Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
26 In Reid, Hewitt & Company v Joseph [1918] AC 717, Lord Finlay LC with whom Lord Parmoor agreed, said (at 733) that the words "'the costs shall follow the event' mean that the costs are to be distributed according to the results of the several issues, while the party who is successful on the whole gets the general costs". Viscount Haldane said (at 742) that "an issue which has a direct and definite event in defeating the claim to judgment in whole or in part is within the meaning of the rule".
27 The learned authors of Ritchie's Uniform Civil Procedure NSW say (at [42.1.10]):
" It is generally accepted that the expression 'follow the event' refers to the practical result of a particular claim: Windsurfing International Inc v Petit (1987) AIPC ¶90-441 per Waddell J. But this general acceptance inhibits a through understanding of the expression. It was fully considered in Reid Hewett & Co v Joseph [1918] AC 717. That case has subsequently been treated as authoritatively determining that the 'event' for the purposes of the costs discretion is not limited to the determination of either the proceedings as a whole or of particular causes of action: Williams v Stanley Jones & Co Ltd [1926] 2 KB 37; Jelbarts Pty Ltd v McDonald [1919] VLR 478. It extends to any disputed question of fact or law and is not limited to 'issues' in the technical pleading sense: Forster v Farquhar [1893] 1 QB 564 at 569 per Bowen LJ; Hughes v Western Australian Cricket Assn Inc (1986) ATPR ¶40-748 at 48, 136 per Toohey J; Cretazzo v Lombardi (1975) 13 SASR 4 at 12. The expression is, therefore, one of some fluidity and, although the 'general acceptance' referred to at the start of this note is an adequate approach for most purposes, there is considerable force in the observation of Thomas J in Colburt v Beard [1992] 2 Qd R 67, that the problem of the identification of 'issues' and the separation of discrete parts of proceedings for the purposes of making orders for costs has never been satisfactorily resolved ."
28 In Waters v PC Henderson (Australia) Pty Ltd, (New South Wales Court of Appeal, 6 July 1994, unreported, BC9404952 at 5), Mahoney JA approved of the statement in Ritchie that:
" Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. " (see now Ritchie at [42.1.15]).
29 In that case, Priestley JA with whom in this respect Kirby P agreed, indicated a greater willingness to evaluate the outcome of distinct issues in making a costs order. His Honour said (at 6):
" I thought there was considerable force in the submissions for the appellant that it would have been not a particularly difficult task to make a quick evaluation of distinct issues that were before the referee and to make a somewhat more particular costs order than the trial judge thought appropriate. "
30 Nonetheless, there was no error of principle in the judge taking a global view that the successful party was entitled to costs, although it failed on particular issues.
31 In Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748, Toohey J said (at 48,136):
" 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v. Godfrey (1920) 2 K.B. 47.
2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v. Farquhar (1893) 1 Q.B. 564.
3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v. Lombardi (1975) 13 S.A.S.R. 4 at p. 12.
There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy. Also it is necessary to keep in mind the caveat by Jacobs J. in Cretazzo v. Lombardi at p. 16. His Honour sounded what he described as 'a note of cautious disapproval' of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented:
'But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.'"
32 A costs order in favour of a successful party can be modified to reflect its failure on particular issues even if the successful party did not act unreasonably in raising those issues (Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Supreme Court of New South Wales, Hodgson CJ in Eq, 3 June 1998, unreported, BC9802305 at 10-11).
33 The relevant event or events for the purpose of r 42.1 encompasses both the overall outcome of the litigation and the parties' success on particular distinct issues. Whilst the plaintiffs enjoyed substantial success, their entitlement to costs is modified having regard to the various issues on which the plaintiffs were wholly or partially unsuccessful, the extent to which those issues were dominant or severable, their overall significance to the outcome, the time they occupied during the hearing, and so far as can be discerned, in preparation.
34 The defendants submitted:
" Any submission by the Plaintiffs that they have largely succeeded in these proceedings should be rejected. There were a number of significant claims by the Plaintiffs on which they failed. Contrary to the Defendants primary submission that each party should pay their own costs, if the Court was minded to determine costs on an issue by issue basis (and linked to the amount of time involved with that issue, both in relation to preparation and evidence (discovery, affidavits, tender bundles and hearing time), and the quantum of the claim), then the ultimate costs would be in the Defendants' favour. That is because the causes of action the Plaintiff failed on outweigh in time, cost and value the causes of action on which the Plaintiffs succeeded. "
35 The defendants did not, through any detailed analysis, seek to support their contention that the causes of action on which the plaintiffs failed far outweighed in time, cost and value the causes of action on which the plaintiffs succeeded. Such an analysis may not be practicable. However, my impression from the hearing and from my involvement in the pre-trial management of the proceedings from March 2005 is that it would be surprising if that were so.
36 In any event, the starting point is that the plaintiffs have had substantial success in the proceedings even though they have failed on a significant number of issues, two of which would have had very substantial monetary value.
37 When the proceedings were commenced, Nabatu owned shares in Marsico and J & J O'Brien which returned no dividends and whose value could only be realised by litigation. Ten years later, the result of the litigation is that Nabatu will receive in excess of $11 million for those shares and, in addition, be entitled to receive a sum in excess of $3.8 million (including interest) from Marsico as its share of debts payable by Marsico to the Australian Youth Hotel partnership and the Racecourse Hotel partnership. To make no order as to costs would be to fail to recognise the plaintiffs' degree of success.
38 The question then is to what extent, if at all, the plaintiffs' costs should be reduced, or the plaintiffs should be ordered to pay costs, in respect of issues on which they failed. This is not a task capable of mathematical precision. It is complicated by the fact that Aldonet, Springsley and Gladewood were not joined as defendants until a further amended statement of claim was filed on 31 August 2004 after a contested hearing before Hamilton J. Those parties were separately represented until the main judgment was delivered. Their participation in the hearing was limited to the issues which affected them. As the defendants submit, it would not be just that those defendants be responsible for costs incurred before their joinder.
39 A further complicating factor is that some of the issues on which the defendants succeeded were not severable and distinct from other issues. This is most clearly so in the case of the Springsley share purchase (section 9). The facts in relation to that transaction were interwoven with the facts relating to the Aldonet loan (at [843]). Springsley succeeded in resisting the relief claimed because of my conclusions on questions of law as to the scope of Mr Crawley's fiduciary duty, and also on the grounds of laches and acquiescence. Had the case only been concerned with the claim made against Springsley, it would have been entitled to its costs. To the extent relief was sought against Springsley the claim is distinct.
40 On the other hand, the facts in relation to the Springsley share purchase were highly relevant to the plaintiffs' case against Mr Crawley that it was entitled to an order for the compulsory purchase of Nabatu's shares (or a winding-up order). It is not correct to say, as the defendants submitted, that there was no issue that the Court would need to make a buy-out order. That only ceased to be an issue in the defendants' closing submissions. The facts relevant to the Springsley share purchase were relevant to the finding of oppression. They were also relevant to the rejection of the defendants' submission that the shares should be valued as at May or June 1997 or 1998 (see paras [1251], [1271]-[1272]). Had the plaintiffs not joined Springsley to claim an entitlement to half of the value of Springsley's shares on paying $500,000 plus interest, it would still have been necessary for the plaintiffs to have litigated the facts concerning the Springsley share purchase and Mr Crawley's breaches of his fiduciary duty in relation to that transaction (see paras [955]-[958], [960]).
41 The claim in relation to the Elizabeth Street Centre development had the highest monetary value of all of the claims that Mr Crawley compensate Marsico, J & J O'Brien and Trudale for breach of fiduciary duty. The amount of equitable compensation sought, with interest up to the hearing, was in excess of $15 million. The claim occupied a significant time at the trial. There were many affidavits prepared in relation to it and I estimate that thousands, rather than hundreds, of pages in the tender bundle go to this issue.
42 Although I accepted parts of the plaintiffs' case on this issue, which resulted in findings of breach of fiduciary duty on the part of Mr Crawley, I also rejected substantial parts of the plaintiffs' case. Most notably in this respect was my rejection of Mr Short's contention that he was unaware that guarantees from Marsico and J & J O'Brien were required as security for Trudale's borrowings. Ultimately the claim failed because I found that the losses were not caused by the only breach of fiduciary duty which I found had been proved and not acquiesced in.
43 Had the claim in relation to the Elizabeth Street Centre development been the only claim, the first to sixth defendants would have been entitled to their costs in relation to it.
44 I consider that the issue was substantially, though not entirely, distinct from the other issues in the case. There was one clear area of overlap. In section 3 (at [496]-[502]) I found that Mr Crawley was liable to repay Trudale $35,000 and $57,875.76 plus interest in respect of fees received in connection with the acquisition of the Elizabeth Street Centre.
45 The issue as to whether Mr Crawley should indemnify J & J O'Brien with respect to any penalties or interest for unpaid tax on the Yurong St development (section 14) was a discrete issue. I found that he would be liable to provide an indemnity only if and to the extent that J & J O'Brien became liable to pay penalties or interest in an amount more than it would otherwise have been liable to pay by reason of the failure to include the capital gain on the Yurong Street development in the tax return lodged on 14 September 2004 (at [1207]-[1208]). I declined to make a declaration because the issue was hypothetical. The issue was not raised during the valuation hearing. I consider Mr Crawley was substantially successful in relation to this issue.
46 The other issue on which the defendants succeeded concerned the hot dog stand (section 15). That took little time at the trial. However, significant preparation costs would have been incurred in relation to this claim. There were various interlocutory applications in which the plaintiffs sought access to records of revenue of Jackson's on George, including till reports, stocktake reports and Z-reads. There were applications concerning access to the computers on which such information was stored. These applications were the subject of three judgments delivered on 17 March 2005, 31 May 2005 and 8 August 2005 as problems with respect to the giving of discovery and the retrieval of information emerged (Short v Crawley (No 22), Short v Crawley (No 23) and Short v Crawley (No 24). I made costs orders with respect to the applications at the time, but those costs orders do not extend to the costs incurred by the plaintiffs' solicitors in inspecting the documents and the fees of experts retained by the plaintiffs to retrieve the electronic records. In the result none of the information was tendered, and the plaintiffs failed on the issue to which the applications related. It would not be just for the defendants to pay any part of the costs, including expenses for experts retained by the plaintiffs, in relation to the inspection of the till roll information or stocktake reports which were the subject of the judgments of 17 March 2005, 31 May 2005 and 8 August 2005.
47 Mr Studdy SC, who appeared for all of the first to ninth defendants, submitted that if I rejected their submission that there should be no order as to costs, and unless I were minded to make a "very substantial" reduction in the plaintiffs' costs, I should deal separately with the costs of Aldonet, Springsley and Gladewood.
48 Because of the late joinder of those parties, and because they had separate representation at the hearing and participated at the hearing only in respect of the issues with which they were concerned, I consider I should deal with their position separately. Having done so, the assessment of costs as between the plaintiffs and the first to sixth defendants will take account of the way costs of the separate claims against Aldonet, Springsley and Gladewood are dealt with.
49 The plaintiffs were successful in their claim against Aldonet and Gladeswood, but failed in their claims against Springsley. On 17 December 2007, I was provided with written submissions from counsel then appearing for the seventh to ninth defendants in relation to costs. (I then anticipated making costs orders but was persuaded that I should not make orders at that time because, depending upon the outcome of the valuation hearing, the appropriate costs orders might be affected by Calderbank offers. In the event, neither party tendered a Calderbank offer or submitted that the final outcome was more favourable to it than a settlement proposal it had offered.)
50 Counsel for the seventh to ninth defendants then submitted that Springsley was successful in the proceedings and that there was no reason to deny the application of the general principle that costs follow the event. I accept that submission. The claim against Springsley was a distinct claim, notwithstanding that the factual matrix and findings of breach of duty were also relevant to the plaintiffs' claim against Mr Crawley.
51 Counsel then appearing for the seventh to ninth defendants accepted that the plaintiffs had been substantially successful against Aldonet and Gladewood, although they stressed the extent to which those parties succeeded on particular aspects of the claim, such as Aldonet's entitlement to retain the $150,000 per annum paid to it for Mr Crawley's services as a just allowance, and Gladewood's entitlement to a just allowance of 42 percent of the management fees paid to it. They submitted, correctly, that the defences to the plaintiffs' claims were not unjustified so as to warrant an order for indemnity costs. However, they accepted that the plaintiffs were entitled to orders for costs on the ordinary basis in relation to the claims against Aldonet and Gladewood. That is realistic. The limited measure of success those parties had in resisting the claims against them would not warrant a departure from the usual rule that costs follow the event. However, as was also submitted, those parties' liability for costs should be confined to the claims made against them and not be costs of the proceedings as a whole.
52 For the reasons in paras [39] and [40], the fact that Springsley is entitled to its costs does not mean that costs in relation to the Springsley share purchase transaction should be excluded from the plaintiffs' costs the first to sixth defendants are to pay. Likewise, the claims against Aldonet and Gladewood overlapped the claims against Mr Crawley, and in some respects, Mrs Crawley.
53 No submission was made that the first to sixth defendants should be treated separately as between themselves. They had common representation and made a common front. In any event, as Mr Crawley will acquire a 100 percent shareholding in J & J O'Brien and Marsico, the question is probably moot.
54 In determining the reduction of costs to which the plaintiffs are entitled, so as to reflect the extent of the first to sixth defendants' success, I take account of the fact that if separate claims had been brought by Marsico, J & J O'Brien and Trudale against Mr Crawley in relation to the Elizabeth Street Centre development by the plaintiffs with leave under s 237 of the Corporations Act, he would be entitled to an order for costs in his favour and the plaintiffs would be required to indemnify the companies in respect of those costs. It is not simply a matter of depriving the plaintiffs of costs in relation to that issue.
55 The same is true of the issue concerning the hot dog stand and the claim for a declaration in relation to Mr Crawley's liability to indemnify J & J O'Brien in respect of liability for penalties and interest in respect of the Yurong Street development.
56 On the other hand, had the only claims been in relation to legal fees, advances at 17.5 percent interest, the deed of acknowledgment of 30 June 2004 and subsequent securities, accounting and management fees, debts owed to the Australian Youth Hotel partnership and the Racecourse Hotel partnership, the claims against Mr Crawley in respect of salary and commission for his services as managing director, and the orders to be made to provide relief against oppressive conduct including the basis on which the shares should be valued, I do not consider that the first to sixth defendants' success in reducing the quantum of some of the claims would warrant a significant reduction of costs.
57 I take account of the fact that Springsley's success on the Springsley share purchase issue will be reflected in the costs order in its favour, and that the plaintiffs' success against Aldonet and Gladewood will result in an entitlement to 100 percent of their costs on the ordinary basis of the claims against those companies.
58 Ultimately the matter is one of impression. Precise assessment is not possible. Whilst costs of the issues between the plaintiffs and Aldonet, Springsley and Gladewood will need to be considered separately, no-one has suggested that it should be left to a costs assessor to carry out the intricate task of assessing costs between the plaintiffs and the first to sixth defendants issue by issue. I have concluded that the appropriate order is the first to sixth defendants pay two-thirds of the plaintiffs' costs of the proceedings, but that such costs are not to include costs relating to the inspection of till roll information and other documents, including expenses of experts, being the subject of paragraph 2 of the plaintiffs' amended notice of motion filed on 23 February 2005, or the orders of 31 May 2005 or 8 August 2005.
59 There can be no double satisfaction of the costs of the issues concerning Aldonet and Gladewood for which they are liable and for which the first to sixth defendants are also liable as to two-thirds. It should be clear that although the plaintiffs are liable to pay Springsley's costs in relation to the claim brought against Springsley, the first to sixth defendants will be liable to pay two-thirds of the plaintiffs' costs in relation to that claim as part of the plaintiffs' overall costs of the proceedings.
Costs of the Valuation Hearing
60 The plaintiffs submitted that they had been substantially successful on the valuation hearing and that costs should follow the event. They did not seek costs of the valuation hearing on the indemnity basis. The defendants submitted that there should be no order as to costs in respect of the valuation hearing. The reference to the costs of the valuation hearing includes the costs of preparation.
61 A separate issue was raised concerning costs of an audit carried out by Ms Cartwright of Pitcher Partners in connection with the valuation hearing. The defendants contended that the plaintiffs should pay their costs on the indemnity basis or alternatively on the ordinary basis, in respect of issues arising from her audit reports.
62 As is apparent from paragraphs [4] and [197] of my reasons in Short v Crawley (No. 38), my conclusions as to the value of Nabatu's shares in J & J O'Brien and Marsico were far closer to the prices the plaintiffs contended should be paid for the shares than the prices for which the defendants contended. The plaintiffs contended that the price to be paid for Nabatu's share in Marsico as at 31 July 2008 should be $6,511,537, and that its share in J & J O'Brien should have been valued at that date at $7,319,641. The defendants' contention was that Nabatu's share in Marsico should be valued at nil and its share in J & J O'Brien should be valued at approximately $4 million. I valued the shares at $5,068,362 and $6,374,772 respectively. I agree with the plaintiffs' submission that Nabatu was the successful party on the valuation hearing and that costs should follow the event. There was nothing in the conduct of the hearing which would warrant departure from the usual rule. In so saying, I exclude for the time being questions arising from Ms Cartwright's audit reports.
63 The defendants contended that there should be no order as to costs of the valuation hearing because I rejected a number of contentions advanced by the plaintiffs and, according to the defendants, my findings were based in large part not on the opinions of the valuers relied on by the parties but on the rejection of parts of their evidence and on methodologies not put by the parties.
64 The correctness of that contention may be a matter for the Court of Appeal in due course. Whether or not it is correct does not affect the order for costs. The plaintiffs are entitled to their costs because they have been substantially successful. However, it is relevant to note that my assessment of the value of Jackson's on George of $36.5 million was based on my conclusion that the property, without the hotel licence, poker machine permits and poker machine entitlements, should be given a higher value to reflect its special value to the Valad Property Group. That was in accordance with submissions of the plaintiff that the unaccepted offer from Valad Funds Management Ltd was admissible to prove that the site had a special value to the adjoining landowner and that it was willing to pay more than the ordinary market price. The plaintiffs had submitted that the value of the property to Valad was, in all likelihood, in excess of $36.5 million.
65 As this was the basis upon which the value of Jackson's on George was assessed, it is really immaterial that I determined the current market value of Jackson's on George (excluding its special value) at $30.9 million by adopting a capitalisation rate of 7.5 percent which was different from that of both valuers. Even if that consideration were material, the fact that the plaintiffs' valuer did not adopt that capitalisation rate is no reason to deprive the plaintiffs of their costs. Particularly is that so when my adoption of that rate was influenced by the cross-examination of Mr Robertson which established that even the normalised wage expenses as a percentage of turnover were at the higher end of the industry expected range which reflected the potential for further savings, and where I also accepted the position put by the plaintiffs that he had not taken that potential into account in the selection of an appropriate capitalisation rate. I noted (at [73]) that Mr Owen did not say that he had reflected the potential for further savings on expenditure or wages in his capitalisation rate and I inferred that he had not. The defendants did not cross-examine Mr Owen to seek to establish that he had. In other words, my conclusions were very much based upon the way in which the parties ran their respective cases.
66 Subject to the question of Ms Cartwright's audit reports, the plaintiffs are entitled to their costs of the valuation hearing.
67 On 19 December 2007, I made orders that J & J O'Brien and Marsico provide access to their computer systems, books and records to an auditor retained by the plaintiffs to conduct an audit in relation to their businesses and to procure such assistance from their employees as was reasonably necessary upon request by the auditor. The order was sought by the plaintiffs and consented to by the defendants. As a result I did not make orders for discovery in the form which had been sought by the plaintiffs. The plaintiffs wished to investigate the accuracy of the regular monthly financial information being supplied to them by the defendants. That was required for the purposes of the valuation hearing.
68 Ms Cartwright's audit reports of 9 May 2008 (concerning Jackson's on George) and 30 May 2008 (concerning the Marlborough Hotel) were not tendered by the plaintiffs. The defendants submitted that the reports were unnecessary. The plaintiffs had the companies' accounts and were supplied with updated financial information on an ongoing basis. The defendants submitted there was no need for the audits to have taken place and that they caused extraordinary disruption to the defendants' businesses. They submitted that there was no explanation as to why the reports, having been served, were not relied on and that the defendants were put to considerable time and expense in reviewing the reports. It was submitted that the reports were voluminous, detailed and argumentative, and considerable costs were incurred in preparing objections. In the result, it was unnecessary to rule on the objections because the reports were not tendered.
69 The plaintiffs submitted that Ms Cartwright was appointed as auditor in lieu of the defendants being ordered to provide discovery. The plaintiffs submitted that no separate order for costs would have been made concerning discovery and that no separate order for costs should be made in relation to Ms Cartwright's audit work simply because the parties consented to the appointment of an auditor instead of giving detailed discovery. The plaintiffs submitted that the audit was justified because Mr Crawley was in control of all of the information. Particularly was that so having regard to the credibility findings contained in the principal judgment. The plaintiffs submitted that they served the audit reports because they needed to prove the income and expenses of the businesses and the various integers adopted in Mr Owen's valuation. The plaintiffs said that ultimately the defendants' experts accepted the figures in Ms Cartwright's reports, with some minor exceptions, and there was therefore no need to introduce her reports into evidence. They said that because the reports had been prepared, the issues in dispute were narrowed and the hearing time reduced. According to the plaintiffs, no special orders should be made in relation to the costs of her report.
70 Neither party referred to any particular parts of Ms Cartwright's reports in relation to these submissions.
71 Both valuers were provided with Ms Cartwright's reports. It is not self-evident that the figures for actual revenue and expenses adopted by the valuers incorporated any amendments to the figures shown in the general ledger. Although some parts of the valuers' reports which made reference to the "Pitcher Partners report" were not read, I have re-examined the valuers' reports including the parts not read for the purposes of the costs exercise.
72 The plaintiffs did not contend that in determining the companies' net assets, any adjustments should be made to the audited balance sheets of Marsico and J & J O'Brien as at 30 June 1997.
73 I am aware from various interlocutory skirmishes prior to the hearing commencing on 28 July 2008 concerning the conduct of the audit that there was considerable correspondence between Ms Cartwright's firm and the defendants' solicitors in relation to the conduct of the audit. I made costs orders in relation to those skirmishes as were appropriate at the time. Doubtless however there would have been significant costs incurred which are not yet the subject of any order and which do not relate directly to the preparation of evidence for the valuation hearing.
74 It is not practicable, nor would it be proper (Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624) to embark on a detailed investigation as to the extent to which the audit reports were useful in identifying additional items of revenue or inappropriate items of expense for the hotel businesses, or to the extent to which they informed the opinions of the valuers, even though they were not ultimately tendered. Nor would it be practicable or proper to investigate the extent to which the defendants co-operated or failed to co-operate in the audit process, and the extent to which, if at all, that compromised Ms Cartwright's work. It is clear that to some extent her work was taken into account by the valuers, but it also appears that at least Mr Owen formed his view as to the appropriate normalised wage expense for Jackson's on George to a substantial degree independently of Ms Cartwright's report. (He reported that Ms Cartwright had identified that a number of employees' wages and on-costs were paid by Marsico although they provided services for other hotels or businesses.) I do not propose to pursue those issues further to resolve questions of costs.
75 In my view, there should be no order as to costs in relation to Ms Cartwright's audit reports with the intent that each party bear its own costs incurred in relation to those reports.
76 Accordingly, I will order that the defendants pay the plaintiffs' costs in relation to the valuation hearing, but that such costs not include costs of, or incidental to, Ms Cartwright's reports of 9 May 2008 and 16 May 2008.
Reserved Costs
77 By notice of motion filed on 27 March 2001, Nabatu sought leave pursuant to s 237 of the Corporations Law to bring proceedings on behalf of Marsico and J & J O'Brien and to file an amended statement of claim. That application initially became before Hodgson CJ in Eq (as his Honour then was) on 27 March 2001. On that day his Honour adjourned the application because of the tender of a large number of documents of which prior notice had not been given to the defendants. His Honour said that it would be appropriate to make an order against the plaintiffs for costs thrown away by reason of the adjournment but did not make such orders there and then because he thought, ultimately, no costs might have been thrown away having regard to the time that would be taken in any event in determining the s 237 application (Short v Crawley [2001] NSWSC 228 at [9] and [10]). His Honour also was considering an application to strike out paragraphs 66, 71, 75, 79, 83, 87, 91 and 97 of the amended statement of claim. In those paragraphs, the plaintiffs alleged that Marsico and J & J O'Brien suffered or were exposed to substantial loss due to conduct of the defendants with the effect that Mr Short and Nabatu sustained substantial losses by reason of "their ... shareholding and investment" in the companies. The s 237 application appears to have been in response to the defendants' application to strike out these parts of the statement of claim. The s 237 application was stood over to 1 May 2001. In his judgment of 1 May 2001, Hodgson CJ in Eq stated that the plaintiffs had served a vast amount of material in support of their application for leave under s 237. His Honour decided that the s 237 application should be stood over to the hearing. His Honour observed that as a result of his decision on other aspects of the applications to strike out the statement of claim, virtually all the issues that would be raised if the s 237 application were granted would be raised in any event in connection with the claim for oppression. His Honour made costs orders in respect of notices of motions except for the s 237 application.
78 In opening submissions at the hearing, the defendants foreshadowed opposition to the s 237 application. Detailed written submissions were provided by the plaintiffs. In Short v Crawley (No. 30), I said (at [177]):
" Sections 232 and 233 of the Corporations Act are in substantially the same terms as the former ss 260 and 246AA. The plaintiffs submitted that s 233 of the Corporations Act was not affected by the introduction of Pt 2F.1A. The defendants did not make any contrary submission. If that is so in relation to s 233 of the Corporations Act , it must also be so in relation to the predecessors of s 233 to the extent they have a continued operation in existing proceedings as deemed provisions of the Corporations Act . There was no dispute that Nabatu is entitled in the oppression proceedings to enforce whatever causes of action J & J O'Brien, Marsico or Trudale have against the other defendants. It is therefore unnecessary to consider the application for leave under s 237 of the Corporations Act . Had it been necessary to consider such an application, this was clearly a case for the grant of leave to the extent it was necessary. All of the criteria in s 237(2) were satisfied. However, it is not necessary to make any order under s 237. Nor is it necessary to make an order under s 260(2)(g) or s 246AA(2)(g) nunc pro tunc so as retrospectively to authorise Nabatu to institute and prosecute the proceedings on behalf of the companies."
79 The plaintiffs were successful on this issue. But I see no reason to differentiate this issue from the other issues dealt with in the main proceeding. Accordingly, the costs of the s 237 application reserved on 27 March 2001 to 1 May 2001 and not dealt with in the costs orders of 1 May 2001, that is to say, the costs in respect of the s 237 application will be costs in the proceedings.
80 Costs were reserved on 21 October 2004 in relation to the plaintiffs' notice of motion filed on 19 May 2004 for the appointment of a receiver and manager to J & J O'Brien and Marsico. That application was listed initially for hearing on 29 July 2004 before Hamilton J but was adjourned to later that year. Various further directions were given in relation to that application and it was further adjourned to March 2005. On 9 March 2005, the plaintiffs advised that they did not intend to proceed with the notice of motion. The defendants say that the plaintiffs abandoned it. However, the application was not proceeded with because orders were made by consent that until further order, the defendants, within 30 days of the end of each calendar month, provide a hard copy of the general ledger for each company in the group and a list of each payment or credit made to the defendants or any related company or related entity, and a list of any payments made outside the ordinary course of business. The defendants submitted that each party should pay its own costs. However, it is common ground that it was not until 9 March 2005 that the defendants advised that they would be willing to provide information which removed the need for the receivership motion. I think the better view is that the costs reserved on 21 October 2004 should be costs in the proceedings.
81 There is a number of other orders where costs were reserved by Hamilton J, and upon which I have received detailed submissions. They related to the examination of Mr Short, the reinspection by the plaintiffs of documents on discovery, the extension of time for the plaintiffs to serve evidence, amendments to the cross-claim and defence, adjournment of applications to set aside subpoenas and extensions of time for compliance with earlier orders in relation to preparation of redacted bundles of documents and inspection thereof. They all appear to be part of the general preparation of the matter for hearing and do not call for any special orders. Accordingly, all such reserved costs will be costs in the proceedings.
82 On 28 March 2008 I reserved costs in relation to an application for a stay pending appeal (Short v Crawley (No. 33)). For the same reasons as I then gave, those reserved costs should remain reserved until disposition of the appeal.
83 For these reasons, I make the following orders: