In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd

Counsel for ASIC: ASIC did not appear

ORDERS NSD 1898 of 2018 IN THE MATTER OF BOART LONGYEAR LIMITED BETWEEN: BOART LONGYEAR LIMITED ACN 123 052 728 Plaintiff

AND: SNOWSIDE PTY LIMITED ACN 003 924 025 Interested Party

MAURICI NOMINEES PTY LIMITED ACN 068 620 986 Interested Party

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Intervener

JUDGE: FARRELL J DATE OF ORDER: 8 April 2019

1. The plaintiff pay the Snowside Parties' reasonable costs: (a) of and incidental to the hearings on 26 November 2018, 29 November 2018 and 3 December 2018; and (b) in the period between 3 December 2018 and 21 December 2018 inclusive, of finalising the form of an undertaking to be proffered by the plaintiff.
2. The plaintiff pay one third of the Snowside Parties' reasonable costs of and incidental to the hearings on 17 December 2018, 19 December 2018, 21 December 2018, 7 February 2019 and 3 April 2019.
3. Pursuant to r 26.12(2)(c) of the Federal Court Rules 2011 (Cth) the plaintiff is granted leave to file a notice of discontinuance on terms that there be no order as to costs other than as provided in these orders. For the purpose of these orders, the 'Snowside Parties' means Snowside Pty Ltd (ACN 003 924 025) as trustee for the Snowside Trust, and Maurici Nominees Pty Limited (ACN 068 620 986) as trustee for the A.P. Maurici & Associates Pty Limited Superannuation Fund. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

FARRELL J 1 These are reasons for orders made on 8 April 2019 in relation to costs and leave to file a notice of discontinuance in proceedings commenced on 10 October 2018 by Boart Longyear Limited (BLY) for orders under s 411 of the Corporations Act 2001 (Cth).

INTRODUCTION 2 On 23 August 2018, BLY announced that it had entered into a scheme implementation agreement to effect its re-domiciliation from Australia to Canada. If the proposed scheme was implemented, a new holding company incorporated in British Columbia (BLY Canada) would acquire all of the issued shares in BLY and BLY Canada would be registered as a foreign company in Australia and apply to be listed on the Australian Securities Exchange (ASX). BLY shareholders would receive ordinary shares in BLY Canada which would be held in the form of CHESS Depository Interests (CDIs). The CDIs would be able to be traded on the ASX using CHESS. BLY would be delisted from the ASX and it would continue to operate as a wholly-owned subsidiary of BLY Canada. 3 Snowside Pty Limited (ACN 003 924 025) as trustee for the Snowside Trust, and Maurici Nominees Pty Limited (ACN 068 620 986) as trustee for the A.P. Maurici & Associates Pty Limited Superannuation Fund (Snowside parties) are shareholders in BLY. The Snowside parties sought, and were granted, leave to appear under r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules) to oppose the Court making orders convening the scheme meeting and final orders. The Snowside parties are not, despite the convenient terminology, parties to the proceedings. Rule 2.13(1) of the Corporations Rules provides as follows: 2.13 Leave to creditors, contributory or officer to be heard (1) The Court may grant leave to any person who is, or who claims to be: (a) a creditor, contributory or officer of the corporation; or (b) an officer or a creditor, or contributory, of a corporation; or (c) any other interested person; to be heard in a proceeding without becoming a party to the proceeding.

