In the matter of Boart Longyear Limited (No 4)

By Interlocutory Process filed on 15 September 2017, Snowside Pty Ltd as trustee for the Snowside Trust and Maurici Nominees Pty Ltd as trustee for the AP Maurici & Associates Pty Ltd Superannuation Fund (“Snowside companies”) seek an order under r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that the order set out at paragraph 30(a) of my judgment as to costs delivered on 13 September 2017 ([2017] NSWSC 1227) (“Judgment”) be amended by changing the word “excluding” to “including”. The amendment that is sought by the Snowside companies would reverse the conclusions that I reached in the Judgment, to the effect that they should not have the costs of preparing the expert evidence on which they relied in respect of the hearings on 4–5, 13–14 and 27 July 2017. Rules 36.16(1) and 36.16(3A) of the UCPR respectively provide that the Court may set aside or vary a judgment or order if a notice of motion for the setting aside or variation is filed before entry of the judgment or order and that if, as here, a notice of motion for setting aside or varying a judgment or order is filed within 14 days after the judgment or order is entered, the Court may determine the matter and (if appropriate) set aside or vary the judgment or order as if it had not been entered.

By way of background, the Judgment determined an application by the Snowside companies for orders for costs in respect of their appearance to oppose approval of two interdependent creditors’ schemes of arrangement concerning the Plaintiffs, Boart Longyear Limited (“BLY”) and others. As I noted in the Judgment, the Snowside companies were not party to those proceedings and were heard in them under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW). I summarised the principles that generally apply in respect of an application for costs by a person who is heard in proceedings without becoming party to them under that rule (Judgment [4]) as follows:

I also observed (Judgment [10]) that:

I also observed that the Snowside companies’ objections to the original schemes and their continued objections to the altered schemes could not be characterised as being “frivolous or without substance” and the hearing was not substantially lengthened by their conduct (Judgment [9], [14], [18]) and that they had made “useful and efficient submissions at the hearings on 4–5, 13–14 and 27 July” (Judgment [29]).

The Plaintiffs had submitted, in their submissions in opposition to the Snowside companies’ claims for costs (Ex R3) that:

I referred to that submission (Judgment [20]) as follows:

I also noted (Judgment [21]) the Snowside companies’ submission in response and observed that:

I recognised (Judgment [22]) that Mr Silvia’s report and Mr Samuel’s report led by the Snowside companies did not involve a substantive overlap with Mr Lonergan’s evidence led by First Pacific Advisors LLC (“First Pacific”) and also noted that the overlap of expert evidence ceased after First Pacific had ceased to oppose the altered schemes, at a further hearing which took place on 9 and 14 August 2017 and only the Snowside companies then opposed the schemes. I then observed (Judgment [23]) that:

I elaborated on that position (Judgment [25]–[26]) as follows:

I held that the Plaintiffs should pay the Snowside companies’ reasonable costs limited to their attendance at the hearing on 4–5, 13–14 and 27 July 2017, but not their costs of expert evidence on which they relied at that hearing or of steps prior to that hearing (Judgment [28]). I expressly took that approach in preference to making an order that would require a costs assessor to seek to separate preparation costs prior to the commencement of the hearing that did and did not relate to the preparation of expert evidence, in a manner that would have given rise to complexities, delay and costs in an assessment. I also held that the Plaintiffs should pay the Snowside companies’ reasonable costs of, and their costs of and incidental to the preparation of expert evidence for, the further hearing on 9 and 14 August 2017, and for their preparation of submissions for and attendance at the hearing on those two days, on an ordinary basis.

The orders set out in paragraphs 30(a)–(b) of the Judgment gave effect to that conclusion, and the order in paragraph 30(a) confirmed the limits to which I referred in the Judgment and above by expressly “excluding costs of preparation for and expert evidence led by them at those hearings [on 4–5, 13–14 and 27 July 2017]” from the costs which the Plaintiffs were required to pay. Conversely, the costs of two expert reports on which the Snowside companies relied on at the hearings on 9 and 14 August 2017 were included in the costs payable to the Plaintiffs in paragraph 30(b) of the Judgment.

I now turn to the principles applicable to an application to reopen a judgment or orders, which are well established and were not in dispute in this application. A reopening may be appropriate to allow a matter to be addressed by a trial judge which would otherwise be open on appeal, and the court’s discretion whether to permit that course must be exercised in the interests of justice, and guided by the provisions of s 56 of the Civil Procedure Act 2005 (NSW): Wentworth v Rogers [2002] NSWSC 921 at [9]; Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No 2) [2007] FCA 1040 at [13]; Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 at [15]. The jurisdiction to reopen at least exists where the court has proceeded under a misapprehension of the facts or the relevant law and that misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing, although an application to reopen may be allowed even if the party seeking it is not entirely blameless: Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 303; Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296 at [773].

Dr Austin, who appears with Mr Mirzai for the Snowside companies, refers to Autodesk Inc v Dyason (No 2) above at 303, where Mason CJ observed that:

In New Cap Reinsurance Corporation Ltd v A E Grant [2009] NSWSC 950 at [20], Barrett J (as his Honour then was) noted that the relevant principles:

I also proceed on the basis, noted by Rothman J in Permanent Custodians Ltd v Geagea (No 4) above at [19], that the principles applicable at first instance are broadly the same as would be applicable on appeal, although s 56 of the Civil Procedure Act may require a more flexible approach in dealing with a matter at first instance. I also reviewed the case law concerning the jurisdiction to reopen a judgment in my decision in Redmond Family Holdings Pty Ltd v GC Access Pty Ltd [2016] NSWSC 1588 at [10]ff, on which I have partly drawn for the summary of the case law that appears above.

As I noted above, the amendment to the orders made in the Judgment that is sought by the Snowside companies would reverse the conclusions that I reached in the Judgment, to the effect that they should not have the costs of preparing the expert evidence on which they relied in respect of the hearings on 4–5, 13–14 and 27 July 2017. Dr Austin recognises that result in submitting that the Snowside companies seek to amend the Court’s order, so that the costs allowed to the Snowside companies in respect of the attendance of Counsel and solicitors at the hearings on 4–5, 13–14 and 27 July should extend to the costs of preparation for and expert evidence led by the applicants at the hearing.

I should refer to the evidence on which the Snowside companies rely before turning to their submissions. The Snowside companies rely on the affidavit of their solicitor, Mr Giles, dated 15 September 2017, which refers to my observations (Judgment [21]ff) as to the overlap between the expert evidence led by First Pacific and the expert evidence led by the Snowside companies in the second hearing of the schemes, to which I have referred above. Mr Giles also sets out a chronology of events relating to the Snowside companies’ preparation for that hearing, which establishes that the Snowside companies did not receive a copy of Mr Lonergan’s expert report on which First Pacific relied until 3 July 2017, the day before the commencement of that hearing. I should briefly refer to that chronology, as supplemented by the exhibits to Mr Giles’ evidence and other affidavit evidence on which the Plaintiffs relied.

Mr Giles refers to First Pacific’s statement of particulars, filed on 15 June 2017, and his evidence, by way of submission, is that that statement of particulars “does not indicate anything about what, if any, expert evidence would be led by First Pacific”. That statement of particulars does, however, as Mr Giles recognised, make clear that First Pacific contended that the shares that would be received by the parties to the schemes known as Centerbridge, Ares and Ascribe would have positive value after a recapitalisation. On 14 and 16 June 2017, the Snowside companies’ solicitors also emailed First Pacific’s solicitors inviting a discussion of the second court hearing. It appears that First Pacific’s solicitors did not take up that invitation. By email dated 21 June 2017, the Snowside companies’ solicitors requested First Pacific’s solicitors to provide copies of documents filed in the proceedings. First Pacific’s solicitors did not comply with that request, but Mr Lonergan’s report had not then been finalised, as Mr Giles recognises in his affidavit. Mr Lonergan’s report was dated 26 June 2017 and, also on that date, the Snowside companies’ solicitors sent a further email to First Pacific’s solicitors requesting provision of the documents on which First Pacific would rely, to which First Pacific’s solicitors did not respond.

On 27 June 2017, the Plaintiffs’ solicitors provided several affidavits on which they relied to the Snowside companies’ solicitors but did not provide any affidavits of First Pacific. It does not seem to me that it was the Plaintiffs’ responsibility to serve First Pacific’s evidence upon the Snowside companies, even if Mr Lonergan’s report had by then been served on the Plaintiffs. As I noted in the Judgment, Mr Hall’s first three reports relied on by the Snowside companies were dated 28 and 29 June and 3 July, and the report of Mr Silvia was dated 3 July and a report of Mr Samuel was also dated 3 July 2017. (It is not necessary to address an earlier report of Mr Hall that was prepared for other proceedings and on which little reliance was placed at the second hearing of the schemes or the two later reports for which the Snowside companies were allowed their costs in the Judgment.)

On 29 June 2017, the Snowside companies’ solicitors spoke by telephone to a solicitor for First Pacific, who was then overseas, and she advised that First Pacific had filed Mr Lonergan’s report but she could not provide that report by reason of confidentiality in a document referred to in that report. Emails sent by the Snowside companies’ solicitors to First Pacific’s solicitors on 30 June 2017 indicate that they knew that First Pacific was relying on Mr Lonergan’s report by that date, and knew that Mr Lonergan was addressing the question of the value of shares in BLY after its restructure, but did not then know the conclusion that Mr Lonergan had reached. The Snowside companies’ solicitors received a copy of Mr Lonergan’s report on 3 July 2017, when it was attached to an expert report filed by the Plaintiffs which responded to it. They were served with First Pacific’s submissions and evidence, other than certain exhibits subject to confidentiality orders, on the first day of the second hearing in respect of the schemes on 4 July 2017.

Dr Austin submits that the Judgment should be reopened and the Court’s orders amended because the Judgment and orders regarding costs are:

Dr Austin also refers to the observation in Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44; (2013) 303 ALR 84 at [13] that the Court may recall its orders if they were made on a ground that the person against whom the orders were made had no opportunity to argue, and submits that the same principle applies where an order made in favour of an applicant is qualified by reference to a ground that the applicant had no chance to argue. If this submission is intended to suggest either that the Plaintiffs did not raise the question of duplication in the expert reports, or the Snowside companies had no opportunity to argue it, then I do not accept it, because that matter was squarely raised by the Plaintiffs’ submission that it would be unfair that they be required to pay for the numerous expert reports, including Mr Hall’s and Mr Lonergan’s reports, which I have set out above. If it is intended to suggest that the Plaintiffs did not argue, and the Snowside companies had no opportunity to respond to, a submission that the Snowside companies had or should have obtained access to Mr Lonergan’s report, that is correct, but that matter was not addressed in the Judgment because it was not raised and does not give rise to any misapprehension in the Judgment.

The Snowside companies also submit that, at the earlier costs hearing:

Mr Izzo, who appears for the Plaintiffs, responds that the power to reopen a judgment is to be exercised with caution, having regard to the public interest in the finality of litigation, and does not provide a “back door method” by which a case can be reargued. Mr Izzo emphasises that the Plaintiffs had raised the question of overlap in their submissions on costs dated 29 August 2017, at the prior costs hearing, where they had drawn attention to the scale of the Snowside companies’ expert evidence and to the fact that “the Snowside [companies] also had the benefit of the expert evidence of Mr Lonergan, which was led by First Pacific”. Mr Izzo also submits that there was no misapprehension in the Court’s Judgment of the kind for which the Snowside companies contend and that:

In oral submissions, Mr Izzo submitted that the suggested misapprehension was not a matter addressed in the Judgment and not the subject of any apprehension one way or the other and the question of the Snowside companies’ ability to avoid overlap was not a matter addressed by the Judgment (T15–16). Mr Izzo also advanced several submissions as to the merits of the question whether an overlap could have been avoided, which I need not address where I am not satisfied that any misapprehension existed so as to reopen the Judgment.

I do not accept the Snowside companies’ submission that the findings that I reached in the Judgment turned on any relevant misapprehension. The finding in Judgment [26], which I quoted in paragraph 9 above, involved observations as to the character of the Snowside companies’ objections to the schemes and their relationship with First Pacific’s objections to the schemes, as put at the second hearing of the schemes; the extent of the expert evidence led by the Snowside companies (although I had previously noted that I gave lesser weight to a mere counting of the number of Mr Hall’s reports); the fact that First Pacific was already leading expert evidence in opposition to the schemes; and the fact that the Snowside companies’ expert evidence covered substantially (although not entirely) similar territory to the expert evidence on which First Pacific relied. Each of those observations relates to objective matters and none of them depended upon any suggestion that the Snowside companies could have or should have taken steps to avoid that position.

Those observations do not involve any understanding or misunderstanding as to any question of subjective fault as to whether the Snowside companies either had, or did not have, or should have had, access to Mr Lonergan’s report or whether the overlap of expert reports was avoidable or not avoidable by the Snowside companies (or, for completeness, First Pacific or the Plaintiffs) or their respective representatives. I did not address or reach any finding as to that matter, or proceed under any misapprehension about it, because neither the Plaintiffs nor the Snowside companies had led evidence as to that matter or made submissions about it in respect of the question of costs. To the extent that I had assumed that the Snowside companies had access to First Pacific’s statement of particulars, there is no evidence that that assumption was incorrect. Those particulars were filed on 15 June 2017 and Mr Giles’ evidence is that his partner had inspected the Court file on 23 June 2017 and does not now recall whether he saw that statement of particulars when he did so.

My conclusion as to costs reflected an assessment of what fairness as between the Plaintiffs and the Snowside companies required in the relevant circumstances, recognising that the Snowside companies and First Pacific were each heard in the proceedings under r 2.13 of the Supreme Court (Corporations) Rules and were not parties to the proceedings; First Pacific was a party bound by one of the schemes, the secured creditors’ scheme, to which it took objection, and the Snowside companies had a more distant connection, as shareholders and possibly subordinated claimants in respect of oppression proceedings that they had only recently commenced against BLY; and there was, objectively, a significant overlap between the evidence led by First Pacific and the evidence led by the Snowside companies. The consequence of that overlap might well have been that neither First Pacific nor the Snowside companies could obtain an order from the Court, over the Plaintiffs’ opposition, for payment of the costs of the overlapping expert reports on which they relied, notwithstanding that their respective reliance on those reports may have been sensible and in their own interests, or necessary in their particular circumstances. That question was only determined in respect of the Snowside companies in the Judgment because the Plaintiffs and First Pacific had previously reached agreement as to the question of costs as part of a wider resolution of their differences in respect of the schemes.

Where no question of subjective fault of the Snowside companies or their legal representatives was in issue before me, and I was under no misapprehension as to such a question, I need not address Dr Austin’s further submissions that seek to establish that the Snowside companies or their legal representatives acted reasonably in that regard. It is also not necessary to address the further submission as to any possible apportionment of costs as between First Pacific (which, as I noted above, had resolved the question of costs with the Plaintiffs) and the Snowside companies, which was not a matter raised in the previous costs hearing before me.

For these reasons, I am not satisfied that the Judgment or the orders made in it should be reopened or that the orders set out in paragraph 30 of the Judgment should be amended in the manner for which the Snowside companies contended. Even if the Judgment had been reopened, it does not seem to me that the matters on which the Snowside companies rely would have altered its result, since they do not establish any reason why costs should be ordered in their favour in respect of overlapping evidence, as distinct from seeking to neutralise matters that might have tended against such an order, had those matters been put against them at the earlier costs hearing.

Accordingly, I make the following orders: