Jolan Pty Ltd v Essential Investments Pty Ltd

Final orders to be made 1 This is a case in which the plaintiff (Jolan) seeks orders under s 233 of the Corporations Act 2001 (Cth) to remedy the oppression, unfair prejudice and unfair discrimination against it as a minority shareholder of the first defendant (Company). 2 Following a trial held in September and early October 2021, the Court delivered judgment in this matter on 7 December 2021: Jolan Pty Ltd v Essential Investments Pty Ltd (No 2) [2021] FCA 1533 (trial judgment). 3 Orders were also made on that date allowing the parties, existing shareholders of the Company and any interested persons to file and serve any written submissions on the appropriate form of final orders to be made. The parties were also invited to file and serve submissions and affidavit material relating to the appropriate costs order to be made. 4 At [25] of the trial judgment, it was found that Jolan had established its claims and was entitled to relief under s 233 of the Corporations Act. 5 At [403] of that decision, it was stated that: As submitted by the defendants, I agree that existing shareholders of the Company should have first right at purchasing Jolan's shares at the price determined by the Court on the basis any clauses in the shareholders' agreement relating to pre-emptive rights will not apply. 6 At [473] of that decision, the price of Jolan's shares was fixed at $1.16 per share or $1,160,000. 7 At [492] - [494] of that decision, it was stated that: If there remains any of Jolan's shares which have not been acquired by any shareholder, then the Company will be ordered to buy back the balance of Jolan's shares which is not otherwise acquired at the price of $1.16 per share, with an appropriate reduction in the share capital of the Company. If, for any reason, Jolan's shares have not been acquired by a particular date, then the Company will be wound up and Mr Anthony Norman Connelly and Mr William James Harris will be appointed as liquidators of the Company. Subject to receiving further submissions, my present view is that the appropriate course is to make the orders appointing the liquidators to the Company, and for an order winding up the Company, but then staying those orders to a particular date to enable the shareholders and the Company to buy all of Jolan's shares. If the acquisition of Jolan's shares is successful (whether by the shareholders and the Company, or just the shareholders) and Jolan ceases to be a shareholder, then the winding up order can then be vacated. 8 As to the issue of the final orders which should be made, Jolan filed submissions on 13 December 2021 and, pursuant to a request of the parties, reply submissions on 17 December 2021. The defendants filed submissions on 13 December 2021 and an affidavit of Ms Stacy Miller sworn 13 December 2021. Other than the parties, no submissions were received from any shareholder or interested person. 9 By her affidavit, Ms Miller, partner of Cronin Miller Litigation (CML), the solicitors for the defendants, swore an affidavit which deposed to the effect that: (a) all of the Company's shareholders had been sent a copy of the trial judgment and orders made on 7 December 2021; (b) all but four shareholders had been approached to ascertain whether they intended to participate in the purchase of Jolan's shares at $1.16 per share. [According to page 28 paragraph 9 of the defendants' closing submissions, there are over 30 shareholders at present, which means that the vast majority of shareholders had been approached by 13 December]; (c) eight existing shareholders and two incoming shareholders intend to participate in the purchase of Jolan's shares at $1.16 per share; (d) each of those parties has deposited funds into the CML trust account such that it holds $1,160,000 in cleared funds for the purposes of that purchase; (e) each of those parties has signed an undertaking to acquire a certain number of Jolan's shares. [When added together, the amounts referred to in these undertakings add up to 1,000,000 shares. Some of these undertakings are dated as early as 8 December 2021, being the day after the trial judgment was delivered]. 10 The issue is whether it is necessary at this stage to make any order as to the Company buying back Jolan's shares, or winding up the Company, in light of this evidence. 11 By their submissions, the defendants did not address the issue of whether an order should be made that the Company buy back any shares not acquired by any shareholders or interested person; however, I have proceeded on the basis that the defendants' position is that such an order should not be made at this stage. 12 The defendants also submitted that: In light of the above, it is most unlikely that there will be any need for the company to be placed into liquidation. For a number of reasons, it is submitted that a preferable form of order is not to make a winding up now, and stay it, but rather to order that in the event that Jolan has not transferred its shares by a certain date, then the company be wound up. The defendants seek that the date be fixed at 28 January 2022. 13 The reasons given in the defendants' submissions for wanting the date to be fixed at 28 January 2022 were, essentially, the "Christmas vacation", that the allocation between prospective purchasers (including those who have deposited funds into the trust account and those who have not yet been given that opportunity) still has to be finalised and "the co-operation of the plaintiff is still required to effect signatures on share transfer forms, which will need to be provided to the plaintiff". 14 However, in circumstances where the decision was handed down on 7 December 2021, a delay until 28 January 2022 is unwarranted. It is especially unnecessary having regard to the speed at which interested purchasers executed the undertakings and deposited funds into the CML trust account following the delivery of the trial judgment. It may be inferred that the share sale completion can be achieved with similar expedition. 15 Further, as it is more than a week since Ms Miller's affidavit was sworn, it is likely that, by now, all of the existing shareholders have been approached about acquiring Jolan's shares. All shareholders of the Company are also aware of the trial judgment (which was handed down two weeks ago). 16 Further, there is no evidence which demonstrates that it is necessary to wait until 28 January 2022 to complete the transfer of Jolan's shares. According to the footer of the email received by my chambers from CML dated 16 December 2021 at 5.29pm, which will become an exhibit, the CML office will re-open at 8.30am on 4 January 2022. 17 The final concern about Jolan not executing share transfer forms is not justified in light of Jolan's written submissions in reply. However, the orders which will be made will also impose obligations on Jolan in this regard. 18 Finally, it is in the best interests of all parties that the completion of the sale of Jolan's shares take place as soon as possible. 19 In the circumstances, it is appropriate to make orders pursuant to s 233 Corporations Act which require that the sale of Jolan's shares be completed by 14 January 2022 and other ancillary orders. The proceeding will be listed for hearing at 9.30am on 17 January 2022 for the purposes of making further orders, if needed. If that hearing is not required, the parties are requested to advise the Court as soon as possible.

Costs 20 As to the issue of the costs orders which should be made, Jolan filed submissions on 13 December 2021, an affidavit of Ms Caitlin Waldron sworn on 13 December 2021 and, pursuant to a request of the parties, reply submissions on 17 December 2021. The defendants filed submissions on 13 December 2021, a further affidavit of Ms Miller sworn 16 December 2021 and supplementary submissions on 16 December 2021. 21 Further, by email dated 16 December 2021 received at 5.29pm, the defendants' solicitors indicated that, in effect, it had just been realised that their firm and counsel briefed to act for the defendants would not be able to provide submissions on the precise question of whether any costs order should be made against the second to fourth defendants. 22 In circumstances where costs orders have been sought against all defendants since the Amended Originating Application was filed on 2 September 2021, it is regrettable that this was only realised at such a late stage. However, as I do not propose to make any costs order against the second to fourth defendants in any event, there was no need to afford the second to fourth defendants an opportunity to file further submissions.

Whether costs order should be on indemnity basis 23 The first issue is whether the Company should pay Jolan's costs on the standard basis or indemnity basis. The Company accepts it is liable to pay costs on the standard basis. Jolan presses for indemnity costs.

Offers made to settle proceedings 24 The first basis upon which Jolan seeks an order that the defendants pay Jolan's costs on the indemnity basis is that the defendants unreasonably refused offers to settle. 25 Jolan made two offers to the defendants. 26 On 10 August 2021, an offer was made in the following terms: 1. The following settlement offer is made in accordance with the principles enunciated in Calderbank v Calderbank. ... 7. Given the requirement for the shares to be purchased as part of the settlement, we have set out two offers which are capable of acceptance by the Defendants to meet both of these requirements. 8. Given that the hearing of this matter is due to commence in mid September and this tight timetable means that additional costs are being expended by both parties for every day that this matter is not resolved, the below offers are open for acceptance for 7 days, until 5.00pm, 17 August 2021. 9. If the offers below are not accepted within this time period, this letter will be relied on by Jolan to seek indemnity costs following trial. Offer 1 10. The Defendants (being the Company, Mr Todd Hiscock, TL Hisco Investments Pty Ltd and Kangaroo Point Realty Pty Ltd), in any combination agreed between the Defendants, purchase Jolan's 1 million shares in the Company at $1/share, for a total of $1 million (the Settlement Sum). 11. The Settlement Sum will be paid by electronic transfer to Holding Redlich's bank account within 7 days of acceptance of this offer. 12. Upon payment of the Settlement Sum Jolan will: (a) transfer its shares in the Company to the Defendants (in the combination agreed between the Defendants); and (b) discontinue proceedings on the basis that there be no order as to costs. 13. Jolan agrees to release the Defendants and any subsidiaries, directors, shareholders and employees of the Defendants from any and all claims with respect to Jolan's investment and involvement with the Company. 14. The Defendants and any subsidiaries, directors, shareholders and employees agree to release Jolan, its directors and shareholders from any and all claims with respect to Jolan's investment and involvement (including directorships of Mr and Mrs McWilliam) with the Company. 15. The parties agree to clauses in the settlement agreement: (a) not to disparage the directors, officers, subsidiaries, shareholders and employees of the Defendants or Jolan; and (b) to keep the terms of the settlement confidential save for an agreed statement between the parties regarding the outcome of the settlement. The purpose of this additional clause is to address any concerns that the Defendants may have regarding their ability to explain the resolution of the proceedings and the allegations made with respect to oppression by the Defendants of Jolan in the future to potential investors or purchasers of the Company. Offer 2 16. It is understood that there has been interest from third parties (i.e. not parties to the proceedings) to purchase shares in the Company in the range of $0.80 cents per share to $0.90 cents per share. Jolan is open to settling the proceedings on the basis that Jolan's shares are purchased by one or more of these third party purchasers on the condition that the proceedings are resolved and Jolan achieves an overall settlement sum of $1,000,000 (the Settlement Sum). 17. The Defendants agree (in any combination agreed between them) to paying Jolan the difference between the third party purchase price for Jolan's shares in the Company and the Settlement Sum in full and final settlement of the proceedings. 18. By way of example, if Jolan reaches agreement with a third party purchaser for the sale of its shares at $0.90 per share, the Defendants pay, in any combination agreed between them, $100,000. 19. Upon a binding agreement being entered into between Jolan and the third party purchasers for the sale of Jolan's shares and the payment of the balance of the Settlement Sum by the Defendants (the Defendants Settlement Sum) Jolan will discontinue proceedings on the basis of there being no order as to costs. 20. Jolan agrees to release the Defendants and any subsidiaries, directors, shareholders and employees of the Defendants from any and all claims with respect to Jolan's investment and involvement with the Company. 21. The Defendants and any subsidiaries, directors, shareholders and employees agree to release Jolan, its directors and shareholders from any and all claims with respect to Jolan's investment and involvement (including directorships of Mr and Mrs McWilliam) with the Company. 22. The parties agree to clauses in the settlement agreement: (a) not to disparage the directors, officers, subsidiaries, shareholders and employees of the Defendants or Jolan; and (b) to keep the terms of the settlement confidential save for an agreed statement between the parties regarding the outcome of the settlement. The purpose of this additional clause is to address any concerns that the Defendants may have regarding their ability to explain the resolution of the proceedings and the allegations made with respect to oppression by the Defendants of Jolan in the future to potential investors or purchasers of the Company. Reference to all of Jolan's 1 million shares is made in the above offers as the Company has not completed the buyback of Jolan's 55,556 shares at $1.15 per share and has indicated this buyback may be cancelled or, at the least, deferred. Each of Jolan's offers above are also open for acceptance on the basis that 944,444 shares are purchased as set out in the offers and the Company agrees that it will proceed with the buyback of Jolan's 55,556 shares at $1.15. 27 On 22 September 2021, which was the third day of the trial, a second open offer was made orally in Court and confirmed in a letter sent by Holding Redlich to CML. 28 The terms of the second offer (as expressed in the letter) were: 1. Jolan's 1,000,000 shares in Essential Investments Pty Ltd are purchased for $1 per share; and 2. The Defendants pay the Plaintiff's costs of these proceedings. In light of the ongoing proceedings and the significant costs associated with the continuation of these proceedings before her Honour Justice Downes this week, this offer is open for acceptance by the Defendants until 9.30am on 23 September 2021. 29 Neither offer made by Jolan was an offer under the Federal Court Rules 2011 (Cth): see r 25.01(1). 30 In Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7], Sundberg and Emmett JJ said: The mere making of an offer of compromise and its non-acceptance, followed by a result more favourable to the offeror, does not automatically lead to an order for payment of costs on an indemnity basis:... The applicant for a more generous award must show that the rejection of the offer was imprudent or plainly unreasonable:... (emphasis added, citations omitted) 31 In Hardingham v RP Data Pty Limited (No 2) [2021] FCAFC 175 (Greenwood, Rares and Jackson JJ), the Full Court stated at [19] that: Different Full Courts have stated slightly differently the general law test applicable to determining whether an offeree who fails to accept an offer of settlement (not being made as an offer of compromise under Pt 25 of the Rules or its analogues) can be ordered to pay the offeror's costs on an indemnity basis if the offeror obtains a better result than that contained in the offer. The differing versions of the test are that the rejection must be either "imprudent or unreasonable" or "imprudent or plainly unreasonable" (emphasis added). 32 The matter of unreasonableness will be judged by reference to the circumstances facing the offeree at the time of the offer: see CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Ltd (2008) 15 ANZ Insurance Cases 61-785; [2008] FCAFC 173 at [75], cited with approval in Hardingham at [26]. 33 In Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112, the Full Court at [7] identified a non-exhaustive list of relevant factors to consider in determining whether the refusal of an offer to compromise was unreasonable. These were (in summary): (a) the stage of the proceeding when the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offeror foreshadowed an application for indemnity costs in the event of the rejection of its offer. 34 It is apparent that Jolan has achieved a better price for the acquisition of its shares than that which it offered both prior to and during the trial. 35 However, the defendants submit that the refusal of both offers was not unreasonable in circumstances where neither offer contemplated the pre-emptive rights provisions in the Shareholders' Agreement. This agreement is addressed at [90] to [108] of the trial judgment and the relevant provisions of that agreement are set out at [105] of the trial judgment. 36 In this context, the defendants submit that it was not possible to accept the offers within the period that the offers were open as the agreement of all other shareholders would have been required to disregard compliance with the pre-emptive rights provisions. 37 Jolan submits in reply that the parties could have approached the Court for consent orders giving effect to the compromise, including orders dispensing with the need for compliance with clause 7 of the Shareholders' Agreement. 38 However, neither offer contained a proposal that the Court be approached in this way. This means that further agreement was required to be reached between the parties before a compromise which was acceptable to the defendants could have been reached. The offers, by their terms, were not able to be accepted. 39 Further and in any event, I do not accept that the defendants could have agreed to any consent order dispensing with the pre-emptive rights in the Shareholders' Agreement so as to enable a transfer of Jolan's shares to them without at least some form of consultation with the other shareholders, which would have taken some time. 40 This has the consequence that it was not unreasonable for the defendants to refuse to accept the offers made by Jolan as referred to above. 41 I also consider that it was not unreasonable for the defendants to refuse the offer made on 10 August 2021 in circumstances where that offer included a proposed release of any and all claims as described in that letter by the Company's "subsidiaries, directors, shareholders and employees" of "Jolan, its directors and shareholders". In circumstances where the 10 August offer was only open for 7 days, and having regard to the large number of people and entities falling within the scope of the Company's "subsidiaries, directors, shareholders and employees" who would need to agree to provide a release, it was not unreasonable for the defendants to fail to accept this offer. 42 For these reasons, I do not consider that it is appropriate to make any order for indemnity costs as a result of the defendants' refusal of the plaintiff's offers.

Whether unreasonable conduct in defence of proceeding 43 The alternative basis for a claim of indemnity costs relied upon by the plaintiff is that the conduct of the defence by the defendants was unreasonable because they, amongst other things, made allegations that should not have been made having regard to the facts known to the defendants. 44 In Alhalek v Quintiliani trading as Kells Lawyers (No 3) [2021] FCAFC 150 (Katzmann, Derrington and Anastassiou JJ), the Full Court stated at [10]: Ordinarily costs are payable on a party and party basis. That is reflected in r 40.01 of the Federal Court Rules 2011 (Cth). When costs are awarded on this basis, a successful party will rarely, if ever, be able to recover all their costs. Where, however, a case has some "special or unusual feature" which would justify a departure from the ordinary course, the Court may make an order for indemnity costs: … The purpose of an indemnity costs order is to compensate a party in full for their costs when the Court takes the view that it was unreasonable for the party against whom the order was made to have caused the other party to incur costs: … (citations omitted) 45 In Alhalek, the Court also observed at [7] - [8] that: The power to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). The Court is given a broad discretion, limited only by the need to act judicially and the obligations imposed by Pt VB of the Act (ss 37M-37P). An express power is included to enable the Court to order that costs awarded against a party are to be assessed on an indemnity basis: s 43(3)(g). Section 37M(3) requires the Court to exercise any power conferred on it by the civil practice and procedure provisions of the Act and the rules made under the Act in the way that best promotes their overarching purpose. That purpose, described in s 37M(1), is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Section 37M(2) provides that: Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. Similarly, s 37N(1) imposes an obligation on the parties to a civil proceeding before the Court to conduct the proceeding in a way that is consistent with the overarching purpose. That obligation applies to all parties, regardless of whether they have legal representation. Further, s 37N(4) provides that, in exercising the discretion to award costs in a civil proceeding, the Court or judge must take into account any failure to comply with that obligation. 46 Two circumstances identified by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 at 233 as justifying an exercise of the discretion to award indemnity costs are: (a) the continuation of proceedings in wilful disregard of known facts or clearly established law; and (b) the making of allegations which ought never to have been made. 47 In this case, the defendants made allegations which ought never to have been made. Because they were made, and maintained, this impeded the just resolution of this dispute according to law and as quickly, inexpensively and efficiently as possible. That is because they expanded the issues to be addressed by the evidence, increased the time spent at the trial itself, increased the legal costs incurred by Jolan and delayed the delivery of the trial judgment. 48 One such allegation appears in paragraph 8(c) of the Defence, which was to the effect that the Company was a holding company only and was not involved in the day to day management of the businesses operated by its subsidiaries. This was an allegation which the Company knew to be incorrect, both as a matter of fact (which the directors knew from their own involvement and experience on the board of the Company) and having regard to the unambiguous terms of the Shareholders' Agreement. 49 Another such allegation related to the conversations held between a small number of the shareholders, and their own private musings, prior to entry into the Shareholders' Agreement and concerning when an Exit Event could be achieved. This issue was the subject of affidavit evidence but the resolution of what was in fact discussed between this subset of shareholders did not feature in any prominent way in the defendants' closing submissions, and was another unnecessary and distracting issue raised in a case where there was no dispute as to the content of the final agreement in relation to the Exit Event, as reflected in the Shareholders' Agreement. 50 Further allegations which ought not to have been made appear in paragraph 43 of the Defence which appears to be a restatement of the content of the 7 December letter referred to in the trial judgment. It repeats the error (as contained in that letter) that Mr McWilliam was employed by the Company, when in fact he was employed by Essential Coffee. It even pleads at 43(m): "our client has since ascertained that". This shows that the words in the letter have not even been changed for the purposes of the pleading. In short, the defendants approved a pleading which replicated the allegations in the 7 December 2020 letter to Mr McWilliam, notwithstanding that the Company (by the board) was aware of the matters which are addressed in [217], [218], [221], [223], [224], [228], [229], [230], [231], [241], [242], [246], [249] of the trial judgment. In light of that awareness, the defendants should not have approved that plea. 51 The allegations concerning Mr McWilliam occupied a significant proportion of the evidence and submissions at the trial. The false facts alleged in the 7 December 2020 letter were pressed by the defendants, through their instructions to their legal representatives. Having regard to the findings in the trial judgment, including concerning the knowledge of the board of the true facts, these allegations should not have been made and maintained. 52 Further allegations which ought not to have been made relate to allegations that Mrs McWilliam improperly used confidential legal advice which had been provided to the Company, and that she had acted contrary to legal advice by causing Jolan to release confidential information in order to gain an advantage for Jolan to the potential detriment of the Company. The allegations were pleaded, were not abandoned and required resolution by the Court. In these circumstances, it is an insufficient response to an application for indemnity costs to rely upon a finding in the trial judgment that the pleaded allegations were not "seriously pressed" in the defendants' closing submissions. 53 Another pleaded allegation was that Jolan had "baited" the Company into acts of oppression. This allegation was maintained in passing in the closing submissions by the defendants, and needed to be addressed in the trial judgment. However, the lack of significant evidence (or even cross-examination) about this issue demonstrates that it was an allegation which should not have been made or maintained. 54 In the circumstances, I accept Jolan's submission that the only reasonable inference is that the pleading and maintenance of these unfounded and disparaging allegations against Mr and Mrs McWilliam was done to try to complicate and delay the proceeding. 55 A further reason to award indemnity costs relates to the Company's conduct in seeking to criticise Mr McWilliam in relation to his performance in his job at Essential Coffee. This was the subject of affidavit evidence which the Company sought to tender in circumstances where Mr McWilliam's professional abilities and his general performance in his job at Essential Coffee had no bearing on any issue in the case. None of this affidavit evidence mattered, but serving and attempting to rely on it at the trial increased the costs for Jolan which needed to address it. 56 The attack on Mr McWilliam through the affidavit evidence of the Company's witnesses was supported by the Company, in circumstances where it adduced such evidence from Mr Todd Hiscock, Mr White, Mr Cook, Mr Rankine and Mr Camilleri. Notably, Mr Hiscock and Mr Cook are both former solicitors which should have given them some insight as to the fact that this evidence was not relevant. 57 These personal attacks on Mr McWilliam were inimical to the overarching purpose as described in s 37M(1) Federal Court of Australia Act 1976 (Cth). They formed part of the defendants' aggressive and excessive defence of the case brought by Jolan. 58 The defendants amended the Defence on the first day of trial to include an allegation that Mr Hiscock relied on an email exchange with Mr McWilliam, where the affidavit annexing such exchange omitted the last email from the email chain. Affidavit evidence has been provided by CML to the effect that the last email was not included in the annexure through their inadvertence. However, that evidence does not assist Mr Hiscock's cause. Along with the board, he was the person giving instructions on the Company's behalf, and he was the person who swore his affidavit deposing to his alleged belief based on an email chain which was annexed to his affidavit. He is a "former qualified solicitor, accountant, insolvency practitioner, IT&T executive and mergers and acquisitions practitioner". It was Mr Hiscock's responsibility to ensure that his affidavit evidence was accurate and complete, especially as he was making such serious allegations against Mr McWilliam. 59 As the alleged concern held by Mr Hiscock about Mr McWilliam's conduct in relation to the JobKeeper subsidy only emerged at the time when Mr Hiscock swore his affidavit, and did not find its way into the 7 December 2020 letter, this was another allegation which was raised by the defendants in an attempt to disparage Mr McWilliam and to bolster a case which the Company and Mr Hiscock knew was based, at least in part, on false allegations. That this was done was inimical to the overarching purpose as described in s 37M(1) Federal Court of Australia Act. 60 Finally, the defendants did not conduct their case at trial as inexpensively and efficiently as they could have done. Senior counsel for the defendants admitted that the Company knew of the identity of Jolan's broker prior to the proceedings being commenced. Although the trial dates were set in April 2021, the Company did not issue a subpoena to Jolan's broker (Link) until August 2021, which had the practical result that the Company ultimately received a large volume of documents just prior to the trial commencing on 20 September 2021. This then resulted in the trial being adjourned part heard to enable the defendants to make closing submissions once they had the opportunity to digest the documents. At the trial, the defendants tendered all of the documents produced by Link (being more than 1,600 pages of material) and all of Jolan's discovered documents. The unlimited tender of the documents obtained from Link would have added to Jolan's legal costs, which would have needed to be reviewed prior to closing submissions being made. It is unreasonable for Jolan to bear these costs in the circumstances. 61 Having regard to these matters, I find that the defendants breached their obligation under s 37N(1) Federal Court of Australia Act. Subject to one matter, I therefore find that this case has some "special or unusual features" which would justify a departure from the ordinary course such that the Company should pay Jolan's costs on an indemnity basis. I explain below why no costs order will be made against the second to fourth defendants. 62 I consider that it is appropriate to reduce the costs payable by the Company to take account of the fact that Jolan advanced one part of its case based on facts relating to certain unmet requests for information by its directors which did not result in findings being made as to oppressive conduct in connection with those facts. My impression, taking into account the significance of this issue, the extent to which this issue was addressed in the affidavit evidence filed by the parties and the extent to which this issue occupied time during the trial is that a fair apportionment is to allow a reduction of 10% of Jolan's costs.

Whether costs should be ordered against the second to fourth defendants 63 Notwithstanding the manner in which the second to fourth defendants conducted their defence of the proceeding, I do not propose to make a costs order against the second to fourth defendants. The reasons for not making a costs order against the second to fourth defendants are as follows. 64 First, the case was, in truth, a dispute between the Company and Jolan, with the second to fourth defendants being joined on the basis that relief would be sought against them if oppression was otherwise established. 65 Second, no order was made (or will be made) against the second to fourth defendants that they acquire any of Jolan's shares. The reasons for this are as stated in [396] to [401] of the trial judgment. 66 Contrary to the defendants' submissions, there was some reason to doubt that the second to fourth defendants could acquire all of Jolan's shares. The demeanour of Mr Todd Hiscock at the trial gave the impression that he had not given the issue much, if any, thought, prior to questions being asked by me about this issue. The answers which he gave to my questions were very much "off the cuff", were not supported by any documentary evidence and included the caveat that whether the shares could be afforded was "subject to price". As indicated in the trial judgment, Mr Hiscock gave evidence during the trial which was then shown to be contrary to documentary evidence on more than one occasion. It would not be surprising if a proper and considered analysis of their financial position showed that the second, third and fourth defendants could not afford to pay $1.16 million for Jolan's shares. 67 Jolan submits that the failure by the second to fourth defendants to plead their financial inability to acquire the shares was a specific basis on which relief was refused. However, another important reason for refusing to grant the relief sought against the second to fourth defendants was that it would be contrary to the interests of the Company that Mr Hiscock and his associated shareholders be ordered to increase their level of shareholding in the Company: see [398]. 68 Third, while it is correct that findings were made about Mr Hiscock's involvement in the oppression, findings were also made about the involvement of others in the oppression, including (by reference to the trial judgment and without attempting to be comprehensive): (a) the board as a whole: see [183] - [185], [187], [191], [193], [200], [217], [218], [223], [252], [255], [257], [283], [284], [285]; (b) Mr Cook: [181], [221], [228], [247], [249]; (c) Mr Rankine: see [162]; (d) Mr Camilleri: see [146] - [147], [183], [203], [272]; (e) Mr McGibbony: see [259]. 69 Further, members of the board were aware of facts which should have put them on notice that the treatment of Jolan was commercially unfair: see, for example, [122], [155], [160], [178] and [179] of the trial judgment. It is relevant that Mr McGibbony is a graduate of the Company Directors Course, Australian Institute of Company Directors, and that Mr Cook is a former practising solicitor. 70 This has the consequence that the oppressive conduct was not engaged in by Mr Hiscock alone. He was either acting in company with others or if he instigated particular conduct, others stood by and did not inquire or intervene when they should have. It would therefore not be fair to require Mr Hiscock and his associated shareholders to pay Jolan's costs in these circumstances. 71 Finally, a just result is that the Company be held liable to pay Jolan's costs because that will mean that the various people who were party to the oppression will bear some financial responsibility for those costs through their direct or indirect shareholdings in the Company. This includes but is not confined to Mr Hiscock. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.

SCHEDULE OF PARTIES QUD 101 of 2021 Defendants Fourth Defendant: KANGAROO POINT REALTY PTY LTD ACN 001 917 237