McHugh & Anor v Eastern Star Gas Ltd & Ors

Court of Appeal (NSW)|2012-05-22|Before: Bathurst CJ, Macfarlan JA, Whealy JA

Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 149 - Yonge v Toynbee [1910] 1 KB 215 - Zimmerman Holdings Pty Ltd v Wales [2002] NSWSC 447 Category: Principal judgment Parties: Michael Robert McHugh (First Applicant/ 1st Cross Respondent) ACN 109 532 630 Pty Ltd (Second Applicant/2nd Cross Respondent) Eastern Star Gas Ltd (First Respondent/Cross Applicant) Ronald Von Harten (Second Respondent) Dean Von Harten (Third Respondent) Steven Charles Grammer (Fourth Respondent/3rd Cross Respondent) Representation: Counsel: A.P. Cheshire, A. Kaufmann (Applicants/ 1st & 2nd Cross Respondents) R.C. Scruby (First, Second & Third Respondents/Cross Applicant) Solicitors: HWL Ebsworths (Applicants/ 1st & 2nd Cross Respondents) Piper Alderman (First, Second & Third Respondents/Cross Applicant) File Number(s): 2010/039033 Decision under appeal Jurisdiction: 9111 Citation: [2011] NSWSC 513 Date of Decision: 2011-06-03 00:00:00 Before: R.S. Hulme J. File Number(s): 2010/039033

Judgment 1BATHURST CJ: I agree with Whealy JA and with his reasons. 2MACFARLAN JA: I agree with Whealy JA. 3WHEALY JA:

Background On 4 December 2008, Namoi Valley Aquafarming Pty Ltd ("NVAF") commenced proceedings in the Mining Warden's Court. The action was against Eastern Star Gas Ltd ("Eastern Star"). That company had been conducting seismic testing and carrying out mining exploration activities in the vicinity of NVAF's farm at Narrabri. The farm was used for fish farming purposes. The proceedings raised a claim that Eastern Star's activities had caused damage and loss to NVAF's fish farm operation. 4The proceedings were commenced in the following manner. One of the directors of NVAF, Steven Charles Grammer ("Mr Grammer"), on 1 December 2008 sent to the Mining Warden an application in the company's name for assessment of compensation pursuant to Pt 11 of the Petroleum (Onshore) Act 1991 (NSW). An acknowledgement was sent by the Mining Warden on 9 December 2008 confirming that the proceedings had been commenced. 5On 22 January 2009, Michael McHugh ("Mr McHugh"), a Tamworth solicitor, and his firm (then called The Law Company ("TLC"), but now known as ACN 109 532 630 Pty Ltd) were engaged by Mr Grammer purporting to act on behalf of NVAF. Following Mr McHugh's attendance at a directions hearing on that date, he confirmed his instructions in writing and provided to Mr Grammer a costs disclosure statement estimating that, in acting in the matter, his costs would be "not less than $60,500". 6NVAF had been incorporated in 1995. As at 2008/2009, its three directors were Dean Von Harten, his father Ronald Von Harten, and Mr Grammer. In due course, the hearing of the proceedings between NVAF and Eastern Gas was listed to proceed on 22 June 2009. After the hearing commenced, on 23 June 2009, the Von Hartens filed a Notice of Motion seeking to be joined as respondents in the proceedings. The purpose of their being so joined was to seek an order that the proceedings be dismissed or stayed on the basis that they were being conducted without the proper authority of NVAF. 7The Von Hartens' motion was heard on 24 June 2009. On the next day, the Mining Warden (Mr Bailey) made orders joining the Von Hartens as respondents, and staying the proceedings. On 30 June 2009, Mr Bailey provided written reasons holding that Mr Grammer had no authority to commence the proceedings against Eastern Star. Thereupon, Eastern Star and the Von Hartens sought costs as against Mr Grammer, Mr McHugh and TLC. None of these was a party to the proceedings in the Mining Warden's Court. 8On 4 March 2010 Fullerton J ordered that the Mining Warden proceedings be removed into the Supreme Court and joined with earlier proceedings that had been commenced in this Court. There was no dispute in this court that Fullerton J had power to order, and had correctly ordered, the removal. There was no dispute that the Supreme Court thereby had jurisdiction to determine the costs issues raised in the Mining Warden's Court: ss 140143 Civil Procedure Act 2005 (NSW). 9The proceedings eventually came on for hearing in September 2010 before R.S. Hulme J. His Honour heard the case over three days in September 2010, and a decision was given on 3 June 2011. His Honour identified the principal matter in contention in these simple terms in his judgment at [1]: "The ultimate issues posed in these proceedings were what costs orders should be made in connection with proceedings purportedly commenced by Namoi Valley Aquafarming Pty Ltd against Eastern Star Gas Ltd in the Mining Warden's Court. ... To a very large degree resolution of the costs issues depends on whether the proceedings, either initially or at any later time, were properly authorised by NVAF." 10R.S. Hulme J held that the proceedings in the Warden's Court were not authorised by NVAF. His Honour held that Mr Grammer had no authority to commence the proceedings, and that Mr McHugh and TLC had acted in the proceedings without the actual authority of NVAF. Consequently, his Honour determined that an order for the costs of the Warden's proceedings should be made against Mr Grammer, and also against Mr McHugh and TLC. 11Having reached these conclusions, his Honour considered in detail the nature and extent of the costs orders necessary to do justice between the parties. The orders he made were somewhat complicated but may be summarised as follows. a)His Honour concluded that an order for the costs of the Warden's Court proceedings should be made against both Mr Grammer and Mr McHugh and his company. However, because of the fact that Mr McHugh had not been involved until 22 January 2009 and had only a limited role to play between 28 March and 25 May 2009, the costs order so far as Mr McHugh and TLC were concerned should be restricted to a payment of 50% of Eastern Star's costs of the Warden's Court proceedings. His Honour, for reasons he outlined, declined to order Mr Grammer to indemnify Mr McHugh and TLC in respect of any costs the McHugh interests had to pay. b)As a consequence of this reasoning, his Honour determined that Mr Grammer should not be made to pay more than 50% of the costs of Eastern Star unless it became apparent that Eastern Star would not be able to recover under the order for costs against Mr McHugh and TLC. His Honour sought to achieve this result by "an appropriate partial stay of the order in favour of Eastern Star and against Mr Grammer". c)His Honour ordered that Mr McHugh and TLC should pay their proportion of costs on an indemnity basis. This arose from authorities suggesting that costs ordered against a solicitor for conducting litigation without authority are normally awarded on an indemnity basis. There was also a Calderbank aspect that came into play in making the order on this basis. d)The order for costs in favour of Eastern Star against Mr Grammer was, however, to be on the usual party and party basis. e)In addition to the costs covered by the matters mentioned thus far, his Honour thought that the Von Hartens were entitled to the costs of the motion they had filed in the Warden's Court on 23 June 2009. His Honour sought to emulate the orders he had already made in relation to this additional aspect of the costs. His Honour did not order that these costs be paid on an indemnity basis. f)Finally, his Honour ordered that the costs of Eastern Star and the Von Hartens in the proceedings before him (including costs reserved by Fullerton J) ought to be paid by Mr McHugh and TLC, with the exception of the costs involved in preparing the three volumes of the Court Book.

