In the matter of 1derful Pty Limited (No 2)

On 8 November 2024, I delivered judgment (Re 1derful Pty Ltd [2024] NSWSC 1414 (“Primary Judgment”)) in a claim brought by the Plaintiffs against Fletch Capital Pty Ltd (“Fletch”) and others. In summary, I found that the Third and Fourth Plaintiffs (“1derful Companies”) established a claim for breach of fiduciary duty against the Second Defendant, Mr Seymour, and that Fletch was knowingly involved in that breach; they had established statutory unconscionability claims against the Second and Third Defendants, Mr Seymour and Mr Birch; they had established a contravention of s 420A of the Corporations Act 2001 (Cth) (“Corporations Act”) against Fletch; and they had also established a claim in conspiracy against Fletch.

I observed (Primary Judgment [193]) that:

As I noted above, I found (Primary Judgment [242]) that Mr Seymour’s conduct constituted a breach of fiduciary duty which was dishonest in the relevant sense and that Fletch knowingly assisted with that breach. I also found (at Primary Judgment [319]) that, subject to allowing a further opportunity for the Fourth Defendant, Mr Ball, to be heard, an order would likely be made setting aside his appointment by Fletch as receiver to 1derful’s assets.

I also observed (Primary Judgment [324]-[325]) that:

I also observed (Primary Judgment [331]) that:

I also made directions as to submissions (including to any election between remedies, any consequential steps and exemplary damages), the time for which was subsequently extended by consent of the parties.

The Plaintiffs seek several declarations as to the findings that I reached in the Primary Judgment. With one exception, I should not make these declarations for several reasons. Generally, the Court should not make a declaration, even if it has jurisdiction to do so, unless it is satisfied that the declaration sought is appropriate and that it has sufficient practical utility; or where that declaration would merely be prefatory to other relief: Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; [1974] HCA 18; Attorney-General (NSW) (Ex rel Corporate Affairs Commission) v Australian Softwood Forests Pty Ltd [1979] 2 NSWLR 73 at 76; E & J Gallo Winery v Lion Nathan Australia Pty Ltd (No 2) [2009] FCAFC 47; JR Consulting & Drafting Pty Ltd v Cummings [2014] NSWSC 1700 at [11]; Lukaszewicz v Polish Club Ltd [2019] NSWSC 595 at [12]; PW Young, C Croft and ML Smith, On Equity (Lawbook Co, 2009) at 1084.

The Plaintiffs’ proposed orders 1-2 relate to findings of breach of fiduciary duty on the part of Mr Seymour and knowing concern on the part of Fletch. Mr Seymour and Fletch did not oppose those declarations. I will not make them although they are not opposed, both for the general reason noted above, and because the proposed declarations do not identify the conduct that amounted to the breach with any specificity and also would not have any utility for that reason.

The Plaintiffs’ proposed order 3 is a declaration that Fletch holds on trust the whole of the business transferred to it under the Business Sale Agreement (“BSA”). I observed (Primary Judgment [246]) that:

Mr Seymour and Fletch accepted, in their proposed draft orders, that this order should be made. I will make that order where it is consistent with my findings in the Primary Judgment, has operative effect between the parties and is not opposed.

The Plaintiffs’ proposed order 4 is a declaration relating to a contravention of s 420A of the Corporations Act and, broadly, to conduct in bad faith on the part of Fletch. The draft orders proposed by Fletch and Mr Seymour limited that order to a declaration of contravention of s 420A of the Corporations Act. I will not make this order, both for the general reason noted above and because the proposed declaration does not identify the conduct that amounted to the breach with any specificity and also would not have any utility for that reason.

The Plaintiffs’ proposed order 5 is that:

Mr Seymour and Fletch submit that this declaration is unnecessary where it is prefatory to the relief and damages sought by the Plaintiffs. They also submit and I accept that this declaration does not correctly record my findings and could not be made, where I did not find that Mr Seymour and Mr Birch breached both s 12CB of the Australian Securities & Investments Commission Act (“ASIC Act”) and s 21 of the Australian Consumer Law (“ACL”), but rather that they breached one or other of those sections and that it was not necessary to decide which of them. Mr Birch also submits that:

The Plaintiffs’ proposed order 6 is that:

Mr Seymour and Fletch also submit that this declaration is not appropriate, where I did not find unconscionable conduct under the general law. That submission highlights the uncertainty as to whether this declaration refers to statutory or general law unconscionability. I would not make that declaration by reason of that ambiguity, and because it also does not identify the conduct referred to with any specificity and also would also not have any utility for that reason.

The Plaintiffs’ proposed order 7 is that:

Fletch and Mr Seymour submit and I accept that this declaration should not be made where it is prefatory to relief by way of damages and only Fletch was found liable in conspiracy. Mr Birch similarly points out that I held (Primary Judgment [315]) that the Plaintiffs did not have an actionable claim for conspiracy against him and that the declaration sought could therefore not be made against him. He also submits that, since the claim in conspiracy was not available against him, I did not make the necessary factual findings to support a claim for conspiracy. It is not necessary to decide that matter. He submits that any claim in conspiracy is prefatory to the claim for damages and other related relief and any declaration in this regard would serve no practical utility and that provides a further reason why no declaration should be made. I accept that submission. I will not make that declaration for these reasons.

The Plaintiffs also submit that:

It seems to me that there is no need for declaratory relief to achieve that result which, to the extent that it is properly available, arises from any res judicata or estoppel which arises from the findings that I have reached in the Primary Judgment, and operates at a level of specificity that is not reflected in the declarations sought by the Plaintiffs, other than the single declaration that I will make.

The Plaintiffs seek an order that the BSA between 1derful and Fletch is “void” (although it may properly be voidable) and is set aside. I observed (Primary Judgment [289], [291]) that:

The Plaintiffs address the question of election and seek an order to set aside the BSA with the practical effect that the 1derful Companies’ business is returned to them under s 12GD of the ASIC Act (or, I interpolate, the corresponding provisions in s 243 of the ACL) and that the shares be returned to the 1derful Companies. Fletch and Mr Seymour accept that this relief gives effect to the Plaintiffs’ election to seek the return of the business, and it is consistent with my finding that relief is available under s 12GM of the ASIC Act or s 243 of the ACL declaring the BSA to be void. I will make the order sought.

The Plaintiffs also seek orders that APL Lending Pty Ltd (“APL Lending”) (formerly known as 1derful Lending Pty Ltd) be joined as the Fifth Defendant to the proceedings and that Fletch and Mr Seymour do all things necessary to transfer the shares in APL Lending to 1derful. I observed (Primary Judgment [301]) that:

Fletch and Mr Seymour accept that this proposed order is consistent with the course approved in the Primary Judgment at [301]. They also submit that:

I accept the Plaintiffs’ submission that that order can be effected by an in personam order against Fletch, and there is no need to join APL Lending as party to the proceedings where an order is no longer sought to transfer the credit licence as distinct from the shares in APL Lending. I will make the order sought that Fletch and Mr Seymour do all things necessary to transfer the shares in APL Lending to 1derful.

I observed (at Primary Judgment [302]) that:

The Plaintiffs proposed orders 11-12 would permanently restrain Fletch, Mr Seymour and Mr Birch from using or transferring any proprietary code developed for or by the 1derful Companies and require that they destroy and provide an affidavit establishing the destruction of such code.

Fletch and Mr Seymour submit that:

Mr Birch also submits that:

In the course of submissions as to orders, I sought submissions as to whether an alternative form of order should be made which did not use the term “proprietary code”. The Plaintiffs did not fully adopt that possibility, and instead advanced a claim that had not previously been raised, that the Defendants should include in an affidavit the identity of any person or entity to which the code or software has been provided, whether a party to these proceedings or not. The Plaintiffs had not sought such an order in the pleadings or in the orders that they originally proposed and it seems to me too late to do so in submissions in reply as to orders, when the other parties will have no opportunity to respond to that proposition. The Defendants did not respond to my request for submissions as to that matter. In these circumstances, I should not make an alternative order that the Plaintiffs did not seek, but simply determine whether or not to make the orders that the Plaintiffs had sought in chief.

I am satisfied that the term “proprietary code” is well understood in the industry which was the subject of these proceedings; whether code falls within that concept and was developed by the 1derful Companies is capable of objective determination; and Fletch, Mr Seymour and Mr Birch will have no difficulty in identifying the proprietary code developed for or by the 1derful Companies which is in their possession. There can be no sensible suggestion that, for example, they would have difficulty in complying with this order because they did not know what proprietary code they obtained from the 1derful Companies, where there is no suggestion that any of them had developed such code for themselves; or that they should be entitled to retain that code which they acquired by the misconduct set out in my Primary Judgment, as against the 1derful Companies, even if others have also developed similar code. I will make the orders in chief sought by the Plaintiffs in this regard, including a date for compliance, but not expand them to include additional actions which the Defendants have had no opportunity to address.

As I noted above, I found (Primary Judgment [319]) that:

The Plaintiffs seek an order that the appointment of the Fourth Defendant, Mr Ball, as receiver was void. It is not necessary to decide whether that appointment was void or was voidable, but it should now be set aside ab initio for the reasons noted below.

Fletch and Mr Seymour accept that the order for the discharge of Mr Ball as receiver can properly be made. Mr Ball, who was not required to take an active role at the hearing, made written submissions as to whether he should be removed as receiver. He pointed out, and I accept, that he was appointed as receiver over the assets of the 1derful Companies by Fletch and I recognise that the Court had no occasion to reach findings that were either favourable or adverse to him in the Primary Judgment. Mr Ball submits that:

In submissions in reply, the Plaintiffs respond that an order should be made that the appointment of Mr Ball was void and invalid ab initio, given the findings that I had reached concerning the circumstances of Fletch’s appointment of Mr Ball as receiver. The Plaintiffs also submit that an order that operated only from the point of judgment would conflict with my findings as to the circumstances in which Fletch appointed Mr Ball as receiver.

I do not accept that an order removing Mr Ball as receiver should only be made prospectively, from the date of judgment, where that would entrench Fletch’s wrongdoing in respect of the appointment of the receiver by allowing Mr Ball to seek his remuneration and costs against the 1derful Companies, the victims of the wrongdoing, rather than against Mr Seymour or Fletch who appointed him as receiver. The basis for any appointment of Mr Ball as receiver by Fletch is also now undermined, ab initio, by the declaration that I have made, without opposition, that Fletch held the business on trust for the 1derful Companies when that appointment was made. It is not necessary for the Plaintiffs to rely on s 418A of the Corporations Act in order to remove Mr Ball as a receiver on that basis; where the Court has power to make appropriate orders consequent on the contraventions of the ASIC Act or ACL by Mr Seymour; and where Mr Ball did not lead evidence in respect of orders to support any claim that power should not be exercised. There is also no evidentiary basis for the Court to make orders only with future effect, so as to immunise Mr Ball, in advance, from any claims against him. His conduct was not the subject of positive or adverse findings in the proceedings and he may be properly left to defend any such claim on its merits, or to seek relief from liability in it if he can establish the evidentiary basis for such relief. I will therefore order that the appointment of Mr Ball as receiver to the assets of the 1derful Companies be set aside ab initio.

I observed (Primary Judgment [298], [322]-[325]) that:

I also observed (Primary Judgment [328]) that:

The Plaintiffs now seek an order that each of the Defendants pay, and are jointly and severally liable to pay, damages in the amount of $2 million “without set-off or reduction of any sum of money whatsoever” and interest on that amount under s 100 of the Civil Procedure Act 2005 (NSW) (“CPA”) from 3 October 2023.

The amount claimed by the Plaintiffs by way of compensatory damages is consistent with the findings which I reached, where I found the business which was returned to them would have lost its value. The Plaintiffs also submitted that they have incurred loss and damage by virtue of accrued interest and fees on the Mastercard Agreement during the period from 3 October 2023 to date. I should not entertain that submission where no submissions were made to establish loss on that basis at the hearing. In any event, the orders proposed by the Plaintiffs did not address such a further claim.

Fletch and Mr Seymour respond that:

Mr Birch submits that:

As I noted above, the Plaintiffs also seek an order that damages be paid in the specified amount “without set-off or reduction of any sum of money whatsoever”. They submit that the Defendants could only rely on an equitable set-off to reduce the damages that are awarded to the 1derful Companies, and that any complaint that Fletch has paid for the security it acquired from PIL should be disregarded, because it did so acting unconscionably and in bad faith. They submit, at length, that Fletch, Mr Seymour and Mr Birch acted improperly and that:

I cannot accept the Plaintiffs’ submission or make the order sought to exclude set-off, for several reasons. First, the Plaintiffs’ submission mischaracterises the issue, which is not whether Fletch can set-off the purchase price it paid to acquire the debt from PIL against a judgment in the 1derful Companies’ favour, but (as I observed at Primary Judgment [328]) whether it can set off the debt that it acquired and, possibly, interest on it. Second, it is not apparent that there would be any unconscionability in Fletch recovering at least the principal of the loan made by PIL and any accrued interest to the point it acquired it where, irrespective of any amount that Fletch paid to acquire the loan, it now has the benefit of that loan; there was no allegation of impropriety as to the circumstances in which PIL made that loan to the 1derful Companies; and the 1derful Companies have had the use of the money that was lent to them. Third, the Plaintiffs have not established the premise of their submission that the only basis for set-off is equitable set-off. It is obviously possible that Fletch will not be able to meet a judgment of the amount awarded against it in these proceedings and will ultimately be placed in liquidation and the Plaintiffs did not address any potential application of statutory set-off under s 553C of the Corporations Act in that situation. I should not make an order which may be inconsistent with that statutory provision.

In submissions in reply, the Plaintiffs advance a further submission that no order should presently be made setting off the debt owed by the 1derful Companies to Fletch against the damages awarded to the 1derful Companies, for several reasons overlapping with their submissions in chief. It is not necessary to address that submission in reply where Fletch does not submit such a set-off should presently be made and Mr Birch, who addresses that question briefly and in general terms, had no interest in that question for the reasons that I have addressed above.

I will therefore make an order for damages consistent with the findings that I reached in the Primary Judgment. Neither the Plaintiffs nor Fletch submitted that any set-off of the amount of debt owed by 1derful to Fletch against the amount of the damages awarded to 1derful against Fletch should be implemented by the orders which I make. I will therefore not reflect any such set-off in the orders, and no basis for set-off was shown in respect of the damages ordered against Mr Seymour or Mr Birch. The order proposed by Fletch and Mr Seymour is appropriate for that purpose, with the addition of a reference to the fact that Fletch, Mr Seymour and Mr Birch are jointly and severally liable for that amount.

I observed (at Primary Judgment [327]) that:

The Plaintiffs seek an order for exemplary damages against each of Fletch, Mr Seymour and Mr Birch, which they contend should be quantified in the amount of $2 million. Generally, exemplary damages are intended to punish a defendant for the behaviour that gave rise to a tort and may be awarded in circumstances involving a deliberate, intentional or reckless disregard for a plaintiff and its interests, or a contumelious disregard of a plaintiff’s rights, where compensatory damages are insufficient to punish, deter or indicate the Court's disapproval of the defendant's conduct: Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 149; Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 ("Digital Pulse") at [254]; State of NSW v Ibbett (2006) 229 CLR 638; [2006] HCA 57.

In response to the claim for exemplary damages against it, Fletch submits that:

I am satisfied that an order for exemplary damages should be made against Fletch to record the Court's condemnation of its conduct, which I have summarised in dealing with the claim for conspiracy against it in the Primary Judgment. In particular, I found in the Primary Judgment that Fletch’s conduct, in combination with Mr Seymour, took advantage of the 1derful Companies' financial vulnerability and their commercial relationship with Mr Seymour, was calculated to and did cause substantial loss to the 1derful Companies, their other creditors (including FIFO Capital) and shareholders and Mr Bunbury, and Fletch was indifferent to those consequences in seeking to enrich itself at the 1derful Companies’ (and FIFO Capital's and other creditors’) expense. These matters warrant an order for substantial exemplary damages, and I will return to the question of quantum below.

The Plaintiffs also submit that exemplary damages should be ordered against Messrs Seymour and Birch, given the conduct which I found in my judgment, although I did not find that they were liable in conspiracy, where the Plaintiffs had separate actionable claims for statutory contraventions under s 12CB of the ASIC Act or s 21 of the ACL. They rely on Gray v Motor Accident Commission (1998) 196 CLR 1 to contend that exemplary damages are available in cases where a defendant’s conduct involves conscious wrongdoing, but I do not understand that case to stand for the proposition that exemplary damages are available irrespective of the cause of action that founds the claim for damages. The Plaintiffs also submit that:

The Plaintiffs draw attention to no authority that supports an order for exemplary damages in respect of a breach of fiduciary duty by Mr Seymour or contravention of s 12CB of the ASIC Act or s 21 of the ACL by Mr Seymour and Mr Birch.

Mr Seymour responds that:

Mr Birch points out that I held that, although the claim based upon statutory unconscionability succeeded against him, the claim for breach of fiduciary duty failed since he did not owe a fiduciary duty to the Plaintiffs (Primary Judgment [238]) and the claim in conspiracy also failed against him (Primary Judgment [315]). Mr Birch also submits and I accept that exemplary or punitive damages are not available for breach of the statutory unconscionability provisions or for breaches of fiduciary duty. He submits that no exemplary damages can therefore be awarded against him and rightly recognises that I implicitly made this finding (at Primary Judgment [327]) in observing that exemplary damages might be awarded against Fletch.

In submissions in reply as to orders, the Plaintiffs refer to Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2022] NSWSC 937, which I addressed in the Primary Judgment, and submit that that judgment does not:

For these reasons, an order for exemplary damages should be made against Fletch but is not available against Mr Seymour or Mr Birch.

The Plaintiffs submit that:

The Plaintiffs also submit that:

Fletch responds that:

I recognise the date of Fletch’s incorporation but that seems to me to have little weight where Fletch’s incorporation, and Fletch’s conduct from the point of its incorporation, was directed to its taking advantage of Mr Seymour’s and Mr Birch’s earlier conduct. I also do not think that there is any real utility, in the commercial setting of this case, in having regard to mean or median exemplary damages as determined by reference to all cases in New South Wales. This case has the particular features to which I referred in the Primary Judgment and above and should be determined on that basis, and by reference to the purpose of awarding such damages as recognised in the case law that I address below.

In Digital Pulse at [256], Heydon JA observed that “[i]f exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting”; that “[i]t is the gravity and character of the defendants' conduct which guides the Court's discretion as to the proper amount to award by way of exemplary damages”; and that this was why there was “no necessary proportionality” between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant. His Honour also observed that “[a] minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant” and that the need for the deterrence of exemplary damages was especially strong where the defendant's wrongdoing was calculated to profit. Those observations were followed by Ward CJ in Eq (as the President of the Court of Appeal then was) in Galati v Deans [2021] NSWSC 1094, and I also summarised the applicable principles in Re DCA Enterprises Pty Ltd [2023] NSWSC 11 at [187]ff which was not disturbed on appeal. The amount of an award of exemplary damages plainly involves an element of evaluation and is not a matter of mathematical certainty.

The Plaintiffs also refer to Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 8) [2022] FCA 1404 which concerned, inter alia, breach of fiduciary duty, dishonest conduct and misuse of confidential information and to Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd (No 10) [2023] FCA 1656, where two defendants were held jointly and severally liable to pay $2,000,000 in exemplary damages, and one other defendant was ordered to pay $1,500,000 in exemplary damages. The Plaintiffs also refer to Beach J’s observation (at [123]) that:

The amount of any exemplary damages ordered against Fletch should also take into account the nature of its conduct, as found in the Primary Judgment, and the fact that it is a corporate entity; it took and has sought to retain the benefits of the conspiracy; and its parent entity announced the benefits that it received from doing so to Australian Securities Exchange in the terms I noted in the Primary Judgment. There would be no utility in an order for exemplary damages against Fletch that was too low to have real deterrent or exemplary value for a subsidiary of a listed company. Such an order would not discourage parties in similar situations from wrongdoing, where the benefits of that wrongdoing would likely then exceed its risks and wronged parties (and especially financially distressed companies) would often not have the resources to bring or sustain complex proceedings and (as here) damages can be difficult to quantify.

I accept that there is a significant degree of commonality between the issues in this case in respect of Fletch and the issues arising in Directed Electronics and that Beach J’s reasoning in that case provides significant assistance in assessing the amount of the exemplary damages to be ordered in this case. The conduct in this case was calculated and it was deliberately concealed so as to maximise its prospects of success, to the Plaintiffs’ disadvantage. Although there is no necessity for proportionality between the amount of exemplary damages and the amount of compensatory damages, there is here a significant risk that the compensatory damages awarded to the 1derful Companies will have understated their loss, because of the intrinsic difficulties in proof of that loss in respect of a start-up company. I am satisfied that there is a proper basis for an order for exemplary damages against Fletch in the amount of $500,000, which is substantial although less than the amounts awarded in Directed Electronics.

It will be convenient to address orders 17-18, dealing with costs as against Fletch, Mr Seymour and Mr Birch and then costs against Mr Ball, in reverse order.

The applicable principles are well established. The Court has power to make an order for costs under s 98(1) of the CPA and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). A successful party in proceedings has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (“Oshlack”) at [22], [134]. In Commonwealth v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with whom Mason P agreed) observed that:

Section 98(1)(c) of the CPA permits the Court to order costs on an ordinary or an indemnity basis. Rule 42.2 of the UCPR provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 deals with an order for costs on an indemnity basis. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party’s conduct in proceedings is plainly unreasonable or involves an element of delinquency, and by Bell CJ in Brown v Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902.

The Plaintiffs seek an order that Fletch, Mr Seymour and Mr Birch pay and are jointly and severally liable to pay the Plaintiffs’ costs on an indemnity basis as agreed or as assessed. They submit that:

Mr Seymour responds that:

Mr Birch also submits that:

I do not accept Mr Birch’s further submission that, where the First and Second Plaintiffs made claims for substantive relief (in particular damages) that were not ordered, the benefit of a costs order should be limited to the 1derful Companies. The First and Second Plaintiffs did not succeed in obtaining damages because they are, in substance, compensated for their loss through their economic interest in the damages awarded to the 1derful Companies.

An order for costs should be made in favour of the Plaintiffs against Fletch, Mr Seymour and Mr Birch on the ordinary basis, and on the basis that costs should follow the event. I am not satisfied that an order for indemnity costs should be made against Fletch, Mr Seymour and Mr Birch. Their defence of the proceedings was not untenable and has been successful in some parts and unsuccessful in other parts.

The Plaintiffs seek an order that Mr Ball pay 25% of their costs on the ordinary basis as agreed or as assessed. Mr Ball responds that there is no basis for an order for costs against him, although he will be removed as receiver ab initio, where there have been no findings against him (or, I should add, made in his favour) and he did not actively participate in the proceedings. I do not accept that the Plaintiffs have any entitlement to costs against Mr Ball, where the fact that Messrs Seymour and Birch had breached s 12CB of the ASIC Act or the corresponding provision in s 21 of the ACL, and Fletch was liable for knowing involvement in a breach of fiduciary duty and for conspiracy in making his appointment, does not establish a basis for an order for costs against him where he took no active role in the latter part of the proceedings or the hearing.

I also do not accept Mr Ball’s submission that he should be awarded costs on the ordinary basis until 13 May 2024, when the claim for damages against him was abandoned, where there has been no determination on the merits as between the Plaintiffs and Mr Ball and there is no basis for any assumption that Mr Ball would in fact have succeeded in a defence of the proceedings, had relief other than his removal ab initio (as to which the Plaintiffs have succeeded) been pursued against him. There should be no order as to costs of the proceedings as between the Plaintiffs and Mr Ball.

I therefore make the following orders: