FEDERAL COURT OF AUSTRALIA JMK Management Pty Ltd v Range Resources Ltd [2012] FCA 961 Citation: JMK Management Pty Ltd v Range Resources Ltd [2012] FCA 961 Parties: JMK MANAGEMENT PTY LTD (ACN 111 000 072) v RANGE RESOURCES LTD (ACN 002 522 009), CAPTAIN STARLIGHT NOMINEES PTY LTD (ACN 073 161 592), OPES PRIME GROUP LTD (ACN 120 372 223) (IN LIQ) WITH DISCOVERY TO BE PROVIDED BY ITS LIQUIDATOR, JOHN ROSS LINDHOLM OF FERRIER HODGSON, OKAP VENTURES PTY LTD (ACN 131 358 266), COMPUTERSHARE INVESTOR SERVICES PTY LIMITED (ACN 078 279 277) and BERNDALE SECURITIES LIMITED (ACN 006 687 467) File number: WAD 517 of 2011 Judge: BARKER J Date of judgment: 28 August 2012 Catchwords: PRACTICE AND PROCEDURE – interlocutory application abandoned – costs – indemnity costs – factors to be taken into account – whether appropriate to make order Legislation: Civil Dispute Resolution Act 2011 (Cth) Federal Court Rules 2011 (Cth) R 7.23 Cases cited: Austal Ships Sales Pty Ltd (ACN 079 160 651) v Stena Rederi Aktiebolag [2009] FCAFC 179 Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 Seven Network Limited v News Limited [2009] FCAFC 166; (2009) 182 FCR 160 Date of hearing: 28 August 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 22 Counsel for the Prospective Applicant: Mr T Galic Solicitor for the Prospective Applicant: Galic & Co Counsel for the First Prospective Respondent: Mr NC Ebbs Solicitor for the First Prospective Respondent: Bennett + Co Counsel for the Fifth Prospective Respondent: Mr CS Gough Solicitor for the Fifth Respondent: Minter Ellison Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 517 of 2011 BETWEEN: JMK MANAGEMENT PTY LTD (ACN 111 000 072) Prospective Applicant AND: RANGE RESOURCES LTD (ACN 002 522 009) First Prospective Respondent CAPTAIN STARLIGHT NOMINEES PTY LTD (ACN 073 161 592) Second Prospective Respondent OPES PRIME GROUP LTD (ACN 120 372 223) (IN LIQ) WITH DISCOVERY TO BE PROVIDED BY ITS LIQUIDATOR, JOHN ROSS LINDHOLM OF FERRIER HODGSON Third Prospective Respondent OKAP VENTURES PTY LTD (ACN 131 358 266) Fourth Prospective Respondent COMPUTERSHARE INVESTOR SERVICES PTY LTD (ACN 078 279 277) Fifth Prospective Respondent BERNDALE SECURITIES LIMITED (ACN 006 687 467) Sixth Prospective Respondent JUDGE: BARKER J DATE OF ORDER: 28 AUGUST 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The originating application by prospective applicant for order for discovery dated 30 December 2011 (first application) be dismissed. 2. The prospective applicant pay the first and fourth prospective respondents' costs of the first application to be taxed if not agreed. 3. The interlocutory application made by the prospective applicant dated 5 July 2012 (second application) be dismissed. 4. The prospective applicant pay the first prospective respondent's and the fifth prospective respondent's costs of the second application respectively on an indemnity basis to be taxed if not agreed (disallowing any costs not reasonably incurred). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 517 of 2011 BETWEEN: JMK MANAGEMENT PTY LTD (ACN 111 000 072) Prospective Applicant AND: RANGE RESOURCES LTD (ACN 002 522 009) First Prospective Respondent CAPTAIN STARLIGHT NOMINEES PTY LTD (ACN 073 161 592) Second Prospective Respondent OPES PRIME GROUP LTD (ACN 120 372 223) (IN LIQ) WITH DISCOVERY TO BE PROVIDED BY ITS LIQUIDATOR, JOHN ROSS LINDHOLM OF FERRIER HODGSON Third Prospective Respondent OKAP VENTURES PTY LTD (ACN 131 358 266) Fourth Prospective Respondent COMPUTERSHARE INVESTOR SERVICES PTY LTD (ACN 078 279 277) Fifth Prospective Respondent BERNDALE SECURITIES LIMITED (ACN 006 687 467) Sixth Prospective Respondent JUDGE: BARKER J DATE: 28 AUGUST 2012 PLACE: PERTH REASONS FOR JUDGMENT 1 On 28 August 2012 I made orders including costs orders and gave short reasons orally. The reasons that follow are an edited form of those reasons. 2 This proceeding for preliminary discovery under R 7.23 of the Federal Court Rules 2011 (Cth) dealing with discovery from several prospective respondents commenced with some urgency on 30 December 2011 and first came before me on 6 January 2012. It then had something of a stop-start history. At an early point the prospective applicant indicated that it did not wish to pursue orders against all of the named prospective respondents. It was particularly interested in the first prospective respondent. 3 On 19 January 2012 I made a formal order that required by 31 January 2012 the first prospective respondent and the second prospective respondent to provide discovery of certain documents. I reserved the question of costs in relation to the first prospective respondent. The orders made at that time were on the basis that there was a degree of preparation on the part of the first prospective respondent to provide whatever information it could, having already endeavoured to supply information to the prospective applicant. 4 As the prospective applicant had decided not to pursue the fourth prospective respondent, on 19 January 2012 I ordered that the fourth prospective respondent be entitled to its costs to be taxed if they were not agreed. 5 There were a number of issues in the early stages of the proceedings that were raised by me, but also by counsel for the first prospective respondent. One of my concerns led to a director of the prospective applicant putting on an affidavit rather than rely on the affidavit of the solicitor for that party. 