Renshaw v Queensland Mining Corporation Limited

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: HOWARD VICTOR RENSHAW

QUEENSLAND MINING CORPORATION LIMITED ACN 109 962 469

AND: QUEENSLAND MINING CORPORATION LIMITED ACN 109 962 469

JUDGES: RARES, GRIFFITHS AND GLEESON JJ DATE: 26 NOVEMBER 2014 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The main issue in this appeal is whether the primary judge erred in finding that certain payments were made in connection with the termination of the first appellant's (Mr Renshaw) employment as managing director of the respondent, Queensland Mining Corporation Limited (QMCL), that fell within ss 200A(1)(a) and 200B(1) of the Corporations Act 2001 (Cth) (the Act). The respondent also cross-appeals against the primary judge's order made on 5 May 2014 that the appellants pay only 80 per cent of QMCL's costs.

(a) Outline of background facts 2 It is convenient to draw on the primary judge's description of the relevant background facts. 3 QMCL was originally incorporated as a private company by Mr Renshaw. He was managing director of QMCL from 8 July 2004 to 23 October 2012 and was the only executive director of the company during that period. Mr Renshaw remained as non-executive director of QMCL following his resignation as managing director on 23 October 2012. 4 The second appellant, Butmall Pty Ltd (Butmall) is owned and controlled by Mr Renshaw. 5 Mr Renshaw's resignation as managing director on 23 October 2012 was in accordance with an agreement which was executed on that day between QMCL, Butmall and him (the Settlement Deed). Mr Renshaw and Butmall contended below that the Settlement Deed provided the means by which QMCL paid out its pre-existing obligations under an agreement dated 27 November 2011 (the November 2011 Agreement), pursuant to which Mr Renshaw had been engaged as managing director of QMCL and Butmall had agreed to provide certain services to QMCL. The November 2011 agreement was for a term of three years ending on 30 November 2014. It did not contain any provision for early or other termination. 6 Pursuant to cl 1.1 of the Settlement Deed, certain payments were made by QMCL on 23 October 2012 to Mr Renshaw, his accountant's trust account and Butmall. The primary judge found these payments to have been made in contravention of s 200B of the Act. 7 Clause 2.2 of the Settlement Deed provided also for the payment of a further termination benefit to Mr Renshaw of two million fully paid ordinary shares in QMCL by 21 December 2012 or, if not issued by then, $110,000 in lieu. No benefit was ever paid under cl 2.2. 8 The primary judge found that, at the board meeting of QMCL on 16 October 2012, the chairman said to Mr Renshaw, "we would like you to retire as managing director and continue as a non-executive director". Mr Renshaw did not resign immediately but negotiated arrangements to give effect to the board's wishes. Those arrangements are the subject of the present appeal. Based on Mr Renshaw's evidence, her Honour found that he would not have signed the Settlement Deed unless the payments were going to be made on the same day that it was executed. Her Honour also noted that Mr Renshaw continued as a non-executive director of QMCL after his resignation as managing director on 23 October 2012. He continued as a non-executive director of QMCL until 21 January 2013 (providing voluntary services to QMCL without payment as provided for under cl 2.5 of the Settlement Deed). He also remained a director of QMCL's 12 subsidiary companies until approximately March 2013.

(b) Summary of relevant provisions of the Act and Regulations 9 Division 2 of Pt 2D.2 of the Act deals with termination payments. Section 200B is a central provision, the effect of which is generally to require that the shareholders of a company approve the payment of a benefit in connection with a person's retirement from an office or position of employment with the company. Section 200B provides: 200B Retirement benefits generally need membership approval Benefits in connection with retirement if person has held a managerial or executive office (1) An entity mentioned in subsection (1AA) must not give a person a benefit in connection with a person's (the retiree's) retirement from an office, or position of employment, in a company or a related body corporate if: (a) the office or position is a managerial or executive office; or (b) the retiree has, at any time during the last 3 years before his or her retirement, held a managerial or executive office in the company or a related body corporate; unless there is member approval under section 200E for the giving of the benefit. Note 1: This subsection extends to benefits given by way of compensation for, or otherwise in connection with, a person's loss of an office or position (see subsections 200A(1) and (3)). Note 2: Sections 200F, 200G and 200H provide for exceptions to this subsection. Note 3: The recipient of the benefit need not be the retiree. (1AA) The entities are as follows: (a) the company; (b) an associate of the company (other than a body corporate that is related to the company and is itself a company); (c) a prescribed superannuation fund in relation to the company. (1A) For an offence based on subsection (1), strict liability applies to the circumstance, that the benefit is in connection with the retiree's, or someone else's, retirement. Note: For strict liability, see section 6.1 of the Criminal Code. (Emphasis in original) 10 There are various provisions which are relevant to the interpretation and operation of s 200B. The first is s 200, which is an interpretation provision that relates to the issue of determining whether a benefit is given: 200 Interpreting this Division For the purpose of this Division, in determining whether a benefit is given: (a) give a broad interpretation to benefits being given, even if criminal or civil penalties may be involved; and (b) the economic and commercial substance of conduct is to prevail over its legal form. 11 The second group of provisions provides relevant definitions. Section 200AA defines a "managerial or executive office", as referred to in s 200B(1). It was not disputed that Mr Renshaw's position as managing director of QMCL was such an office. 12 The definition of "benefit" is to be found in s 200AB. On the appeal, there was no contest that each of the payments made to Mr Renshaw and Butmall was "a benefit". 13 Section 200A is an important provision. It defines when a benefit is given in connection with a person's retirement from an office or position (as defined in s 200A(1)(e)). It relevantly provides: 200A When benefit given in connection with retirement from an office or position General rules (1) For the purposes of this Division: (a) a benefit is given in connection with a person's retirement from an office or position if the benefit is given: (i) by way of compensation for, or otherwise in connection with, the loss by the person of the office or position; or (ii) in connection with the person's retirement from the office or position; and (b) giving a benefit includes: (i) if the benefit is a payment - making the payment; and (ii) if the benefit is an interest in property - transferring the interest; and (c) a person gives a benefit even if the person is obliged to give the benefit under a contract; and (d) a pension or lump sum is paid or payable in connection with the person's retirement from an office or position if the pension or lump sum is paid or payable: (i) by way of compensation for, or otherwise in connection with, the loss by the person of the office or position; or (ii) in connection with the person's retirement from the office or position; and (e) retirement from an office or position includes: (i) loss of the office or position; and (ii) resignation from the office or position; and (iii) death of a person at a time when they hold the office or position; and (f) when working out whether a person has retired from an office or position, disregard whether or not the person's details are included in a directors' report in accordance with paragraph 300A(1)(c). … 14 Certain benefits and benefits given in certain circumstances are also exempt from s 200B(1) by virtue of the operation of ss 200F, 200G or 200H. During the hearing of the appeal, the appellants stated that they did not rely on any of those exemptions. 15 Section 200J is another important provision. It provides that if there is a contravention of s 200B, the amount or money value of the benefit is held on trust and must be immediately repaid: 200J Benefits to be held on trust and repaid (1) If an entity (the giver) contravenes section 200B by giving a benefit to a person (the recipient), then the amount of the benefit, or the money value of the benefit if it is not a payment: (a) is taken to be received by the recipient on trust for the giver; and (b) must be immediately repaid by the recipient to the giver. (1A) An amount repayable under subsection (1) to the giver: (a) is a debt due to the giver; and (b) may be recovered by the giver in a court of competent jurisdiction. (2) Subsection (1) applies to the whole of the amount of a payment or of the money value of the benefit even though giving the benefit would not have contravened section 200B if that amount or value of the benefit had been less.

(c) Relevant agreements summarised 16 There are two significant agreements. The first is the November 2011 Agreement, which is set out in a letter dated 27 November 2011 and written on QMCL letterhead and which relevantly provides: MANAGEMENT/SERVICE CONTRACT BETWEEN QUEENSLAND MINING CORPORATION LTD, HOWARD RENSHAW AND BUTMALL PTY LTD EFFECTIVE DATE OF COMMENCEMENT 30 NOVEMBER 2011 We confirm the basis of a renewed contract as follows as ratified by the Board on 20th November 2011. The previous contract entered into on 16th May 2011 relating to the period 3 years from 30th November 2010 to 30th November 2013 is hereby mutually terminated. TERM: 3 years to 30th November 2014, provided that if the contract is not renewed at that date, Howard Renshaw will be entitled to a severance payment equivalent to 50% of the total earnings in the 12 months prior to the date of termination. In the event the contract continues on a 3 month rollover basis, and if subsequently terminated, Howard Renshaw will be entitled to a severance payment equivalent to 50 per cent of the total earnings in the 12 months prior to the date of termination. BASE AMOUNT: The base amount is $285,000 plus $50,000 superannuation p.a. In addition, you are entitled to Director's fees which may be payable by the Company from time to time. It is noted the current median fixed remuneration of MD's of companies with a similar market capitalisation is $360,000 plus super. The base amount is to be reviewed annually based on market capitalisation and Company cash flow periodically. It is agreed the base amount of $285,000 comprises a payment of yourself of $165,000 for your personal services and a further payment of $120,000 plus GST is payable to Butmall Pty Ltd (Butmall) for corporate services which have been agreed between the Company and Butmall. BONUS: You shall be entitled to receive a bonus for each year of the contract, or part thereof in accordance with the following formula: [the detail of the formula is not relevant]. 17 The other relevant agreement is the Settlement Deed, which was executed on 23 October 2012, and which relevantly states: Background A. QMC, Butmall and Renshaw are parties to a Management and Services Contract dated 27 November 2011 retaining Renshaw as Managing Director of QMC, (the "Renshaw Agreement"). B. QMC acknowledges if it terminates the Renshaw Agreement it must pay Butmall and Renshaw the ("Renshaw Parties"); all of the sums as required by the Renshaw Agreement as set out in clause 1 Table 1. C. QMC has agreed to pay the Renshaw Parties the sum amounts totalling $653,333 ("the Termination Sum") and any adjustments as set out in clause 1 Table 1 in accordance with this Deed. D. Renshaw is also a Director and/or Officer of wholly owned subsidiaries of QMC ("the QMC Parties). E. QMC has also agreed to pay a termination benefit to Renshaw in accordance with this Deed, in consideration for which Renshaw will resign as the Managing Director of QMC. F. QMC, and the Renshaw Parties have agreed to mutual releases and indemnities as set out in this Deed. Operative Clauses 1. Termination of Renshaw Agreement 1.1 QMC terminates the Renshaw Agreement effective as at the date of this Deed and agrees to pay the Renshaw Parties a Termination Sum of $653,333 as set out in Table 1 of this clause. TABLE 1 Period Renshaw Butmall Termination Sum 1/12/2012 to 165,000 120,000 30/11/2013 1/12/2013 to 165,000 120,000 30/11/2014 Superannuation for the above period 83,333 TOTAL 413,333 240,000 $653,333

(the Termination Sum") upon signing of this Deed. The parties also agree that any adjustment for statutory entitlements including but not limited to accrued long service leave from 8 July 2004 will be calculated by the QMC company secretary and paid to Renshaw or as he directs on or before 28 October 2012. 1.2 QMC must pay the Termination Sum to the Renshaw Parties by bank cheque or bank transfer to any account or person nominated in writing by Renshaw and/or Butmall upon the giving of a written direction to make payment but not before. 1.3 QMC will pay the Renshaw Parties interest at the Default Rate on or amount that is not paid when it becomes due and payable in accordance with clause 1.1, 1.2 or clause 2.2 of this Deed. 1.4 QMC hereby acknowledges that as at the date of execution of this Deed it does not have any money claim or any contingent money claim which could be claimed by way of set-off against any sum payable by QMC to the Renshaw Parties under this Deed. 2. Renshaw Resignations 2.1 By this Deed, Renshaw hereby agrees to resign as Managing Director of QMC upon receipt by the Renshaw Parties of the Termination Sum paid in accordance with Clause 1.2. 2.2 QMC further agrees to pay to Renshaw a termination benefit of Two million (2,000,000) fully paid ordinary shares in QMC by 21 December 2012 and if not issued by that date then $110,000 in lieu on or before that date to be made by bank cheque(s) or bank transfer(s) to any account or person nominated in writing by Renshaw. 2.3 QMC acknowledges that the payment of the said termination benefit of Two million (2,000,000) fully paid ordinary shares in QMC or $110,000 is separate from its obligation to pay the Termination Sum in clause 2.1. 2.4 QMC agrees that it will allot and issue the Two million (2,000,000) fully paid ordinary shares in QMC to any account or person nominated in writing by Renshaw. 2.5 Renshaw agrees to assist the Board and Chairman of QMC on operations or related matters until 31 January 2013 without payment. Thereafter he will if requested by QMC provide consulting services to QMC subject to his availability, and the entry of a standard consulting retainer agreement. (Emphasis added). 18 The parties to the deed are the same as those to the November 2011 Agreement, i.e. QMCL, Butmall and Mr Renshaw.

(d) Summary of primary judge's reasons for judgment 19 In her primary judgment, her Honour described the relevant statutory scheme as "casting a broad net so as to ensure that all payments or other things given in connection with retirement are caught by the statutory requirement for shareholder approval save where the Act or regulations creates an exemption". 20 Her Honour noted that it was not argued that the payments made by QMCL to Butmall should be treated differently from the payments to Mr Renshaw for the purposes of s 200B of the Act merely because those payments were made to a different legal person. 21 Her Honour noted that there was no issue that: (a) QMCL was an entity for the purposes of s 200B(1); (b) Mr Renshaw held a managerial or executive office in QMCL for the purposes of that provision as at the time of his retirement on 23 October 2012; (c) his resignation for that office constituted a "retirement from the office or position" for the purposes of that provision; nor (d) no general meeting of QMCL was called or held to consider any resolution to approve the payments. 22 The primary judge identified various issues as requiring determination. They included whether the termination payments constituted, in whole or in part, "a benefit" as defined in s 200AB of the Act, whether the termination payments were made "in connection with" Mr Renshaw's retirement, whether any of the payments was exempt from the operation of s 200B(1) and whether QMCL was estopped from bringing its claims to recover the termination payments. It is unnecessary to summarise all of her Honour's findings on these matters because the appeal, as ultimately presented, was essentially confined to the issue whether her Honour erred in finding that each of the termination payments (which the appellants accept were "a benefit" within the meaning of s 200AB) constituted a benefit given in connection with Mr Renshaw's retirement from the office or position of managing director for the purposes s 200A. The appellants also argued that the primary judge erred in not finding that the November 2011 Agreement was terminated by QMCL. 23 The primary judge's reasons for finding that the termination payments were made in connection with Mr Renshaw's retirement were as follows: In my view, the Termination Payments were made in connection with Mr Renshaw's retirement from his office as Managing Director. Mr Renshaw agreed to retire as Managing Director only upon agreement being reached as to the terms on which he was to depart, agreement as to those matters was in fact reached with the terms embodied in the Settlement Deed, and Mr Renshaw retired upon payment of the Termination Payments in accordance with the terms of the Settlement Deed. Indeed, it was Mr Renshaw's evidence that he would not have signed the Settlement Deed by which he agreed to resign unless the Termination Payments were paid on the same day. In these circumstances, the existence of a sufficient connection for the purposes of s 200B(1) between Mr Renshaw's resignation and the payment of the Termination Payments cannot, in my view, be doubted. The latter was directly related to the former. As I have earlier explained at paragraph [18] no distinction was drawn in this regard by the parties between payments to Mr Renshaw and payments to or on trust for Butmall.

(e) The costs judgment 24 On 22 October 2014, the primary judge delivered separate reasons for judgment in respect of her earlier decision to order Mr Renshaw and Butmall to pay 80 per cent of QMCL's costs. Her Honour summarised QMCL's contentions that it should be awarded all its costs, which included the contention that the direct cause of the litigation to recover the termination payments was the failure by the appellants to comply with the obligation imposed by s 200J of the Act immediately to repay those amounts. That contention was accepted by her Honour, however, her Honour explained why she considered that QMCL should only receive 80 per cent of its costs, saying: Nonetheless, I do not accept that QMCL's conduct, in freely entering into the Settlement Deed and paying over the moneys, is too remote for me to take it into account in determining an appropriate award of costs. In this regard, while at the end of the day I did not consider it appropriate or necessary for a declaration to be made that QMCL acted in breach of s 200B of the Act, the reason for that was that there was no utility in making such a declaration. The finding was still made that there was a breach of that provision by QMCL and that lead to the circumstances on which the litigation was brought. I consider that the part played by QMCL in creating the situation leading to the need for recovery proceedings should fairly find reflection in the order for costs.

(f) Summary of appellants' contentions 25 It is sufficient if we summarise the appellants' primary contentions. First, they contended that, in finding that the termination payments were made in connection with Mr Renshaw's resignation as managing director of QMCL, the primary judge erred in not construing cll 1.1 and 2.2 of the Settlement Deed as involving two distinct and separate payments which related to distinct and separate obligations, but happened to have a coincidence of timing. They contended that cl 2.2 alone related to Mr Renshaw's loss of office and that cl 1.1 simply involved the payment of compensation for QMCL's early termination of the November 2011 Agreement and was not in connection with Mr Renshaw's resignation. 26 Secondly, the appellants contended that the primary judge erred in not finding that the November 2011 Agreement was terminated by QMCL. This contention, which was raised under ground 2 of the appeal, appeared to be primarily directed to the primary judge's finding that: Nor, in my view, does the evidence suggest at that stage [i.e. 16 October 2011] that there was any intention by QMCL to terminate the November 2011 Services Agreement insofar as it related to the provision of services by Butmall, separate from those provided by Mr Renshaw as managing director. There was no evidence of that topic being specifically raised at the meeting. 27 The appellants argued that this finding was contrary to the express terms of the Settlement Deed.

(g) Summary of cross-appellant's contentions 28 It is sufficient if we summarise QMCL's primary contentions in the cross-appeal which, as noted above, relates to the primary judge's order that Mr Renshaw and Butmall pay only 80 per cent of QMCL's costs. QMCL argued that the primary judge erred in the exercise of her discretion to award costs by failing to take into account certain relevant considerations, namely, that the proximate cause of the proceedings was the refusal of Mr Renshaw and Butmall to repay the termination payments and also their culpability under s 200D of the Act for having received the payments. Senior counsel for QMCL initially submitted that it was also an irrelevant consideration for the primary judge to take into account QMCL's conduct in approving the payment on the basis that such conduct did not arise in the conduct of the litigation, but, ultimately, this argument was not pressed. Rather, it was submitted that if QMCL's conduct in this regard was relevant, so too was Mr Renshaw's role as managing director and the sole executive director of QMCL.

(h) Consideration of the appeal 29 The expression "in connection with" appears repeatedly in Div 2 of Pt 2D.2 of the Act. It is used in Div 2 in circumstances where s 200 requires attention to be given to the economic and commercial realities of conduct in evaluating whether a company has given particular benefits to one or more of its senior personnel that its shareholders are entitled to examine. The purpose of Div 2 is to bring transparency to, and shine daylight onto, transactions commonly called "golden handshakes" that involve significant expenditure of the company's money in connection with the cessation of an employment or services relationship with a senior office holder or employee. 30 By using the expression "in connection with", the Parliament intended to create a broad nexus between the benefit concerned and the cessation of the person's relationship with the company so as to protect the rights and interests of its shareholders to know of, and approve, the expenditure of the company's money. The context of Div 2 thus informs and suggests a broad construction of the reach of the expression "in connection with" when used in that Division: see Minister for Immigration and Multicultural Affairs v Singh [2000] FCA 845; (2000) 98 FCR 469 at [28]-[29] per Black CJ, Sundberg, Katz and Hely JJ. 31 In White v Norman [2012] FCA 33; (2012) 199 FCR 488 at [62] and [67], Besanko J concluded that the expression, as used in Div 2 immediately before it was amended to the form applicable on 23 October 2012, comprised words of wide import and did not require a direct link between the cessation of the person's relationship with the company and the giving of the benefit. Although it is not necessary for us to decide this issue, because there was a direct link here created by the provisions of cll 1 and 2 of the Settlement Deed, his Honour's view would also appear to reflect the intention of the Parliament in the current form of Div 2 of Pt 2D.2 of the Act. 32 We reject the appellants' argument that the payment under cl 1.1 of the Settlement Deed was not a benefit given in connection with the loss by Mr Renshaw of his office of managing director or position under the November 2011 Agreement within the meaning of s 200A(1)(a)(i) of the Act. First, in determining whether a benefit is given in connection with the loss of a position or office, a broad construction should be given to both the term "benefit", as required by s 200, and also to the phrase "in connection with", as discussed above. 33 Secondly, cl 1.1 of the Deed expressly provided that QMCL would both terminate the agreement and pay the appellants the "termination sum", being the amount of $653,333, "upon signing of this Deed", while cl 2.1 recorded Mr Renshaw's agreement to resign as managing director upon receipt by the appellants of the termination sum. That is, the termination of the November 2011 Agreement and Mr Renshaw's resignation both depended upon QMCL paying the termination sum on signing the Settlement Deed. The interconnection of the two events was express. That interconnection was anterior to the further obligation of QMCL, under cl 2.2, to pay Mr Renshaw a termination benefit of two million fully paid ordinary shares or $110,000 by 21 December 2012 and his agreement (under cl 2.5) to assist the board or chairman on operations or related matters until 31 January 2013 without further payment. 34 The appellants' contention that cl 2.3 of the Settlement Deed recognised that QMCL's obligation to pay the termination benefit was separate from its obligation to pay the termination sum under cl 2.1 does not avail them. That is because the Settlement Deed made the payment and corresponding receipt of the termination sum, conditional upon the signing of the Deed, the occasion of both QMCL terminating the November 2011 Agreement and Mr Renshaw resigning as its managing director. The commercial substance of the conduct that occurred in the signing of the Deed, the payments and receipts of the termination sum and Mr Renshaw's contemporaneous resignation, as provided in cll 1 and 2 of the Deed, established a sufficient connection between all those events. Those circumstances resulted in QMCL giving the appellants a benefit, being the payment of the termination sum in connection with Mr Renshaw's loss of or retirement from his office or position as QMCL's managing director, within the meaning of s 200A(1)(a). 35 The primary judge was correct to conclude that the termination sum was given in connection with Mr Renshaw's retirement from the office of managing director. 36 The appellants accepted in argument that if the Court came to this conclusion, then a contravention of s 200B(1) had occurred and the appeal failed. It is thus not necessary to decide the other matters argued by the appellants which depended on a contrary conclusion, including ground 2.

(i) Consideration of the cross-appeal 37 Her Honour's exercise of the discretion under s 43 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) can only be interfered with if she made an error of the kind identified in House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ. 38 We reject QMCL's argument that her Honour failed to take into account as relevant considerations that the appellants had contravened s 200D by receiving the benefit and that Mr Renshaw had been involved in the board's decision. 39 That argument appeared to assume that her Honour had put out of her mind all of the findings that she had so carefully made to establish the appellants' liability to repay the benefit under s 200J. However, immediately before explaining why she considered it appropriate to limit QMCL's recovery to 80 per cent of its costs, her Honour referred to the appellants' conduct of failing to comply with their obligation under s 200J to repay the benefits. Her principal reasons established the legal justification for the existence of that obligation. True it is that her Honour did not refer to whether the appellants had contravened s 200D. Nevertheless the primary facts, as opposed to their legal consequences, were relevant and her Honour had appropriate regard to them. 40 The power to order costs under s 43 of the Federal Court Act is a broad discretionary one. Generally, the discretion is exercised in favour of the successful party. But, there is no automatic rule that costs always follow the event: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25]-[26] per Gleeson CJ, Gummow, Hayne and Crennan JJ. In Kazar v Kargarian [2011] FCAFC 136; (2011) 197 FCR 113 at [5], Greenwood and Rares JJ said: Although the discretion is said to be unconfined, absolute and unfettered, the public interest in the quelling of controversies and the administration of justice is secured by recognising that the discretion ought to be exercised according to settled principle. Settled principle guides the exercise of the discretion and recognises that the modern embodiment of the post Judicature Act discretion as to costs has escaped "arterial hardening" (Oshlack v Richmond River Council (1998) 193 CLR 72 per Gaudron and Gummow JJ at [38]) and has avoided elevating guiding principles into narrow legal rules controlling the exercise of the discretion (Norbis v Norbis (1986) 161 CLR 513 at 537 per Brennan J; Wilson and Dawson JJ at 533). Because settled principle merely guides the exercise of the discretion, there is no automatic or absolute rule controlling the exercise of the discretion to the effect that costs always follow the event. Nor is there an automatic or absolute rule that in the absence of disentitling conduct, a successful party is to be compensated by an unsuccessful party. Moreover, the jurisdiction conferred by s 43(1), exercised by reference to the broad discretion conferred by s 43(2), is not constrained by any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party (Oshlack per Gaudron and Gummow JJ at [40] and [41]). As their Honours observe at [41] in Oshlack, there is nothing surprising or remarkable about the absence of hard arterial propositions in construing the scope of the discretion as the discretion must take account of the "myriad circumstances presenting themselves in the institution and conduct of litigation, and to the very nature of litigation" within the scope of the Court's jurisdiction. See also Probiotec Ltd v University of Melbourne (2008) 166 FCR 30 per Finn J at [1]; Rares J at [45]-[52] and Besanko J at [82] subject to the observations at [83]-[92]. (Emphasis in original) 41 The Court can take into account in exercising its discretion the circumstances of the particular case and the situation and conduct of the parties: see Foots at [34] and Kazar at [7]. 42 In our opinion, her Honour had regard to all of the relevant circumstances that had occurred both before and during the litigation before her. We are satisfied that she did not make any of the errors that QMCL complained of but, rather, exercised a sound discretionary judgment in accordance with s 43 of the Federal Court Act. The primary judge's order reflected the fact that, viewed broadly, Mr Renshaw was not the sole author of the unfortunate litigation. Rather, he had been offered and accepted the benefit, because the other members of QMCL's board, on the company's behalf, had wanted to terminate the November 2011 Agreement and Mr Renshaw's position as managing director. Having done so, and achieved their goal, the board must subsequently have come to appreciate that they, QMCL, and he, had overlooked the requirements of Div 2 of Pt 2D.2 of the Act, to Mr Renshaw's significant detriment. 43 The primary judge said, "the part played by QMCL in creating the situation leading to the need for recovery proceedings should fairly find reflection in the order for costs". Her Honour was justified in doing so for the reasons she gave. The cross-appeal is without substance and must fail.

(j) Conclusion 44 For these reasons, the appeal and cross-appeal should be dismissed, both with costs that may be set off. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Rares, Griffiths and Gleeson.