First court hearing 4 At the first court hearing on 25 October 2018, the Snowside parties sought an adjournment on the basis that they had had insufficient time to consider a draft scheme booklet provided to them at approximately 5:00 pm on Friday, 19 October 2018 and the proceedings had no urgency. The adjournment was refused. 5 The primary basis of the Snowside parties' opposition to orders being made convening the scheme meeting was their contention that they would be unfairly prejudiced if their shares were acquired under the scheme because they would lose standing to pursue proceedings commenced by them in the Supreme Court of New South Wales on 7 June 2017 against BLY and its directors (Oppression Proceedings) (OP standing objection). 6 The background to the Oppression Proceedings is set out in the reasons for making the orders sought at the first court hearing and for adjourning the second court hearing: see Boart Longyear Limited, in the matter of Boart Longyear Limited [2019] FCA 62 (Boart (No 1)) at [21]-[23]: 21 The Oppression Proceedings relate to BLY's agreement to the restructuring program by entering into a Restructuring Support Agreement with its creditors on 2 April 2017. The restructuring program involved schemes of arrangement between BLY and its secured and unsecured creditors which were ultimately approved by the Supreme Court of New South Wales (with amendments) on 22 August 2017: see In the matter of Boart Longyear Limited (No 2) [2017] NSWSC 1105 (Boart Longyear (No 2)). Under agreements reached around the same time as the Restructuring Support Agreement, Centrebridge, Ascribe and Ares also obtained rights to nominate directors to BLY's Board. 22 The Snowside parties appeared at the second court hearing in the Supreme Court to oppose orders approving the two creditors' schemes being made. Justice Black explained part of the background to the Oppression Proceedings in Boart Longyear (No 2) at [21]-[22]: 22 … The Snowside companies together hold 26,773,181 shares in BLY, comprising approximately 2.82% of its shares, and are together the third largest shareholding group in BLY, after Centerbridge and another entity (McKenzie 3.7.17 [8]; Ex FR-3, 461). The effect of implementation of the schemes of arrangement would be to reduce their collective shareholding in BLY to approximately 0.1%. The Snowside companies oppose the schemes both in their original form and with the alterations proposed by the Plaintiffs. 23 In June 2017, the Snowside companies commenced separate proceedings against BLY and its directors alleging, inter alia, misleading and deceptive conduct in contravention of the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) in respect of the distribution of the explanatory statement for a notice of meeting of BLY to approve shares issues to Centerbridge, Ares and Ascribe and involvement of the directors in the alleged breach, breaches of an equitable duty of disclosure owed by the directors of BLY to shareholders including the Snowside companies and oppressive conduct within the scope of Ch 2F of the Corporations Act. An application for interlocutory relief to restrain BLY from bringing resolutions before its annual general meeting to approve that issue of shares was dismissed on 13 June 2017 by Brereton J ([2017] NSWSC 756). As I will note below, the interests of the Snowside companies were also potentially affected by the Unsecured Creditor Scheme, so far as it may have an effect upon those claims. 23 The nub of the Snowside parties' claim in the Oppression Proceedings is that, in negotiating and agreeing the terms of the Restructuring Support Agreement and associated transactions with the key creditors and by implementing them, BLY and its directors "unnecessarily sacrificed the interests of" shareholders who were not associated with the key creditors. They say that BLY and its directors gave preferential treatment to Centrebridge by acceding to Centrebridge's demand to maintain a shareholding in excess of 50% of BLY shares without adequate commercial justification or consideration and without taking any or adequate steps to avoid or substantially limit the dilution of their shareholdings by a factor of 27. It appears that the Snowside parties do not take issue with the allotment of shares to Ascribe and Ares in consideration of the cancellation of debt which BLY owed to them. They do take issue with the fact that Centrebridge did not cancel any principal debt as part of the arrangement but rather only extended the term of loans and varied interest charged to BLY. 7 The Snowside parties submitted that the draft scheme booklet should disclose the Oppression Proceedings and the possible impact of the scheme on those proceedings. After oral submissions, and following a suggestion by BLY's senior counsel, BLY and the Snowside parties accepted that it would be appropriate for the Court to determine the OP standing objection after they had had the opportunity to file evidence. The Court would then determine what, if any, supplemental disclosure should be made ahead of the scheme meeting proposed to be held on 6 December 2018 and if the impact of the scheme on the Snowside parties standing to bring the Oppression Proceedings would be a reason to refuse final orders. It was ultimately agreed that the Court would hear argument on the OP standing objection on 26 November 2018 and timetabling orders were made for the filing of further submissions and evidence. 8 The other disclosure issues raised by the Snowside parties at the first court hearing were addressed during the first court hearing. Since the Snowside parties had received the draft scheme booklet at approximately 5:00 pm on Friday, 19 October 2018, the Court was not satisfied that the Snowside parties had not had sufficient time to review the draft scheme booklet and raise any material disclosure issues.

Snowside letter 9 By a letter dated 14 November 2018 sent to some BLY shareholders, Anthony Maurici in his capacity as a director of Snowside Pty Limited urged BLY shareholders to vote against the scheme (Snowside letter). The text of the Snowside letter is set out in Boart (No 1) at [29]. 10 At the commencement of the hearing on 26 November 2018, BLY provided to the Court a copy of the Snowside letter which had come into its possession. It noted that it might wish to address issues raised in the letter and foreshadowed that, as a result, it may be necessary for BLY to obtain the Court's approval to the dispatch of corrective material. 11 On 28 November 2018, the Court made orders in chambers approving a letter from BLY to its shareholders addressing the Snowside letter; the orders were made after the Snowside parties had been given an opportunity to comment on the draft letter from BLY.

Hearings in relation to possible prejudice to the Snowside parties in relation to the Oppression Proceedings if the scheme were implemented 12 The hearing on 26 November 2018 was conducted over a full day in which the parties presented evidence and argument about the OP standing objection in light of the decisions of Kenneth Martin J in Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) [2012] WASC 169, Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) [2013] WASC 143; 94 ACSR 151 and Jebb v Superior Lawns Australia Pty Ltd [2017] WASC 335; 123 ACSR 388 (together referred to as the Superior Lawns line of authority). Submissions also addressed the question of whether, even if the Snowside parties were to be prejudiced by losing standing in the Oppression Proceedings if the scheme were implemented, it would be a reason to refuse orders approving the scheme at the second hearing, assuming all statutory majorities were achieved, having regard to Lindgren J's decision in In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849; 25 ACLC 208 (Re Stork) at [111], Barrett J's decision in In the matter of Centro Properties Limited and CPT Manager Limited in its capacity as responsible entity of Centro Property Trust [2011] NSWSC 1465; 86 ACSR 584 at [104]-[106], and commentary on Re Stork at [111] by Stone J in CSR Limited, in the matter of CSR Limited [2010] FCA 33; 76 ACSR 454 at [26]. 13 In submissions filed before the hearing on 26 November 2018, BLY indicated that it was prepared to offer an undertaking to the Court that it would not seek to advance an argument in the Oppression Proceedings that the Snowside parties were not able to maintain those proceedings by reason that they were no longer members of BLY. BLY noted that, at the first court hearing, the Court had raised the possibility that such an undertaking may not be sufficient if the Supreme Court of New South Wales took the view that the question went to jurisdiction and that that Court needed to satisfy itself that it did have jurisdiction. Senior counsel for BLY presented arguments why that outcome was insufficiently likely to occur. The Snowside parties noted that BLY was not the only respondent to the Oppression Proceedings so that the proposed undertaking did not preclude another party from raising the jurisdictional issue. 14 In the course of the hearing, there was discussion of what measures might be the subject of an expanded undertaking so as to ensure that the Snowside parties would not lose standing in the Oppression Proceedings as a result of implementation of the scheme having regard to the Superior Lawns line of authority. The hearing was adjourned to 29 November 2018 to allow BLY and the Snowside parties time to negotiate the terms of a possible undertaking. 15 There was a brief hearing on 29 November 2018, but as BLY had provided a revised form of undertaking to the Snowside parties only shortly before the hearing, it was necessary to further adjourn to 3 December 2018 to allow the Snowside parties an opportunity to consider it. At that time, the Court indicated to BLY and the Snowside parties that it was minded to the view that the Snowside parties would not lose standing if its shares were acquired by BLY Canada under the scheme but as that view would not be binding on the Supreme Court of New South Wales which was seised with the Oppression Proceedings, it would be preferable if a form of undertaking could be settled. 16 At the hearing on 3 December 2018, the Court indicated that, in light of the revised form of undertaking that BLY was prepared to make (and although there were some minor issues which needed to be settled between BLY and the Snowside parties), it was not satisfied that any prejudice to the Snowside parties arising from the impact of the implementation of the scheme on the Oppression Proceedings would be a reason to refuse to make final orders. The Court approved the publication by BLY of an announcement to the ASX to that effect. 17 The submissions made by BLY and the Snowside parties and the Court's reasons for its findings are set out in Boart (No 1) at [31]-[62].

Scheme meeting 18 At the scheme meeting held on 6 December 2018, the scheme was approved by 97.61% of votes cast (thus passing the "number of votes" test in s 411(4)(a)(ii)(B)) but failed to meet the more than 50% by number of shareholders "headcount test" set out in s 411(4)(a)(ii)(A) of the Corporations Act, because only 31.12% of the shareholders who attended and voted at the meeting in person or by proxy approved the scheme.

Second court hearing 19 By an email which appears to have been sent at 11:37 pm on 13 December 2018, the solicitors for BLY advised the Court that it would seek orders under s 411(4)(a)(ii)(A) of the Corporations Act dispensing with the headcount test and approving the scheme at the second court hearing listed for 19 December 2018. The email was copied to the Snowside parties' solicitors. 20 By an email sent at 7:14 am on 14 December 2018, the Snowside parties' solicitors asked for the matter to be relisted. In response to a query from the Court, the reasons for seeking relisting were said to be the "lateness of notice by the plaintiff about its position for the hearing on 19 December 2018", the steps necessary to be taken for the hearing and "whether the parties will be ready for the hearing". 21 The matter was listed for case management in the afternoon of Monday, 17 December 2018. The events which occurred at that hearing are sufficiently summarised in Boart (No 1) at [73]-[80]. It is useful to note that: (1) BLY submitted that the Court would be justified in dispensing with the headcount test under s 411(4)(a)(ii)(A) because the vote at the scheme meeting was unfairly influenced by the misleading nature of the Snowside letter. (2) Counsel for the Australian Securities & Investments Commission (ASIC) appeared amicus curiae for the purpose of making submissions concerning the appropriate scope of the power to dispense with the headcount test under s 411(4)(a)(ii)(A) of the Corporations Act. 22 The second court hearing was convened on 19 December 2018 and adjourned to 21 December 2018, as had been foreshadowed at the hearing on 17 December 2018. The events which occurred at that hearing are summarised in Boart (No 1) at [81]-[86]. 23 At the adjourned second court hearing held on 21 December 2018, ASIC formally intervened in the proceedings and made written and oral submissions concerning the appropriate interpretation of s 411(4)(a)(ii)(A): see Boart (No 1) at [87], [140]-[144] and [149]-[151]. 24 BLY's submissions and the evidence on which it relied at the second court hearing on 21 December 2018 are summarised in Boart (No 1) at [66]-[72], [76], [83]-[85], [88]-[109] and [145]-[148]. BLY formally tendered the undertaking designed to avoid prejudice to the Snowside parties as a result of implementation of the scheme: see Boart (No 1) at [32]-[33]. 25 The Snowside parties' submissions and the evidence on which they relied are summarised in Boart (No 1) at [110]-[139] and [152]. 26 The Court found that the Snowside letter contained statements that were misleading or had a tendency to mislead, but BLY was not able to persuade the Court, based on the flow of proxies alone, that the Snowside letter unfairly influenced the vote. In the absence of evidence from members who received and relied on the Snowside letter, the Court found that it could not make that finding so that it was not minded to exercise the power to dispense with the headcount test at that time. However, the Court also found that impact on the integrity of the vote could not be discounted because of the misleading statements in the Snowside letter concerning the availability of franking credits, the statement that the Snowside parties' claims in the Oppression Proceedings were "likely to be defeated" by the scheme, the possibility of a class action on a similar basis and the flow of proxies after the Snowside letter was sent compared to the flow before that time: see Boart (No 1) at [171]-[175]. 27 On that basis, the Court took up ASIC's suggestion that it would be appropriate to allow BLY to dispatch supplementary material (the content of which would be supervised by the Court) and a further shareholder vote should be held: Boart (No 1) at [176]. Accordingly, the Court adjourned the second court hearing to a date to be fixed and listed the matter for case management on 7 February 2019. If, following a shareholder vote at which the statutory majorities were achieved, the Court would re-consider whether it was appropriate to dispense with the headcount test and make orders approving the scheme.

Events after 21 December 2018 28 The Court's reasons for the orders made on 21 December 2018 were published on 1 February 2019: see Boart (No 1). Although the Court had indicated that it would not be offended if representatives of BLY, the Snowside parties and ASIC did not attend at the publication of reasons and a copy of the reasons would be sent to them by email immediately upon publication, only senior counsel for the Snowside parties appeared. 29 A case management hearing was held on 7 February 2019 at which senior counsel for BLY advised that BLY intended to hold a shareholders meeting at the time of its annual general meeting in May to consider whether to approve the scheme. Senior counsel for BLY submitted that while that was some way off, it was the most cost-efficient method of addressing the issue. A hearing was listed for 3 April 2019, at which time the Court would consider materials to be dispatched in relation to the meeting. Senior counsel for the Snowside parties expressed their continued opposition to the course proposed and pressed for orders dismissing the proceedings. 30 On 26 February 2019, BLY made an announcement to the ASX as follows: The Company has elected not to proceed with a further vote, as permitted by the Australian courts, to approve the scheme of arrangement to re-domicile Boart Longyear to Canada and intends to file a notice of discontinuance. While the Company believes the business logic for re-domiciliation is compelling we will continue our present focus on running the underlying business and, in the future, may again consider the merit of re-domiciliation. 31 On 27 February 2019, BLY's solicitors provided the following advice to the Court: We are writing to inform her Honour that the plaintiff has been giving further consideration to the scheme of arrangement which is the subject of these proceedings, and, having considered how matters have been developing and currently stand, its board has now determined that the plaintiff's chances of having a successful result in a further headcount vote are insufficient to justify the further financial costs associated with continuing the current scheme of arrangement. This is not a decision the plaintiff has taken lightly. … our client has only now been able to complete its analysis with the necessary data to reach its conclusion. We anticipate filing a notice of discontinuance shortly. The parties are considering their positions in respect of costs and we will write to her Honour about that separately. Our client has instructed us to convey this to the Court as promptly as possible. The solicitors for ASIC and the Snowside parties are copied on this email. 32 BLY and the Snowside parties were unable to reach agreement. ASIC did not seek costs. 33 At a hearing on 3 April 2019, BLY sought leave to file a notice of discontinuance and the Snowside parties sought their costs of participating in the proceedings. At the end of the hearing, the Court indicated the sorts of orders that it was minded to make and directed the parties to provide draft orders consistent with that guidance. Orders were made on 8 April 2019.

COSTS DISPUTE 34 Each of BLY and the Snowside parties filed written submissions and appeared by counsel at the hearing on 3 April 2019. BLY submitted that there should be no order as to costs. The Snowside parties contended that BLY should pay their costs of the proceedings, including costs relating to submissions on costs and the hearing on 3 April 2019.

Snowside parties' submissions summarised 35 The Snowside parties' relied on the distillation of principles from relevant cases made by Santow J in Re NRMA Limited [2000] NSWSC 82; 33 ACSR 595 at [45] as follows: (i) The ordinary rule is that the scheme companies pay the objector's costs and do not suffer cost orders against them. (ii) However, this is subject to the objections not being frivolous or without substance but rather such as to be properly and justifiably advanced, even if unsuccessfully. I would add that even sensible objections should be capable of being advanced with reasonable economy of time, consistent with the summary nature of a s 411(1) application. (iii) These principles reflect the fact that the scheme procedure unavoidably must provide an independent court forum on two separate occasions - for convening and then to approve the scheme. The court will often be assisted by having a contradictor at either stage. It must not be forgotten that the end point of most schemes, if adjudged sufficiently fair and achieving the statutory majorities, is compulsory acquisition of the member's property and the court is no rubber stamp in that process. (iv) Where there is a clear indication that objectors are using the tactics of technical and artificial objection so as to stall a scheme of arrangement for their own purposes, the courts will not hesitate to make costs orders against objectors to the extent warranted; those cost orders may even be indemnity cost orders in appropriate cases. (v) Since assessment of the objections cannot be made in advance, cost orders should not be made in advance either. 36 The Snowside parties submitted that they did not act frivolously and their objections were not without substance because: (1) They could not be described as unsuccessful objectors because the substantive outcome was that BLY elected to discontinue the proceedings and it did not get the relief that it sought. (2) The Snowside parties' initial key objection concerned the potential impact of the scheme on the Oppression Proceedings in view of the Superior Lawns line of authority and that issue was only resolved when BLY proffered an undertaking to the Court on 21 December 2018 after argument on 26 and 29 November and 3 December 2018. This underscores the substance of the point (irrespective of the final resolution of the issue) and the practical success achieved by the Snowside parties. (3) The Snowside parties' other key objection was to BLY's application for orders under s 411(4)(a)(ii)(A) dispensing with the headcount test. The Court did not accede to that application and it conveyed that, if it were to proceed to decide the matter at the end of the hearing on 21 December 2018, it would have refused that application. (4) In the absence of the Snowside parties' appearance, it is unlikely that the competing approaches to the Superior Lawns line of authority or s 411(4)(a)(ii)(A) would have been fully agitated before the Court. (5) The Court found that Mr Maurici's opinion that the advantages of the scheme were not compelling was unsurprising: the benefits of the proposed Scheme are unquantified, there is no payment to shareholders, they will become shareholders in a company regulated by unfamiliar laws and regulations, the liquidity of their shareholding may be adversely affected and there is no prospect of receiving dividends in the immediate term. It was also found that there was inadequate disclosure about board members and, possibly, in relation to share transfers effected shortly prior to the scheme meeting: see Boart (No 1) at [163] and [169]. In those circumstances, it is entirely proper that costs incurred by the Snowside parties in objecting to the scheme to retain their existing legal rights be borne by BLY, especially where BLY no longer presses its applications. 37 Taking a "more overarching view" of what occurred, the Snowside parties submitted that BLY made an application to the Court to approve the scheme which it ultimately abandoned and sought leave to file a notice of discontinuance. They say it is appropriate that BLY pay the Snowside parties costs by analogy with r 26.12(7) of the Federal Court Rules 2011 (Cth), which states: Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued. That rule provides a prima facie entitlement on the part of the party not discontinuing to costs, relying on Travaglini v Raccuia [2012] FCA 620 at [36], Nicolai v Indochina Medical Co Pty Ltd [2013] FCA 180 at [17]-[19]; Australian Securities & Investments Commission v Diploma Group Limited (No 3) [2017] FCA 891 at [2]; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Building and Construction Commission [2017] FCA 1062 at [2]. BLY did not explain why it has abandoned its application. 38 The Snowside parties submitted that, on any view, BLY's decision to discontinue the proceedings cannot be attributed to their conduct. They say that once BLY had decided to make an application to dispense with the headcount test solely on the basis of alleged misleading conduct by the Snowside parties, it was necessary that the Snowside parties appear to defend its conduct. With BLY now being unwilling to avail itself of the opportunity to test the integrity of the vote following corrective supplementary disclosure, it could be inferred that the headcount test would not be satisfied and therefore the Snowside letter had no causative effect and the proceedings would be dismissed if not discontinued. 39 Last, the Snowside parties submitted that any suggestion that the true contradictor in this case was ASIC should be rejected. BLY's application to dispense with the headcount test was based on conduct by the Snowside parties and ASIC had no interest in and did not engage in any defence of that factual case. There was either no or no material overlap whatsoever in the submissions that were made at the final hearing between the Snowside parties and ASIC. As a result, the Snowside parties should not be disentitled from their costs by reason of ASIC's limited participation in the proceeding.

BLY's submissions summarised 40 BLY said that there should be no order as to costs because the matters raised by the Snowside parties were essentially for their own benefit, their conduct caused a substantial portion of the costs to be incurred, there was in any event a contradictor in the form of ASIC, and the Snowside parties conducted their objection in a manner which did not seek to contain costs. 41 BLY said that the starting position where a non-party is heard under r 2.13(1) of the Corporations Rules is that they should have little expectation of being awarded costs unless there is "some very special factor outside the ordinary and expected course of events and engendering a justifiable expectation of compensation in the mind of the none-party", relying on Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; 48 ACSR 681 at [20] per Barrett J, Re Boart Longyear Limited (No 3) [2017] NSWSC 1227 (Boart (No 3)) at [4] per Black J, affirmed in Snowside Pty Ltd as trustee for the Snowside Trust v Boart Longyear Ltd [2018] NSWCA 75 (Snowside v Boart) at [8]. 42 The Court ought to determine what is just in the particular case having regard to the reasonableness of the conduct of the parties and the substance, or lack thereof, of objections raised by the objector: see Quatro Limited v Argo Investments Limited [1999] VSC 231; 32 ACSR 480 (Quatro v Argo Investments) at [13] per Hansen J. Despite Santow J's statement in Re NRMA at [45] that the ordinary rule is that the scheme companies pay the objector's costs and do not suffer cost orders against them, an objector does not have an automatic entitlement to costs: see Winpar Holdings Limited v Goldfields Kalgoorlie Limited [2000] NSWSC 855; 35 ACSR 363 (Winpar Holdings v Goldfields Kalgoorlie) at [11] per Santow J. Re NRMA at [45] does not set out "rules", but rather Santow J was articulating guidelines to the application of the Court's unfettered discretion: see Gas2Grid Limited, in the matter of Gas2Grid Limited (No 2) [2010] FCA 1006; 80 ACSR 179 (Re Gas2Grid (No 2)) at [15] per Stone J. 43 BLY submitted that, applying these principles, there should be no order as to costs because: (1) The only objection to the scheme maintained by the Snowside parties from the first court hearing onwards was the OP standing objection and the Court did not uphold that objection: see Boart (No 1) at [58]. The hearing on 26 November 2018 was conducted to hear argument about the OP standing objection. It was, in practical terms, an adversarial dispute about the correct construction of s 234 of the Corporations Act in light of the Superior Lawns line of authorities. That hearing necessarily led to the incurring of greater costs by BLY. (2) The standing objection was taken for the Snowside parties' own purposes, not for the benefit of BLY's members as a whole. BLY relied on Re Castlereagh Securities Ltd [1973] 1 NSWLR 624, in which Street CJ (at 640-641) justified an order that the company pay the costs of objectors as being that "[t]here were undoubtedly matters proper to be brought forward on behalf of the shareholders as a whole in criticism of the withholding of the accountants' report. In this sense the objectors were properly and justifiably advancing a class right of the shareholders, and they are entitled to have their costs paid by the company". Far from bringing an important matter before the Court, the Snowside parties came with a purely idiosyncratic point because, aside from the Oppression Proceedings, there were no other proceedings that might be affected. Even if the Court had upheld the OP standing objection, it would only have avoided detriment to the Snowside parties. The Snowside parties therefore provided no material assistance to the Court in determining whether the proposed scheme was fair and reasonable to the members generally; such assistance is a material basis on which costs awards to objectors are commonly made: see Quatro v Argo Investments at [7]; Boart (No 3) at [4]. (3) BLY's costs were increased unnecessarily by the Snowside parties' unwillingness to accept the undertaking proffered before the resumed court hearing on 3 December 2018. It was apparent from Kenneth Martin J's decision in Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 2) [2013] WASC 143; 94 ACSR 151 at [28]-[31], a decision on which the Snowside parties relied, that the undertaking would resolve their concerns underlying the standing objection, yet the Snowside parties persisted in raising an objection. The objection was the complaint that BLY did not undertake to issue shares to the Snowside parties immediately upon the implementation of the scheme rather than at a time when it became necessary to ensure that they had standing in the Oppression Proceedings. BLY said that this issue highlighted its reasonableness in seeking to address the OP standing objection compared to the Snowside parties who refused to accept undertakings proffered by BLY and instead maintained their objection and required a contested hearing on the issue. (4) BLY's costs were unnecessarily increased by the adjournment of the second court hearing from 19 to 21 December 2018 to give the Snowside parties further time to consider BLY's evidence and submissions so that they could respond to them: see Kumarina Resources Ltd, in the matter of Kumarina resources Ltd (No 2) [2013] FCA 723 at [2] per Gilmour J. (5) The Court accepted that statements in the Snowside letter were misleading or liable to mislead: see Boart (No 1) at [171]-[174]. If the Snowside parties had not sent the Snowside letter, BLY would not have had a reason to seek dispensation orders under s 411(4)(a)(ii)(A). Accordingly, the Snowside parties' conduct again increased the costs in the proceedings and it would be inappropriate for them to have their costs of that hearing. (6) ASIC was an effective contradictor on the question of the construction of s 411(4)(a)(ii)(A), the Snowside parties' participation was not necessary to assist the Court in determining this point and they should not have their costs of doing so. (7) The Court should not accept the Snowside parties' submission that it could infer from BLY's decision to seek leave to file a notice of discontinuance and not proceed with the scheme that the Snowside letter had no causative effect.

Snowside parties' submissions in reply summarised 44 Two matters were raised by the Snowside parties in reply. First, the decision in Re Castlereagh Securities pre-dates Santow J's distillation of relevant principles in Re NRMA at [45], and that distillation does not contain any proviso that an objector is only entitled to its costs if the objections are for the benefit of all or a majority or any proportion or number of members. A person whose interests may be adversely affected, even if they perceive it incorrectly, by a proposed scheme are entitled to raise issues with it. 45 Second, in submissions made by BLY that the Snowside parties had been unresponsive to approaches from BLY to reach agreement about a form of undertaking to address the OP standing objection, ultimately it was not an inter partes undertaking; it was an undertaking to be provided by BLY to the Court and therefore it was for BLY to persuade the Court to accept its terms.

CONSIDERATION 46 Although neither BLY nor the Snowside parties' written or oral submissions adverted to it, the relevant starting point informing the determination of the costs dispute in this court is s 43 of the Federal Court of Australia Act 1976 (Cth) which relevantly provides as follows: 43 Costs (1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. … (1A) … (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge. (3) Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following: (a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; (b) make different awards of costs in relation to different parts of the proceeding; (c) order the parties to bear costs in specified proportions; (d) award a party costs in a specified sum; (e) award costs in favour of or against a party whether or not the party is successful in the proceeding; (f) order a party's lawyer to bear costs personally; (g) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise; (h) … 47 The Court's discretion pursuant to s 43(2) of the Federal Court of Australia Act is a broad one albeit that it is one that must be exercised judicially: see Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 per Black CJ and French J at [9]. Similarly, as Leeming JA (speaking for the Court) observed in Snowside v Boart at [8] (albeit in the context of a creditors' scheme of arrangement), there is no presumptive entitlement to costs and this is a concomitant of the limited exposure to an adverse costs order that those to whom leave is granted under r 2.13 of the Corporations Rules enjoy, thereby affirming Re Pan Pharmaceuticals Ltd at [20]. 48 Nothing turns on the fact that, in this case, BLY has sought leave to discontinue the proceedings in circumstances where it might more usually and equally appropriately have applied to the Court to dismiss its application. Any analogy with r 26.12(7) of the Federal Court Rules is not apt: this is not inter partes litigation. Insofar as that submission may have sought to raise a presumption in favour of the Snowside parties' application for costs, that would not be appropriate. Instead, the Court must look to the facts and all relevant circumstances of this case: see Re Gas2Grid (No 2) at [15] per Stone J. 49 In many members' schemes of arrangement and applications for approval of reductions of capital, the Court has allowed objectors their costs where their intervention has assisted the Court by the provision of an effective contradictor on issues relevant to the Court's exercise of jurisdiction. However, as established in the authorities referred to above, there is no general rule to that effect and Santow J observed in Winpar Holdings v Goldfields Kalgoorlie at [11] that he did not wish to be understood as saying that courts will automatically make costs orders in favour of unsuccessful objectors. Justice Santow cautioned against "excessive lenience with cost orders [in favour of objectors]", noting that courts should not encourage waste of court time and resources with objections that have no real substance. 50 In considering the orders for costs which should be made, the Court also took into account that it is well settled that a broad-brush approach should be taken to questions of costs: see Snowside v Boart at [10]. 51 In this case, the primary issue raised by the Snowside parties was their concern that if the scheme were implemented, they would lose standing in the Oppression Proceedings having regard to the Superior Lawns line of authority. 52 The Court does not accept BLY's submission that what Street CJ's said in Re Castlereagh Securities at 640-641 means that a Court should not make costs orders in favour of objectors who properly raise issues which primarily affect them (or do not affect other shareholders) provided the objection is prosecuted economically and there are no other disentitling circumstances. 53 Although the issue raised by the OP standing objection was one that affected the Snowside parties peculiarly, it was also a risk that was borne by the Snowside parties in another forum and it was an issue which might have had bearing upon the ultimate fairness of the scheme. Because a scheme binds all members even if they do not agree to it, a significant aspect of the Court's role is to consider the effect on minority interests: see In re Anglo-Continental Supply Company Ltd [1922] 2 Ch 723, per Astbury J at 729. 54 I am satisfied that the OP standing objection was an issue of substance which the Snowside parties properly raised in the context of BLY's application under s 411 having regard to (a) the Superior Lawns line of authority; and (b) their need to clarify the position was occasioned solely by the manner of re-domiciliation chosen by BLY which involved compulsory acquisition of the Snowside parties' BLY shares. The fact that the Court ultimately found that the Snowside parties would not lose standing to prosecute the Oppression Proceedings does not change the view that the Snowside parties have an entitlement to their reasonable costs of prosecuting that issue, subject to any disentitling conduct. 55 In the exercise of its discretion, the Court also takes into account the following factors. 56 The Court's overall impression of the Snowside parties was that they sought to delay the progress of the scheme proposal, "dragging it out", an impression which the Court made known to senior counsel for the Snowside parties at the case management hearing on 17 December 2018. The Court's impression was that the Snowside parties would rather have a fight than resolve material issues in an economical and efficient way so that the Court accepts that the Snowside parties did not conduct their appearance in a way that sought to contain costs. 57 The Snowside parties' requests for adjournment of the first and second court hearings to enable evidence to be gathered and submissions to be made were based on the proposition that the nature of the scheme did not require prompt action. While it must be acknowledged that there will usually be more urgency attached to schemes occasioned by pending insolvency or schemes designed to effect a takeover, BLY is a public company whose securities are traded on the ASX. It is highly desirable that issues which might affect decisions to buy, sell or hold those securities be resolved promptly, in the interests of an efficient market for those securities. 58 After the approach to determining the OP standing objection had been agreed at the first court hearing, the Snowside parties pressed for adjournment of that hearing so that they could examine the scheme booklet so that they could raise issues about the adequacy of disclosure. They had had the draft booklet for three business days and a weekend before the first court hearing. Since the Snowside parties had been shareholders of BLY for some time and they had taken an active part in the creditors' schemes of arrangement in 2017, material disclosure issues should have been obvious to them within that timeframe. Critically, the submissions made by the Snowside parties in relation to disclosure issues were not helpful to the Court in deciding whether to make orders under s 411(1). The issues identified by them at the first court hearing were addressed by disclosures already in the draft scheme booklet or in documents (such as the terms of issue of warrants) which had been on the public record for some time, some of which were attached to affidavits filed by the Snowside parties. The submission that the benefits to the major shareholders should be disclosed appeared to the Court to be fishing. The Court formed the impression that the Snowside parties' interest at the first court hearing was more in achieving delay in the dispatch of the scheme booklet than in securing full and fair disclosure. 59 On the other hand, the question of whether or not the Supreme Court of New South Wales has jurisdiction to hear the Oppression Proceedings after the Snowside parties cease to be members of BLY upon implementation of the scheme would ultimately be a question for that Court. BLY was slow to propose a form of undertaking which would address the issue of enabling the Snowside parties to regain membership of BLY consistent with them retaining standing in accordance with the Superior Lawns line of authorities. BLY continued to press (at the hearing on 26 November 2018) its proposal that it would undertake not to raise the issue of standing in circumstances where BLY was not the only respondent and the Court had previously indicated that it was not satisfied that that undertaking was adequate. BLY only proposed a revised form of the undertaking shortly before the hearing on 29 November 2018, which made that hearing less effective than it could have been. The Court acknowledges that there were a number of issues which BLY needed to address before it was able to settle a form of undertaking which would enable BLY to provide the Snowside parties with assurance that BLY would issue shares to them if required to maintain standing in the Oppression Proceedings, but that advice was only sought on or after 26 November 2018, when the issue of the adequacy of the undertaking proposed by BLY had been queried by the Court at the first court hearing. The Court also acknowledges that it was open to the Snowside parties to propose or comment on the form of wording more promptly, and the fact that the undertaking was given to the Court did not justify their apparent reluctance (at the hearing on 29 November 2018) to finalise issues relevant to the OP standing objection in sufficient time to provide settled information on that issue to shareholders before the scheme meeting. 60 Accordingly, taking a broad-brush approach having regard to all of these matters, the Court was prepared to allow the Snowside parties their reasonable costs of and incidental to the hearings on 26 and 29 November and 3 December 2018 and in the period 3 to 21 December 2018 inclusive of finalising the form of an undertaking to be proffered by BLY. The Court notes that no order as to costs should be made in relation to the Snowside parties' appearance at the first court hearing. This is on the basis that the costs of the days identified represented a just allowance having regard to the Snowside parties' participation in the proceedings to 3 December 2018 (and later in relation to the undertaking) and taking into account that BLY also incurred costs in that period referable to seeking Court approval to corrective disclosures related to the Snowside letter. 61 In considering the Snowside parties' costs incurred after 3 December 2018 (other than in respect of settling the undertaking given by BLY), the Court has taken into account that the Snowside parties significantly altered the landscape of these proceedings by issuing the Snowside letter. It formed the basis of BLY's application to dispense with the headcount test under s 411(4)(a)(ii)(A). There is no reason to believe that, absent the Snowside letter, BLY would have made any such application if the vote at the scheme meeting had failed the headcount test. 62 In Boart (No 1), the Court ultimately found that the Snowside letter had a tendency to mislead or was misleading in the following respects: (1) The statement concerning loss of franking credits did not accurately reflect all of the relevant information in the scheme booklet, in particular, the qualifications in the independent expert's report (see [171]); (2) The statement that the Snowside parties' claims in the Oppression Proceedings were "likely to be defeated" by the re-domiciliation was wrong (see [173]); (3) It was misleading to suggest that the "same arguments" as raised in the Oppression Proceedings might be used as a basis for a class action when Mr Maurici had made no enquiries as to whether any such class action existed and he is not aware of any such proceedings or that anyone (including Snowside) has them in prospect (see [174]). 63 At the hearing on 3 April 2019, senior counsel for the Snowside parties acknowledged these findings and said they "did not for a minute cavil with them". Despite this, senior counsel emphasised the submission that the Court could not be satisfied that the misleading statements had any causative effect of the vote at the scheme meeting. The Snowside parties also submitted that it was necessary for them to appear at the hearing on 21 December 2018 to defend their conduct. Those two submissions should be rejected. 64 The Court accepts that in Boart (No 1), it was made clear (at [175]) that it could not be satisfied, in the absence of evidence from BLY members who had received and relied on the Snowside letter, that any BLY shareholder had relied on it in deciding how to exercise their vote. However: (1) In Boart (No 1) at [175], the Court also made it clear that it could not be satisfied about the integrity of the vote having regard to its finding that statements in the Snowside letter were misleading and having regard to the proxy flows after the Snowside letter was sent to some BLY shareholders. It is for that reason that the Court accepted ASIC's submission that it might be appropriate to allow another vote before determining whether the headcount test should be dispensed with under s 411(4)(a)(ii)(A); and (2) The Snowside parties' conduct in issuing the Snowside letter with the misleading statements in it was wrongful. So was the statement in the Snowside letter that "it was likely" that it would lose standing in the Oppression Proceedings. That later statement was made at time when the Snowside parties knew that this Court was fully seised of that issue and would adjudicate on it before the scheme meeting and authorise disclosures accordingly with a view to there being an informed vote at the scheme meeting. 65 In the Court's view, any award of costs in relation to the hearings on 17, 19 and 21 December 2018 must take into account the causative role that the Snowside letter had in casting doubt on the integrity of the vote at the scheme meeting and creating a basis for BLY to make its application to dispense with the headcount test. Since the Snowside parties were not successful in defending their conduct which was wrongful, there is no basis for their suggestion that they are entitled to costs of defending it, albeit that BLY was not required to do so and it ultimately declined to take the opportunity to test the shareholders' will at a second meeting. 66 That said, the Court also recognises that: (1) In Boart (No 1) the Court found that there were areas in which disclosure in the scheme booklet could or should be improved if it were to seek a further shareholder vote, albeit that those areas were not such as would have prevented the Court making final orders had the statutory vote been achieved at the scheme meeting; (2) BLY did not get the relief for which it applied under ss 411(4)(a)(ii)(A) or 411(4)(b) because it did not establish reliance on the misleading statement in the Snowside letter and accordingly, the Snowside parties successfully resisted that relief; (3) The Court obtained some minor assistance from the Snowside parties' submissions in relation to dispensing with the headcount test, although the Court was assisted primarily by ASIC's submissions. 67 In relation to the Snowside parties' attendance in Court on 1 February 2019 and 7 February 2019 and 3 April 2019: (1) The attendance by senior counsel on 1 February 2019 when the Court published reasons for orders made on 21 December 2018 was unnecessary. Orders had already been made, a case management hearing was set for 7 February 2019 and the Court had indicated (by saying that attendance was not required) that it intended only to publish ts reasons. Senior counsel did not request any action by the Court or make any submission on that occasion. No costs should be awarded in relation to that appearance. (2) The only submission made by senior counsel at the case management hearing on 7 February 2019 was to note the Snowside parties continued objection to the course of allowing a further vote rather than dismissing the application. However, the Court accepts that it was appropriate that the Snowside parties be represented at the hearing. (3) The Snowside parties were partially successful on their application for costs following the hearing on 3 April 2019. 68 Taking all these matters into account, including the award of costs referred to at [60] above, the Court determined in its discretion that the Snowside parties should be awarded one third of their costs of and incidental to the hearings on 17 December 2018, 19 December 2018, 21 December 2018, 7 February 2019 and 3 April 2019.

LEAVE TO DISCONTINUE 69 In light of the fact that the scheme was not approved by at least 50% in number of shareholders who attended and voted at the scheme meeting and BLY's decision not to pursue a further vote of shareholders, it was appropriate that leave be granted to BLY to discontinue its application under s 411(1). I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.