The appeal proceedings 12Mr McHugh and TLC have sought leave to appeal against the orders made by his Honour. This Court determined that the leave application and the consequential appeal should be heard concurrently. I should mention that Eastern Star has sought leave to cross appeal but only on a defensive basis. The relief sought in the cross appeal only arises if this Court were to find, contrary to his Honour's findings, that a meeting of the three directors on 29 March 2009 amounted to a ratification of the proceedings in the Mining Warden's Court and of Mr McHugh's retainer in that regard. In those circumstances, the cross appellant seeks an order that Mr McHugh and TLC pay its costs of the Warden's Court proceedings on an indemnity basis from 25 May 2009. Mr Grammer did not appeal from the orders made by the primary judge against him.

The primary judge's reasoning 13It is necessary to examine in a little further detail the process of reasoning which led the primary judge to his conclusions. It may be fairly said that the evidence of Mr Grammer and Mr McHugh on the one hand, and the evidence of the Von Hartens on the other, was, in many aspects, diametrically opposed. It was necessary for the primary judge to make clear and decisive credibility findings. He did so, finding, for example, that where there was a conflict, he preferred the evidence of the Von Hartens to that of Mr Grammer and Mr McHugh. 14In his judgment (Grammer v Bailey [2011] NSWSC 513), his Honour said at [77]-[78]: "[77] It is also appropriate that I record that, given the extent of the conflict between Mr Grammer and the Von Hartens, I paid particular attention to these witnesses and Mr McHugh while they were being questioned. There was nothing in the demeanour of any one of them to suggest he was lying or unreliable. The general tenor of the documents for which persons were responsible leads to the view that the Von Hartens were fairly simple while Mr Grammer was much more sophisticated and, at least to some degree, cunning. The conflicts in the evidence mean that I must, at times, choose between the evidence of the witnesses. In general, where there is a conflict, I prefer the evidence of the Von Hartens to that of Mr Grammer and Mr McHugh, largely because their account struck me as more genuine than Mr Grammer's. [78] So far as Mr McHugh is concerned, I was influenced also by the tenor of his correspondence which indicates that he did not maintain an attitude of neutrality between the directors and, consciously or unconsciously but very definitely, allowed himself to favour Mr Grammer. Also, I was not impressed with Mr McHugh's explanations for a number of his actions." 15Further, his Honour made a general finding that meetings between the directors were "informal affairs"; minutes were not always kept and issues were decided on occasions "while having a cup of tea or the like": at [24]. Equally, his Honour was not satisfied that Mr Grammer held, as he claimed, more than fifty percent of the units in the trust (at [26]), or that Mr Grammer "customarily decided" what capital works were to be carried out on the farm. Rather, his Honour found that all three directors were involved in making decisions that were "of a significant nature": at [24]. Finally, as a general observation, his Honour determined that there had been no holding out by the Von Hartens of Mr Grammer as "managing director" of the company. Indeed, his Honour expressly found that the evidence did not establish that Mr Grammer had ever been appointed managing director. If, contrary to this finding, he had been appointed, the primary judge said, there was no evidence that the requisite powers were ever conferred upon him as envisaged by Article 81. Such authority as he might have had or been entitled to act upon did not extend to Mr Grammer having authority to institute significant litigation, such as that envisaged in the Eastern Star proceedings: at [80]. 16With these general findings in mind, it is appropriate to move to his Honour's first major determination. This related to the question whether or not the Von Hartens had, at the outset, authorised the commencement of the proceedings. Mr Grammer's evidence suggested that they had so authorised him, whereas the Von Hartens' evidence vehemently asserted that they had not. The primary judge was satisfied that, prior to the institution of the proceedings in the Mining Warden's Court, the Von Hartens did not agree to such litigation being instituted: at [81]. His Honour placed particular reliance on the fact that the Von Hartens' evidence consistently stated that the claim was an unjustified or fraudulent one and that there was no mention in minutes prepared in March 2009 to the effect that there had been an earlier approval given by the Von Hartens to the commencement of the proceedings. There were other matters as well, but it is not necessary for me to detail them. 17The next critical issue related to a meeting in March 2009 and, in particular, whether the minutes prepared following that meeting constituted a ratification of the institution of the proceedings. As to this, his Honour said: "[82] Fourthly, I do not regard the meeting in March and the Von Harten's agreement recorded in the minute of that time to await Eastern Star's evidence as a ratification of the institution of the proceedings. There is not the clarity normally required for ratification and rather does it seem to me that their actions then should be regarded as mere acquiescence in Mr Grammer's request to defer a decision and not to call off the proceedings at that time." 18The facts underlying this finding were within a short compass. As at March 2009, the Von Hartens' evidence was that they continually asserted that they had no knowledge that proceedings in the Mining Warden's Court were contemplated until after they were commenced, and that they had never approved such proceedings. 19The Von Hartens faxed a letter dated 28 March 2009 to Mr McHugh. On one page the following appeared: "Mr McHugh, I wish to notify you on behalf of Ron Von Harten and Dean Von Harten, the undersigned shareholders in Namoi Valley Aquafarming Pty Ltd, that after viewing the documentary evidence supplied by Steve Grammer regarding legal action against Eastern Star Gas, have agreed that we do not want to be involved in this matter and that Mr Grammer has no authority to act on our behalf as shareholders of the above company." 20There was a second page to like effect telling Mr McHugh "to withdraw all legal action against Eastern Star Gas effective from 27 March 2007 [sic]". Dean Von Harten's evidence was that this letter was written because from January he had been asking Mr Grammer to stop the proceedings and the latter would agree, but then change his mind. Ron Von Harten said that he also had told Mr Grammer he was against the proceedings. His opposition was because he viewed the claim as fraudulent and he was risking his equity in the farm: at [39]. 