In the matter of Yamari Ochre Pty Ltd (in liq) (No 2)

I delivered judgment in these proceedings on 11 December 2025 (Re Yamari Ochre Pty Ltd (in liq) [2025] NSWSC 1498) and directed the parties to bring in Short Minutes of Order to give effect to the judgment and, in the event of disagreement, their respective draft orders and submissions. The Plaintiff, Ms Kennedy, submitted proposed draft orders and submissions on 18 December 2025. The First Defendant, Ms Franks, addressed the substance of the dispute as to orders in her submissions of the same date.

The parties appear to have agreed as to the substance of Ms Kennedy’s proposed orders 1 and 2, with a minor dispute as to pre-judgment interest. I will adopt the structure of Ms Kennedy’s form of these orders where, although Ms Franks reformulated them, she did not explain any reason for that reformulation. Ms Franks calculated pre-judgment interest to 18 December 2025 in an amount that differed from Ms Kennedy’s calculation by about $16, without either party explaining the difference. I will order pre-judgment interest in the lower of the two amounts. I will amend Order 2 sought by Ms Kennedy to refer to s 493A of the Corporations Act 2001 (Cth), as suggested by Ms Franks, where (as I noted in paragraph 1 of my principal judgment) Yamari is in voluntary winding up rather than Court ordered winding up. I will also amend Order 2, as Ms Franks suggests, to require that the transfer of shares to Ms Franks be free of encumbrances, where that is the basis on which the shares have been valued, and to make clear that Ms Kennedy is not only permitted to transfer her shares to Ms Franks on payment of the judgment amount, but is obliged to do so.

There was a contest between the parties as to the costs of the primary claim and the costs of the Cross-Claim. Ms Kennedy sought an order that Ms Franks, pay her costs of the proceedings (including costs incurred in respect of the Cross-Claim) on an ordinary basis up to 26 November 2025 and on an indemnity basis after that date.

I bear in mind that s 98 of the Civil Procedure Act 2005 (NSW) provides that costs are in the discretion of the Court. That section confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid; and costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with 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 at [22], [134]. The principle that costs should follow the event is the “guiding principle” with respect to costs, and the onus is on the losing party to establish the basis for a departure from the usual costs rule in UCPR r 42.1: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]; Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]–[25].

Ms Franks submits that Ms Kennedy was successful in establishing oppression, but that she did so on the limited basis of her exclusion from Yamari’s management without fair compensation, and Ms Franks was successful as to the quantum of a buy-out order. She submits this is not a matter where Ms Kennedy has simply been successful in respect of the litigation and costs should follow the event. I recognise that there are occasions on which costs should be attributed to particular issues in the proceedings, and I summarised the applicable principles in Re Quasar Constructions (Commercial) Pty Ltd (No 2) [2025] NSWSC 737 at [3]ff as follows:

Adopting the approach indicated by Bostik and the subsequent case law to which I have referred above, I do not accept Ms Franks’ submission that there was here a particular issue or group of issues which was clearly dominant or separable such that the Court should differentiate between the issues on which Ms Kennedy was successful and any issue on which she failed, or failed in part. I am also not satisfied that any such issue took up a significant part of the trial so as to support an issue-based approach to costs. Here, Ms Kennedy has substantially succeeded in the substance of her claim and that supports an order for costs in her favour, at least on the ordinary basis. In submissions, Mr Emmerson refers to several matters which support that conclusion but are not necessary to it.

Ms Franks also submits that, although the Court was the appropriate forum to commence and prosecute an oppression claim, the Court has a discretion to decline to order costs where the amount awarded is small and the costs are out of proportion to the amount recovered: Jones v Sutton (No 2) [2005] NSWCA 203. There is no basis to exercise that discretion against Ms Kennedy here; the pursuit of the proceedings was necessary to establish her claim to the value of her shares in Yamari, and the value of those shares would be material to ordinary persons. Ms Kennedy’s reasonable offer of settlement, on which she now relies, also sought to avoid the costs of a hearing and Ms Franks did not take up that offer.

The costs orders sought by Ms Kennedy extend to the costs of the Cross-Claim brought by Ms Franks against her, up to and including 18 November 2025 when that Cross-Claim was abandoned by Ms Franks’ opening submissions prior to the hearing. That Cross-Claim was then dismissed by consent on the first day of the hearing. Ms Franks makes submissions as to the nature of the Cross-Claim and appears to accept that Yamari and not Ms Franks had standing to bring the relevant claims and that she had not sought or obtained derivative leave to do so. That matter does not assist Ms Franks in avoiding an order for the costs of that Cross-Claim. Ms Franks also submits that the Cross-Claim was dismissed because Yamari was placed into voluntary administration and liquidation, and the external administrator chose not to pursue the Cross-Claim. I do not accept that submission, which fails to recognise that, first, Ms Franks had brought the Cross-Claim although she now acknowledges that she did not have standing to do so, and, second, the Cross-Claim was dismissed not by reason of any action of the administrator or liquidator, but because Ms Franks rightly abandoned it.

I bear in mind that UCPR r 42.20 provides that, if the Court makes an order for the dismissal of proceedings, then, unless the Court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which they have been dismissed, and I addressed the applicable principles in Re Bailey Roberts Group Pty Ltd (in liq) [2023] NSWSC 492 at [6]–[7]. Even if that approach is not properly applied in respect of a cross-claim, and recognising that the Cross-Claim has not been determined on its merits, it seems to me that Ms Franks’ abandonment of the Cross-Claim on the first day of the hearing amounts to a capitulation such as to warrant an order for costs against her in respect of the Cross-Claim.

Ms Kennedy seeks costs on an indemnity basis on and from 27 November 2025, relying on an open settlement offer made by Ms Kennedy to Ms Franks on 26 November 2025 to settle the proceedings and an offer in substantially the same terms sent on a without prejudice except as to costs basis on 27 November 2025. I had addressed the position as to settlement offers in my primary judgment and observed (at [72]–[73]) that:

Ms Kennedy relies on the principles identified in Calderbank v Calderbank [1975] 3 All ER 333 and subsequent cases, and summarised by Ward J (as the President of the Court of Appeal then was) in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 at [9]–[15]. I also summarised those principles in Re Alsafe Security Products Pty Ltd (atf Alsafe Trust) (in liq) [2016] NSWSC 575 at [8] as follows:

I recognise that a Calderbank offer will not justify an indemnity costs order unless its rejection was unreasonable: Ofria v Cameron (No 2) [2008] NSWCA 242 at [20]. I also addressed the applicable principles in Alora Davies Developments 104 Pty Ltd (in liq) v Raphael [2024] NSWSC 735 at [3]ff and Re Mobius Distilling Pty Ltd (in liq) (No 2) [2025] NSWSC 649 at [10]ff on which I have drawn for this summary.

Ms Kennedy submits that Ms Franks failed to achieve a more favourable outcome than the offers made by Ms Kennedy, which included an allowance for reasonable legal costs. I recognise that the amount that Ms Franks will be ordered to pay Ms Kennedy referable to the value of her shares is slightly less than the amount attributed to those shares in Ms Kennedy’s offer, but pre-judgment interest increases the total amount payable by Ms Franks to Ms Kennedy to exceed the amount of that offer. Ms Kennedy also contends that Ms Franks’ failure to accept or respond to the offers was unreasonable, where the offers were made shortly before the hearing and at a time that Ms Franks should have been capable of assessing the strength of the respective cases.

Ms Franks responds that a party who does not accept a Calderbank offer and achieves a less favourable result will not “necessarily” be required to pay indemnity costs from the date of the offer. That position is plainly correct, but does not have the consequence that a party who unreasonably does not accept such an offer will not be required to pay indemnity costs. Ms Franks submits, by way of assertion, that it was reasonable for her to reject Ms Kennedy’s last offer, by reference to a suggestion that it was tied to Ms Kennedy’s defence of the Cross-Claim. That matter does not assist Ms Franks, where she now accepts that she did not have standing to bring the Cross-Claim, and it was (as I noted above) abandoned in any event.

On balance, it seems to me that it was unreasonable for Ms Franks not to accept Ms Kennedy’s offers, when an assessment of the evidence then led by the parties would suggest that Ms Kennedy was likely to succeed in her claim for oppression, at least on the basis on which she did succeed; the amount of Ms Kennedy’s offer was broadly comparable to the valuation of Ms Kennedy’s shares in Yamari in the expert evidence led by Ms Franks; the acceptance of the offer would have avoided both parties incurring the costs of a relatively lengthy hearing, where there was a real risk that those costs would be disproportionate to the amounts in issue; and the allowance for legal costs in Ms Kennedy’s offer was reasonable given the time for which the proceedings had been on foot, and likely substantially less than costs actually incurred. I am satisfied that Ms Kennedy also allowed Ms Franks sufficient time to accept the offer, where it was made at a time that she would have the necessary information available to her to form a view as to the merits of the proceedings and should have done so before the hearing commenced. For these reasons, Ms Franks must pay Ms Kennedy’s costs on an indemnity basis on and from 27 November 2025. For completeness, I have amended Order 3 to provide that it should extend to Ms Kennedy’s costs of the Cross-Claim, to which she was a Cross-Defendant, up to and including 18 November 2025, where the Cross-Claim was not pressed after that date. I have amended Order 4 to delete reference to costs of the Cross-Claim, where it was not pressed after the date from which indemnity costs would be payable.

The Second and Third Cross-Defendants to the Cross-Claim, Ms Kennedy’s husband and a company associated with him, also seek an order that Ms Franks pay their costs of the Cross-Claim on an ordinary basis, as agreed or assessed, up to and including 18 November 2025 when (as I noted above) that Cross-Claim was abandoned by Ms Franks’ opening submissions prior to the hearing. I am satisfied that Ms Franks must also pay those Cross-Defendants’ costs of the Cross-Claim, for the reasons noted above in respect of Ms Kennedy’s costs of the Cross-Claim, and where Ms Franks put the other Cross-Defendants to the costs of the Cross-Claim before abandoning it in submissions prior to the hearing. The Second and Third Cross-Defendants rightly do not seek these costs on an indemnity basis.

Ms Kennedy also seeks her costs of these submissions in respect of the question of costs. She has been substantially successful in seeking the orders sought and has been put to the costs of a dispute as to those orders, and I am satisfied such an order should also be made.

For these reasons, I make the following orders: