Verguier Pty Ltd v Ramelius Resources Limited

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

WHITE J: 1 On 30 May 2019, the Court published its judgment finding that the Defendant (Ramelius) had refused or failed without just cause to register the transfer of 310,000 shares from the Second, Third and Fourth Plaintiffs (O'Reilly Plaintiffs) to the First Plaintiff (Verguier) and that by that conduct Ramelius had breached its statutory contract with the O'Reilly Plaintiffs: Verguier Pty Ltd v Ramelius Resources Limited [2019] FCA 796. 2 The breach occurred because cl 23 of the Ramelius constitution prohibited Ramelius from charging a fee to register a transfer of shares, and cl 24.2 prohibited it, amongst other things, from delaying the registration of a transfer of shares, and yet the Share Registry provider of Ramelius (Computershare Investor Services Pty Ltd) would not register the transfer without the Plaintiffs paying a security validation fee. 3 The Court adjourned the matter for submissions with respect to the form of orders by way of declarations and injunctions appropriate to give effect to its reasons and with respect to costs. 4 The parties reached substantial but not complete agreement with respect to the form of the orders. Part of the difference between them is attributable to the circumstance that at Ramelius' Annual General Meeting on 29 November 2018, which occurred while judgment was reserved, its shareholders resolved to amend cl 23 of its constitution with the intention, it seems, to permit Ramelius to charge a fee for registering of transfers of shares in some circumstances. Whether the terms of the resolution will have the effect which the shareholders seem to have intended is not a matter which the Court need determine presently. 5 The resolution of 29 November 2018 makes it appropriate, however, that the Court frame the declarations in a way which makes it plain that they reflect the position which applied until at least 29 November 2018. 6 Ramelius' solicitor has deposed to having been informed by the Company Secretary of Ramelius that Ramelius intends, in the light of the Court's decision, to direct Computershare to register the share transfer without any fee being charged. However, that has not yet occurred and Ramelius has not proffered an undertaking that it will effect the transfer. In these circumstances, and for the reasons stated in the principal judgment at [131]-[137], it is appropriate for the Court to issue an injunction directed to Ramelius with respect to the transfer of the shares. 7 The positions of the parties with respect to costs are divergent. The Plaintiffs seek an order that Ramelius pay their costs and do so on an indemnity basis. Ramelius submits that it should have an order for costs in its favour, or, alternatively, that there be no order as to costs. 8 Both parties referred to the discretion with respect to costs vested in the Court by s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) and to many of the well-known authorities concerning the exercise of the costs discretion. These included Latoudis v Casey [1990] HCA 59, (1990) 170 CLR 534 at 543; Oshlack v Richmond River Council [1998] HCA 11, (1998) 193 CLR 72; and Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801, (1993) 46 FCR 225 at 233. It is not necessary to refer to those authorities in detail. 9 Counsel for the Plaintiffs emphasised the following matters: (a) the Plaintiffs succeeded in obtaining the relief which they sought; (b) the Plaintiffs brought the proceedings as a "test case", and there are authorities which indicate that, when applicants bring proceedings in pursuit not only of their personal interest but to settle an issue in the wider public interest, they should not be out of pocket as a result. Counsel referred in this respect to: Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd [1991] FCA 150, (1991) 100 ALR 568 at 571-2; Baltic Shipping Co, The Mikhail Lermontov v Dillon (1991) 22 NSWLR 1; Australian Electoral Commission v Towney (No 2) [1994] FCA 438, (1994) 54 FCR 383 at 388; Ragata Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115, (1993) 217 ALR 175 at 177 (although indemnity costs had been refused in that case); and (c) Ramelius had rejected (counsel submitted imprudently) an offer of settlement from the Plaintiffs. 10 In relation to the application for an order of costs in favour of Ramelius, counsel for Ramelius submitted: (a) the Court may make an order for costs in favour of an unsuccessful party; (b) such an order should be made in this case because the Plaintiffs had imprudently rejected an offer of settlement made by Ramelius before the proceedings had even been commenced; and (c) the terms of that offer were such that Ramelius could not have offered more to the Plaintiffs in order to achieve a settlement. 11 In relation to the alternative order for costs proposed by Ramelius, counsel for Ramelius referred to Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229. Black CJ and French J referred, at [13], to academic commentary indicating that the general compensatory principle underlying the Court's discretion with respect to costs may not be universally appropriate in cases in which declaratory relief is sought because of genuine uncertainty about the interpretation of the document or a statute and when the legal issue is novel and has consequences extending beyond the particular litigation. 12 It is the Plaintiffs themselves who styled the proceedings as a "test case". It needs to be recognised that it is not every case raising questions of statutory or contractual interpretation of significance which warrant the characterisation of the case as a test case or, for that matter, as a case brought in the public interest. There are many cases bought by individuals for the vindication of their own personal rights and entitlements in which the determination of the proper construction and effect of a statute, contract or other document of general application will have implications for others. The mere fact that an issue of actual or potential wide practical application has not previously been determined by a court does not, of itself, mean that the case should be characterised as a test case for the purposes of the exercise of the costs discretion. 13 Counsel for Ramelius submitted that there were two elements required for the characterisation of the proceedings as a test case which do not exist in these proceedings. These are the presence of a "line-up" of cases by other persons for which it could be said the decision in this case would be determinative, and the proceedings having been brought by a public interest advocacy group. I accept that it is common experience that public interest litigation, and sometimes test cases, are brought by such groups. 14 Although the fact that there are other cases pending or which, subject to the Court's decision, may be brought, may indicate that a case is properly characterised as a test case, and although the identity of the litigant bringing the case may also be relevant to the characterisation, I do not consider that the presence of either of those two matters is essential for that purpose. These matters may be in the nature of sufficient conditions, but they cannot be regarded as necessary. Individuals are just as capable of bringing test cases as are advocacy groups, and there are circumstances in which it is apparent that the determination of an issue in a case brought by an individual will have widespread ramifications for other potential litigation. 15 The features which, to my mind, point to the appropriateness of the characterisation of the present case as a test case are the modesty of the fee of $62 compared with the cost of the litigation with the consequence that the particular benefit to the Plaintiffs from their success is likely to be significantly outweighed by the benefit to the class of persons in like circumstances to themselves; the fact that a provision like cl 23 in the Ramelius constitution has not previously been the subject of judicial consideration; and the importance of the issue to others in like circumstances, including shareholders in companies other than Ramelius. The second and third of these considerations, at least with respect to the importance of the issue, were matters on which Ramelius itself relied for its submission that the Court should make no order as to costs. 16 I would add to these considerations that, in general, litigants such as consumers who are personally affected in only a small way by a systemic institutional unlawful practice, should not be deterred by costs consideration from bringing litigation before the Court for the vindication of their own rights and of others in like circumstances. In such cases, the litigation promotes the public interest as well as that of the individual. It is generally not in the public interest that large institutions should be able to avoid litigation of the present kind because the impact of their unlawful conduct on each individual in a large class of persons is so minor as to make it economically unviable for an individual litigant to bring proceedings. 17 Accordingly, I regard the case as having some of the character of a test case in the public interest and that this is a matter pointing in favour of the costs order sought by the Plaintiffs. 18 The Plaintiffs relied on an open offer of settlement made by their solicitors on 13 April 2018 (before the commencement of proceedings). The offer of settlement was in the following terms: [6] Our clients are willing to resolve this matter on the basis that, within 14 days of the date of this letter, Ramelius: a. openly, and without any condition, reservation or qualification, agrees and acknowledges in writing that: i. Ramelius has breached its Constitution, as amended 28 November 2013 (Constitution) by: 1. failing to register a transfer of shares, because of the non-payment of a fee to register that transfer; and 2. preventing and delaying the registration of a paper-based transfer in registrable form; ii. Ramelius refused or failed to register a transfer of shares to Verguier without just cause; iii. the Constitution requires Ramelius to register a transfer of shares without charging a fee in connection with any security validation and/or fraud prevention security checks, or similar, in order to register that transfer; iv. the Constitution requires Ramelius to register a transfer of shares without charging any fee to register that transfer; v. Ramelius has breached ASX Listing Rule 8.10 by preventing and delaying the registration of a transfer document relating to quoted securities; vi. whilst clause 23 (or any equivalent provision) of the Constitution remains in force, Ramelius will not charge any fee to any shareholder to register a transfer of shares in the future including, without limitation, any fee in connection with any security validation and/or fraud prevention security checks, or similar, in order to register that transfer; b. registers the transfer of shares to Verguier in accordance with the share transfer form submitted by our clients on 27 February 2017, without charging any fee to register that transfer, including, without limitation, any fee in connection with any security validation and/or fraud prevention security checks, or similar. (Emphasis in the original) 19 The offer did not make any claim with respect to costs and, had the offer been accepted, Ramelius would not have had any liability to the Plaintiffs with respect to costs. 20 The Plaintiffs have succeeded almost completely in obtaining the relief sought in the letter of 13 April 2018. I have said "almost completely" because the Plaintiffs have not succeeded in obtaining an order that Ramelius acknowledge in writing that it had breached ASX Listing Rule (LR) 8.10 by preventing and delaying the registration of the share transfer, as they had sought in [6(a)(v)] of their solicitors' letter. 21 Ramelius had not been obliged, at the time that offer was made, to provide the statements in writing sought by the Plaintiffs. However, the declarations which the Court will make will achieve, in substance, the same effect as those requirements. 22 Had Ramelius not wished to provide the acknowledgements in writing which were sought by the Plaintiffs, it would have been relatively simple for it to have registered the transfer of the 310,000 shares without charging any fee for that transfer, including the security validation fee. 23 The approach of Ramelius to settlement is contained in the letter from its solicitors of 15 January 2018, which was written without prejudice save as to costs. Having set out the basis upon which Ramelius denied that it had breached either its own constitution or the ASX LR, the solicitors said (relevantly): [13] Notwithstanding the above, with a view to resolving this matter without further unnecessary dispute or expense, on a without prejudice basis and in full and final settlement of any claim your clients may have in respect of the subject matter of your letter of 21 December 2017, our client is willing to take steps to arrange for your clients' share transfer to be registered on the basis that our client will meet the $62 security validation fee on your clients' behalf. Please advise within 14 days whether your clients wish to take up this opportunity. [14] If your clients do not accept this offer we put them on notice that our client will defend any legal proceedings brought and will rely upon this letter in seeking an order for indemnity costs against your clients. (Emphasis added) 24 Counsel for Ramelius submitted that the offer represented a sensible means of resolving the litigation between private parties; that Ramelius could not have offered more than it did, with the consequence that Ramelius had been compelled to defend the litigation; that had the offer been accepted, the litigation would have been avoided; that the Plaintiffs had failed to better the offer in the judgment; and that their rejection of the offer had been unreasonable. He also submitted that ss 37M and 37N of the FCA Act indicated that it had not been reasonable for the Plaintiffs to have rejected the offer. 25 In my view, these submissions should not be accepted. The Plaintiffs have bettered the offer, because there has been a finding that they have no liability at all with respect to the $62 security validation fee. The emphasised passage in the letter of 15 January was premised on the Plaintiffs having a continuing liability to pay the fee, and simply suggested an alternative means by which that liability could be satisfied. 26 In my view, it would not be accurate to hold that Ramelius could not have done anything more. Plainly, it could have, simply by registering the transfer. 27 Thirdly, this submission of Ramelius does not address the public interest aspect of the proceeding. 28 In my opinion, resort to ss 37M and 37N is not of particular assistance presently. It could be said, as counsel for Ramelius submitted, that the Plaintiffs could have accepted the offer of 15 January 2018, in which case the share transfer would have been registered. But on the other hand, the same consideration suggests that Ramelius itself could simply have registered the share transfer, thereby avoiding the necessity for the litigation altogether. It is evident that the Plaintiffs did not wish to concede that they, and other shareholders in the like position, had a liability to pay the security validation fee and Ramelius did not wish to concede that there was no such liability. 29 In my opinion, the decision in Ruddock v Vadarlis (No 2) does not assist Ramelius. Black CJ and French J were there suggesting a circumstance which may make inappropriate the compensatory principle upon which the courts' approach to the exercise of the discretion is based. It is not apparent that their Honours were intending to articulate a general principle which should guide the exercise of the discretion. Further, and in any event, Mr Ruddock was not bringing a test case in the public interest and that of itself distinguishes the circumstances of Ruddock v Vadarlis (No 2) from this case. 30 The Plaintiffs' claim in this case was necessitated only because of the unlawful conduct of Ramelius. The fact that there may have been some uncertainty about the interpretation of its constitution or the application of provisions in the Corporations Act 2001 (Cth) in the circumstances does not alter the fact that it was Ramelius, by its conduct, which made it necessary for the Plaintiffs to bring the action by which they sought vindication. I am unable, in these circumstances, to see any basis upon which the Court should depart from the usual principle that costs should follow the event. 31 The remaining issue, therefore, is whether the costs to the Plaintiffs should be awarded on a basis more beneficial to the Plaintiffs than an order for party-party costs. Ultimately, I am persuaded that the Plaintiffs are entitled to an order that Ramelius pay their costs on a solicitor-client basis. That is essentially because of the public interest nature of the proceedings. That makes it appropriate for the Plaintiffs to have their costs as between solicitor-client but not on the basis that they had a complete indemnity, subject only to issues of reasonableness for their costs. It was not suggested, for example, that there were aspects of the conduct of Ramelius which would make it appropriate for it to bear all of the Plaintiffs' costs other than those which it could show had been incurred unreasonably. 32 I have also taken into account, in deciding that a departure from the party-party approach to costs is appropriate, the fact that the Plaintiffs succeeded in substance in obtaining relief equivalent to the form in which they sought in their solicitor's letter of 13 April 2018. 33 Accordingly, the Court declares that: (1) By reason that until at least 29 November 2018: (a) clause 23 of the Defendant's constitution (the Constitution) prohibited the Defendant from charging a fee to register a transfer of shares; and (b) the Defendant did not otherwise have authority or power to charge a fee to register a transfer of shares; the Defendant was not entitled to refuse or fail to register the transfer to the First Plaintiff of the 310,000 fully paid ordinary shares held by the Second, Third and Fourth Plaintiffs submitted by the Plaintiffs on 22 February 2017 (being annexure GDO10 to the affidavit of Gregory Denis O'Reilly sworn 4 June 2018) ("the Transfer) by reason only of the non-payment by the transferors to the Defendant or its share registry provider of a fee described as a security validation fee. (2) The Defendant breached cll 23 and 24.2 of the Constitution by delaying the registration of the transfer. (3) The Defendant refused or failed to register the Transfer without just cause. 34 Further, the Court orders that: (1) The Defendant register the transfer within seven days without charging any fee to the Plaintiffs. (2) The Defendant is to pay the Plaintiffs' costs of and incidental to the proceedings on a solicitor and client basis, with those costs to be taxed in default of agreement. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

SCHEDULE OF PARTIES SAD 141 of 2018 Plaintiffs Fourth Plaintiff: IRIS JEAN O'REILLY