Federal Court of Australia Kirsten v Miller as executor of the estate of Detlef John Kirsten (No 2) [2024] FCAFC 106 Appeal from: Miller as executor of the estate of Detlef John Kirsten v Kirsten (No 2) [2023] FCA 1034 File number: SAD 119 of 2023 Judgment of: CHARLESWORTH, DERRINGTON AND HALLEY JJ Date of judgment: 27 August 2024 Catchwords: PRACTICE AND PROCEDURE – costs – appeal from order awarding costs to a party – whether primary judge failed to have regard to an agreement that the parties bear their own costs of part of the proceeding – whether there was utility in pursuing claims for relief not previously settled – whether the appellant belatedly capitulated in respect of claims not previously settled – whether the appellant presented a case on appeal different to that presented before the primary judge Legislation: Corporations Act 2001 (Cth) ss 259A, 259B, 1071F, 1072A, 1072G Federal Court of Australia Act 1976 (Cth) s 24 Administration and Probate Act 1919 (SA) ss 44, 121A Cases cited: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 House v King (1936) 55 CLR 499 Miller as executor of the estate of Detlef John Kirsten v Kirsten (No 2) [2023] FCA 1034 Division: General Division Registry: South Australia National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 53 Date of hearing: 6 May 2024 Counsel for the Applicant: Mr B Roberts KC with Mr E Guthrie Solicitor for the Applicant: Douglas Hoskins Legal Counsel for the Respondent: Mr H Abbott SC with Mr I Thomas Solicitor for the Respondent: Piper Alderman ORDERS SAD 119 of 2023 BETWEEN: KARL JAMES KIRSTEN Applicant AND: CARA ELLEN MILLER IN HER CAPACITY AS EXECUTOR OF THE ESTATE OF THE LATE DETLEF JOHN KIRSTEN Respondent order made by: CHARLESWORTH, DERRINGTON AND HALLEY JJ DATE OF ORDER: 27 AUGUST 2024 THE COURT ORDERS THAT: 1. The respondent has leave to withdraw the submitting notice filed on 29 September 2023. 2. Leave to appeal is granted. 3. The appeal is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT THE COURT 1 Mr Karl James Kirsten seeks leave to appeal from an order requiring him to pay 40% of the respondent's costs of the proceedings at first instance (Costs Order). The Costs Order was made in circumstances where it was unnecessary to conduct a trial of issues relating to the present and historical ownership of shares in a company, Ombrel Pty Ltd. In respect of those issues, the respondent, Ms Cara Ellen Miller had sought both declaratory relief relating to the historical ownership of the shares, and non-declaratory relief in the form of orders compelling the registration of a share transfer. No orders were made because Mr Kirsten took steps that rendered it unnecessary to resolve the respondent's entitlement to the relief. 2 The primary judge concluded that Mr Kirsten had wholly capitulated in respect of the disputed issues: Miller as executor of the estate of Detlef John Kirsten v Kirsten (No 2) [2023] FCA 1034 (J). The percentage of Ms Miller's costs was said by the primary judge to reflect the circumstance that the dispute related to the shares of five companies, of which Ombrel was but one: J, [95]. 3 Mr Kirsten contends that the Costs Order is contrary to a settlement agreement between the parties, including because they had agreed to bear their own costs in connection with non-declaratory claims for relief and because the claims for declaratory relief were inutile. He further contends that the primary judge erred in characterising his conduct as involving a capitulation with respect to the declaratory relief, and that any unreasonable conduct on his part was irrelevant because of the parties' agreement to bear their own costs with respect to a substantive part of the proceedings. 4 The parties made submissions on the application for leave to appeal and on the substantive merits of the grounds at the same hearing. LEAVE TO APPEAL 5 Mr Kirsten cannot appeal from the Costs Order without the leave of the Court: Federal Court of Australia Act 1976 (Cth), s 24(1A). The discretion to grant leave is guided by the principles stated in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (at 398). An applicant for leave should demonstrate that the decision in respect of which leave is sought is attended with sufficient doubt to warrant it being reconsidered and that substantial injustice would result if leave were refused, supposing the decision to be wrong. 