21On receipt of this letter, Mr McHugh contacted Mr Grammer and the latter organised a meeting for 29 March 2009. The minutes of the meeting describe it as a "special directors' meeting regarding court proceedings". The minutes which were subsequently prepared include the following: "Steven Grammer then further explained to both Ron and Dean Von Harten that to call off the proceedings now would be futile in reducing costs as most of the costs regarding evidence was already spent/guaranteed and that from this point it was the smarter situation to proceed with the evidence as Eastern Star Gas will have to furbish us also with their defence evidence prior to the hearing around the end of next month, being April 2009. It was further suggested by Steven Grammer that once Eastern Star Gas had submitted their defence evidence and also present to our legal advisers copies, that I ... Steven Grammer, would convene/call another special meeting of the directors including Namoi Valley Aquafarming lawyer, Mr Michael McHugh, to present all the evidence for and against in regards to the court proceedings and direction/advice to the Trust's Directors. This was agreed by both Dean Von Harten and Ron Von Harten. Steven Grammer then advised that he would draft a copy of the minutes of this meeting and present a copy for both Dean and Ron Von Harten for their records and that all directors sign the minutes of this meeting and that Steven would then fax a signed copy to Mr Michael McHugh ... " 22It appeared that the minutes were signed by Mr Grammer and the Von Hartens and, according to Mr McHugh, were received by him on or about 31 March 2009. 23This appeal raises an issue as to whether or not his Honour's conclusion that there was no ratification was justified. Mr McHugh contends that the minutes clearly show ratification for what had earlier occurred, and sanctioned the solicitors continuing to act in the proceedings. 24The next central issue considered by the primary judge related to the events of a meeting on 25 May 2009. His Honour considered the circumstances of this meeting in the event that his finding concerning non-ratification of the institution of the proceedings were held to be in error. 25The minutes of 29 March 2009 had indicated that any future decision regarding the proceedings would be made on the basis of material that was to be filed by Eastern Star by the end of April 2009. It appears that this did not happen and other events then intervened. 26On 22 May 2009, the solicitors acting for Eastern Star e-mailed Mr McHugh offering to settle the proceedings on the basis that the claim would be dismissed and that there would be no order as to costs. The offer was expressed to be made as a Calderbank offer and to expire at the close of business on 29 May 2009. 27A meeting was then held on 25 May 2009. As the primary judge indicated, the evidence concerning the events of this evening contained "many contradictions". There was no doubt, however, that the two Von Hartens were present, as were Mr Grammer and Mr McHugh. 28In his evidence, Dean Von Harten said that, after discussion, Mr McHugh indicated that the directors "should all now vote on continuing the Warden's Court proceedings or not", and that all three directors then voted. He maintained that he and his father voted to end the proceedings, but that Mr Grammer appeared to abstain, as he wanted to talk to his wife about the matter. Dean Von Harten claimed that he then said "what is there to talk about, Steve, the board has voted". Dean Von Harten also maintained that, at the meeting, there was a formal raising of hands and that, after the hand raising, he (Dean) had said to Mr McHugh: "Last time I went to school, two out-votes one". He rejected the suggestion that there was no formal vote. 29In his affidavit, Mr Ron Von Harten said that at the meeting he and his son voted to end the Warden's Court proceedings and to accept Eastern Star's offer. He said that Mr Grammer did not vote but said that he would have to talk to his wife on the topic. He agreed that he did not regard the meeting as a formal directors' meeting at which motions were going to be put and votes taken, and that there was no "formal vote" about whether the Court proceedings should continue. 30However, Mr Grammer's evidence further complicated the issue. He agreed in cross examination that, at the meeting, those attending agreed there should be a vote, and that the Von Hartens actually did proceed to vote - they both put up their hands and said: "We want to discontinue the proceedings". Mr Grammer said that at the meeting he had stated he wanted to continue with the proceedings. 31Mr McHugh said that he had told those present that he had received a letter from Eastern Star Gas. He told them: "If you want to accept the offer, then I want all the directors, shareholders and unitholders to sign a minute to authorise that in writing." 32Mr McHugh said that Dean Von Harten stated that he and his father wanted to accept the offer and that, if Mr Grammer wanted the matter to continue, he could pay the costs. Mr McHugh maintained that both Von Hartens agreed with his suggestion that the matter be reviewed when Eastern Star's defence and evidence were available. However, in oral evidence, Mr McHugh agreed that, immediately following the meeting, it was clear that the Von Hartens wanted to accept Eastern Star's offer, and that Mr Grammer wanted to press on. Mr McHugh claimed it was "not a formal meeting, that both the Von Hartens expressed the view they thought the claims were baseless, that Mr Ron Von Harten said he considered the claim fraudulent ... He denied both that anyone suggested the directors needed to vote and that the Von Hartens put up their hands and said something like 'we vote to end the proceedings'": at [55]. 33However, on 28 May 2009, Mr McHugh had written a letter addressed to "the directors" of NVAF in which he enclosed a further letter of that date seeking instructions. The letter referred to "the directors and shareholders meeting which Mr Steven Grammer, Mr Ron Von Harten and Mr Dean Von Harten ... on 25 May 2009". It continued: "We confirm that Ron Von Harten and Dean Von Harten want NVA to accept that offer. We note that Steve Grammer wishes to continue with NVA's claim. ... NVA must hold a meeting of its directors and shareholder and pass a resolution in relation to ESG's offer and the future conduct of the case." 34The Von Hartens replied to this letter: "We direct you to have the case against Eastern Star Gas dismissed in accordance with the offer received from Eastern Star Gas. This was agreed to at the meeting held on the premises of Namoi Valley Aquafarming with Steven Grammer, Ron Von Harten and Dean Von Harten on 26 May 2009." (My emphasis) 35Mr McHugh responded to this letter on 29 May as follows: "We are instructed to advise that, notwithstanding the assertion therein that an agreement had been reached between all shareholders as to the future conduct of this matter, the direction outlined in that facsimile is in error. Further, we are instructed by Mr Grammer, the majority shareholder, that no such agreement has been reached and further that, until such time as there is a direction in writing executed by all shareholders, this firm is to accept instructions from the managing director of the corporate entity and the majority shareholder. On our instructions, the person holding these corporate offices is Mr Steven Grammer. We further note that, on the basis outlined above, we are instructed to reject the Offer of Compromise outlined in the letter from Messrs Piper Alderman dated 22 May last and to submit a counter-offer. ... We thank you for your facsimile, however we again advise that the facsimile is not binding until signed and executed by all directors." 36The primary judge commented that neither of Mr McHugh's letters of 28 or 29 May 2009 recorded any agreement on the part of the Von Hartens to continue the proceedings pending receipt of Eastern Star's defence and evidence. Nor did those letters point out that the Von Hartens could outvote Mr Grammer. When cross examined on these admissions, his Honour said: "Mr McHugh's evidence was not impressive". 37On 1 June, Mr McHugh wrote to Eastern Star's solicitors rejecting the offer of 22 May and making a counter-offer. On 3 June, Mr McHugh forwarded the directors of NVAF a deed of indemnity for execution by the company and each of the directors. This letter elicited a reply from the Von Hartens dated 4 June 2009. They rejected the deed of indemnity and stated: "As directors of Namoi Valley Aquafarming we are again requesting that you, Michael McHugh, have this case dismissed immediately." 38The draft of Eastern Star's defence and evidence were ultimately received by Mr McHugh on 16 June 2009, with formal service occurring on Friday, 19 June. There were discussions between Mr McHugh and Mr Grammer concerning the contents of this material, however, Mr McHugh did not provide the material to the Von Hartens, nor did he inform them that it had been received. 39Despite the rather contradictory nature of the evidence as to what had occurred on 25 May 2009, his Honour concluded that the probabilities were that there was a vote taken at the meeting on that day. His Honour said: "[84] ... I am conscious of the evidence of Ron Von Harten and Mr McHugh and the fact that Mr McHugh's correspondence of that time does not record such a vote and that these matters argue to the contrary but I do not believe Mr Grammer would have answered as he did if there was no vote. It may be that Mr McHugh did not refer in his letters to any vote because he did not regard the meeting as a formal directors' meeting but be that as it may, I prefer the evidence of Dean Von Harten and Mr Grammer in this respect. I accept that the reference to 'agreed to' in the undated letter of the Von Hartens of about 28 May is to overstate the situation if understood as encompassing agreement by Mr Grammer but it does not do so if understood as referring to their agreement in circumstances of a binding vote. [85] I am also of the view that the circumstances of the vote were such as to make it a valid vote of the directors. Certainly, there was a degree of informality about those circumstances but given the occasion for the meeting and the circumstances of the vote, I do not regard such informality as there was as negating the conclusion at which I have arrived." 40A second issue raised in the appeal is whether his Honour fell into error in making this determination, namely, that a valid vote had been passed at a directors' meeting. 41The primary judge concluded from the overall findings he had made that the Warden's Court proceedings in NVAF's name were not authorised by the company. Mr Grammer, he said, had no authority to commence them and Mr McHugh had acted without the actual authority of the company. However, his Honour appears to have accepted that from the time of the meeting on 25 May 2009 Mr McHugh did have a limited authority in respect of the litigation against Eastern Star. It was confined, however, to accepting that company's offer to settle the proceedings and to carry out any ancillary tasks to a concluded settlement. His Honour said that, despite Mr McHugh's evidence, this was the substance of what had actually occurred at the 25 May 2009 meeting, and that Mr McHugh had been appropriately informed and was aware that this was so. Mr McHugh, however, did not carry out those instructions. 42These then were the principal reasons for his Honour's conclusion that an order for the costs of the Warden's Court proceedings should be made against both Mr Grammer and Mr McHugh.

Grounds of appeal 43The grounds of appeal (and the submissions in support) distil Mr McHugh's complaints into these questions: i)did his Honour err in holding that the March meeting and/or subsequent conduct failed to ratify Mr McHugh's retainer? ii)whether his Honour did or did not err in that regard, was there, in any event, an error in his conclusion that the meeting of 25 May 2009 was a valid meeting of NVAF at which Mr McHugh was instructed to do no more than accept Eastern Star's offer to settle the proceedings and carry out ancillary tasks to bring the proceedings to an end? The correct answers to these questions, it was submitted, undermines the basis of the costs orders against Mr McHugh, namely, that he had acted without authority. 44There was a third matter that involved the situation as between Mr McHugh and Mr Grammer. This was whether if, contrary to Mr McHugh's submissions, costs orders were to be made or confirmed against him, the primary judge had erred in not ordering Mr Grammer to indemnify Mr McHugh and The Law Company in that regard. 45(It should be noted that Mr Grammer did not participate in the appeal. Evidence was provided, however, to the Court that Mr Grammer was served with the Notice of Appeal and informed as to the date when the appeal was to be heard.) 46The cross appeal, as I indicated at the outset, was lodged purely on a defensive basis and was brought upon the contingency that the Court might find that Mr McHugh's retainer was ratified at the March meeting. In those circumstances, Eastern Star seeks to recover an order for costs against Mr McHugh and The Law Company in relation to its costs incurred after 25 May 2009. This order should be made, it was argued, upon the basis that a valid vote had been taken at the May meeting, but that Mr McHugh had disobeyed his instructions.

Submissions of the parties 47It ought to be mentioned at the outset that there was no dispute between the parties that the proceedings in the Mining Warden's Court should be dismissed, and that no order should be made against NVAF: [13] primary judge's decision. Secondly, there was no dispute that Mr McHugh and The Law Company were not parties to the proceedings in the Mining Warden's Court. Accordingly, they were not bound by the findings of the Mining Warden and, indeed, had no standing to challenge those findings. It was also not in contest that Mr McHugh and The Law Company were not involved as solicitors in those proceedings prior to 22 January 2009, on which date instructions were given by Mr Grammer. Consequently, it was accepted that there was no basis for any costs order against them prior to that date. 48In this appeal, no challenge has been made to the finding that Mr Grammer did not have authority to retain Mr McHugh on 22 January 2009. It was common ground that, during the period 22 January 2009 to 29 March 2009, the absence of a valid retainer meant that the proceedings were in effect a "nullity", although this was subject to the possibility of NVAF ratifying the proceedings, in which event the proceedings would be adopted by NVAF retrospectively ab initio: MultitecFBM (Asia Pacific) Pty Ltd v Han [2008] NSWSC 1339; 69 ACSR 106 at [28]-[29]; Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; 201 CLR 520 at [20]. 49In these circumstances, as I have identified earlier, the critical question focussed on the signed minutes of meeting of 29 March 2009. The primary judge held that the minutes did not operate as a valid ratification. Mr Cheshire, on behalf of Mr McHugh, argued that it was "crystal clear", from the terms of the document, that ratification had taken place, and that the primary judge's categorisation of the minutes (as a deferral of the question of ratification) was a clear error. 50Mr Scruby supported the primary judge's finding, arguing that the minutes did not reflect an "unequivocal" ratification and that, in any event, the Von Hartens were not provided with sufficient and correct information to allow them to understand the full material circumstances sufficient to enable ratification to occur. He submitted that the Von Hartens had no more than the most basic understanding of the proceedings or the likely costs of those proceedings. 51A subsidiary issue to this critical question was raised by Mr Cheshire. He argued that the actions (or lack of actions) on the part of the Von Hartens in the period between 29 March 2009 and 25 May 2009 supported the fact of the earlier ratification. Although the minutes, an internal document of the company, constituted the ratification, it was also the fact that the consequence had been communicated to third parties. Further, the Von Hartens, by their actions or inactions, corroborated the earlier ratification. In particular, Mr Cheshire pointed to these matters: a)the Von Hartens took no further steps in the period 29 March to 25 May to bring the proceedings to an end or otherwise divert from the particular course agreed upon on 29 March and reflected in the minutes; b)Dean Von Harten provided assistance to the seismologist on 15 and 16 April for the purpose of NVAF pursuing the proceedings (this was a reference to evidence that Dean Von Harten was present when a seismologist, instructed by Mr McHugh, attended the hatchery to make a number of tests); c)the Von Hartens allowed Mr McHugh to continue to act in the proceedings between 29 March and 25 May and allowed both parties to the litigation to continue in their case, including preparation for trial. 52Mr Cheshire argued that the fact of ratification validated Mr McHugh's retainer ab initio. It was not thereafter terminated, so that the basis of the primary judge's costs order was entirely vitiated. 53Mr Scruby argued that the only positive conduct relied upon by Mr McHugh after 29 March related to the visit by the seismologist. He submitted that Dean Von Harten's evidence was to the effect that he had participated in the testing on the basis that Mr Grammer was paying for the testing personally, and that he had an interest as a farmer to see what were the effects on the fish ponds of mining operations. Counsel argued that these activities could not amount to ratification of Mr McHugh's retainer. 54Both parties addressed the issue of the 25 May meeting. Mr Cheshire argued that it was not a valid meeting and, even if it were, no valid resolution was passed in the sense that it was formulated in a comprehensible manner. Whatever its purport, it did not terminate Mr McHugh's retainer. 55Mr Scruby argued, however, that there was enough formality to enable the resolution to pass muster, and that the primary judge's findings were entirely justified. He denied that the resolution, if it were a valid one, could have amounted to ratification if there were no earlier ratification at the 29 March meeting. On the other hand, if the 29 March meeting had constituted a ratification, Mr McHugh had acted without authority after 25 May 2009. He agreed that this situation would require this Court to exercise afresh the discretion in relation to costs, and that his cross appeal would then come into play.

Resolution 56The relevant principles in relation to ratification are not in issue. They are well expressed in the decision of this Court in Leybourne v Permanent Custodians Ltd [2010] NSWCA 78. In that case the Court (Giles, Tobias JJA and Sackville AJA) stated at [131]: "[131] A principal can ratify the making of a contract entered into by a purported agent when the agent did not in truth have authority to make the contract on behalf of the principal. The ratification has retrospective effect, and the agent is treated as having had the requisite authority: Union Bank of Australia Ltd v McClintock (1922) 1 AC 240 at 248; [2006] NSWSC 1028 at [81]; Jones v Peters (1948) VLR 331 at 335. [132] Whether the conduct of the principal amounts to ratification is a question of fact, but there should be 'clear adoptive acts' (Eastern Construction Co Ltd v National Trust Co Ltd (1914) AC 197 at 213 per Lord Atkinson); the conduct must be unequivocal (for example, Petersen v Moloney (1951) 84 CLR 91 at 101). It is well expressed in Dal Pont, Law of Agency, 2nd ed at 5.28: The positive acts of the alleged principal may, aside from any express words, constitute sufficient evidence of ratification. This may be so where the fair inference to be drawn from a person's conduct, on an objective basis, is that the person consents to a transaction to which he or she might properly have objected. Put another way, ratification "is implied from or involved in acts when you cannot logically analyse the act without imputing such approval to the party whether his mind in fact approved or disapproved or wholly disregarded the question.' (citations omitted) [133] Acceptance of the benefit of the unauthorised act of the agent with knowledge that the benefit flows from that act will ordinarily suffice (Australian Blue Metal Ltd v Hughes (1961) 79 WN (NSW) 498 at 515; Brockway v Pando [2000] WASCA 192 at [120]). Suing on a transaction brought about by an agent acting beyond authority will also ordinarily mean ratification of the unauthorised transaction: the reason is obvious, see Dal Pont, op cit, at para 5.29 and cases cited. [134] There must be full knowledge of all the material circumstances in which the act was done, unless the principal intends to ratify and take the risk whatever the circumstances (for example, Bremner v Sinclair NSWCA, 3 November 1998; (2001) ANZ Conv R 29 at [32] per Campbell J. The extent of knowledge necessary depends on the particular facts. It should be enough knowledge to decide whether or not to adopt the unauthorised act (Bremner v Sinclair at [32])." 57To these principles may be added the following: the issue in the present matter did not turn essentially on the principles of an election communicated to the other party: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; 182 CLR 26 at 41-43, despite the fact that the appellant did in fact place some emphasis on communication of the minutes to Mr McHugh. Rather, the resolution of the issue turned upon the (asserted) express act of ratification represented by the signing of the minutes of the meeting: see Aztech Science Pty Ltd v Atlanta Aerospace (Woy Woy) Pty Ltd [2005] NSWCA 319; 55 ACSR 1 at [81]-[82] per Basten JA (with whom Handley JA agreed). Did this "internal" document ratify the proceedings that had been commenced irregularly? Did it as well ratify Mr McHugh's retainer? 58In my opinion, the signed minutes of 29 March 2009 did constitute a ratification of the proceedings and of Mr McHugh's retainer. In that regard, I would respectfully disagree with the conclusion reached by the primary judge. It is plain that there was an unequivocal agreement between the three directors that the proceedings would be kept on foot and continue with Mr McHugh acting as the company's solicitor. It is significant that Mr McHugh is referred to in the minutes as "Namoi Valley Aquafarming lawyer". While it is true that there was a deferral of the ultimate decision as to whether to continue with the proceedings, there was a clear and immediate affirmation of Mr McHugh's role as solicitor of NVAF in those proceedings. Indeed, Mr McHugh was required to await and eventually obtain the evidence to be presented by Eastern Star and, at a subsequent directors' meeting, "to present all the evidence for and against in regard to the court proceedings", and to provide "direction/advice" to the directors at this meeting. 59In accordance with the principles I have stated, the effect of this unequivocal ratification was to sanction and adopt the proceedings which had been commenced without authority. It sanctioned the proceedings having been brought in NVAF's name and validated Mr McHugh's retainer ab initio. 60The subsequent actions (or inactions) of the directors and Mr McHugh reinforce this conclusion. First, the minutes were forwarded to Mr McHugh and received by him on or about 31 March 2009. This was an unequivocal direction to him to act in accordance with those minutes, and that is what he did. Secondly, the proceedings were allowed to remain on foot and were not brought to an end in the period between 29 March and 25 May 2009. Thirdly, while it may be accepted that Dean Von Harten "assisted" the seismologist on the basis that he anticipated Mr Grammer would be responsible for the costs of the expert, there is no doubt that the seismologist was there acting on the instructions of Mr McHugh, and in preparation for the hearing of the proceedings. In other words, it was immaterial to the question of whether Mr McHugh was acting in the proceedings that Mr Grammer might ultimately be responsible for the payment of the fees of a particular expert in the proceedings. 61Finally, and significantly, the effect of the agreement reached on 29 March 2009 was to allow the proceedings to actually advance to the next stage, with a significant step being the obligation cast upon Eastern Star to prepare and file its evidence, no doubt entailing considerable work and expenditure. 62Although, in my opinion, the matter does not turn essentially on questions of election, this was not a situation akin to that discussed in Immer (at 41-43), where it could be said that as at 29 March 2009 the time had not arrived for the Von Hartens to make a choice between two inconsistent rights. In such a situation, a contractual party may keep its position open by refraining from engaging in conduct that unequivocally indicates that it has made a choice between the two positions: Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 149, per Macfarlan JA at [126]. Rather, in the present matter, because this litigation was proceeding rapidly towards a hearing, there was a need to make a decision then and there as to whether Mr McHugh's retainer could be ratified, even if the decision as to whether to continue with the proceedings themselves could be deferred. It may be properly observed that, if it were otherwise, the Von Hartens would have been reaping the benefit of the unauthorised acts of its solicitor by allowing the proceedings to remain on foot, and requiring the case to proceed to the stage where the bulk of the other side's evidence would need to be assembled and presented to them. It would, in such a situation, have constituted approbation and reprobation for NVAF later to attempt to dissociate itself from the proceedings on the basis that ratification had not occurred at the meeting on 29 March 2009, as it plainly had. 63I am not persuaded that Mr Scruby's submissions on the "knowledge" issue ought to be accepted. This is so for two reasons. First, the Von Hartens (as is clear from the letter written on 28 March 2009) were aware of the substantial situation. They were aware, for example, that the proceedings had been commenced by Mr Grammer without their authority. They understood the nature of the proceedings, and that Mr McHugh was acting in the matter on the instructions of Mr Grammer. Moreover, the full minutes of 29 March show that they were informed as to the likely area of the dispute in the Mining Warden's Court. The fact that they were not told everything or, indeed, that they may arguably have been misled about certain matters, does not alter the fact that they had knowledge of the material circumstances sufficient to make a decision on the spot as to whether or not to ratify Mr McHugh's retainer. 64In any event, to the extent that they may not have had full knowledge of all the material circumstances, it appears that they were, in sanctioning Mr McHugh's retainer, prepared to "take the risk" in connection with keeping the proceedings on foot and investigating further the merits of the other side's case. There was certainly enough knowledge to decide whether or not to adopt the unauthorised act: Bremner v Sinclair, unreported, NSWCA, 3 November 1998; (2001) ANZ Conv R 29 at [32]. 65For these reasons, I would find that the primary judge fell into error, and that, as a consequence, it will be necessary for this Court to re-exercise the discretion as to the costs of the Mining Warden's Court proceedings. 66Before doing so, however, it is necessary to determine the second major matter argued, namely, the consequence of the meeting of 25 May 2009. 67This question involves a challenge by Mr McHugh to the factual findings made by the primary judge. However, those findings very much involve the primary judge's impressions of the witnesses. This was particularly important since there was a considerable discrepancy between the various accounts as to what had happened at the meeting on 25 May 2009. Those discrepancies, it might be observed, were by no means along "party lines". For example, Mr McHugh's letter of 28 May 2009 (approved by Mr Grammer) referred to the "directors and shareholders meeting on ... 25 May 2009", whereas Mr McHugh had insisted in his evidence that it was not a formal meeting. 68Mr Grammer, by contrast, accepted in cross examination that it was a formal meeting of directors. Concessions by the Von Hartens in their evidence that it was not "a formal meeting" were offset by the fact that their correspondence, following the meeting, asserted their belief that what had occurred was "a decision of the company". 69In my opinion, the primary judge was correct in finding that, despite the informality involved, there had been a meeting of the directors at which a valid and effective resolution was passed. I would not, having considered the evidence carefully, come to a different conclusion. 70It is clear that there were two aspects to the meeting on 25 May 2009. The first was to enable Mr McHugh to explain to the Von Hartens matters pertaining to the proceedings. It is clear that there was quite some time spent on this aspect of the matter. Mr Grammer largely absented himself from that aspect of the discussion. This was done to enable Mr McHugh to give what might be perceived to be an objective overview of the proceedings, and the likely outcome, without interference by Mr Grammer. 71The second aspect arose in circumstances where, as Mr Grammer himself said, Mr McHugh, after the earlier discussion, stated: "You need to hold a meeting of the company's directors and shareholders and decide what you want to do in respect of ESG's offer, and their future conduct of the case. I strongly recommend you make a counter-offer to ESG." 72Mr Dean Von Harten said that, in this context, Mr McHugh had stated that the directors should "all now vote on continuing the Warden's Court proceedings" and that all three directors then voted. Initially, he said that while he and his father voted, Mr Grammer seemed to abstain, but later he maintained that he had made a mistake in that regard and that he was referring to Mr Grammer's reference to his talking to his wife at an earlier meeting. Dean Von Harten also asserted that at the meeting on 25 May there had been a formal raising of hands, and that Mr Grammer raised his hand "against dropping the case". According to Dean, he said to Mr McHugh: "last time I went to school, two out-votes one". Dean Von Harten added that he thought he had said: "We are all here. We are all directors. Let's vote on it. And that is when we had a raise of hands." 73Significantly, Mr Grammer agreed in cross examination that there had been a statement that there should be a vote on the question of whether to continue with the proceedings. He also agreed that the vote had taken place. 74Mr McHugh agreed in his evidence that, immediately following the meeting, it was clear that the Von Hartens wanted to accept Eastern Star's offer, but Mr Grammer wanted to "press on". 75These extracts from the evidence, of course, do not do justice to the ebb and flow of the discrepancies to which I have earlier made reference. There was enough there, however, to conclude that, during the afternoon, a meeting was held at which a valid resolution was passed. 76Mr Cheshire argued that there was no meeting but that, if there were, the resolution was not clearly enough stated to be effective. He argued, no doubt correctly, that, where the result is unanimous, there may thereby be the lesser need for some degree of formality. However, it is a proper inference from the facts summarised by the primary judge that all three directors were, by their words and actions, prepared to dispense with formality. They were, it may be inferred, unanimous in that regard. 77In my opinion, there can be little doubt that the vote was two to one, and that the vote centred upon Mr McHugh's advice (reinforced by Mr Grammer) that in his opinion, the offer made by Eastern Star should be rejected and a counter-offer put. The reference by the Von Hartens in their evidence to "terminating the proceedings" needed to be understood in that light. So understood, it was correct to find, as the primary judge did, that the vote confined Mr McHugh's instructions to accept Eastern Star's offer to settle the proceedings and, in connection with that task, to carry out any ancillary work to bring the proceedings to an end. 78It must be said, however, that when the resolution is viewed in this light, it could in no way be seen as a termination of Mr McHugh's retainer. Indeed, it was confirmation of the continuation of that retainer, albeit that his instructions were within a relatively narrow compass. 79In all these circumstances, it must be concluded that there was no warrant for the primary judge's decision to make an order for costs against Mr McHugh and The Law Company on the basis stated by his Honour. This basis appears in the primary judgment in these terms at [87]: "... it follows from these conclusions that the Warden's Court proceedings commenced in NVAF's name were not authorised by the Company. Mr Grammer had no authority to commence them and Mr McHugh acted in them without the actual authority of NVAF." 80To the contrary: the ratification on 28 March 2009 authorised and sanctioned Mr McHugh's retainer. The resolution passed at the meeting of 25 May 2009, in so far as it was necessary, confirmed his retainer and authorised him to continue to act in the proceedings. Importantly, it did not terminate the retainer. 81The primary judge's decision was vitiated for the reasons I have identified. Consequently, I am confirmed in my view that this Court must re-exercise the discretion in relation to the costs issue. I turn now to do so.

Re-exercise of discretion 82Mr Scruby put his arguments in relation to re-exercise of discretion on a reasonably narrow basis. He argued that costs ought to be ordered against Mr McHugh on an indemnity basis as from 25 May 2009. The power to do so, he argued, came from s 98 of the Civil Procedure Act 2005 (NSW). He submitted that this power ought to be exercised in his clients' favour because Mr McHugh "had taken unauthorised steps in the proceedings" after the 25 May meeting: Hillig v Darkinjung Pty Ltd (No 2) [2008] NSWCA 147. His actions thereafter, in rejecting the settlement offer and preparing for and going to the hearing, were contrary to the dictates of the 25 May vote. 83Mr Scruby accepted that s 99 Civil Procedure Act was relevant to wasted costs issues, where a solicitor had deliberately engaged in professional misconduct ("serious neglect, serious incompetence or serious misconduct"), but fairly conceded that his clients' case against Mr McHugh had never been put on that basis. Although criticism had been made of Mr McHugh, it had never been suggested that he had breached his duties to the Court, Mr Scruby said. 84Mr Cheshire submitted, firstly, that Hillig (and Hawksford v Hawksford [2005] NSWSC 463 - a decision of Campbell J, as he then was - mentioned in Hillig) related to situations where solicitors had acted without a retainer. They were not cases where, as here, it was claimed that a solicitor, properly retained, had acted contrary to his instructions. Secondly, Mr Cheshire pointed out that the power exercised in Hillig arose out of the then applicable r 42.3 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), later omitted by amendment in 2010. Consequently, Mr Cheshire suggested that the appropriate section to be considered was s 99, concerned as it is with a solicitor's general conduct rather than the situation where a solicitor has acted without retainer. 85Thirdly, Mr Cheshire submitted the juxtaposition of s 98 and s 99 (and the omission of the former r 42.3) rather suggested that the exercise of the power to order costs against a solicitor for misconduct was now to be found in s 99 rather than s 98. Counsel suggested that the specific power to order wasted costs against a solicitor acting in dereliction of his duty was likely to have subsumed a correlative power within the unconfined jurisdiction of s 98. In any event, Mr Cheshire submitted that no costs order should be made in the present matter because of a number of factors. These were: a)Eastern Star was not aware that Mr McHugh was acting contrary to his instructions, if in fact that were the case; b)Mr McHugh, qua Eastern Star, had ostensible authority to act for NVAF. If the proceedings had terminated or in any fashion entitled Eastern Star to an order for costs, it would have been perfectly appropriate in the proper exercise of discretion for an order for costs to be made against NVAF; c)in such a situation, NVAF would have been entitled to bring proceedings against Mr McHugh based upon his acting contrary to his instructions; d)this case was not one where NVAF was indigent or "a person of straw". At least there was no evidence to suggest that this was so. 86Finally, it was submitted that the conduct of Mr McHugh here, although not beyond criticism, was not so derelict in terms of his professional duty as to warrant the making of a costs order against him personally. 87In Hillig, McColl JA (with whom Beazley and Giles JJA agreed) considered contrasting views stated in two authorities. First was Zimmerman Holdings Pty Ltd v Wales [2002] NSWSC 447, a decision of Bryson J. His Honour examined Yonge v Toynbee [1910] 1 KB 215 (and other cases) where it was said that the Court's jurisdiction to make an order against a solicitor was founded on the premise that "a solicitor who does not in fact have authority to represent a plaintiff is liable to other parties on an implied contract that he had authority". Bryson J concluded the Yonge approach should not be applied, both because of the discretionary power as to costs in s 76(1) Supreme Court Act 1970 (NSW) (the predecessor of s 98(1) Civil Procedure Act), and because he was unpersuaded by the Yonge analysis. McColl JA agreed that the approach adopted by Bryson J in Zimmerman was the preferable approach. Her Honour said at [52]: "The discretionary power to make costs orders pursuant to s 98 is absolute and unfettered: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (at [34]) per Gaudron and Gummow JJ. UCPR 42.3(2)(d) is subject to that discretion." 88Rule 42.3 UCPR restricted the Court's power to make a costs order against a person who is not a party. However, in the subsection referred to by her Honour there was preserved the power to make an order against a person who "purports, without authority, to conduct proceedings in the name of another person". 89Earlier in the decision, McColl JA had said at [47]-[48]: "[47] It is a common order, when a solicitor has taken unauthorised steps in litigation, to require the solicitor personally to pay the costs he has thereby caused other parties to incur: Hawksford v Hawksford [2005] NSWSC 463 (at [111]) per Campbell J (as his Honour then was). [48] Where a solicitor has acted without authority for one of several parties to proceedings, then, subject to discretionary considerations, the solicitor will be ordered to pay so much of the other party's costs as were attributable to the parties for which the solicitor purported to act being joined as parties: Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421 (at 430) per Powell J." 90It is clear, however, that her Honour's remarks, when read in context, were referring to the situation in the matter before her, where a solicitor's retainer had been withdrawn and he had no authority to continue to act in the matter. It was not a case of a solicitor with a valid retainer acting contrary to instructions. Hawksford was itself a case of a solicitor acting without authority in proceedings between family members. 91It may be that one reason, perhaps an important reason, why costs have commonly been allowed against a solicitor where he has not been retained is that the third party cannot, in ordinary circumstances, obtain an order for costs against the solicitor's "client". That is precisely because the "client" has never authorised the solicitor to act. The position is otherwise where a solicitor is retained and acts contrary to instructions. In that situation, the solicitor will have ostensible authority to act on behalf of the client vis a vis the third party. The consequence of this is that the third party may obtain an order for costs against the client. 92Mr Scruby conceded in the present matter that the cases to which he had made reference were all cases of a solicitor acting without retainer. Despite his extensive research, he had been unable to find a case which enabled the principle stated in Hillig to be applied directly to the situation of a solicitor acting contrary to instructions. If an order for costs had been made at the behest of Eastern Star against NVAF, it would have had remedies against Mr McHugh if the actions in breach of his instructions had caused NVAF to incur a liability to the other party to the proceedings, or other loss. 93In any event, I have come to the conclusion that there is nothing in the circumstances of the present matter that would warrant taking the extreme step of ordering the solicitor to pay costs in a case in which, as was conceded, s 99 does not apply. First, this is not a case involving a "person of straw". Secondly, it is an unusual case in that Eastern Star has agreed that the proceedings brought by NVAF against it ought to be dismissed, but it does not seek an order for costs against NVAF. Thirdly, there is no analogy in the present circumstances to those that led to the making of a costs order against a third party in Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178: see also Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA 43; 239 CLR 75. Fourthly, the conduct of Mr McHugh does not warrant an order being made. Reviewing each of the periods when he was involved, it may be observed that in the first period Mr McHugh was entitled to believe he was authorised because he had been retained by Mr Grammer and his fees were paid by NVAF. In the second period (29 March to 25 May 2009) the proceedings were continued with the express authority of the company. The mere fact that he may have done more work in this period than was expressly contemplated by the 29 March meeting would not have entitled Eastern Star to an order for costs against him, as distinct from NVAF seeking a remedy, if it were otherwise proper to do so. In the final period, after 25 May 2009, the position is really the same. Mr McHugh's retainer was still on foot and there could be no valid suggestion that it had been terminated. True it is, he may have carried out work that exceeded his instructions. This may have entitled NVAF to seek a remedy against him in appropriate circumstances. It does not appear to me to be sufficient to make Mr McHugh liable to pay the costs of the other party. 94In these circumstances, it is not necessary to give consideration to Mr McHugh's claim to receive an indemnity from Mr Grammer. 95I propose the following orders: (1)Leave to appeal is granted. (2)The appeal by Michael McHugh and ACN 109 532 630 Pty Ltd is allowed. (3)The order that Michael McHugh and ACN 109 532 630 Pty Ltd pay 50% of the costs of Eastern Star Gas Ltd of the proceedings in the Narrabri Mining Warden's Court on an indemnity basis is set aside. (4)The order that Michael McHugh and ACN 109 532 630 Pty Ltd pay 50% of the costs of Ronald and Dean Von Harten of and incidental to their motion filed on 23 June 2009 in the Narrabri Mining Warden's Court on an indemnity basis is set aside. (5)The order that Michael McHugh and ACN 109 532 630 Pty Ltd pay the costs of and incidental to the hearing before the primary judge, being the costs of Eastern Star Gas Ltd and of Dean and Ronald Von Harten is set aside. (6)Order that Eastern Star Gas Ltd, Dean Von Harten and Ronald Von Harten pay the costs of and incidental to the hearing before the primary judge (save and except for the costs of and incidental to the preparation of the Court Book). (7)Eastern Star Gas Ltd is to pay the appellants' costs of the appeal. (8)Dean and Ronald Von Harten are to have a certificate under the Suitors' Fund Act 1951, if qualified.

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