next few weeks), the further information which the Court would have found should arguably have been given to the security holders would be provided to them before an adjourned meeting was held or before a new meeting was convened. 34 But the strength of the plaintiffs' claim for final relief would not be the only consideration. Also relevant on the balance of convenience would be at least the following considerations. First, the expenses which would be incurred if the meeting had to be adjourned and reconvened. Secondly, any risk that Macquarie might be entitled to withdraw from the proposal, and, if so entitled, any risk that it would withdraw from the proposal if the meeting were delayed. Thirdly, the additional base fees and any performance fees that would or might become payable to Macquarie as a result of a delay in the holding of the meeting. Fourthly, any losses which might be suffered by third parties from such a delay as, for example, loss which might be suffered by Macquarie by the delay in its receipt of the consideration of $345 million. Fifthly, risks to Macquarie, as a result of its commitment to subscribe for new securities on the issue to be made to fund the payment arising from its exposure to changes in the market for the additional period which the delay would occasion. Sixthly, similar risks to other security holders who propose to take up their entitlement under such an issue. Seventhly, any losses which might be suffered by the entities comprising MAp arising from a delay in the capital raising in relation to these matters. Consideration would also need to be given to any savings which might eventuate from the delay, particularly from the delay in raising capital. 35 Whatever uncertainties there might be in these areas, there is undoubtedly a risk that the grant of an interlocutory injunction could cause loss to other security holders, to Macquarie and to the defendants. Hence, the law requires the plaintiffs to proffer an undertaking as to damages as the price of obtaining an injunction which would stop the meetings proceeding before there has been a final determination of the plaintiffs' claims. 36 Because, having regard to the absence of undertakings as to damages, this claim for interlocutory relief will be decided on the questions going to the balance of convenience, I will deal more shortly than would otherwise be appropriate with the ways in which the plaintiffs put their claims for final relief. 37 The principal reason the plaintiffs contend that the Explanatory Memorandum did not contain all information reasonably required by security holders to decide whether or not it is in the interests of members of the schemes and the shareholders of MAL to pass the proposed resolution is that it is said that the Explanatory Memorandum fails to disclose the precise terms of the relevant change of control and pre-emptive provisions, fails to disclose the basis on which the independent directors are confident that potential adverse consequences under those provisions are avoided, it fails to disclose why an adjustment to the consideration of $100 million was procured from Macquarie for a risk that the independent directors advised in substance could safely be ignored, and fails to advise why the monetary limit of $100 million and a temporal limit of six months were, at the date of the Explanatory Memorandum, considered appropriate to cover the risk that the change of control provisions would be activated notwithstanding arrangements entered into with Macquarie. 38 The plaintiffs also point to the change in the amount of the potential adjustment to the consideration payable to Macquarie announced by Mr Gerber on 21 September 2009. They point to Mr Gerber's statement on that day that Macquarie's entire internalisation payment was placed at risk. 39 The plaintiffs submitted that there was a real risk that the change of control provisions might be triggered if the proposal were approved, which could lead to costs well in excess of $345 million. They say that they are unable to assess for themselves the reality or magnitude of that risk. They pointed to statements by others, in particular by RiskMetrics Group to like effect. 40 RiskMetrics provides services, presumably to subscribers, advising on risk management issues, and governance services issues. It provides financial research and analysis. It recommended that the security holders vote against the proposed internalisation resolution on the ground that security holders had not been provided with sufficient information to assess for themselves that there would be no adverse consequences from the triggering of change of control clauses in the debt facilities. They said that on the information available to security holders, there was no certainty that the adverse debt consequences adverted to in the Explanatory Memorandum would not occur, regardless of Macquarie's assistance. 41 The plaintiffs also contended that the details of the new Facilitation Deed Poll announced to security holders on 23 September 2009 showed that there was a material risk that costs arising from the triggering of change of control provisions in the debt facilities would not be recovered from Macquarie. They say that the advice given to security holders about the terms of the deed indicates that inadequate information was provided in the Explanatory Memorandum. 42 The plaintiffs also contended that the balance of convenience favoured restraining the meeting because there would be no utility in pursuing the internalisation resolutions. The reason for that submission is that the resolution to be put at tomorrow's meeting is for the security holders to consider, and, if thought fit, to pass resolutions that: " Approval is given for the Internalisation, as outlined in the Explanatory Memorandum of the company in this notice of meeting, for the purposes of Listing rule 10.1 and for all other purposes. "

43 A glossary to the Explanatory Memorandum describes "Internalisation" as: " The proposal by which the management of MAp will be internalised through a process involving the acquisition of the shares in MAML and the ending of the management and other contractual agreements between MAp and the Macquarie Group. " 44 In the heading "Overview of the Internalisation" the Explanatory Memorandum identified four "key elements of the Internalisation", one of which was that: " Macquarie will provide assistance to MAp and co-operation generally to ensure that implementing the Internalisation complies with the terms of the shareholders agreements and with a debt facility relating to MAp's investments in Brussels Airport and Copenhagen Airports. "

45 But, so the plaintiffs say, the Internalisation now proposed is different from that described in the Explanatory Memorandum, and, hence, different from that set out in the proposed resolutions, because following entry into an amending deed on 21 September 2009, (that is a deed amending a Facilitation Deed Poll dated 30 August 2009), the present form of the proposed Internalisation is not that outlined in the Explanatory Memorandum. 46 The plaintiffs also submit that the requirements of s 219(d) and (e) and s 222 would not be met because of this change. 47 I think there is a serious question to be tried in relation to these contentions. But there are powerful contrary arguments. Where a proposal to be put to shareholders or unit holders is complex, it has often been said that a balance needs to be struck between providing all information which might conceivably affect a vote, and making the disclosure document informative, or, as it is put, clear, concise and effective. 48 The Explanatory Memorandum did describe the change of control provisions in the debt facilities in so far as it stated that in relation to each of the Brussel's Airport and the Copenhagen Airports under the debt documents "a Macquarie entity cannot cease to control a relevant holding company." Documents provided to security holders on other occasions and for other purposes describe the companies through which MAp holds its interests in each airport and the percentage of its interest. 49 The Explanatory Memorandum described in general terms what steps would be taken to ensure that there was no change of control which would trigger the relevant clauses. What in effect is said by the plaintiffs, and what was contended for by RiskMetrics in their report, was that security holders should have been provided with the information on which the independent directors' assurances were based. There is authority against that proposition (see ENT Pty Ltd v Sunraysia Television Ltd [2007] NSWSC 270; (2007) 61 ACSR 626 at [25]). 50 In the light of the absence of undertakings as to damages, I do not find it necessary to weigh closely the strength of the plaintiffs' case. As I have said, I accept that there is a serious question to be tried. But the contrary arguments are such that it could not by any means be said that the plaintiffs would be almost bound to succeed at a final hearing. The same is true of the second principal way in which the plaintiffs put their case based upon the changes to the adjustment payment announced on 21 September 2009. 51 Given that this is not a final hearing, and given that no undertakings as to damages are proffered, I think it is quite clear that the balance of convenience favours rejection of the plaintiffs' application. If an injunction were granted, the meeting were delayed, but it was ultimately held that the plaintiffs were not entitled to the final relief they seek, then there is a serious risk that third parties would have suffered loss as a result of the adjournment of the meeting. In the absence of undertakings as to damages, there would be no mechanism by which such losses could be addressed. Even if there are special circumstances in which an interlocutory injunction can be given in the absence of a proffered undertaking as to damages, they do not exist in this case. 52 Indeed, the general policy of courts is not to restrain the holding of meetings. It is thought that it is usually better to allow shareholders or members of a group to meet to discuss their differences. Doubtless that general approach might need to be modified on occasion, particularly where there might be immediate consequences from the passing of a resolution at a meeting for which it is said members have been given insufficient information. But the fact that there is such a general approach reinforces the need for undertakings as to damages if individual security holders seek to restrain a meeting which will affect the interests of many. 53 What I have said applies also to the claim characterised as interlocutory relief for the plaintiffs to be authorised to inspect enumerated books of the first and second defendants. That application was made pursuant to s 247(1)(a) and (b) of the Act. Various documents were sought to be inspected, including the relevant debt facilities, and all documents recording or summarising the consideration of the boards of the risks associated with the operation of the change of control clause and pre-emptive rights clauses in the debt facilities and shareholders agreements. 54 In my view, the orders sought under s 247A were, in any event, applications for final relief. I was not persuaded that the orders should or could be made on an interlocutory basis, because once inspection was given, the application would have been completely dealt with. But it was not possible for that application to be dealt with on a final basis. Amongst other things there would have been an issue as to whether the plaintiffs were acting in good faith in seeking the inspection, and whether the inspection was made for a proper purpose. 55 For these reasons, I order that the plaintiffs' claims for the relief in paragraph 5 of the originating process be dismissed. I will hear the parties on costs. I will hear the parties in relation to directions for the balance of the application.

[Counsel address on the question of costs.] 56 The defendants seek an order that their costs of the application be paid on the indemnity basis. They point to correspondence between the solicitors in which the defendants' solicitors pointed to the need for a worthwhile undertaking as to damages and outlined the quantum of potential damages which they said an undertaking ought to be able to compensate. The question of the worth of undertakings as to damages has at all times been a live question. 57 The plaintiffs read evidence, which I earlier rejected for reasons of form, that they had an arrangement with Mr Fitzpatrick whereby he had agreed to meet any costs they incurred in relation to the proceedings including any amount which might have to be paid under any undertaking as to damages. 58 Following rejection of that paragraph, and the granting of leave to the plaintiffs to adduce evidence in relation to that matter in proper form, it appears that the plaintiffs sought to document what was described as the arrangement they had with Mr Fitzpatrick. 59 The documented agreement of 28 September 2009 included the qualification that Mr Fitzpatrick and Global Airports would have no liability in respect of an undertaking as to damages unless the proffering of that undertaking was made with their prior agreement. 60 It is submitted for the plaintiffs that when the proceedings were commenced, the plaintiffs expected that they would be in a position to proffer undertakings as to damages and expected that they would be indemnified in respect of any amount which might have to be paid under the undertakings. Given that I have concluded that there is a serious question to be tried, it is submitted that it could not be said that the plaintiffs have acted improperly in bringing proceedings, and they could not know that the proceedings for interlocutory relief would be doomed to fail for the absence of an undertaking. 61 As Mr Jackman SC submits, the economic burden of an order for indemnity costs will fall on Global Airports and Mr Fitzpatrick. Hence, he submits that even if the plaintiffs acted reasonably in the belief that they would be indemnified in respect of an undertaking as to damages, that should not weigh against the making of the order for indemnity costs. I think there is substance in that contention. 62 I infer that the application would not have been brought unless it were thought by those standing behind Global Airports that the proceedings would advance the interests of that consortium. In those circumstances, it behoved the plaintiffs, if they were to rely upon an indemnity from Mr Fitzpatrick or from Global Airports against their liability under an undertaking as to damages, to have concluded those arrangements before the proceedings were commenced. 63 It appears from the fact that ultimately no undertakings as to damages were proffered, that the plaintiffs were not willing to expose their own assets to the potential consequences of giving such undertakings. Had the position which has now emerged been established at the start of the case, it is most unlikely that the case would have consumed the time and resources it obviously has. I think this is an appropriate case for indemnity costs. 64 I order that the plaintiffs pay the costs of the proceedings to date on the indemnity basis. Those costs may be assessed forthwith and will be payable forthwith after agreement or assessment. In relation to the balance of the proceedings, I stand over the proceedings to the Corporations List before the Registrar on Tuesday, 6 October 2009.

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