6 Thereafter the proceeding seemed to have become inactive, as a result of which I arranged for my associate to contact the parties, particularly the prospective applicant's solicitors, to see whether the matter was concluded. As a result of that enquiry, the matter came back before me on 28 June 2012. The prospective applicant then alleged the first prospective respondent had not complied with the earlier order regarding discovery, something not conceded by the first prospective respondent. 7 On 28 June 2012 I made a further order that the first prospective applicant file and serve, by 5 July, its proposed application in respect of the alleged non-compliance with order 1 of the orders that I made on 19 January 2012, failing which the application, insofar as it related to the first and fourth prospective respondents, be dismissed, and secondly, that the prospective applicant pay the first and fourth respondents' costs incurred in relation to the application to be taxed, if not agreed. At that point there had been no interest shown by the prospective applicant in the fifth respondent. 8 The proceeding was then advanced by the prospective applicant filing an interlocutory application on 5 July 2012 seeking orders, firstly, against the first prospective respondent for further disclosure of documents, and also against, for the first time, the fifth prospective respondent, Computershare, for the disclosure of a range of documents. 9 The description of the documents that each was required to disclose, was in precisely the same terms, and they covered the general manuals, procedures, guidelines, policies, and other documents that applied to the off-market share transfer in question involving Captain Starlight Nominees Pty Ltd and the shares in the first prospective respondent, with a value of approximately $7 million as of the transfer date being transferred from the prospective applicant, JMK Management Pty Ltd to Captain Starlight Nominees Pty Ltd, and the actual documents selected from the first category of documents and completed for this particular transfer. 10 The application was not obviously in respect of non-compliance with the earlier order, although I suppose it could be construed that way against the first prospective respondent in that it was now said against Range Resources Ltd that it held documents of this type that ought to be disclosed, albeit that they seemed to relate to the share registration process, involving Computershare as the share registrar in relation to these alleged potential transactions, and not the first prospective respondent. 11 In any event, on the return of the interlocutory application it was abandoned by the prospective applicant. It is appropriate in the circumstances that I make relevant orders dismissing these proceedings and it is appropriate that costs orders should be made. It seems to me that the proceeding overall, and certainly since the interlocutory application of 5 July 2012 was filed (what has been called today the "second application") was in circumstances that, at the very least, were questionable. It is not clear exactly what cause of action would be pursued to which the disclosure sought in the second application against Computershare for the purposes of R 7.23 is said to be relevant. 12 The prospective applicant contends that there might be a negligence action but that is not something that is identified in the documents at all, whether the originating application, the second application, or the affidavits. It is said on behalf of the prospective applicant that it is not required to detail every aspect of what it is attempting to do. This may be so, but there still needs to be a statement of belief as to the cause of action, and this must require some detail. The circumstances of the transaction that was the subject of concern had been made very clear in the earlier documentation and there had never been any suggestion that something might have been done negligently or improperly by the fifth prospective respondent somewhere along the way. In any event, the position has now been arrived at where the prospective applicant no longer wishes to pursue the application. 13 It does seem to me that in all the circumstances there has been a lack of attention to detail in this case by the prospective applicant to what might reasonably be obtained under R 7.23, and what is being done against Computershare in particular is being done at the very last minute. I think it is appropriate that indemnity costs orders should apply in this particular case, in relation to the second application, as the affected prospective respondents submit. 14 The basis upon which the second application has been pursued is questionable. Questions of the jurisdiction of the court, for example, have been raised if it is merely a negligence action the prospective applicant wishes to pursue against the fifth prospective respondent. Very little else is suggested from the bar table as being relevant. A failure to file a genuine steps statement is an issue that has been raised by the fifth prospective respondent, something which again suggests that everything has happened in a great rush at the last minute. The Civil Dispute Resolution Act 2011 (Cth) that requires a genuine steps statement is designed to have parties talk before they come to the Court to prevent the waste of time and money, as has been occasioned here. 15 It is fair to say that the whole basis on which the application has been pursued over time has