Snowside Pty Ltd as trustee for the Snowside Trust v Boart Longyear Ltd

JUDGMENT of THE COURT delivered by LEEMING JA: This application for leave to appeal relates to part of the costs incurred by the applicants, who were shareholders of the respondent and potential creditors if they were successful in pending oppression proceedings, in opposing two interdependent creditors’ schemes of arrangement.

Following an exchange of written submissions, the primary judge determined the question of costs on the papers: In the matter of Boart Longyear Ltd (No 3) [2017] NSWSC 1227. Favourably to the applicants, his Honour ordered that they be paid their costs of attending the hearings on 4-5, 13-14 and 27 July 2017 as well as the costs of preparing for and attendance at the hearings of 9 and 14 August 2017. Adversely to the applicants, the primary judge declined to order that they have their costs for preparing for the July hearings, a significant (indeed, probably the most significant) component of which was the obtaining of a suite of expert reports.

The applicants were not parties, nor were they bound by the proposed schemes, but were permitted to be heard in the scheme proceedings under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW). The procedural history was described by the primary judge at [2]-[3]:

The primary judge carefully summarised the background and the competing submissions on the exercise of the costs discretion. Dispositively of the question of the costs of preparation were his Honour’s reasons at [25]-[28]:

There are two proposed grounds of appeal. The first is that there was error in basing the decision on a finding of a substantial overlap between the applicants’ expert evidence and that of First Pacific LLC, without considering whether the applicants knew or should have known that there was such overlap. This ground resembles the basis upon which the applicants applied to reopen the earlier judgment, which application was refused: In the matter of Boart Longyear Ltd (No 4) [2017] NSWSC 1357. The dispositive paragraphs are [26]-[28]:

It has not been submitted that any of that reasoning is inaccurate. It follows that this is not a proposed ground of appeal which warrants a grant of leave. It is not disputed that the point now sought to be raised was not a matter which had been raised before the primary judge at first instance. The challenge is to the exercise of discretion as to costs. The applicants need to establish House v The King error. When a court has been asked to exercise a discretion, it will ordinarily be incumbent on a party contending on appeal that the discretion miscarried to demonstrate that the judge’s attention was drawn to the particular matter of which complaint was made: Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66; [2008] HCA 42 at [120]; Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission [2016] NSWCA 298; 116 ACSR 473 at [51] and [56] (coincidentally, the latter decision also involved a challenge to a costs discretion). No basis for a grant of leave has been made out.

The second proposed ground of appeal is that the Court erred in excluding the applicants’ preparation costs, rather than excluding the portion of preparation costs relating to the overlapping expert evidence. What the applicants seek is an order for their actual costs of preparation, less the costs of obtaining the expert reports, or alternatively, less a percentage reflecting the proportion of the preparation costs relating to the overlapping portions of the expert reports.

The starting point is that, as the primary judge noted, there is no presumptive entitlement to costs: Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681 at [20]. That is an aspect of a grant of leave under r 2.13, with a concomitantly limited exposure to an adverse costs order.

Secondly, the unchallenged finding of the primary judge is that the steps taken by the applicants prior to hearing “would largely have related to the preparation of [the expert evidence] and of submissions about it”.

Thirdly, it is well settled that a broad-brush approach should be taken to questions of costs. That approach was taken by the primary judge, who considered making orders which delineated the different categories of costs more precisely, but declined to do so on the basis that it might “likely give rise to significant complexities, delays and costs in an assessment”. Indeed, the draft notice of appeal in this Court contemplates a remittal to determine the percentage of the overlap between the reports that were supplied.

There being no question of principle, or of public importance, and the subject matter being costs, the onus lies on the applicants to make out a clear case of injustice. No such case has been made out.

The application for leave to appeal should be dismissed, with costs.