6 The order appealed from is interlocutory. However, it does not go merely to a matter of practice and procedure and entertaining the appeal would not fragment or delay the prosecution of the originating application. In addition, as identified below, the proposed grounds of appeal raise an arguable case that the discretion of the primary judge may have miscarried. Together, those considerations warrant the grant of leave. reasons for the COSTS ORDER 7 Mr Detlef John Kirsten (the deceased) died on 2 November 2018. Prior to his death, the deceased was the sole director of a number of companies including Ombrel. Upon his death, the sole director of Ombrel was Mr Kirsten, the deceased's brother. 8 Ombrel was incorporated on 29 July 2009 with 100 issued shares. At that time the deceased was recorded in Ombrel's register of members (Ombrel Register) as the beneficial owner of one of them, and the non-beneficial owner of the remaining 99 (99 Ombrel Shares). 9 On 30 July 2009, the register of members was amended. The amendment purported to record the transfer of the 99 Ombrel Shares to Ombrel itself, in its capacity as trustee for the Ombrel Trust. The register, as amended, may be referred to as the Kirsten-Ombrel Register. The circumstances of the amendment and the underlying transaction recorded by it are unknown. 10 It is common ground that a company cannot hold shares in itself, except as provided for in s 259A and s 259B of the Corporations Act 2001 (Cth). Neither of those sections apply. 11 Ms Miller, is the executor of the deceased's estate and his "personal representative" for the purpose of the Corporations Act. 12 On 3 July 2020, Ms Miller wrote to Mr Kirsten enclosing (among other things) the grant of Probate for the deceased's estate and two share transfer forms which together provided for the transmission of all of the shares into her name. She requested that Mr Kirsten register the two transmission forms. He did not do so. 13 Under s 1072A of the Corporations Act, if the personal representative of a deceased person gives the directors of a company the information they reasonably require to establish the representative's entitlement to be registered as the holder of shares, the personal representative may elect to be registered as the holder of the shares by giving written and signed notice to the company. By letter dated 23 July 2020, Ms Miller provided a notice under s 1072A of the Corporations Act to Mr Kirsten. Ms Miller asserted that the shares had transmitted to her as the deceased's legal representative upon his death by operation of the law. Through her solicitor, Ms Miller again requested that Mr Kirsten register the transmission of shares in her name. Ms Miller was not at that time aware of the Kirsten-Ombrel Register. 14 In an email sent on 24 July 2020, Mr Kirsten said that he "will ensure any legally required share transfers are processed within the timeframe required under law". Despite that correspondence, he did not register the shares in Ms Miller's name. In later correspondence he questioned why the shares had not been listed in the statement of the deceased's assets and liabilities used for the grant of Probate and why they had not been disclosed under s 121A of the Administration and Probate Act 1919 (SA) (AP Act). 15 Ms Miller's attempts to have the Australian Securities and Investments Commission correct the register of members were unsuccessful. 16 By her originating application filed on 15 December 2020, Ms Miller sought, among other things, declarations and orders in relation to the affairs of five companies, including Ombrel, naming Mr Kirsten as the first defendant. The claims for relief in respect of Ombrel were expressed as follows: 1. A declaration that the Ombrel Register of Members rather than the Kirsten Ombrel Register of Members … is the true register of members for [Ombrel]. 2. A declaration that the Deceased rather than [Ombrel] is registered in the register of members of [Ombrel] as the holder of the 99 Ombrel Shares … … 4. Orders pursuant to s1071F(2) of the Corporations Act 2001 (Cth) that: 4.1 … 4.2 The transfer or in the alternative the transmission of the 1 Ombrel Share … be registered. 4.3 The transfer or in the alternative the transmission of the 99 Ombrel Shares … be registered. 17 After the proceeding was commenced, Ms Miller obtained orders and a certificate from the Registrar of Probates to overcome Mr Kirsten's assertion that the shares had not been included in the deceased's statement of assets and liabilities. That occurred on 24 November 2021. 18 At first instance the parties acknowledged that none of the shares had monetary value, and that the real issue was who held the 99 Ombrel Shares as trustee. 