not been thoroughly thought through. The result is that, whilst the second application has been abandoned, the consequences are, in this case, that there ought to be indemnity costs orders made. Indemnity costs orders should not be made lightly, and I rarely make them. The concept of an indemnity costs order is to recognise the maintenance of proceedings which are variously described as misconceived, hopeless and having no proper grounds for being pursued: Seven Network Limited v News Limited [2009] FCAFC 166; (2009) 182 FCR 160 at [1102]; Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; Austal Ships Sales Pty Ltd (ACN 079 160 651) v Stena Rederi Aktiebolag [2009] FCAFC 179. I think what has happened in this case in relation to the second application fits into those categories. This is one of those cases where parties have been obliged to incur costs unnecessarily at the hands at the prospective applicant. I am inclined therefore to exercise my judicial discretion and fully remunerate the prospective respondent parties for the actual costs of engaging solicitors to act on their behalf. 16 The first prospective respondent, at all times, has plainly sought to be as cooperative as it could in providing materials, and yet it has been further kept in the proceedings by the second application, while new strategies were devised and then abandoned against it at the last minute. 17 The fourth prospective respondent also sought joint costs orders against the director of the prospective applicant and its solicitor. It is always a difficult thing, so far as solicitors are concerned, for a judge who sits watching what happens in legal proceedings, where all sorts of strategies are adopted and positions pursued on behalf of clients, to be able to make an authoritative decision that something done was so utterly hopeless that the lawyer should take full responsibility for it. There has been here, and I do not mean to use the word in an overly pejorative way, some muddling from the very beginning in relation to this proceeding, and I have made some comment about that already. But at the commencement of the proceedings, at least, there seemed to be some grounds, albeit poorly expressed, for a prospective action. In the end, I do not think it would be appropriate to make an order against the solicitor as a third party for the costs in the matter. Nor am I entirely satisfied that it is appropriate to make a separate costs order against the director, Mr Jim Marinis, who eventually put on an affidavit in the proceeding. In the end, I will just make orders against the prospective applicant itself, but they will be on the indemnity basis that has been asked for. 18 I have a minute that has been put on by the first prospective respondent. The first order sought is that the originating application by the prospective applicant for orders for discovery made by the prospective applicant, dated 30 December 2011, which is called the first application, be dismissed. There ought to be an order in those terms. The second order sought is that the prospective applicant pay for the first and fourth respondents' costs of the first application, to be taxed if not agreed. There will be an order in those terms. 19 The third order sought is that the interlocutory application made by the prospective applicant, dated 5 July 2012, be dismissed. There should be an order in those terms. The fourth order sought is that the prospective applicant pay the first prospective respondent's costs of the second application on an indemnity basis. I will make an order in those terms, adding the words to it, "to be taxed if not agreed," and then in brackets, "(disallowing any costs not reasonably incurred)". 20 In relation to the position of Computershare it does not need a separate order dismissing the second application. I will simply add to the minute I have from the first prospective respondent in paragraph 4, the mention of the fifth prospective respondent. So that order will read, "The prospective applicant pay the first prospective respondent's and the fifth prospective respondent's costs of the second application on an indemnity basis, respectively, to be taxed if not agreed (disallowing any costs not reasonably incurred)". As a result there will be just one costs order, but the first and the fifth prospective respondents will each get their costs, and I have articulated that in the one paragraph, rather than separate paragraphs, and added the word "respectively" so that that is quite clear that it is not a joint costs order. 21 I am also inclined to make an order that the proceeding otherwise be dismissed so that there is no misunderstanding that the whole of the proceedings is now at an end. ORDERS 22 The Court orders that: 1. The originating application by prospective applicant for order for discovery dated 30 December 2011 (first application) be dismissed. 2. The prospective applicant pay the first and fourth prospective respondents' costs of the first application to be taxed if not agreed. 3. The interlocutory application made by the prospective applicant dated 5 July 2012 (second application) be dismissed. 4. The prospective applicant pay the first prospective respondent's and the fifth prospective respondent's costs of the second application respectively on an indemnity basis to be taxed if not agreed (disallowing any costs not reasonably incurred). I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate: Dated: 4 September 2012