Winspear v Mackinnon

REASONS FOR JUDGMENT 1 On 24 December 2007, the Court published its judgment on the plaintiff's application and the defendants' cross claim in these proceedings. The Court did not make any substantive orders in that judgment. It required the parties to file and serve minutes of orders which they contended should be made to give effect to the reasons for judgment. 2 On 25 January 2008, the Court made orders directing the third and fourth defendants to correct their register of members in respect of certain shareholdings of the plaintiff. Those defendants were also required to lodge notices of correction of their registers of members with the Australian Securities and Investments Commission. 3 One of the issues left unresolved, as at 25 January 2008, was the question of costs. The plaintiff seeks the payment of her costs on an indemnity basis. Counsel for the plaintiff refers to evidence given in the trial which confirmed that the plaintiff had an extremely strong case for the relief she sought from the Court. 4 The defendants resist the plaintiff's claim for indemnity costs. They contend, correctly, that the usual course is that costs are payable on a party and party basis, unless the circumstances of the case warrant a departure from that normal course; see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233, per Sheppard J and Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 1844 at [3] and [17], per Gray J. 5 The categories of cases in which indemnity costs may be granted are not closed. The overriding consideration is the justice of the particular case. This includes the recognition that there are circumstances which justify the order of indemnity costs, including when a party unreasonably causes another party to incur costs; see Colgate-Palmolive at 233 and Leahy Petroleum at [17]. 6 Counsel for the defendants submit that, although his clients did not succeed in the substantive proceedings, it could not be said that they had no chance of success. He contends that the determination of the proceedings depended on the resolution of disputed facts. There is much force in that submission. The merits of the competing claims in the litigation did not crystallise until the conclusion of the evidence in the proceeding. The evidence took three days of hearing time to complete. The Court held a directions hearing on the fourth day and subsequently another day of hearing was programmed for the hearing of final submissions. Those submissions were made on 28 November 2007. 7 After the conclusion of the evidence in the proceedings it should have been apparent to any close observer of the case that, on that evidence, the defendants were unable to resist the plaintiff's claims and unable to succeed on their cross claim. The defendants put the plaintiff to unnecessary additional expense by continuing to resist the plaintiff's claims and advance their cross claim by way of submissions. On the conclusion of the evidence it would have been plain to any knowledgeable observer that the defendants' position was wholly untenable. 8 After the conclusion of the evidence, the defendants persisted "in what should on proper consideration be seen to be a hopeless case": see J Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, West Australia Branch (No 2) (1993) 46 IR 301 at 303 per French J. This is particularly so when they had about two weeks to reflect on their position before coming to Court on the final day of the hearing to present their submissions. In those circumstances, I consider that the plaintiff should have her costs with respect to the hearing on 28 November 2007 paid on an indemnity basis. Indeed, ultimately, counsel for the defendants did not oppose that course. There is no reason to depart from the usual order that costs follow the event in respect of the balance of the proceedings. 9 The remaining issue requiring resolution is which of the defendants should pay the plaintiff's costs. The plaintiff contends that it should be the first and second defendants. The defendants submit that it should be the first defendant only. I agree with the later submission. The first defendant was the key decision maker for the defendants. The second defendant is an elderly lady and her actions as a director of the third and fourth defendants were influenced by the first defendant. The evidence bears out that he decided, without reference to the second defendant, to deny the plaintiff her correct entitlement to shares in the third and fourth defendants. 10 As each party has had some degree of success in the matters requiring resolution today, no order will be made concerning the costs of today's hearing. 11 The remaining issue dealt with by draft orders 7 and 8 of the plaintiff's proposed minutes filed on 18 January 2008, which deal with the proposed winding up of the third and fourth defendants, is adjourned to a telephone directions hearing at 9.30 am on 26 March 2008. That date can be brought forward, or put back if necessary, by agreement of the parties on 3 days notice to each other party.