Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd

Plaintiff's submissions on costs

1. In summary, Wollongong Coal submits that the appropriate orders to be made are that: each party bear its own costs of the 30 June 2018 notice of motion (i.e., the application by the second and fourth defendants to set aside the Gokani Subpoena) and the related aspect of the 16 April 2019 notice of motion or, in the alternative, that the costs ought to be the second and fourth defendants' costs in the cause; and, in relation to its 16 April 2019 notice of motion for leave to amend the statement of claim, that costs should follow the event (see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW)) or, in the alternative that there should be an order that these be the plaintiff's costs in the cause.
2. As to the outcome of the subpoena application, Wollongong Coal notes that the subpoena was set aside in part (two categories being set aside and one category upheld). It submits that the categories that were set aside were capable of being read down and notes that leave was granted to Wollongong Coal to issue a more circumscribed subpoena in respect of those categories (see [194] of the principal judgment).
3. Wollongong Coal argues (by reference to the principal judgment at [194]), that were it not for the fact that the hearing of the application occurred after production of the documents by Gokani & Associates, it would have succeeded in upholding the Gokani Subpoena in its entirety, albeit subject to the making of any necessary qualifications or amendments to categories 2 and 3.
4. On that basis, it is submitted by Wollongong Coal that neither party was clearly successful; rather, both sides "enjoyed a measure of success". Wollongong Coal accepts that an order that is often made in such circumstances is that the costs be reserved or that each party bear its own costs. However, in recognition of Wollongong Coal's decision not to press the subpoena that it caused to be issued to the Council (as to which there was also an application for it to be set aside), Wollongong Coal acknowledges that an order reserving costs would not be appropriate insofar as it would leave open the possibility that Wollongong Coal could obtain its costs of the application if it is successful in the final outcome. In those circumstances, Wollongong Coal submits that the appropriate costs order is as identified above.
5. As to the costs of the application for leave to amend, as to which Wollongong Coal seeks its costs, it submits: first, that that it has achieved "overwhelming success" on the amendment application; and, second, that at all times up until the day of the hearing, the second to fourth defendants adopted an unreasonable stance in their opposition to the amendments, which unduly expanded the scope of the contest.
6. As to the first of those submissions, it is said that the majority of the proposed amendments (set out in the further amended statement of claim annexed to the 16 April 2019 notice of motion) were of a minor nature or were otherwise directed to the "tidying up" of the existing pleading and that the second to fourth defendants contested all but a small number of them.
7. Wollongong Coal has calculated that (disregarding deletions and certain amendments that were unopposed, the insertions of headings, and the amendments made at the subparagraph and sub-subparagraph level) there were 103 paragraphs that contained proposed amendments; and that, of these, leave was granted with respect to the amendments in 99 of these 103 paragraphs (the four exceptions being the amendments sought in respect of the proposed [85A], [169B], [172] and [173]).
8. As to the ten categories of objections framed by the second to fourth defendants (addressed between [40] and [77] of the principal judgment), Wollongong Coal contends that it also emerges as the clear successful party, noting that, in relation to the following: 1. the "Ordinary course of business allegation": leave to amend was granted in relation to 1, [35A], [61A], 78, [116A], 145 of the amended statement of claim, subject to the qualification that 78 be reformulated; 2. the "Family/indefinite residence allegation": leave to amend was granted in relation to [42], [69], [72], [75], [94], [119], [142]-[143] and [194]-[195] of the amended statement of claim, subject to the qualification that the words "which would be built to their personal specifications" be removed from [42]; 3. the "Augmentation of First and Second Allotments allegation": leave to amend was granted in relation to [61], [61A], [65], [67], [68], [68A]-[68C], [69]-[70], [72], [74], [75], [77], [77A]-[77B], [79], [81], [83], [89], [89A]-[89C], [95], [97], [104] of the amended statement of claim; 4. the "Gujarat NRE knowing receipt/liability to account allegations": leave to amend was granted in relation to [68A]-[68C], [77A]-[77B], [89A]-[89B], [89C] and [152A]-[152B] of the amended statement of claim; 5. the "Outside core business allegations": leave to amend was granted in relation to 1, [35A], [61A], 78, [116A] and 145 of the amended statement of claim, subject to the aforementioned qualification that 78 be reformulated; 6. the "Purpose to which a reasonable director would have regard" amendments of the amended statement of claim: leave to amend was refused in relation to 145; 7. the issue of "Causation": leave to amend was granted in relation to [168A] of the amended statement of claim, subject to the qualification that the words "and idiosyncratic" be removed; 8. the "Jindal takeover allegation": leave to amend was refused in relation to [169B] of the amened statement of claim; 9. the "Further non-disclosures at 18 June 2013 meeting" amendments: leave to amend was refused in relation to [172] and [173] of the amended statement of claim; and 10. the "Sale of shares at a loss" amendments: leave to amend was granted in relation to [210A] and [218A] of the amended statement of claim.
9. Thus, it is submitted that there was an overwhelmingly successful outcome for Wollongong Coal on its amendment application and, on that basis, costs should follow the event.
10. As to the second of those submissions, it is said that the approach taken by the second to fourth defendants in their opposition to the amendment application was unreasonable and "failed to distinguish between proposed amendments that were inconsequential and those that were genuinely contentious". In that regard, Wollongong Coal points to the following matters.
11. Wollongong Coal notes that, before it filed the notice of motion, its solicitors proposed orders on 18 March 2019 ahead of a directions hearing which contemplated that a draft of the proposed further amended statement of claim would be provided to the second to fourth defendants to enable them the opportunity to consider the amendments and indicate their position. It is said that the purpose of Wollongong Coal proposing those orders was to reach an agreement, if possible, with the second to fourth defendants (and the cross-defendants) as to obtaining leave to amend by consent; and it is noted that those orders were opposed by the second to fourth defendants. It is noted that, at the time that opposition was expressed, the second to fourth defendants had not been given a copy of the draft further amended statement of claim.
12. Counsel for Wollongong Coal then pressed for those orders at a directions hearing before Registrar Walton on 20 March 2019. It is noted that Senior Counsel appearing for the second to fourth defendants informed the Registrar that his clients would be "opposing any amendment" and that it was inappropriate for Wollongong Coal to propose a regime the effect of which would be to forestall the filing of a notice of motion for amendment until 16 April 2019.
13. Wollongong Coal again emphasises that, at the time the second to fourth defendants confirmed that they would be "opposing any amendment", neither they nor their legal representatives had seen the draft further amended statement of claim that ultimately became the subject of the amendment application (or any draft of that pleading); and, hence, (notwithstanding the unqualified nature of the opposition), it could not have been known at that time by the second to fourth defendants (or their legal representatives) to what extent and in what nature Wollongong Coal was proposing to amend its pleading.
14. The orders proposed by Wollongong Coal were not made by Registrar Walton. Instead, the parties were granted leave to approach either the trial judge or me in relation to any case management issues. Wollongong Coal says that it was in that context that it filed its notice of motion (which annexed the draft further amended statement of claim) and sought for the application to be listed before me for directions.
15. A directions hearing occurred before me on 23 April 2019, on which occasion timetabling orders were made for the amendment application. The parties then filed and served evidence and submissions in accordance with those directions. The last of those steps was completed on 17 May 2019, when Wollongong Coal filed its reply submissions, before the hearing of the application on 7 June 2019.
16. Wollongong Coal says that the second to fourth defendants had the opportunity at all times between 16 April 2019 (the date on which they were served with the notice of motion which annexed the draft further amended statement of claim) and 7 June 2019 (the hearing date of the amendment application) to reduce the scope of the contest by refining their position on the amendments they would oppose and those to which they would not object, and to inform Wollongong Coal of this position; but that, with the exception of [20A], [27] and the deletions to the proposed further amended statement of claim, which the second to fourth defendants conceded in their written submissions were "minor", they failed to do so.
17. Wollongong Coal emphasises that the opposition by the second to fourth defendants included opposition to amendments which concerned the first defendant only (notwithstanding that the first defendant has at all times been unrepresented and has not appeared in the proceeding).
18. Wollongong Coal says that, as a result, it bore the costs of preparing for and contesting the application on the understanding that all but a small number of the amendments were opposed; and that those costs had already been incurred by the time that the scope of the debate was narrowed when the second to fourth defendants handed up the list of core objections during oral submissions at the hearing.
19. It is submitted that, had the second to fourth defendants acted reasonably, including by consenting to the orders proposed by Wollongong Coal on 18 March 2019 and by limiting their opposition to those proposed amendments that were genuinely contentious, it is possible that the amendment application might have been avoided altogether (or, at the very least, that it would have led to the application being contested on a narrower basis) and that their failure to do so caused Wollongong Coal to incur unnecessary costs. For that reason, it is said that Wollongong Coal ought to be compensated by an order that the second to fourth defendants pay its costs of the application.
20. Alternatively, Wollongong Coal seeks an order that the costs of the application be the plaintiff's costs in the cause on the basis that this will give due recognition to the matters set out above.

Second to fourth defendants' submissions as to costs

1. The second to fourth defendants argue that the appropriate orders as to costs to be made in respect of the two motions are that: Wollongong Coal should be ordered to pay the second to fourth defendants' costs of the 30 June 2018 (subpoena) notice of motion (and of that part dealing with the subpoenaed documents in the 16 April 2019 notice of motion) and that Wollongong Coal should also pay the second to fourth defendants' costs of the 16 April 2019 amendment motion (notwithstanding its limited success on that application) or, in the alternative, that the costs of the amendment motion should be the second to fourth defendants' costs in the cause.
2. As to the subpoena motion, the basis on which the second to fourth defendants argue that Wollongong Coal should be ordered to pay the second to fourth defendants' costs is that Wollongong Coal (unsuccessfully) sought to defend both subpoenas the subject of that application (i.e., the subpoena to the Council and the Gokani Subpoena) and to gain access to the documents produced.
3. In relation to the subpoena to the Council, it is said that it was only at the hearing on 7 June 2019 that Wollongong Coal announced that it no longer sought access to the documents produced by the Council (see T 2.44-49). The second to fourth defendants say that that subpoena was clearly untenable for the reasons articulated in the second to fourth defendants' submissions dated 10 May 2019 (at [35]-[38]).
4. In relation to the Gokani Subpoena, it is noted that two of the three paragraphs of the Schedule were ultimately set aside (see [194] and [196] of the principal judgment).
5. In those circumstances, while they accept that they have not enjoyed complete success, the second to fourth defendants say that they have experienced substantial success sufficient to warrant a costs order in their favour (referring by way of analogy to: Carberry v Drice as Rep of Brisbane Junior Rugby Union (An Unincorporated Body) (No 2) [2011] QSC 19 at [5] per Wilson J; Austress Freyssinet v Kowalski [2007] NSWSC 1105 at [35] per Austin J; Ahmed v Harbour Radio Pty Ltd (2009) 180 FCR 313; [2009] FCA 1113 at [86] per Foster J). It is argued that they have been the successful party on this notice of motion by reason of Wollongong Coal's capitulation in respect of the subpoena to the Council and the orders setting aside two of the three paragraphs of the Gokani Subpoena and, hence, Wollongong Coal should be ordered to pay the second to fourth defendants' costs of the subpoena motion.
6. As to the amendment application, the second to fourth defendants note that, while Wollongong Coal was granted leave to amend (including amendments that the second to fourth defendants had not opposed - see [38] of the principal judgment), it was also refused leave to insert a significant number of substantive amendments (see 199 of the principal judgment).
7. The second to fourth defendants say that, in these circumstances, it cannot be said that the second to fourth defendants unreasonably opposed leave being granted and, as such, the usual rule should be followed, namely, Wollongong Coal should pay the second to fourth defendants' costs of the motion (notwithstanding its limited success over objection by the second to fourth defendants) (reference there being made to Amalgamated Television Services v Marsden [1999] NSWCA 319 at [5] per Mason P, Meagher and Handley JJA; Butterfield Services Pty Ltd v Bentley [2013] NSWSC 1217 at [70] per Button J (with the present case said to be distinguishable from the facts of that case given the success enjoyed by the second to fourth defendants); Harris v Harris [2013] NSWSC 1261 at [41] per Kunc J; Mauger v Wingecarribee Shire Council [2013] NSWSC 1587 at [2] and [34] per Button J; Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 5) [2012] FCA 112 at [7] per Jagot J).
8. It is submitted that this conclusion is reinforced by the "substantive indulgence" that has been afforded to Wollongong Coal to permit it to amend its pleadings (complaint here being made as to Wollongong Coal's failure to explain satisfactorily the delay in bringing its application).
9. In the alternative, it is submitted that the costs should be in the second to fourth defendants' cause (referring by way of example to Crawley v Vero Insurance Ltd (No 2) [2012] NSWSC 1053 at [26] per Beech-Jones J; Investec Bank (Australia) Ltd v Burge (No 3) [2012] NSWSC 7 at [10] per Black J).

Determination as to costs

1. As to the respective applications in relation to the subpoenas issued by Wollongong Coal (the second to fourth defendants' notice of motion filed 30 June 2018 and that part of Wollongong Coal's notice of motion filed 16 April 2019 that deals with the issue of access to the subpoena documents), I consider that Wollongong Coal should pay the second to fourth defendants' costs. In substance I consider that the second to fourth defendants were successful in their complaints as to the Gokani Subpoena (albeit that I accepted that there was a legitimate forensic purpose in relation to one of the three categories of documents sought under that subpoena).
2. The fact that the Gokani Subpoena was not set aside in its entirety was a function of my concern to ensure the just, quick and cheap resolution of the real issues in dispute and to minimise ongoing disputes as to the one category of documents for which I considered the subpoena to have a legitimate forensic purpose. However, that does not, in my opinion, gainsay the fact that the second to fourth defendants were in substance successful in their application.
3. As to the amendment application, this is more finely balanced. It is certainly the case that up until the hearing of the application the second to fourth defendants had adopted a blanket opposition to any proposed amendment to the pleading (and even at the hearing of the application were only prepared to concede very minor amendments) but it is also the case that Wollongong Coal did not succeed in obtaining leave for all of the amendments that it had sought to make.
4. Relevant in this context is the fact that, in the circumstances explained in the principal judgment, it was necessary for Wollongong Coal on its application for leave for any further amendments to its pleading to establish that there were special circumstances to warrant leave being granted. Had the amendments been limited to "tidying up" amendments then I would have accepted that a blanket refusal to entertain any such amendments would have been unreasonable (and would have been inconsistent with the acceptance by Senior Counsel for the second to fourth defendants when the first hearing of this matter was vacated last year that housekeeping type amendments would be permissible). However, the amendments went far beyond tidying up of the pleading (as explained in the principal judgment) and the fact that there was (in the end unsuccessful) opposition to the amendments relating to the first defendant was not in my view unreasonable (in that there was a cogent reason put forward for such opposition, albeit that I did not accept that the prejudice there identified was likely).
5. The significant factor in my opinion is that, once any of the amendments went beyond a tidying up of the pleading, special circumstances were required to be shown for leave to amend to be granted. Hence, a hearing to determine that issue would have been required in any event (notwithstanding that some of the amendments were of a tidying up nature). Moreover, the grant of leave to amend in relation to some of the more substantive amendments (such as the claims against the first defendant) reflected a degree of latitude on my part.
6. In the circumstances, I consider that Wollongong Coal should be required to pay the second to fourth defendants' costs of the amendment application as well. I accept that there was mixed success but I do not consider it appropriate to apportion costs on a quantitative basis as between the various amendments that were permitted and those that were not. Broadly speaking, the second to fourth defendants were successful in resisting a number of significant amendments that would have expanded the claims made against them. It was made clear before the trial judge when the hearing dates were vacated that the concern of the second to fourth defendants, relevantly, was that the plaintiff not obtain a forensic advantage from the adjournment of the hearing. Opposition to proposed amendments that were perceived to have that effect was not unreasonable. In my opinion, the second to fourth defendants were, thus, relevantly successful in the overall outcome of the amendment application and should have their costs.

Access to documents already produced

1. Responding to the leave given for any submissions arising from O 6 of the orders made on 21 June 2019, Wollongong Coal notes that it has not had the benefit of inspecting the documents produced by Gokani & Associates under the subpoena issued to Gokani Subpoena.
2. The second to fourth defendants have confirmed in their submissions that they have accessed the documents produced on subpoena by Gokani & Associates. They have divided the documents produced on subpoena into those responsive to par 1 of the Schedule to the Gokani Subpoena (packet S7-14/175645) and those not so responsive (packet S6-14/175645). The second to fourth defendants accept that Wollongong Coal is to have access to packet S7-14/175645. They submit that the documents in packet S6-14/175645 should be returned to Gokani & Associates in accordance with the orders that were made on 21 June 2019.
3. In this regard, subject to one qualification, Wollongong Coal is content with that process and seeks an order that it be granted access to the documents which are contained in the packet that is referrable to category 1 of the Gokani Subpoena.
4. The qualification is that Wollongong Coal has assumed that any document which answers multiple categories of the Gokani Subpoena, where one of those categories is category 1, has been included in the category 1 document packet. Wollongong Coal says that if that assumption is incorrect, and to the extent that this has not occurred, then the preferable course would be for orders to be made which facilitate the following steps: 1. the legal representatives of Wollongong Coal and the second to fourth defendants carry out a joint inspection of the documents produced under the Gokani Subpoena for the purposes of agreeing which of the documents properly fall within category 1 of the Gokani Subpoena and which of them do not; 2. to the extent that agreement is unable to be reached, an independent solicitor be appointed, at the expense of both parties, to inspect the documents the subject of the disagreement and to make a determination as to whether the documents answer or do not answer category 1 of the Gokani Subpoena, whose determination would bind the parties.

Determination as to access to documents already produced

1. It is not clear to me from the written submissions what the position of the second to fourth defendants is in relation to the above qualification. The procedure suggested by the solicitors for Wollongong Coal seems to me not to be unreasonable. Accordingly, I will make orders to encompass such a procedure and if there is any difficulty in the implementation of those orders the parties will have liberty to apply.

Orders

1. For the reasons set out above I make the following orders: 1. Order the plaintiff to pay the second to fourth defendants' costs of the second and fourth defendants' notice of motion filed 30 June 2018. 2. Order the plaintiff to pay the second to fourth defendants' costs of the plaintiff's notice of motion filed 16 April 2019. 3. Grant leave for the plaintiff to have access to documents produced by Gokani & Associates in response to par 1 of the Schedule to the Gokani Subpoena (and contained in packet S7-14/175645). 4. Direct the solicitors for the second to fourth defendants to notify the plaintiff by close of business on 12 July 2019 as to whether all documents (assuming there be any) falling within both par 1 of the Schedule to the Gokani Subpoena and another one or more paragraphs of the said Schedule have been included in packet S7-14/175645. 5. If all documents (assuming there be any) falling within both par 1 of the Schedule to the Gokani Subpoena and another one or more paragraphs of the said Schedule have not been included in packet S7-14/175645, then direct the legal representatives of the plaintiff and the second to fourth defendants on or before 19 July 2019 to carry out a joint inspection of the documents contained in packet S6-14/175645 in order to determine which, if any, documents contained in packet S6-14/175645 properly fall within par 1 of the Schedule to the Gokani Subpoena. 6. If there is any dispute as to whether or not any documents contained in packet S6-14/175645 properly fall within par 1 of the Schedule to the Gokani Subpoena and/or whether the plaintiff (as opposed to the plaintiff's legal representatives) should be permitted to have access to any document(s) contained in packet S6-14/175645 but properly also falling within par 1 of the Schedule to the Gokani Subpoena, direct the parties to notify my Associate on or before 10am on 22 July 2019 and the matter will be relisted for directions at 9am on 23 July 2019. 7. Liberty to apply on 48 hours' notice if there is any difficulty in the implementation of Orders 4-6 above.

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: 10 July 2019