19 Mr Kirsten defended all claims for relief on the basis that his refusal to register the transmission of shares to Ms Miller was "with just cause" within the meaning of s 1071F(2) of the Corporations Act. In addition, he asserted that under s 1072G of the Corporations Act, the directors of a company may refuse to register a transfer of shares for any reason. He alleged that the shares had not been disclosed under s 121A of the AP Act and that if he transferred the shares he would commit an offence under s 44 of that Act (s 44 defence). As a further and alternative defence, he asserted that Ombrel was the registered owner of the 99 Ombrel Shares, and so relied on the Kirsten-Ombrel Register. 20 However, Mr Kirsten later agreed to register the transfer forms on the basis that the parties bear their own costs of that part of the dispute. He registered the transfer of all of the shares in Ms Miller's name, so rendering it unnecessary for her to pursue the order in [4] of the originating application compelling him to do so. The agreement that the parties bear their own costs of that part of the dispute was not in evidence before the primary judge nor is it in evidence on this appeal. It is common ground that the parties' agreement to bear their own costs did not encompass the claims for declaratory relief made in [1] and [2] of the originating application, and that Mr Kirsten's agreement to register the shares did not involve any express consent to the grant of declaratory relief. 21 Ms Miller persisted in her assertion that the Ombrel Register and not the Kirsten-Ombrel Register was at all times the "true" register of members. Mr Kirsten later accepted that the Ombrel Register was the correct register. He signalled that acceptance by providing to Ms Miller a register that satisfied her that his reliance on the Kirsten-Ombrel Register was unequivocally abandoned. Upon that acceptance, Ms Miller did not press the application for declaratory relief in [1] and [2] of the originating application. That occurred some time after the settlement agreement relating to the order under the Corporations Act. 22 Just prior to the hearing date the primary judge was informed that the dispute had been resolved and that the only issue left for determination was Ms Miller's claim for the costs of pursuing her claims for declaratory relief. On the question of costs, Ms Miller contended that she was almost certain to have obtained that relief, and that the provision of the correct register to her involved a belated capitulation by Mr Kirsten. Mr Kirsten submitted that he acted reasonably in defending the action and that there was no capitulation. Among other things, he asserted that it was reasonable for him to await the inclusion of the 99 Ombrel Shares on the statement of the deceased's assets and liabilities and that once that was done, he had proceeded to register the transfer to Ms Miller. 23 The primary judge summarised the principles guiding the discretion to award costs in circumstances where a dispute is resolved without the need for a trial. His Honour observed that s 1072G of the Corporations Act had been replaced by Ombrel's Constitution. He said that in any event it was unclear why Mr Kirsten had relied on s 1072G if he was willing to cooperate, but said that no weight would be attributed to that factor: J, [69]. 24 The primary judge made no finding as to how the Kirsten-Ombrel Register had come into existence, but concluded that the transfer recorded in it was a legal impossibility. That fact, his Honour said, should have been made clear to Mr Kirsten at the earliest opportunity by those advising him, putting him on notice that Ms Miller was almost certain to succeed on her claims for declaratory relief: J, [72]. 25 The primary judge found that Ms Miller had attempted to resolve the dispute in correspondence prior to the commencement of the action and by her repeated requests for the transfer forms to be registered. His Honour further observed that Mr Kirsten had defended the claims not merely on grounds relating to the deceased's statement of assets and liabilities, but on the additional basis that Ombrel was named in the Kirsten-Ombrel Register as the owner of the 99 Ombrel Shares: J, [74] – [75]. His Honour concluded that Mr Kirsten had not abandoned that position until the trial of the matter was imminent: J, [75]. 26 The primary judge accepted that there was an issue as to whether it was necessary to declare the shares on the deceased's statement of assets and liabilities, having earlier noted that the necessity had been previously questioned by the Registrar of Probates given that the shares had no value. His Honour observed that Ms Miller had made her application to the Supreme Court of South Australia to obtain the certificate and order because Mr Kirsten had insisted that that be done before he would register the transmission: J, [77] – [78]. His Honour described an additional defence relating to the refusal to register the transmission as misconceived: J, [80] – [84]. His Honour said that Mr Kirsten's assertion that there was a competing interest in the 99 Ombrel Shares (evidenced by the Kirsten-Ombrel Register) was "not only doomed from a legal perspective, it was a position which was abandoned immediately prior to trial": J, [85]. His Honour said that Mr Kirsten had insisted on formal steps being taken under the AP Act which "had no practical value": J, [87] – [90]. His Honour continued: 91 Further, there was no other party other than Ombrel itself through Mr Kirsten challenging the ownership of the 99 Ombrel shares, which as I have noted was doomed to fail given s 259A of the Act. 92 In these circumstances, I consider Mr Kirsten capitulated at the last moment. 93 In short, these proceedings were a triumph of form over substance and were only necessary because of what I consider to be the unreasonable actions taken by Mr Kirsten in relation to the ownership of the 99 Ombrel shares. In my view, the plaintiff was almost certain to be successful in her application and it is because of Mr Kirsten's unreasonable actions, which were taken without just cause, that the estate and Mr Kirsten have been put to unnecessary expense, including the retaining of senior counsel on both sides. 27 The primary judge noted that the application for an order under s 1071F of the Corporations Act had been resolved on the basis that each party bear their own costs and the transmission of the shares to Ms Miller was registered. Nonetheless, his Honour said, "utility remained in obtaining the declarations to ensure that there was no issue raised subsequently about the ownership of the 99 Ombrel shares": J, [94]. 28 His Honour concluded that as the proceeding had dealt with a number of other matters involving companies other than Ombrel, Mr Kirsten should pay only part of Ms Miller's costs of the action, fixed at 40% of her costs of and incidental to the whole of the proceeding: J, [95]. GROUNDS OF APPEAL 29 The grounds of appeal are contained in exhibit "DCJ1" to the affidavit Mr Dominic Joseph Calabro, sworn 8 December 2023. They are as follows: In this Notice of Appeal, paragraph references are to the Reasons for Judgment of the primary judge of the Federal Court of Australia dated 29 August 2023 (Miller as executor of the estate of Detlef John Kirsten v Kirsten (No 2) [2023) FCA 1034). Further, the defined terms used in the Reasons are adopted in this Notice of Appeal. 1. In circumstances that there was no trial of the proceeding and no final relief ordered, on the basis that there was a consensual resolution of the proceeding by way of settlement, the primary judge materially erred in making the order for costs dated 29 August 2023, as follows: a. In finding that the Appellant 'capitulated at the last moment'' (Reasons, [92]), and in doing so: i. failing to identify any act of 'capitulation' (as there was none); ii. failing to have regard to the settlement between the parties, with each party agreeing to bear their costs of the registration issue (Reasons, [4] – [5]), and which otherwise did not involve any relief being ordered; iii. misapprehending the outcome of the proceedings. involving the abandonment of the claim in its entirety by the Respondent following the settlement, and instead erroneously finding that 'utility remained in obtaining the declarations' (when no such declarations were obtained) (Reasons, [94]); b. In making the order as to costs which was contrary to the settlement agreement reached between the parties because the order was for 100% of the costs of the company in question. Ombrel (Reasons, [95]), yet the parties had explicitly agreed that there be no order as to costs of any parties in relation to the registration issue, which included in relation to Ombrel (Reasons, [4] – [5]); c. In finding that the Appellant's 'conduct in defending the proceedings was unreasonable' (Reasons, [70]), and in doing so, having regard to irrelevant matters and impermissibly making findings in the absence of a trial, as follows: i. that there was no mention by the Appellant of the Kirsten-Ombrel Register until 31 July 2020 (Reasons, [71]), being a tentative finding as to credit: ii. that it should have been made clear to the Appellant by his advisors that the transfer in the Kirsten-Ombrel Register was a legal impossibility (Reasons, [72]) iii. as for the Appellant's reliance on s 44 of the Administration and Probate Act 1919 (SA) (APA): 1. that it was misconceived (Reasons, [84]): 2. that the only conceivable basis was to contest the true ownership of the Ombrel shares (Reasons, [83 – [86]), going to motive: 3. that the Appellant was likely to have been protected by s 43 of the APA in circumstances that this was not raised by the parties in the proceedings (Reasons, [88]); 4. that the Appellant's concerns regarding s 44 of the APA were not Valid, because it was open to him to obtain an acknowledgement from the Respondent that she was proceeding on the basis of the grant of probate naming her executor (Reasons, [90]). 2. The primary judge ought to have exercised his discretion, by making no orders as to costs. 30 When the application for leave to appeal was first commenced, the proposed grounds were in substantially different terms. On 29 September 2023, Ms Miller filed a notice submitting to the outcome of the appeal, other than as to costs. When the proposed grounds were amended, Ms Miller applied for leave to withdraw the submitting notice. That leave will be granted. On the material before us, it is plain that Ms Miller's decision to file the submitting notice was based on her consideration of the proposed grounds of appeal as then framed. She should be permitted to revisit that decision given the degree and nature of the amendments to Mr Kirsten's grounds. CONSIDERATION 31 Some preliminary observations may be made, pertinent to all grounds of appeal. 32 First, the award of costs involved the exercise of a discretion and it is therefore necessary for Mr Kirsten to show that the judgment is affected by an error of the kind discussed by Dixon, Evatt and McTiernan JJ in House v King (1936) 55 CLR 499 (at 504 – 505), namely: It is not enough that judges composing the appellate court consider that, if they had been in the position of the primary judge they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court at first instance. 33 Second, it is correct to say that the application for declaratory relief was ultimately not pressed by Ms Miller. But the factual context of the decision not to press those claims must be properly understood. As the primary judge concluded, there was utility in the declaratory relief to avoid any future dispute about the historical ownership of the 99 Ombrel Shares during the deceased's lifetime. That conclusion is not affected by error. The declarations concerned the historical ownership of the shares and hence the identity of the person or entity previously entitled to exercise the powers of trustee in respect of them. Mr Kirsten has not demonstrated that the declarations were mere formalities or precursors to the claim for relief under the Corporations Act. His registration of the transmission of the shares was not accompanied by the withdrawal of the whole of his defence. 34 Third, the dispute about historical ownership of the shares remained live for so long as Mr Kirsten persisted with that part of his defence that relied on the transaction recorded in the Kirsten-Ombrel Register. We do not accept his submission that the issue was wholly subsumed in and resolved by his decision to register the transfer of shares in Ms Miller's name. He has not shown that the earlier agreement that the parties bear their own costs encompassed the costs of the factual context as to which of the Ombrel Register or the Kirsten-Ombrel Register correctly recorded the historical ownership of the shares. 35 The claims for declaratory relief were pressed up to the point where Mr Kirsten took steps involving an unequivocal disavowal of the Kirsten-Ombrel Register. The primary judge was correct to conclude that those events did not occur until just prior to the hearing of that part of the dispute that had not previously been resolved and that the claims for declaratory relief therefore had utility. Considered in that context, the finding of the primary judge that Mr Kirsten had capitulated must be understood as including a finding that he had belatedly capitulated in that part of his defence. In addition, the finding that there was utility in the declaratory relief should properly be understood as relating to the period between the settlement of the Corporations Act aspect of the claim and Mr Kirsten's unequivocal withdrawal of his reliance on the Kirsten-Ombrel Register. 36 Fourth, the earlier agreement to settle the claim for relief under s 1071F(2) of the Corporations Act (being the order sought in [4] of the originating application) encompassed an agreement that the parties bear their own costs of that part of the dispute. In light of that agreement, Ms Miller could not make an application for any part of her costs associated with it. Accordingly, it could not assist her to argue that there had been an earlier capitulation by Mr Kirsten in connection with the non-declaratory claim for relief because she could not be awarded any costs by reference to it. In our view, it mattered not whether there was any merit in Mr Kirsten's prior reliance on s 44 of the AP Act as a reason for refusing to register the transfer form. Nor could it assist Mr Kirsten to show that he had a reasonable basis to defend the application for the s 1071F(2) order on that basis. 37 It is convenient to approach the remaining issues in the order set out below. Ground [1(a)(i)] 38 In light of the above observations, the primary judge did not fail to identify any relevant act of capitulation. The relevant act of capitulation affecting the claims for declaratory relief was Mr Kirsten's belated acknowledgment that the Ombrel Register and not the Kirsten-Ombrel Register properly reflected the historical membership of Ombrel. As we have mentioned, Mr Kirsten expressly relied upon the Kirsten-Ombrel Register in opposing all claims for relief, including the declarations. The primary judge was correct to describe the transaction recorded in the Kirsten-Ombrel Register as a legal impossibility and in his conclusion that there was no reasonable basis to resist the grant of the declarations. His Honour's reference to other acts of capitulation will be considered in the context of other grounds. The contention in [1(a)(i)] of the amended grounds of appeal is rejected. Ground [1(a)(iii)] 39 As we have already identified, Ms Miller did not press for substantive orders in the proceeding because the acts of capitulation by Mr Kirsten meant it was unnecessary to do so. The characterisation of that as an "abandonment of the claim in its entirety" is not persuasive. There was utility in pressing each of the claims for so long as Mr Kirsten maintained a defence in connection with them. The pleaded defence relied on the Kirsten-Ombrel Register and was maintained until immediately before the hearing. For the purposes of discharging his onus on this appeal, Mr Kirsten has not demonstrated that he abandoned that aspect of his defence to the claim for declaratory relief at the time of, or as part of, the earlier settlement agreement. Accordingly, nothing in the settlement agreement prevented Ms Miller from seeking an order for the recovery of her costs of meeting that defence. On any view, Mr Kirsten's reliance on the transaction recorded in the Kirsten-Ombrel Register was always bound to fail, irrespective of any additional defences he erected under the AP Act. He has not demonstrated that the parties' agreement to bear their own costs encompassed the costs of that aspect of the dispute. 40 Ground [1(a)(iii)] is rejected. Grounds [1(a)(ii)] and [1(b)] 41 Considered together, these grounds allege that the primary judge awarded Ms Miller the costs of that part of the proceeding relating to Ombrel, a result contrary to the parties' agreement that they bear their own costs of the application for orders under s 1071F of the Corporations Act compelling the registration of the transfer forms. 42 The primary judge awarded Ms Miller 40% of her costs of and incidental to the whole of the proceeding. At J [95], his Honour appears to explain that apportionment solely by reference to the circumstance that the proceeding involved claims for relief relating to four other companies. The reasons of the primary judge contain no express mathematical calculation of Ms Miller's costs of her claims for declaratory relief relating to Ombrel, separate and apart from her compromised costs relating to her claim for relief under the Corporations Act (also relating to Ombrel). 43 Among other things, Mr Kirsten asserts that the fixing of the 40% figure is a strong indication that the primary judge erroneously took into account the costs of the claim for relief under the Corporations Act, in respect of which no costs are payable, and so wrongly conflated the issues. 44 We do not accept that submission. 45 The primary judge twice made express reference to the parties' earlier agreement to bear their own costs relating to the claim for relief in [4] of the originating application: J, [5] and [94]. At J [12], his Honour made it plain that the only remaining issue was Ms Miller's application for costs of pursuing the declarations sought in [1] and [2] of the originating application. Considered in context, the 40% apportionment may be understood as a reflection of the costs of pursuing the issue of which was the correct member register, relative to all other issues arising on the originating application, whether relating to Ombrel or not. 46 We do not accept that the question of which was the correct register was wholly subsumed in the question of whether an order should be made under the Corporations Act. We are reinforced in that view by the fact that Mr Kirsten's representative made submissions before the primary judge about the reasonableness of his conduct in relying on the Kirsten-Ombrel Register. His submissions as to costs did not include any assertion that that topic was irrelevant because the parties had agreed to bear their own costs with respect to that question. We accept Ms Miller's submission that he should not be permitted to adopt that stance now. In any event, the onus is on Mr Kirsten to prove that the settlement agreement encompassed Ms Miller's costs of meeting all defences erected in answer to the claims for declaratory relief, including the pleaded allegation that the Kirsten-Ombrel Register was the true register of members. That onus is not discharged. 47 Considered in its proper context, the assessment of the primary judge that the allowable costs should be 40% of Ms Miller's total costs does not disclose error. The assessment should be understood as a reflection of his Honour's evaluation of Ms Miller's costs of preparing her answer to a part of Mr Kirsten's defence (as discussed above) relative to her total costs. Ground [1(c)] 48 This ground includes a contention that the primary judge erred at J [70]. There, his Honour said: I make no finding as to how the Kirsten-Ombrel Register came into existence, however a number of matters persuade me that Mr Kirsten's conduct in defending proceedings was unreasonable and that this is one of those cases where I am confident the plaintiff would almost certainly have succeeded in her claim for declarations. 49 Mr Kirsten submits that the primary judge there focussed on the reasonableness of his defence to the whole of the proceeding and that his Honour went on to consider matters that were irrelevant because they related solely to the question of whether an order under s 1071F(2) of the Corporations Act should be made. 50 The passage at J [70] introduces the reasons why the primary judge was confident that the application for declarations would almost certainly have succeeded. 51 It is true that in the paragraphs following J [70] the principal focus was upon Mr Kirsten's reliance on the AP Act as a reason for refusing to register the transfer based on the transmission of the shares to Ms Miller on the death of the deceased. However, whilst the AP Act aspect of the defence related to the question of the registration of the transfer forms, that was not exclusively so. The arguments in support of the AP Act included (in part) Mr Kirsten's continued reliance on the Kirsten-Ombrel Register as evidence of a transaction that purportedly resulted in a competing claim to the shares by Ombrel itself. It was open to Mr Kirsten to expressly abandon his reliance on that transaction at the time of the registration of shares in Ms Miller's name, but he has not established that he did so. The passages following J [70] were not irrelevant to the subject matter of the costs application because they went to explain how reliance on the Kirsten-Ombrel Register infiltrated the whole of the proceeding including the discrete applications for declaratory relief. As we have mentioned, at first instance, Mr Kirsten did not argue that the dispute concerning the correct historical register had been compromised or resolved by the earlier settlement agreement or by his decision to register the transfer. That explains why the reasons of the primary judge do not grapple with that issue. 52 We have already concluded that the primary judge did not err in finding that Ombrel's membership in itself was a legal impossibility. Accordingly, continued reliance on the Kirsten-Ombrel Register purporting to record any such membership for any reason was bound to fail for all purposes, including on the application for declaratory relief. It follows that even if the primary judge erroneously made findings in the absence of a trial of the kind alleged in ground [1(c)], demonstration of those errors would not warrant the relief now sought on this appeal. That is because in exercising the discretion afresh, we would award Ms Miller her costs of pursuing the claims for declaratory relief, which include her costs of meeting the defence. Mr Kirsten has not demonstrated that Ms Miller's costs of pursuing her claims for declaratory relief, in light of his defence, did not approximate 40% of the whole of her costs. 53 There will be an order dismissing the appeal. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Charlesworth, Derrington and Halley. Associate: Dated: 27 August 2024