Boyd v Feeney & Ors

On 22 November 2017 I delivered judgment in these proceedings ([2017] NSWSC 1595) (“Judgment”). I held (at [53]–[55] (omitting citations)) that:

I then summarised the conclusions I had reached (at [56]–[58]) as follows:

I also made the following direction:

On 29 November 2017, Ms Feeney, the First Defendant, personally (rather than by her solicitor, who she indicated was ill) sent an email to my Associate providing draft orders for the immediate appointment of a liquidator without a stay of the winding up. Ms Feeney there referred to matters affecting her position that, she contended, supported the immediate appointment of a liquidator without a stay, to maximise the prospect that the liquidator could realise the Company’s assets promptly and make a distribution to the three shareholders, in her case net of the loan and interest that she owed the Company. My Associate responded, at my request, noting the difficulty in the Court accepting submissions from Ms Feeney personally while a solicitor was acting for her in the proceedings.

Later that day, Ms Feeney’s solicitor wrote to the Court requesting the matter be relisted to finalise the appointment of a liquidator and so that the argument as to costs could be dealt with orally. My Associate responded, at my request, indicating that I did not propose to relist the matter for a further oral hearing where I had made directions for the parties to bring in short minutes of order or, if there was no agreement between them, their respective draft short minutes of order and submissions. I indicated that I would extend the time for the parties to bring in such draft orders and submissions to 4pm on 30 November 2017.

Also on 29 November 2017, the solicitors for the Plaintiff, Ms Boyd, submitted draft minutes of order which provided for an order that Mr Steven Nicols of Nicols & Brien be appointed liquidator of the Company, with that order to take effect on the date it was made, and also submitted a consent of liquidator of Mr Nicols. Those orders also proposed, inconsistently with the direction that I had previously made, that the parties would serve submissions in respect of costs by 6 December 2017 with the matter then to be dealt with in Chambers.

On 30 November 2017, Ms Boyd on the one hand and the Second and Third Defendants, Ms Ellersdorfer and the Estate of the late Mr Dane Corak, on the other, made further submissions as to costs that I will address below. Ms Feeney did not make submissions as to costs.

I made orders in Chambers on 1 December 2017. These are my reasons for making those orders.

I noted in the Judgment that the Court would ordinarily appoint the Plaintiff’s choice of liquidator, absent reasons to take a contrary approach. In the event, all parties now consent to, or do not oppose, the appointment of Mr Nicols as liquidator and I will take that course.

I had indicated, in the Judgment, that I would stay the order for appointment of a liquidator for a further period to allow the parties to seek to reach an alternative result. Both the Plaintiff and Ms Feeney press for a winding up order to take immediate effect and Ms Ellersdorfer and the Estate of Mr Corak did not oppose that course. No party now suggests that there is any utility in further discussions between the parties and, in those circumstances, there is no utility in a stay of the order for the appointment of a liquidator.

I had expressed a preliminary view as to costs in the Judgment. Ms Boyd on the one hand and Ms Ellersdorfer and the Estate of the late Mr Corak on the other addressed the question of costs by further submissions.

Mr Simpson, who appeared for Ms Boyd at the hearing, outlined the history of the proceedings and referred to the applicable principles in respect of an order for costs. Mr Simpson accepted that the Court had discretion to determine by whom, to whom and to what extent party/party costs were to be paid, but also submitted that costs would follow the event unless it appeared 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). Mr Simpson also noted that a successful party 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] HCA 11; (1998) 193 CLR 72 at [22], [134]. Mr Simpson also referred to the observation of Hodgson JA (with whom Mason P agreed) in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] that:

Mr Simpson submitted that the wider relief pursued by Ms Boyd was not without merit, was reasonably pursued in all the circumstances and was relevant to the Court’s overall finding, and that the presumption as to costs would not be displaced so as to cause Ms Boyd to pay any of the Defendants’ costs, but rather that the Defendants (other than the Company, which filed a submitting appearance at the hearing) should be ordered to pay 50% of the Plaintiff’s costs. That percentage was higher than the percentage of 25% of those costs that I had indicated, in my judgment, reflected my preliminary view as to a possible outcome.

Mr Simpson also submitted that the evidence led by Ms Boyd as to matters of oppression was relevant to the winding up on just and equitable grounds and the Court’s finding that there was an objective lack of confidence in the Company’s management. I accept that evidence was of some relevance to supporting that order, although it was primarily led to support a wider oppression case and a wider application for winding up on just and equitable grounds and was not necessary to support the orders that I made on a narrower basis. That is reflected in my observation in the Judgment that Ms Boyd:

In Re Swan Services Pty Ltd [2017] NSWSC 692 at [26], I observed, with reference to authority, that the Court does not generally attempt to differentiate between the issues on which a party is successful and those on which it failed, although it may deprive a successful party of the costs relating to an issue on which it lost when that issue is clearly dominant or inseparable. I also observed that a costs order in favour of a successful party may be modified to reflect its failure on particular issues even if the successful party did not act unreasonably in raising them, and that:

The Second and Third Defendants, Ms Ellersdorfer and the Estate of the late Mr Corak, submitted that an order should be made that Ms Boyd pay half of their costs of and incidental to the proceedings calculated on an ordinary basis. Mr Bennett, who appeared for Ms Ellersdorfer and the Estate of the late Mr Corak at the hearing, referred to several claims advanced by Ms Boyd that had failed.

Mr Bennett submitted that the Court, rather than Ms Boyd, had drawn attention to the significance of the fact that the Company had had no director in place and submitted that Ms Boyd did not adopt that contention in closing submissions even after the Court had raised that issue. That submission does not seem to be correct, as a matter of fact, since Mr Simpson had observed, inter alia, in oral submissions (T135) that:

Mr Bennett submitted that Ms Boyd had also failed entirely in the contentions and submissions that she had put and submitted that, where the Defendants were always agreeable to a members’ voluntary winding up (Judgment [51]), three days of Court time were “wasted” by Ms Boyd’s arguments. That submission reflected the oddity, to which I referred in the Judgment, that the proceedings were not resolved, although all the parties appeared to accept that the Company should be wound up; Ms Ellersdorfer and the Estate proposed a members’ voluntary winding up and Ms Boyd supported a court-ordered winding up; and no party had identified any relevant difference between those two forms of winding up in the relevant circumstances. It is, however, by no means clear that responsibility for that unfortunate position can be attributed only to Ms Boyd. It was also by no means clear that the members’ voluntary winding up favoured by Ms Ellersdorfer and the Estate could have been promptly or readily implemented where the Company had no director to call a shareholders’ meeting and its shareholders were in dispute.

Mr Bennett in turn refers to my decision in Re Joe & Joe Developments Pty Ltd (subject to a deed of company arrangement) [2014] NSWSC 1703 at [34]–[36] as authority that a plaintiff, whose arguments failed but who nonetheless obtained an order similar to that which they sought, can still be ordered to pay costs following the “event”, being their loss on the contentions made. Mr Bennett submitted that the outcome of the proceedings, being the appointment of a liquidator without a finding of blame on the part of the Defendants, was what had been offered by them to Ms Boyd by way of a members’ voluntary winding up. Mr Bennett submitted that the hearing resulted from Ms Boyd’s decision to press the specific performance and oppression claims, which failed entirely, and it seems to me that proposition is at least partly true.

Having now had the benefit of the parties’ further submissions, I am not persuaded that I should take a somewhat different view from my preliminary view. I accept that the parties were put to the costs of the hearing partly by reason of Ms Boyd’s continuing to press the specific performance and oppression claims, on which she failed. It seems to me that the parties were also put to the costs of the hearing in circumstances that the Defendants continued to press for a voluntary winding up, with the difficulties noted above, rather than submitting to a Court-ordered winding up before, at the commencement of or at any point during the hearing. The result was that all of the active Defendants incurred the costs of a hearing of three days. In the event, Ms Boyd was successful in obtaining the relief that she had sought, which the Defendants could have, but did not, accept should be given.

I will therefore order that all previous costs orders in the proceedings remain in effect and that the First, Second and Third Defendants pay one-quarter of the Plaintiff’s costs of the proceedings not dealt with by such orders, as agreed or as assessed.

Accordingly, I made the following orders in Chambers on 1 December 2017: