William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752

(1) Costs in the Industrial Relations Court 9These proceedings were cross-vested from the IRC to the Supreme Court of New South Wales via the Federal Court of Australia. The IRC did not make costs orders covering the whole of the IRC proceedings before the proceedings were cross-vested from the IRC. The parties are now at issue as to what costs orders should be made in the IRC proceedings, both for the period before they left the IRC, and since they have been in this Court. 10It was common ground that the Jurisdiction of Courts (Cross Vesting) Act 1987, s 12 confers on this Court the power to make orders relating to the conduct of the IRC proceedings before their cross-vesting to this Court, because those costs had not already been dealt with by the IRC. The parties are at issue as to the extent to which Backman J dealt with the question of costs in the IRC, when her Honour reserved the costs of the IRC proceedings: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2009] NSWIRComm 187 at [20]. But this issue aside, it was common ground that the costs of the IRC proceedings that had not already been determined by the IRC were now a matter for this Court. 11The plaintiffs submit: that they are entitled to the costs of the IRC proceedings on the basis that costs should follow the event under Uniform Civil Procedure Rules, r 42.1; and, that this is not a case where some other order should be made. In broad terms the plaintiffs submit that they have achieved success in relation to their claim in contract, their oppression case and their employment case, which success is summarised in the Court's principal judgment at [1125] to [1132]. 12A short account of the course of the IRC proceedings before they were cross-vested is necessary background. Mr McCausland commenced his proceedings in the IRC by Summons in August 2004. Mrs McCausland also commenced her proceedings in September 2005. The same month Mr McCausland sought leave to amend his Summons to include claims concerning the acquisition of his shares under the 2002 Shareholder's Agreement as part of his Industrial Relations Act, s 106 claim: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2005] NSWIRComm 334. In 2005 and early 2006 the IRC made various procedural orders for the filing of affidavits, the detail of which need not be covered here. In April 2006 Mr McCausland filed his principal affidavit in the IRC, a very substantial affidavit which contains the substantial background for the bringing of his IRC claim. 13In May 2006 the defendants changed solicitors from Allens Arthur Robinson ("Allens") to Harmers Workplace Lawyers ("Harmers"). Between June 2006 and November 2007, as well as pursuing interlocutory disputes and steps in the IRC proceedings, the parties were engaged in a contest about whether Harmers could continue to act for the defendants because of an alleged conflict of interest. In July 2006 Marks J restrained Harmers from acting further in the proceedings: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2006] NSWIRComm 261. In September 2006 the IRC full bench granted a stay on Marks J's orders, conditional upon Harmers giving signed undertakings about the manner of that firm acting in the proceedings pending appeal: Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors v William McCausland [2006] NSWIRComm 276. In March 2007 the appeal on the Harmers issue was heard before the IRC full court and in April 2007 the full court allowed the appeal from the decision of Marks J: Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors v William McCausland (No. 3) [2007] NSWIRComm 64. 14Harmers ceased to act in July 2007. But in October 2007 the McCauslands sought to re-open the appeal before the IRC full court. In November 2007 the McCauslands' application to re-open was dismissed: Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors v William McCausland (No. 6) [2007] NSWIRComm 285. Throughout this period the defendants complained that the plaintiffs had not served the exhibits to their affidavits. 15In December 2007 Mr McCausland the IRC granted a stay of the IRC proceedings for three months, to assist in managing Mr McCausland's depression. When granting the stay, Backman J said "These matters have had a long history. They have been subject of no less than six full bench decisions in this jurisdiction and two first instance decisions". At that time the first anticipated hearing date was not until May 2008, so Backman J granted the stay and ordered the respondents to prepare and file evidence: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2007] NSWIRComm 322. 16In January 2008 SHI Holdings commenced proceedings in the Federal Court of Australia alleging Mr McCausland breached his duty as an employee and had failed to account to it. In February 2008 SHI Holdings also commenced proceedings in this Court to remove both Mr and Mrs McCausland's IRC proceedings into this Court. SHI Holdings commenced both the Federal and Supreme Court proceedings during what was a respite period for Mr McCausland in the IRC proceedings. 17By March 2008 the McCauslands began to complain about the defendants' failure to file their evidence in the IRC. By April 2008 Mr and Mrs McCausland had successfully sought an extension of their respite stay in the IRC, until July 2008. 18In October 2008 the Federal Court of Australia dismissed SH Holdings' proceedings in that Court as an abuse of process: Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors v William McCausland [2008] FCA 1522. In December 2008 the SHI Holdings proceedings in the Supreme Court were dismissed by consent, with SHI Holdings paying the McCauslands' costs of the proceedings. Curiously, notwithstanding the dismissal of these proceedings only six months later the McCauslands in substance sought substantially the same relief the defendants had been seeking in the Supreme Court: a transfer of the IRC proceedings here. 19By December 2008, over four years after the IRC proceedings were commenced, they finally began to head towards a trial. In December 2008 both IRC proceedings were listed for directions and then set down for hearing in June 2009. 20The first half of 2009 was spent preparing for the final IRC hearing in June that year. In March 2009 Messrs Lee, Alscher, Ford, Bosher, and Hawkins filed their respective IRC affidavits. In April and May 2009 the parties were engaged in the usual pre-trial processes: issuing notices to produce and summonses for production; the McCauslands filed affidavits in reply; and just before the hearing, the expert accounting reports were served on each side, from Mr Wayne Lonergan and Mr John McInnes. 21The McCauslands' IRC claims were listed for hearing for the two weeks commencing Monday 22 June 2009. On the second day, Tuesday, 23 June 2009, the McCauslands applied to vacate the balance of the hearing dates, to enable proceedings to be commenced in the Federal Court with a view to removing the whole of the IRC proceedings into this Court. 22After changing solicitors in August 2009, the McCauslands commenced proceedings in the Federal Court in September 2009, and seeking to have the IRC proceedings cross-vested to the Supreme Court of New South Wales. The McCauslands also filed an application in the IRC proceedings for their transfer to this Court. Backman J granted this application in November 2009: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2009] NSWIRComm 187. Part of the contest before Backman J and her Honour's resulting orders were relevant to the costs argument in the present proceedings, and are considered in more detail below. 23In November 2009, Rein J in the Equity Division of this Court transferred the IRC proceedings into this Court. In April 2010 the Registrar in Equity made extensive orders for the filing of pleadings for discovery and for the production of documents. The proceedings in this Court were now on track towards their eventual hearing before me in October 2011. 24In May 2010 the McCauslands served their Supreme Court Statement of Claim and in June 2010 the defendants' present solicitors commenced acting. Between June 2010 and June 2011 the parties were occupied with interlocutory preparation: including the service of further pleadings, general directions hearings, discovery issues, further affidavits relating to the moral rights claim, further experts reports and final pre trial directions. The main trial commenced on 10 October 2011 and continued until 28 October 2011, with supplementary submissions hearings on 11 and 23 November. 25The defendants submit that the plaintiffs should not have their costs of the whole, or alternatively parts of the IRC proceedings up to the date of transfer. These reasons now deal with each of these defendants' arguments. 26The defendants argued that the plaintiffs' Industrial Relations Act, s 106 claim relating to the compulsory acquisition of the plaintiffs shares was misconceived. The defendants submit that this claim could not have succeeded and therefore no costs should now be awarded with respect to it, either in the IRC or in this Court. 27But this submission overstates the Court's findings in the principal judgment. The defendants submit that Mrs McCausland's claim, for example, "has failed in its entirety". The true position is that the Court declined to address Mrs McCausland's Industrial Relations Act, s 106 claim because of the findings the Court had already made on the contract and oppression cases: principal judgment at [836] and [1128]. The Court has not found that her claim was without merit. 28The defendants next argue that the plaintiffs' IRC evidence was "discursive and largely irrelevant to the ultimate issues". They submit as a result the plaintiffs should not have all their IRC costs. This argument is not persuasive. Whilst the principal evidence the McCauslands filed in the IRC was a longer historical narrative than it needed to be, the Court did use this account in a number of ways: it was relevant to valuation issues; it bore upon the probability the Court's determination of the competing versions of Mr McCausland's employment contract; it gave considerable insight into Mr McCausland's personality and motivation which were important determinants, as the principal judgment shows, of many of the sub-issues on which he was successful (such as the causal link between the defendants' breaches of contract and Mr and Mrs McCausland's loss, and the means by which Mr McCausland's employment contract became relevantly unfair in the way it was performed); and assessing the performance of SHI Holdings leading up to the date of valuation required an understanding of the underlying dynamic within the business of the company and an assessment of the defendants' judgments of the performance of the company with and without his involvement. Ultimately, the McCauslands' extensive narrative was embedded within the Court's reasoning process that lead to his success. The first 200 pages of the Court's 401 page principal judgment dealt in detail with the McCauslands' narrative. Moreover, however discursive the McCauslands' evidence was the Court did not see fit after it had been filed to strike it out and order tighter affidavits to be filed. There was discussion before Rein J in July 2011 about applying a "blue pencil" to the McCausland's affidavits, but in the end most of the affidavits were read and used. 29And in the second judgment (at [81]) this Court has already made a general assessment of the relevance of this material which does not assist the defendants' arguments: "81. The IRC proceedings were not without merit and utility. Mr McCausland has succeeded in an amount of a little over $100,000 in the IRC proceedings. Although that is less than 10 per cent of his total claim, the case he presented in the Supreme Court utilised the affidavit evidence which had been prepared for the IRC, so the preparation time and resources for the IRC hearing in June 2009 was not wasted and was re-deployed in aid of the oppression and contract cases as well. " 30Another perspective in evaluating the relevance of the plaintiffs' evidence is that the plaintiffs did not supplement their evidence prepared for the IRC when the proceedings were transferred to the Supreme Court, except in a minor degree in relation to the moral rights claim. 31The defendants next submit that the IRC proceedings as originally constituted could not have succeeded before the IRC. But that is not the applicable test for the awarding of costs in the IRC. Costs were incurred in the IRC, the cross-vesting legislation permits the transfer of these IRC proceedings into this Court, and after they were transferred the plaintiffs had some success in this Court. The extent to which they were successful in this Court, and on what issues, is a separate question which will be dealt with under heading five below. 32The defendants next submit that the plaintiffs should not have resisted their application to transfer the proceedings to the Supreme Court. There is some validity in this argument. Within approximately six months of the defendants making this application, the plaintiffs substantially moved in the same direction. 33In answer the plaintiffs attempt to argue that the defendants really commenced what Justice Foster found in the Federal Court was "a false case" and it was therefore entirely appropriate for the plaintiffs to resist that application: Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors v William McCausland [2008] FCA 1522 at [59]. But Foster J's observations were made in relation to the Federal Court proceedings. The defendants' Supreme Court proceedings, not their Federal Court proceedings, really present the conundrum on which the defendants rely. The defenadnts' Supreme Court proceedings sought very relief which the plaintffs later sought: cross-vesting to the Supreme Court. 34Despite these observations, in my view there should be no costs consequences merely from the plaintiffs' reversal of position on the cross-vesting of the IRC proceedings to the Supreme Court. First, the defendants consented to the dismissal of their own Supreme Court proceedings. And secondly, given the nature of the defendants' Supreme Court proceedings, it is unlikely that significant costs were expended upon them. 35The thicket of IRC judgments referred to earlier in these reasons contain many orders for costs for and against some of the parties to these proceedings. None of those existing costs orders in the IRC will be disturbed. They generally relate to discrete issues which the Court should not now revisit and was not invited to re-visit. The parts of the IRC proceedings now the subject of the application for an order for costs are in effect what is left of the plaintiffs' costs in the IRC proceedings after all those other various individual costs orders were made. The final orders in these proceedings will reflect that. 36But there was one discrete issue the subject of a pre-existing costs order, which the parties did contest and which this Court was invited to resolve. It relates to the McCauslands' application to adjourn the trial of the IRC proceedings on Tuesday, 23 June 2009. The plaintiffs successfully applied for an adjournment before Backman J that day. After the adjournment was obtained the parties argued about what was the appropriate costs order. This was a matter of some financial significance as the proceedings had been set down for two weeks and senior counsel were engaged on both sides in a trial which although not as substantial as the one held in this Court, nevertheless would have involved the preparation of a great quantity of documents. When Backman J heard the costs argument on 8 October 2009 and then gave judgment on 9 November 2009, her Honour decided to "follow the usual course and reserve costs, bearing in mind the comments I have made with respect to the merits of each of the party's costs applications": William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 & Ors [2009] NSWIRComm 187 at [19]. The order of the Court was that "costs are reserved". 37Mr Alexis SC submitted that her Honour's order meant that the costs thrown away by the adjournment had been dealt with and should not be re-visited. This submission is not persuasive upon a proper reading of her Honour's judgment. Her Honour recorded the McCauslands' submissions that the adjournment was well justified by the defendants' late provision of spreadsheets attached to the document which became known in these proceedings as the 16 July memorandum (at [14]). The defendants' competing contention was that the information in this spreadsheet raised "no new issue in the applicants' cases" and the absence of the annexures was in any event always obvious. A proper reading of the judgment in my view shows that her Honour thought it was too early to decide the question of costs, until the significance of the 16 July memorandum was finally decided at trial. 38The parties were at issue about a number of subsidiary matters, including whether the defendants consented to the adjournment. A proper reading of the transcript on 23 June 2009 shows that the adjournment was opposed and that the adjournment was only accepted on the basis of the defendants sought payment of their costs. 39This Court now has the advantage of discerning what Backman J could not in November 2009: the significance for the issues of the schedules to Mr Alscher's 16 July memorandum. The answer is quite simple. As the Court's principal judgment shows, the schedules to Mr Alscher's 16 July memorandum were of no special significance in themselves in the issues in the proceedings or in the Court's findings: principal judgment at [503] to [522]. 40Looked at objectively there is every reason why the McCauslands should have decided at least some months before 22 June 2009 to commence proceedings in the Federal Court or the Supreme Court and avoid the costs thrown away by the commencement of that hearing. Their failure to do so means that the costs order should be made against them. And the new schedules to the 16 July memorandum do not justify the adjournment. The circumstances do not obviously warrant an order for indemnity costs. But the McCauslands will pay the costs thrown away by the vacation of the hearing date on 22 June 2009 and all costs associated with the argument about the costs on 8 October 2009 in the IRC.

(2) Costs of the Successful Defendants 41The defendants make interrelated submissions concerning question (2) and question (5). On these questions the defendants submit that it should be recognised on the outset that the plaintiffs joined ten defendants in these proceedings and obtained no relief against five of them and only very limited relief against one defendant. The defendants submit therefore that the successful defendants are presumptively entitled to their costs of the proceedings under UCPR, r 42.1. Moreover, it is said that in respect of those defendants against whom only limited relief was obtained, the plaintiffs should not have all their costs. This later issue is dealt with under issue 5 below. In this section however the Court will deal with the question of apportionment of costs because the plaintiffs were not successful against five of the defendants. 42The defendants developed their submission. They submit that the applicable principles are outlined in Carrabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232 ("Carrabubula") at [90] - [104] and in particular [95] as follows. The principle is as follows: "[95] These decisions reveal that the concern of the rule of thumb is to achieve substantial justice in the awarding of costs as between a partially successful plaintiff and variously successful and unsuccessful defendants. The rule operates upon the premise that defendants are proportionately responsible for and liable for the joint costs involved in mounting the defence. Thus, a successful defendant cannot claim from the plaintiff more than a proportionate share of the joint costs of the action in addition to any costs separately referable to that defendant. Conversely, the partially successful plaintiff is prevented from looking to each of the unsuccessful defendants for more than an equal proportionate share of the costs not solely referable to the plaintiff's case against one or other of the defendants individually, in addition to the costs which are so referable. In this way, the rule of thumb prevents both the unjust enrichment of the partially successful plaintiff or successful defendant and the casting of an unfair burden on the unsuccessful defendants. Where the premise is falsified or the rule does not achieve its intended effect, it finds no application." 43The principles in Carrabubula have been widely applied. They have been cited with approval at State and Federal appellate level: Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84, David Weiping Chin v Kim Man Chan (2009) VSCA 233 at [10], and Wardle v Agricultural & Rural Finance Pty Ltd (No. 2) [2012] NSWCA 388 at [46] - [47]. 44The defendants submit that consistent with these principles the plaintiffs should be ordered to pay the successful defendants 50 per cent of the defendants' total costs, save in so far as those costs are "solely referable to the plaintiffs case not made against them". The defendants submit that that is effectively all costs incurred in the proceedings apart from the moral rights claim. 45The plaintiffs contest that Carrabubula represents a rule of law. The plaintiffs accept the broad propositions in Carrabubula at [95] which have received appellate approval. But the plaintiffs submit that Carrabubula does no more than identify the kind of order that may be appropriate in some circumstances, and that when Carrabubula considerations are in play that a Court must still follow the dictates of justice rather than mechanically apply such a rule, as the Court of Appeal in the Supreme Court of Victoria pointed out in David Weiping Chin v Kim Man Chan (2009) VSCA 233 at [10b] "[t]he primary issue for determination is...that of fairness between the parties, having regard to the manner in which the trial or appeal has been conducted". The defendants re-emphasize the well established width of the costs discretion of the Civil Procedure Act, s 98(1) costs discretion, which is recently been confirmed by the Court of Appeal in Seller v Jones [2014] NSWCA 19 at [54]. 46The plaintiffs then persuasively answer most of the defendants' arguments. It is difficult to apply Carrabubula considerations in a case such as this. The following conclusions are an acceptance of the plaintiffs' arguments on this issue. The defendants all have common legal representation. The defendants may be taken to have incurred no additional costs in responding to the claims also made against the successful individual defendants. Three of the individual defendants who were successful (Messrs Alscher, Lee and Bosher were shareholders of their corporate vehicles against whom declarations and orders were being made). A reading of the principal judgment shows that Messrs Alscher, Lee and Bosher were centrally active in the affairs of the unsuccessful corporate defendants with which they are associated. The successful principals should be relevantly identified with their unsuccessful corporate vehicles. Moreover, the "success" of the so-called successful defendants is fortuitous. All that really happened is that the Court found it unnecessary in the principal judgment to make findings against them, because the plaintiff had attained sufficient success against the corporate defendants, that not all alternative causes of action needed to be considered. 47But this reasoning does not take proper account of Mr Ford's position. The principal judgment makes clear that Mr Ford did not have any liability to Mr or Mrs McCausland. Nor was Mr Ford associated with any unsuccessful corporate defendant. Mr Ford's corporate conduct was found to be unblemished throughout the events in contest in these proceedings. To the extent that he may have to bear some part of the costs of these proceedings himself, I see no reason why he should not have a costs order against the plaintiffs. He may, for example, have had to seek separate legal advice on certain issues. He may have incurred personal legal costs in relation to parts of his evidence. I will make an order for costs in his favour.

(3) Costs of the Moral Rights Claim 48The parties are also in contest about the appropriate order to reflect the result of Mr McCausland's moral rights claim. The defendants submit that as Mr McCausland failed to establish any infringement by the second defendant of any moral rights in relation to the "Work" and that as the only relief Mr McCausland obtained was a declaration that the production drawings and the H2 Fin itself "are an exact reproduction of the work", then Mr McCausland should be ordered to pay the defendants' costs of this discrete part of the proceedings. 49Mr McCausland contests this submission. He argues that each party should bear his or its own costs in relation of the moral rights claim. 50Although the moral rights claim was a discrete part of the proceedings, it involved a not insubstantial quantity of evidence, submissions and legal analysis. The claim was dealt with in over 56 pages of the principal judgment: principal judgment at [837] to [1011]. The Court summarised its findings on the moral rights claim in the principal judgment at [1010] and [1011] both as follows: "1010. The Court concludes the following on Mr McCausland's moral rights claim. Mr McCausland has made out his joint authorship with Mr Dovell of the Work, which is an original artistic Work. Copyright subsists in the Work and has done so since it was first published in Australia in December 2004. Since then SH International has done or authorised the attributable acts of reproduction of the Work by authorising the manufacture of H-2 fins. The publishing of photographs of the Work in brochures and in advertisements in surfing magazines did not constitute any attributable act in respect of the Work. 1011. But Mr McCausland has failed to establish that his moral rights were infringed by the attributable acts that have been established. The manufacture of the H-2 fin took place overseas, and so the Work's reproduction through manufacture could not constitute a direct infringement. But Mr McCausland's pleaded case of dealing with the manufactured Work in Australia is insufficient. It does not fairly raise a case to which SH International can fairly respond of indirect infringement through the importation or sale of the manufactured H-2 fin, which would infringe if manufactured in Australia. Moreover, even if it did raise such a case the earliest that it could be said that SH International was aware of or had reason to suspect that it may be authorizing the sale of infringing copies of the Work was during the trial of these proceedings in October 2011 when all the evidence was available." 51Ordinarily the fact that Mr McCausland achieved some success on his moral rights claim would mean that he would be a candidate either for a costs order in his favour or at least for the result for which he now contends: that each party should bear his or its own costs of that claim. The Court's findings at [1010] and [1011] of the principal judgment show that Mr McCausland was successful in establishing many of the intermediate steps of his moral rights claim although he was ultimately unsuccessful on the issue of infringement. 52But the defendants seek to displace the effect of the plaintiffs' partial success on this claim by pointing to the plaintiffs' delay in the furnishing of evidence which hampered the defendants' capacity to deal with the moral rights issue. 53Mr McCausland was slow in the production of important evidence. But after the new evidence was produced the defendants' opposition to Mr McCausland's moral rights claim was unchanged. It is therefore difficult to infer in the defendants' favour that had Mr McCausland's late evidence been produced earlier, then the defendants were likely to have conducted this part of the case differently. A little more detail is required to explain this debate. 54Exhibit K, "the Work", the drawing "Hydro Fin 2a" dated 1 July 2003 was the final printed out version of the CAD design at the end of Mr McCausland's and Mr Dovell's work as at 1 July 2003. It became the foundation document for the Court's determination that both the production drawing and the manufactured H2 Fin are reproductions of the Work, Exhibit K: principal judgment at [955]. But Mr McCausland only produced Exhibit K in the course of the hearing: principal judgment at [864]. This final printed out version of Mr Dovell and Mr McCausland's work is Schedule A to the principal judgment. The Court's reasoning as to the comparisons of the Work with the production drawing and the physical H2 Fin includes one comparison that Mr Durante made in April 2011 before the hearing without Exhibit K, and subsequent comparison he did in October 2011 with Exhibit K, after it had been produced to the Court: principal judgment at [927] to [956]. 55The defendants complained that their solicitor Mr Peter Thompson made extensive attempts to obtain and examine the original of the Work, Exhibit K, during his preparation for the hearing: see Mr Peter Thompson's affidavit sworn 14 April 2014. Mr McCausland's case on the moral rights issue started with his affidavit of 11 March 2011 to which Exhibit WBM-8, which was a document said to be "a true copy of the final design" was exhibited. I accept that when Mr Thompson sought to see the original Exhibit WBM-8 he was only shown a photocopy document bearing the same dimensions as the document appearing in Exhibit WBM-8. But he was not shown the original drawing Exhibit K. 56Mr McCausland was cross-examined on the moral rights issue and invited to compare the profile of the actual fin with the exhibit to his affidavit. Based on this comparison doubts emerged whether the fin and the production drawings were an exact reproduction of the Work and there were difficulties in undertaking the comparison. The following day, 18 October 2011, Exhibit K was produced for the first time. 57The production of Exhibit K allowed the defendants to refer it to Mr Durante to undertake what became his October 2011 comparison. As a result of Mr Durante doing that comparison, concessions followed in his evidence: principal judgment at [1001]. 58The defendants submit that Mr McCausland's failure to produce Exhibit K earlier in the proceedings and especially after Mr Thompson had made an express request for the original document, is sufficient disentitling conduct to justify the Court when awarding costs on this issue to ignore the modicum of success that Mr McCausland achieved in obtaining a declaration in relation to the reproduction of the drawing. Moreover the defendants submit that they should be seen as having a substantial if not complete success in the moral rights claim and Mr McCausland should be ordered to pay the defendants' costs of that claim. 59The defendants' argument is persuasive to the extent that it contends that Mr McCausland's late production of Exhibit K largely neutralises the modicum of success that Mr McCausland achieved in obtaining a declaration as to the reproduction of the drawing. But it does not follow in my judgment that Mr McCausland should pay the defendants' costs on this issue. Rather, the correct result is the one for which Mr McCausland contends, that each party should bear its own costs. It would be too harsh an exercise in the costs direction to require Mr McCausland to pay the defendants' costs on an issue in which he achieved some success and where it cannot be said that without Exhibit K he would necessarily have failed. 60Mr McCausland does not contest the facts to which Mr Thompson deposes in his 14 April 2014 affidavit. He accepts that Mr Thompson and the defendants did not get access to Exhibit K until 18 October 2011. But Mr McCausland puts a persuasive submission that Mr McCausland's failure to produce Exhibit K at an earlier time does not disentitle him from a costs order. Despite Mr Durante's concessions in cross-examination after production of the Work, Exhibit K about its resemblance to the production drawings and to the physical fin, the defendants nevertheless continued in their closing submissions to contend that there was no reproduction. There remained, "a very real dispute as to whether the production drawings of the H2-fin and the three dimensional H2 fins in evidence were reproductions" of the Work: second judgment at [27]. Because of this conduct this is not a case where the defendants can say that had the Work been produced in evidence earlier that this issue probably would not have been contested. The defendants did not pull back from this part of the contest once they had access to Exhibit K. The appropriate order in the circumstances is that there will be no order as to costs on the moral rights issue to the intent that each party will bear his or its own costs of the proceedings.

(4) Interest on Costs 61The plaintiffs seek an order for interest on costs. The Court has power to order the interest "is to be paid on an amount payable under an order for the payment of costs": Civil Procedure Act, s 101(4). 62The plaintiffs seek what they described in their written submissions on the issue as "the usual order for interest on costs". This order is in substance the form of order the Court of Appeal made in Leda Pty Ltd v Weerden (No. 2) [2007] NSWCA 283 ("Leda") and in Drummond & Rosen Pty Ltd v Easey (No. 2) [2009] NSWCA 331 ("Easey"). 63The formula developed in the Court of Appeal has the effect of avoiding "the complex and expensive task of a cost assessor calculating interest on individual payments": Ying v Song [2011] NSWSC 618 at [109] per Ward J. The usual order made has the effect that a plaintiff is entitled to interest on the proportion of its costs that it is allowed, being calculated from the day that the underlying costs were in fact paid by a plaintiff. 64The order that the plaintiffs propose for interest on costs is an amalgam of the orders in Leda and Easey. The order sought by the plaintiff is in the following terms: "1. In this order: X - equals the total amount of costs and disbursements which the plaintiffs have paid or are liable to pay to their legal advisers in connection with these proceedings. Y - equals the total amount of costs and disbursements allowed on assessment to the plaintiffs in connection with these proceedings. The 'Allowed Percentage' equals ((Y/X) x 100)%. 2. The first, second, sixth, seventh and eighth defendants to pay to the plaintiffs interest on costs and disbursements, at the rates set out in Schedule 5 of the Uniform Civil Procedure Rules, on the Allowed Percentage of each amount for costs and disbursements actually paid by the plaintiffs, from the date of payment by the plaintiffs of each such amount until the first to occur of: (a) such time as the first, second, sixth, seventh and eighth defendants have paid the costs due to the plaintiffs under any order made in these proceedings; or (b) any further order relating to interest on costs in these proceedings. 3. Grant liberty to apply upon 3 days' notice for any further order pursuant to order 2(b)." 65It should be noted that the terms of the proposed order for interest on costs reflects an amalgam of the orders in Leda Pty Ltd v Weerden (No. 2) [2007] NSWCA 283 at [9] and Drummond and Rosen Pty Ltd v Easey (No. 2) [2009] NSWCA 331 at [55]. 66The defendants oppose an order for interest on costs. The defendants submit that in proceedings which have been as drawn out as these proceedings have been that a party seeking interest on costs must do more than just make the claim. The defendants submit: that interest on costs is not awarded on the same principles as the Court awards interest up to judgment under Civil Procedure Act, s 100, where the purpose of the discretion is to permit a successful party to be properly compensated for the practical loss it has suffered; and, that accordingly, a successful plaintiffs who obtain a money judgment will generally be entitled to an award of interest: Screenco Pty Ltd v R.L. Dew Pty Ltd (2003) 58 NSWLR 720, Bennett v Jones (1977) 2 NSWLR 355 and Ruby v Marsh (1975) 132 CLR 642 and Faulkner v Bourke (1990) 19 NSWLR 574 at 576B. 67The defendants submit that the test under Civil Procedure Act, s 101(4) is different and was aptly described by the Court of Appeal in Illawarra Hotel Co v Walton Construction (No. 2) (2013) 84 NSWLR 436 at 442 [38]: "[38] That submission must be accepted. A party who contends that there should be an order for interest on costs must do more than point to the fact that the proceedings were protracted and that it had to outlay moneys on its own costs over a long period. The reasons for the protracted nature of the proceedings are of obvious relevance. To take a hypothetical example, one can imagine a case in which one party deliberately seeks to prolong proceedings with an eye to some collateral benefit of its own for which it is quite happy to pay the price of being out of the money it progressively outlays for costs. That hypothetical case can be contrasted with another in which a party has made strenuous effort to expedite matters and to avoid all delay with a view to the earliest possible trial but has been frustrated in those efforts by actions of the other party. A middle course is where each party acts with reasonable diligence and dispatch but the nature of the proceedings and their subject matter is such as to prolong them. A court might well take different attitudes to applications for interest on costs in these hypothetical cases." 68The defendants submit that an order for interest on costs modelled on Leda and Easey would not be appropriate in this case particularly because: (1) the McCauslands sought to vacate the IRC hearing and take fresh proceedings in the Supreme Court in the circumstances outlined above, so no interest on costs should now be available to the plaintiffs before the commencement of the Supreme Court proceedings; and (2) the shareholder defendants, Crescent, Macquarie and TMX were not even parties to the IRC proceedings. 69There is some merit in the defendants' arguments against a full award of interest on costs. Although the Court found in the second judgment that it was not unreasonable for the plaintiffs to persist in their proceedings in the IRC once they had started proceedings, that is not to say that the parties should have interest on all the legal costs they expended in the IRC. The plaintiff pursued many procedural dead ends and incurred solicitor client costs on procedural contests of doubtful ultimate importance in achieving the statutory objective, the just quick and cheap resolution. Moreover, as the defendants submit, given that the corporate shareholder defendants were not even parties to the proceedings until after the IRC proceedings were cross-vested into this Court in 2009: it is difficult to see now why these shareholder defendants should have to pay interest on costs the plaintiffs incurred against other defendants in an earlier form of proceedings in an earlier jurisdiction over which they had no procedural control. Moreover, although the plaintiffs' principal affidavits were ultimately used by the Court they were overly lengthy. 70Taking these factors into account and the requirement of fairness in giving some compensation to the plaintiffs for the financial costs they incurred in relation to the payment of their legal costs and further taking into account the need to ensure whatever interest on costs formula is applied does not create an excessive burden for a costs assessor, in my view the plaintiffs should have 50 per cent of the interest which would otherwise arise on the application of the Leda and Easey usual formula. And that formula will be appropriately modified to achieve that effect.

(5) Adjustments to Costs Orders on Account of Success on Some Issues 71The defendants also submit that in respect of the defendants against whom costs orders should be made that this is an appropriate case to recognise some apportionment on account of the defendants success on many of the issues in contest. The defendants pray an aid of their argument the well known principles that where there is a multiplicity of issues and mixed success has been enjoyed by the parties, then the Court may take a pragmatic approach in framing a costs order, taking into consideration the parties' success or lack of it on an issues basis: Mineralogy Pty Ltd v Sino Iron Pty Ltd [2013] NSWSC 546 at [12], Sabah Yazgi v Permanent Custodians (No. 2) [2007] NSWCA 306 at [24]. 72Based on these principles the defendants submit that the issues on which the plaintiffs succeeded against the second, sixth, seventh and eighth defendants (that is SHI Holdings, Crescent, Macquarie and TMX) were narrowly confined and effectively involved the construction of clause 12 of the 2002 Shareholders Agreement, and that the plaintiffs' success on the oppression claims were precisely co-extensive with the findings of breach of contract. In these circumstances the defendants submit that the plaintiffs should receive only 20 per cent of their costs in the Supreme Court, other than the costs attributable to the moral rights claim. 73But the plaintiffs effectively answer this claim in submissions which the Court accepts. 74The Court of Appeal recently re-stated the Court's general approach to the issue of apportionment of costs among issues which a party has been successful and issues where success is absent. In Bostik Australia Pty Ltd v Liddiard (No. 2) [2009] NSWCA 304 at [38] the Court (Beazley, Ipp and Basten JJA) ("Bostik") said: "Where there are multiple issues in a case, the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed." 75The Court can depart from that approach if certain issues are clearly dominant or separable from other issues or if the matters on which the parties are unsuccessful took up a significant part of the trial: Bostik at [38]. But the principle is "unless a particular issue or group of issues is clearly dominant or separable, it would ordinarily be appropriate to award the costs of the proceedings of the successful party without attempting to differentiate those particular issues on which it was successful and those on which it failed: Tomanovic v Global Mortgage Equity Corp Pty Ltd (No. 2) (2011) 288 ALR 385; [2011] NSWCA 256 at [107] (per Campbell JA). Accordingly, "[a] plaintiff who succeeds in proving the core of his or her case will rarely be denied full recovery of costs even if many of the guises in which the case is closed are unsuccessful": Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180 at [120]. It is legitimate for the Court to approach the assessment of success on issues "with a broad brush" rather than as if the issues "were pleader's issues": Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No. 3) (1998) 30 ACSR 20 at 22. That approach is applicable to this case and I see no special reason to depart from it by taking up the defendants invitation to examine the discrete elements of the plaintiffs pleading. 76The Court considered the McCauslands' case by dividing it into four separate baskets representing the claims for relief that they make: (1) the breach of contract claim; (2) the breach of fiduciary duty and oppression claim; (3) the Industrial Relations Act, s 106 claim; and (4) the moral rights claim. The plaintiffs were successful in relation to the contract case, the oppression case and the Industrial Relations Act, s 106 claim to the extent that it dealt with aspects of the plaintiff's employment. The plaintiffs were not wholly successful on all these claims but were awarded substantial damages with the respect to the contract case and with the oppression case. The Court's findings on all of these remedies is found in the "conclusions and orders" section of the primary judgment at [1124] to [1131]. The reader of this judgment is referred back to that section of the principal judgment at this point. 77It is worthwhile to analyse the extent of the plaintiffs success. The plaintiffs were wholly successful in their claim in contract and obtained a substantial verdict. The McCauslands' oppression case was successful because of the defendants' breach of the 2002 Shareholders Agreement. Although the McCauslands' breach of fiduciary duty - confidential information case failed because the relevant duty was owed to SHI Holdings and not to the McCauslands, the Court did not have to decide whether a related aspect of the oppression case - concerning the sale of the shares' undervalue - was made out or not, and was ultimately left undetermined in what was a lengthy judgment that determined many other issues: primary judgment at [716] - [720]. The parties made clear in their final submissions that the Court was not asked to consider every one of the alternative arguments that were advanced by each side. And so aspects of the plaintiff's oppression case must not be assessed as aspects on which the plaintiffs failed but as alternative claims that the Court did not have to determine. 78Mr McCausland's Industrial Relations Act, s 106 case was partially successful. But that success was in important foundational areas that should not be forgotten. There was a very large contest between the parties about whether the Court had jurisdiction to determine Mr McCausland's primary Industrial Relations Act, s 106 case because of the possible inhibition of Industrial Relations Act, s 108A. That jurisdictional question was inseparable from the wider contest about the nature of Mr McCausland's employment contract made in December 2002 in the 13 December 2002 memorandum. 79Although Mr McCausland did not then succeed for a particularly large amount in relation to his employment contract his success involved close analysis of the performance of his contract of employment, which was seamlessly integrated with almost all the other issues which were contested between the parties for the period between the making of his contract of employment in December 2002 and the termination of his employment in late August 2003. Finally, Mr McCausland did not fail in his claim to vary the 2002 Shareholders Agreement using the Industrial Relations Act, s 106 jurisdiction. The Court made clear in the principal judgment that that issue did not have to be decided because the McCauslands had been successful on their breach of contract and oppression claims: principal judgment at [1128]. 80On this analysis the McCauslands achieved a broad measure of success. Against this, the defendants' analysis seems parsimonious. The defendants adopted a somewhat artificial argument in response to this level of success. They put that in substance the foundation of the plaintiffs' success was their construction of clause 12 of the 2002 Shareholders Agreement and that that issue together with associated valuation questions only occupied about 20 per cent of the costs of the proceedings and that they should therefore be compensated commensurately with that level of success. That approach does not give credit, in my judgment, to the real broader view of the plaintiffs' success, and what it took to achieve that success in each of the three baskets of issues on which the plaintiffs were successful. 81The plaintiffs failed on their allegations of breach of fiduciary duty. But those allegations did not occupy much of the Court's time on their own. Moreover, many of the underlying facts relating to those allegations were also relevant to the oppression claim, a part of which the Court did not have to decide because the plaintiffs had already been successful in the principal contract-related way that the oppression claim had been put. The breach of fiduciary duty case does not qualify as "clearly dominant or separable" so as to attract the Court's discretionary approach to awarding costs by particular issues. That is to be contrasted, of course, with the moral rights claim where such an approach is warranted.

Conclusions and Orders 82The Court has considered five costs issues, and reached the following conclusions. The defendants will pay the plaintiff's costs of the IRC proceedings, with the exception of the costs thrown away by reason of the plaintiff's application for the adjournment of the hearing fixed in June 2009, all of which costs the McCauslands will pay on the ordinary basis. The plaintiffs will pay Mr Ford's costs of the proceedings but otherwise the successful defendants will bear their own costs of these proceedings, which should in any event not be separable from the costs of the related unsuccessful corporate defendants. Each party will bear his or its own costs of the moral rights claim. The plaintiffs will have 50 per cent of their interest on their costs, which interest will otherwise be calculated in accordance with the standard interest formula adopted in Leda and Easey. No special allowance will be made for the defendants' success on particular issues, as the plaintiffs were sufficiently successful on the main baskets of issues overall. 83The orders of the Court therefore will be: (1) That the first, second, sixth, seventh and eighth defendants pay the plaintiffs' costs of these proceedings, including the IRC proceedings cross-vested to this Court subject to orders (2), (3), (4) below. (2) Order the plaintiffs pay the fifth defendants' cost of these proceedings to extent that those costs are separable from the other defendants' costs of the proceedings with whom the fifth, defendant was jointly represented. (3) Order that each party bear his, her and its costs of the first plaintiffs' moral rights claim. (4) Order the plaintiff to pay the defendants' costs thrown away by reason of the adjournment of the trial of the IRC proceedings listed before Backman J for two weeks commencing on 22 June 2009, including the costs of all argument on 23 June 2009 and 8 October 2009. (5) The third, fourth, ninth and tenth defendants will bear their own costs of these proceedings. (6)(A) In this order: X - equals the total amount of costs and disbursements which the plaintiffs have paid or are liable to pay to their legal advisers in connection with these proceedings. Y - equals the total amount of costs and disbursements allowed on assessment to the plaintiffs in connection with these proceedings. The 'Allowed Percentage' equals ((Y/X) x 100)%. 6(B) The first, second, sixth, seventh and eighth defendants to pay to the plaintiffs one half of the interest on costs and disbursements, at the rates set out in Practice Note SC (Gen) 16, on the Allowed Percentage of each amount for costs and disbursements actually paid by the plaintiffs, from the date of payment by the plaintiffs of each such amount until the first to occur of: (a) such time as the first, second, sixth, seventh and eighth defendants have paid the costs due to the plaintiffs under any order made in these proceedings; or (b) any further order relating to interest on costs in these proceedings. 6(C) Grant liberty to apply upon 3 days' notice for any further order pursuant to order 6(B)(b)." (7) Liberty to apply in relation to the implementation of these orders. (8) Exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined. (9)(A) In this order: X - equals the amount of costs and disbursements which the defendants, or any of them, have paid or are liable to pay to their legal advisers in connection with the preparation for, appearance at or adjournment of the trial of the IRC proceedings listed before Backman for twoweeks commencing on 22 June 2009, including the costs of all argument on 23 June 2009 and 8 October 2009. Y - equals the total amount of costs and disbursements allowed on assessment to the defendants pursuant to order (4) above. The 'Allowed Percentage' equals ((Y/X) c 100)% (9)(B) The plaintiffs to pay to the defendants interest on costs and disbursements, at the rates applicable from time to time pursuant to Practice Note SC(Gen)16, on the Allowed Percentage of each amount for costs and disbursements identified in the definition of X in (9)(A) above actually paid by the defendants from the date of payment by the defendants of each such amount until the first to occur of: (a) such time as the plaintiffs have paid the costs due to the defendants under order (4) above, whether by agreed set-off or otherwise; or (b) any further order relating to interest on costs pursuant to this order. (9)(C) Grant liberty to apply upon 3 days' notice for any further order pursuant to order (9)(B)(b). (10)(A) In this order: X - equals the amount of costs and disbursements which the fifth defendant paid or is liable to pay to his legal advisers in connection with these proceedings. Y - equals the total amount of costs and disbursements allowed on assessment to the fifth defendant pursuant to order (2) above. The 'Allowed Percentage' equals ((Y/X) c 100)% (10)(B) The plaintiffs to pay to the fifth defendant interest on costs and disbursements at the rates applicable from time to time pursuant to Practice Note SC(Gen)16 on the Allowed Percentage of each amount for costs and disbursements identified in the definition of X in (10)(A) above actually paid on behalf of the fifth defendant from the date of payment of each such amount until the first to occur of: (a) such time as the plaintiffs have paid the costs due to the fifth defendant under order 2 above, whether by agreed set-off or otherwise; or (b) any further order relating to interest on costs pursuant to this order. (10)(C) Grant liberty to apply upon 3 days' notice for any further order pursuant to order (10)(B)(b).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 May 2014