Inspector James v Ryan

LEGISLATION CITED: Corporations Act 2000 (Cth) Occupational Health and Safety Act 2000

Cretazzo v Lombardi (1975) 13 SASR 4 Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105 Inspector James v Ryan (No 2) [2010] NSWIRComm 63 Inspector James v Ryan (No 3) [2010] NSWIRComm 127 CASES CITED: Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75 Kimberley John Hughes v Western Australian Cricket Association (Inc) and Ors (1986) ATPR 48 O'Sullivan v Crown in Right of State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303; (2003) 128 IR 158 Rockdale Beef Pty Ltd v Industrial Relations Commission of NSW [2007] NSWCA 128; (2007) 165 IR 7 Subramaniam v The Queen [2004] HCA 51; (2004) 79 ALJR 116 Toll Transport Pty Ltd v Transport Workers' Union of New South Wales (No 2) [2010] NSWIRComm 97 WorkCover Authority of New South Wales (Inspector Keenan) v Leighton Contractors Pty Ltd [2005] NSWIRComm 454; (2005) 147 IR 329

HEARING DATES: Written submission: 10 September 2010; 15 September 2010; 13 October 2010; 27 October 2010

Mr M J Joseph SC with Mr D W Chin of counsel (Appellant) WorkCover Authority of New South Wales LEGAL REPRESENTATIVES: Mr L P Robberds QC with Mr R F Crow of counsel (Respondent) Bilbie Dan, Solicitors and Attorneys

CORAM: BOLAND J, President KAVANAGH J BACKMAN J

Application by Inspector Wayne James of the WorkCover Authority of New South Wales for leave to appeal and appeal from decisions of Justice Marks given on 18 December 2009 in Inspector James v Ryan [2009] NSWIRComm 215 and 28 May 2010 in Inspector James v Ryan (No 2) [2010] NSWIRComm 63

1 In Inspector James v Ryan (No 3) [2010] NSWIRComm 127 the Full Bench of the Court granted leave to appeal and with the exception of one of the grounds of the appeal, dismissed the appeal. Costs were reserved to be dealt with on the papers. This judgment deals with costs of the proceedings at first instance as determined by Marks J in Inspector James v Ryan (No 2) [2010] NSWIRComm 63 and the costs of the appeal proceedings.

2 In Ryan (No 3) the Full Bench had to consider three principal issues: (1) whether Marks J erred in holding that the term 'director', where it appears in s 26(1) of the Occupational Health and Safety Act 2000 ('OHS Act') does not include the extended meaning of 'director' as it appears in s 9 of the Corporations Act 2000 (Cth). The Full Bench found his Honour erred and held that the term 'director', where it appears in s 26(1) of the OHS Act, did include the extended meaning of 'director' as it appears in s 9 of the Corporations Act and, therefore, s 26 of the OHS Act embraces the concept of a de facto director and shadow director (at [86]). It was this issue that constituted ground 7 of the appeal and was the one issue in respect of which the appellant was successful; (2) whether Marks J erred in finding there was no appointment of the respondent as a director of the corporation Dekorform Pty Ltd in accordance with Dekorform's constitution. The Full Bench found his Honour did not commit any error in this regard (at [177]); (3) whether Marks J erred in finding that the respondent was not a de facto director nor was he a shadow director. The Full Bench held there was no error (at [224] and [231]). 3 In the light of its findings that the respondent was not appointed as a director of Dekorform and its finding that the respondent did not fall within the definitions in (b)(i) or (b)(ii) of the definition of director in s 9 of the Corporations Act, the Full Bench found it unnecessary to consider whether the respondent was in a position to influence the contravention of the OHS Act by Dekorform, although the Full Bench in its judgment expressed a tentative opinion in the negative. 4 In relation to the costs of an appeal, the usual rule is that costs follow the event. However a question has arisen as to whether there should be an exception to the rule in this case given the appellant's success in one of the principal issues for determination. Further, the respondent has raised an additional issue, contending a breach of prosecutorial duty and, therefore, the prosecutor should be liable for the whole of the costs at both first instance and on appeal. 5 In relation to costs at first instance, Marks J considered that in general terms the respondent/defendant should have been entitled to a costs order in his favour. The one reservation his Honour had concerned the contradictory positions taken by the respondent/defendant as to whether he had been validly appointed at law as a director of Dekorform. His Honour held at [54]: [54] I am of the opinion that the conduct of the defendant in contradicting the representation made on 13 November 2008 that he was at all relevant times a director of Dekorform, such contradiction occurring after the hearing had commenced, constitutes conduct that would disentitle the defendant from obtaining a costs order in his favour about this issue. In referring to "this issue", I am referring only to the question whether the defendant had been validly appointed a director of Dekorform, something that could only have been attended to by Alesco Corporation, the ultimate parent company. I do not intend to disentitle the defendant from recovering his costs with respect to the remaining controversy concerning whether or not he was otherwise a director for the purpose of s 26 of the Act because it is clear from the manner in which the prosecutor conducted the proceedings that these were issues that the prosecutor would have pursued even if informed that the defendant had not been validly appointed a director of Dekorform. Given also that the prosecutor vigorously contested the evidence that the defendant adduced about the validity of his appointment as a director of Dekorform, there is no justification in my opinion for making any order about this matter in favour of the prosecutor against the defendant. 6 Marks J made the following orders: 1. Subject to Order 2, the prosecutor is to pay the defendant's costs of the proceedings in an amount assessed under the Legal Profession Act in default of agreement.

2. Notwithstanding the provisions of Order 1, the defendant is not entitled to recover against the prosecutor any costs arising out of or in connection with the question whether the defendant was validly appointed a director of Dekorform Pty Ltd by Alesco Corporation. Case for the appellant

7 The appellant alleged that there were four errors in the costs decision at first instance. The first error related to the respondent recovering his costs for that part of the proceedings in which the appellant proved the contravention of the OHS Act by Dekorform. The alleged error related to what Marks J found at [22]-[23] of his decision: [22] In essence, the prosecutor was required to prove that Dekorform contravened the Act and that the defendant was a director. The prosecutor claimed that there was no effective challenge to the finding that the corporation had breached the Act, yet the prosecutor was "put to its proof." [23] At the commencement of the prosecution case, there was dialogue between counsel for the prosecutor and the defendant concerning the adducing of evidence about the breach by the corporation. The Court was informed that there had been discussions between counsel but that agreement had not been reached concerning those admissions that the defendant was prepared to make about the breach by the corporation. Mr Robberds QC said that "apart from some minor matters" he had indicated that the defendant was prepared to admit matters that would have "virtually proved the case that the prosecution had to prove that the company committed the offence. We don't take issue about that." Mr Robberds indicated that Mr Joseph SC, counsel for the prosecutor, required additional admissions which the defendant was not prepared to make. It was on this basis that the matter proceeded by the prosecutor calling evidence to establish the breach by the corporation. I do not regard those matters as favouring any exercise of discretion against the defendant's application for costs. 8 The appellant submitted that the respondent's concession at the commencement of the prosecution case that it was prepared to admit matters that would have 'virtually proved the case that the prosecution had to prove' against Dekorform was not sufficient. It was submitted 'virtual' proof was not actual proof; such that the prosecutor was effectively put to proof on the charges against the company and was successful. 9 The second alleged error was that his Honour failed to take into account that the respondent 'materially contributed to the prosecution and its costs by exercising his right to remain silent as to his "defence" to a charge under s 26(1)' and 'brought upon himself the prosecution during the investigative process and the prosecutorial discretionary decision-making process'. It was submitted that the prosecution was commenced with total justification that the respondent was a 'validly' appointed director and was thus in a position of influence. The appellant submitted his Honour failed to give any or sufficient weight to this fact. 10 The third alleged error was his Honour's finding that the Deed of Indemnity from Alesco would not have the effect of indemnifying the respondent for legal costs incurred in connection with the prosecution. At [42] Marks J found that: [42] By clause 2.1, an indemnity is provided by Alesco in favour of the Director "to the maximum extent permitted by law" against "legal costs, not limited to taxed costs, incurred by the Director as a Director of the Relevant Subsidiary, other than legal costs incurred" in circumstances which it is not necessary to describe. As I understand the relevant provision, the indemnity that would apply to the defendant in these proceedings against legal costs must be costs incurred by the defendant as a director of Dekorform. As I have found that he was not a director of that corporation, it follows that the provisions of the indemnity could not, in any event, apply to him. On this basis, the assertion made by the prosecutor has no application to a consideration of whether a costs order should be made in favour of the defendant. 11 The appellant submitted that: His Honour's finding as to liability was limited to failure to prove that the respondent was a director to the criminal standard of proof. The reasonable doubt held by his Honour on the question of directorship is not determinative of the respondent's rights under the Deed. The proper construction of the Deed is that indemnity is not limited to the respondent's position as a director "duly" appointed in accordance with the constitution of Dekorform, or even as a de facto director under the Corporations Act 2001. The Deed indemnifies the respondent against liability incurred by him even after he has ceased to be a director of Dekorform. The Deed merely envisages that the respondent would be appointed as a director to one or more subsidiaries of Alesco and may extend to liability incurred notwithstanding some procedural irregularity with respect to such an appointment. The Deed operates to oblige Alesco to indemnify the respondent " to the maximum extent permitted by law " which would extend to indemnification on the basis that the respondent was, at least on the balance of probabilities, a director or de facto director of Dekorform. 12 The fourth error alleged was that Marks J failed to take into account the indemnification under the Deed. It was submitted that like the Court of Appeal in Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148; (2008) 67 ACSR 105, this Court should look beyond the surface identity of the parties, and have regard to the financial ability of those persons or organisations that actually stand behind the parties for the purpose of liability for costs. 13 Marks J reasoned in the costs decision that the deed of indemnity, even if it did cover the respondent, would not be a matter disentitling him to his costs. His Honour was reinforced in his conclusion by comparing and contrasting this case with two decided cases in which a party's costs were met by a third party litigation funder: see Green. 14 The appellant submitted that there should be no order as to costs in relation to the first instance proceedings. 15 In respect of the costs of the appeal, it was the appellant's case that he had succeeded in a significant issue on appeal, namely, ground 7 concerning the question whether the term 'director' in s 26 of the OHS Act is confined to persons duly appointed to that position in accordance with the constitution of the corporation, and also in respect of the question of leave to appeal.

16 The respondent contended there was no error in the first instance judgment concerning costs. In relation to the first alleged error the respondent submitted it was evident from the transcript of the proceedings that the appellant wished to lead oral evidence on matters other than 'some minor matters' that the respondent declined to admit, in order to rectify inadequacies he perceived in the particulars of the charge in the application for order. It was submitted the evidence led by the appellant, which occupied most of the first two days of the trial, far exceeded what was necessary to cover 'some minor matters', and traversed all the circumstances of the accident. Further, it was submitted, it was the appellant who caused the parties to incur unnecessary costs, not the respondent. 17 In relation to the second alleged error the respondent submitted that the prosecution of the respondent was commenced on 30 June 2008. It was not in dispute that the respondent did not form the belief until 13 or 14 May 2009 that he had not been appointed as a director of Dekorform according to law. The trial commenced on 11 June 2009. The respondent submitted he could not have been remaining silent, in June 2008, about a belief that he did not form until May 2009. It was submitted his Honour did not err 'in failing to take into account' this submission of the appellant. 18 In relation to the third alleged error the respondent submitted the points raised by the appellant were answered by the findings of the Full Bench, that the respondent: (a) was not appointed a director of Dekorform in accordance with its constitution (at [177]); and (b) was not a director of Dekorform, as defined in the Corporations Act , at the relevant time (at [224] and [230]-[231]).

These findings, it was submitted, confirmed his Honour's conclusion about the non-application of the deed. 19 In relation to the fourth alleged error the respondent submitted that the appellant had ignored the extensive reasoning of Marks J in distinguishing Green from the present case. It was submitted the appellant had 'latched on' to one effect of the decision in Green and asked for the same without explaining why he should have it, without explaining why his Honour erred in refusing it and without any attempt to distinguish the second decision on which his Honour relied and to which his Honour attached more relevance, namely, Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; (2009) 239 CLR 75. 20 In any event, it was submitted, Green did not support the submission that a Court should 'look beyond the surface identity of the parties'. It concerned an application by a defendant for an order for security for costs against a plaintiff liquidator who had a third party standing behind him and funding his litigation in the expectation of sharing in the proceeds of it. It was further submitted: By contrast, the respondent did not initiate this litigation with the financial support of a third party who will share in the proceeds. He did not initiate it at all. He will not enjoy any proceeds from his acquittal. There is no litigation funder who ought to be required to share the risk of the litigation. The respondent had no choice but to resist the unwarranted prosecution of him. 21 In relation to the costs of the appeal, the respondent submitted: (a) The appellant succeeded on only one of his 39 grounds of appeal. That success did not alter the result at first instance. This is not a case for the apportionment of costs;

(b) The time spent by both parties on the question of leave to appeal was negligible. In all the circumstances of the case, it would be just and equitable that the respondent have his costs on this question also. Alleged breach of prosecutorial duty

22 The respondent submitted there were additional reasons why the Court should dismiss the costs applications made by the appellant and make a costs order in favour of the respondent. It was submitted the proceedings were criminal proceedings and because of that, the appellant had prosecutorial duties imposed on him, which he failed to carry out and the findings of Marks J and of the Full Bench were a direct result of that failure. In summary, the respondent submitted: (a) In deciding whether to prosecute a person who is alleged to be a director of a corporation, a prosecutor must consider the evidence which he or she has on the question whether the possible defendant is able to satisfy a court that he or she was not in a position to influence the conduct of the corporation in relation to its contravention of the OHS Act. A prosecutor must also give consideration to what evidence he or she has to prove that the director was in a position to influence. (b) In deciding whether to prosecute, a prosecutor cannot ignore the possibility that the prospective defendant was not in a position to influence the relevant conduct of the corporation, or was in such a position and exercised all due diligence to prevent the conduct. (c) When a prosecutor is considering whether to prosecute, it is a fundamental requirement that consideration be given to the question whether there is a reasonable prospect of a conviction. That, in turn, requires that consideration be given to whether the prospective defendant has a defence. (d) It is the prosecutor's duty at the investigation stage, to be satisfied that there is insufficient, or no, evidence available to the prospective defendant to prove such a defence, or that there is evidence available to the prosecutor with which to disprove it. (e) It is oppressive to a defendant for a prosecutor to commence a prosecution without considering the availability of a defence. The potential for oppression is acute under s 26(1) of the OHS Act, because proof of either defence will usually require an extensive evidentiary survey of executive responsibility and/or OH&S procedures in the contravening corporation. The legal costs of defending a charge will inevitably be high, as this case demonstrates. They will vastly exceed the likely fine for an early plea of guilty. (f) In this case, apart from tendering ASIC records, which recorded the respondent as a director of Dekorform, the appellant did not lead any evidence that the respondent was in a position to influence. It can therefore be concluded that he had no such evidence. (g) Had a realistic and objective review of the evidence been carried out by the appellant after the respondent had completed his evidence, the appellant would have realised that he could not secure a conviction. The appellant should have therefore brought the prosecution to an end and consented to an order of acquittal. The position at the end of the respondent's evidence was corroborated by the additional evidence of Messrs Wareing and Clarke. (h) It is a fundamental obligation of a prosecutor to assist in the timely and efficient administration of criminal justice. That obligation is breached when a prosecution is continued where it is clear that it will fail and when submissions are made which have no basis. (i) The manner in which the case was conducted by the appellant and the submissions which he placed before the Court both during the trial and on the appeal show that no attempt had been made by the appellant to make a realistic assessment of the evidence. (j) The submissions made by the appellant on the appeal are a further illustration of his unrealistic approach to this prosecution. The appellant did not limit the submissions made on his behalf to realistic issues between the parties. Numerous paragraphs of the appeal decision note submissions of the appellant that had no substance. 23 For his part, the appellant submitted: (a) There is no requirement upon the prosecutor to prove that the person charged was in a position to influence the conduct of the corporation in relation to its contravention. Proof of that matter falls on the personal defendant alone. (b) The respondent's assertion that the appellant should not have commenced the prosecution without sufficient evidence that the respondent was in such a 'position of influence' is entirely misconceived because the respondent was not required to establish any such proposition in the prosecution case. (c) The respondent's assertion is further undermined in view of his own conduct in allowing the appellant to continue with the impression - at all times up until the opening of the defence case in the trial at first instance on 16 June 2009 - that no issue would be taken in the proceedings that the respondent was a director of the relevant corporation; an impression that was confirmed by an express representation made by the respondent to the appellant on 13 November 2008. (d) The evidence of Messrs Wareing and Clarke did not wholly corroborate the respondent's evidence. (e) The appellant's duty was to ensure a fair trial for the respondent. The appellant had an obligation to put before the Court 'all arguably credible and relevant evidence': Subramaniam v The Queen [2004] HCA 51; (2004) 79 ALJR 116 at [57], cited in Rockdale Beef Pty Ltd v Industrial Relations Commission of NSW [2007] NSWCA 128; (2007) 165 IR 7 at [144]. There is no suggestion that the appellant failed in this regard, or in any other respect giving rise to relevant unfairness. The respondent received a fair trial; he had an opportunity to test all relevant evidence; and to establish a defence. The respondent's complaint of breach of prosecutorial duty is without substance and should be disregarded. (f) The commencement and conduct of the trial and the subsequent appeal were consistent with the fulfilment of the appellant's prosecutorial duty. In the result, the respondent cannot rely upon the asserted breach of prosecutorial duty in aid of its submissions on costs. There was no such breach.

24 The Court's power to deal with costs has recently been the subject of extensive consideration in two Full Bench judgments (Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 at [8]-[9]; Toll Transport Pty Ltd v Transport Workers' Union of New South Wales (No 2) [2010] NSWIRComm 97 at [8]-[11]) and although those judgments were in relation to civil proceedings, the relevant principles are not materially affected by the fact that the present proceedings are criminal proceedings. We adopt what was said in Cretney and Toll Transport. 25 As it has been explained, the appellant's position regarding the proceedings at first instance was that there should be no order as to costs as a consequence of four errors on the part of the primary judge. As to the first alleged error that there was no effective challenge to the finding that the corporation had breached the OHS Act, yet the prosecutor was 'put to its proof', Marks J did not regard that as favouring any exercise of discretion against the respondent's application for costs. 26 In light of the respondent's concession that its admissions 'virtually proved the case that the prosecution had to prove that the company committed the offence' it seems to us that it was quite unnecessary for the appellant to occupy most of the first two days of the trial to traverse all the circumstances of the incident. It was only necessary to address 'some minor matters' that the respondent declined to admit, in order to rectify inadequacies perceived in the particulars of the charge in the application for order. We do not consider Marks J committed any error. 27 The second alleged error was that his Honour failed to take into account that the respondent 'materially contributed to the prosecution and its costs by exercising his right to remain silent as to his "defence" to a charge under s 26(1)'. We do not consider there is any substance in this contention. The respondent did not form a belief about his defence until about one month prior to the trial commencing. Furthermore, there was no evidence that the appellant incurred additional cost as a result of the timing of the respondent's disclosure of his defence. 28 The third alleged error concerned the finding by his Honour that the deed of indemnity made by the respondent and his employer, Alesco, would not indemnify the respondent. The indemnity against legal costs, etc, was only available if the respondent was a director of Dekorform. As the Full Bench confirmed on appeal, Mr Ryan was not a director of that corporation. It follows that the provisions of the indemnity could not, in any event, apply to him. 29 Moreover, and this concerns the fourth alleged error, as Marks J correctly observed at [43], the fact that an indemnity exists does not, of itself, provide any reason for denying a defendant in criminal proceedings a costs order against the prosecutor. 30 The appellant relied on Green to submit that this Court should look beyond the 'surface identity of the parties' and have regard to the financial ability of those persons or organisations that actually stand behind the parties for the purpose of liability for costs. Green concerned the question whether security for costs should be ordered in circumstances where proceedings had been commenced by a liquidator of a company, but those proceedings were financed by a litigation funder who stood to make a financial gain from the proceeds of the litigation. 31 After referring to the judgments in Green, Marks J stated: [48] In my opinion, the part played by a consideration of a commercial gain to be made by a litigation funder in considering whether security for costs should be ordered is relevantly distinguishable from a consideration of whether a successful party in proceedings is entitled to a costs order in his or her favour assuming the existence of a third party indemnity. A litigation funder stands to make a commercial profit from the arrangement with the party. A third party provider of an indemnity for costs does not have, without more, any interest in the proceeds of the litigation. It is of the nature of an arrangement to finance costs incurred by a party to proceedings. Furthermore, there are significant differences in approach that are taken into account in considering whether an order for security for costs should appropriately be made when compared with a consideration of whether a successful party to proceedings should have the benefit of a costs order. [49] In determining whether to exercise the discretion to make an order for the provision of security for costs, a court will have regard to the need to provide protection in appropriate circumstances against a successful party (usually a defendant) being denied a right to recover costs against another party who is impecunious. The discretion is a wide one and was the subject of general consideration in the New South Wales Court of Appeal in Green , previously referred to. However, in determining whether to exercise the discretion to make an order for costs in favour of a defendant who is successful in criminal proceedings, the court is concerned about compensation, as I have earlier discussed. Furthermore, the entitlement to costs has crystallised, whereas in considering matters involving security for costs a court is looking at matters in futuro . [50] Of more relevant consideration is the recent decision of the High Court of Australia in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43. In those proceedings, the High Court of Australia considered whether or not the Supreme Court of New South Wales had power to order costs against a non-party who was a litigation funder. The High Court held that no such power existed because, fundamentally, the litigation funding arrangement did not constitute an abuse of process of the court. Although neither the High Court of Australia nor the New South Wales Court of Appeal, nor, indeed, the judge at first instance, had given specific consideration to whether or not a party might be deprived of the right to seek costs because of a litigation funding arrangement, the various judgments cast no doubt on the general proposition that the existence of a litigation funding agreement for the benefit of a successful party in proceedings would not in some way disentitle that party from recovering costs in circumstances where he or she would otherwise be entitled to the benefit of a costs order. [51] I am of the opinion that the existence of any indemnity for costs to the benefit of the defendant would not disentitle him to a costs order to which he would otherwise be entitled. 32 We agree with Marks J's reasoning. In any event, as the respondent submitted: By contrast [to the facts in Green ], the respondent did not initiate this litigation with the financial support of a third party who will share in the proceeds. He did not initiate it at all. He will not enjoy any proceeds from his acquittal. There is no litigation funder who ought to be required to share the risk of the litigation. The respondent had no choice but to resist the unwarranted prosecution of him. 33 The appellant has not established any proper basis to interfere with his Honour's first instance decision regarding costs. 34 As to the costs of the appeal, the appellant submitted the respondent should be deprived of the costs of the relevant disputed question of law upon which he had failed, and should be ordered to pay the appellant's costs of that dispute: O'Sullivan v Crown in Right of State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303; (2003) 128 IR 158 at [198], referred to with approval in WorkCover Authority of New South Wales (Inspector Keenan) v Leighton Contractors Pty Ltd [2005] NSWIRComm 454; (2005) 147 IR 329 at [13]. 35 O'Sullivan concerned five separate charges brought against the defendant in those proceedings. Two of the charges were not made out. Having regard to Kimberley John Hughes v Western Australian Cricket Association (Inc) and Ors (1986) ATPR 48, subject to the qualifications in Cretazzo v Lombardi (1975) 13 SASR 4, and noting the decision in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, Walton J, Vice-President decided to make an order for costs in favour of the prosecutor, with an apportionment of the costs recoverable by the prosecutor from the defendant (that portion of costs being 70 per cent). 36 In the present proceedings, the question of whether s 26 of the OHS Act extended to cover de facto and shadow directors arose in the context of the respondent's defence that he had not been validly appointed as a director of Dekorform. The appellant sought to counter that defence by contending, successfully, that s 26 covered de facto and shadow directors. However, ultimately it was found at first instance, and upheld on appeal, that the respondent was not a director in either capacity. The prosecution failed because an element of the offence was not made out. 37 As it was observed in Cretney at [8]: …

(f) A successful litigant is, prima facie , entitled to an award of costs, unless there are special circumstances warranting a departure from the rule: O'Sullivan v Crown in Right of the State of New South Wales (Department of Education and Training) [2003] NSWIRComm 303; (2003) 128 IR 158 at [198] - [199]; Powerlan Ltd v Squires (No 2) [2007] NSWIRComm 68; (2007) 162 IR 389; Kim Hollingsworth v Commissioner of Police [2007] NSWIRComm 137 at [14]. '[T]he making of an order that a successful party pay his or her opponent's costs requires strong justification and exceptional circumstances must exist before a party will ... be ... required to pay part of the opponent's costs': Arian v Nguyen (2001) 33 MVR 37, [2001] NSWCA 5 at [37]; Hooker v Gilling (No 2) [2007] NSWCA 214 at [21].

38 We do not consider there are any exceptional circumstances in this case that warrant a departure from the usual rule. Further, the time spent by both parties on the question of leave to appeal was negligible. Given his overall success, there is no reason for the respondent to be deprived of a portion of his costs because the appellant was successful in gaining leave to appeal. Accordingly, we propose to order that the appellant shall pay the respondent's costs of the appeal. 39 In light of that outcome, we find it unnecessary to address the allegations of breach of prosecutorial duty. Orders

40 The Full Bench makes the following orders: (1) The decision of Marks J in relation to costs in Inspector James v Ryan (No 2) [2010] NSWIRComm 63 is confirmed. (2) The appellant shall pay the respondent's costs of the appeal as agreed or assessed. __________________________________________

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