FEDERAL COURT OF AUSTRALIA Queensland Mining Corporation Ltd v Renshaw (No 3) [2014] FCA 1126 Citation: Queensland Mining Corporation Ltd v Renshaw (No 3) [2014] FCA 1126 Parties: QUEENSLAND MINING CORPORATION LIMITED (ACN 109 962 469) v HOWARD VICTOR RENSHAW, BUTMALL PTY LIMITED (ACN 060 658 639) and 23 MARTIN PLACE PTY LTD (ACN 145 097 258 File number: NSD 1308 of 2013 Judge: PERRY J Date of judgment: 22 October 2014 Catchwords: COSTS – Where successful plaintiff's breach contributed to need for recovery proceedings Legislation: Corporations Act 2001 (Cth), ss 200B, 200J Cases cited: Latoudis v Casey (1990) 170 CLR 534 Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 Queensland Mining Corporation Ltd v Renshaw [2014] FCA 365 (QMCL (No. 1) Queensland Mining Corporation Ltd v Renshaw (No. 2) [2014] FCA 438 (QMCL (No. 2) Date of hearing: 5 May 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 14 Counsel for the Plaintiff: Mr N Furlan Solicitor for the First and Second Respondents: Mr P Beazley, Beazley Singleton Lawyers Solicitor for the Third Respondent: MacKellars Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1308 of 2013 BETWEEN: QUEENSLAND MINING CORPORATION LIMITED (ACN 109 962 469) Plaintiff AND: HOWARD VICTOR RENSHAW First Defendant BUTMALL PTY LIMITED (ACN 060 658 639) Second Defendant 23 MARTIN PLACE PTY LTD (ACN 145 097 258) Third Defendant JUDGE: PERRY J DATE OF ORDER: 5 may 2014 WHERE MADE: SYDNEY THE COURT DECLARES THAT: 1. The first defendant holds an amount of $270,000 on trust for the plaintiff pursuant to s 200J of the Corporations Act 2001 (Cth). 2. The second defendant holds an amount of $264,000 on trust for the plaintiff pursuant to s 200J(1) of the Corporations Act 2001 (Cth). 3. The first and second defendants hold an amount of $143,333 on trust for the plaintiff pursuant to s 200J(1), of the Corporations Act 2001 (Cth). THE COURT ORDERS THAT: 4. Judgment be entered against the first defendant, in favour of the plaintiff, in the amount of $270,000 together with pre-judgment interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to date of judgment, as agreed or assessed. 5. Judgment be entered against the second defendant in favour of the plaintiff in the amount of $264,000, together with pre-judgment interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to the date of judgement, as agreed or assessed. 6. Judgment be entered against the first and second defendants in favour of the plaintiff in the amount of $143,333, together with pre-judgment interest, pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from 23 October 2012 to the date of judgment, as agreed or assessed. 7. The sum of $50,333 held by the third defendant, subject to undertakings given by the third defendant to the court on 24 October 2013 be paid forthwith by the third defendant to the plaintiff. 8. Upon payment of the sum referred to in order 7 above, the plaintiff is restrained from enforcing the judgment referred to in order 6 above, save to the extent that it may enforce judgment up to the amount of $93,000. 9. The first and second defendants are to pay the plaintiff's costs of the cross-claim and I publish my reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1308 of 2013 BETWEEN: QUEENSLAND MINING CORPORATION LIMITED (ACN 109 962 469) Plaintiff AND: HOWARD VICTOR RENSHAW First Defendant BUTMALL PTY LIMITED (ACN 060 658 639) Second Defendant 23 MARTIN PLACE PTY LIMITED (ACN 145 097 258) Third Defendant JUDGE: PERRY J DATE: 21 October 2014 PLACE: SYDNEY REASONS FOR JUDGMENT (Revised from transcript) 1 For reasons given on 10 April 2014, I held that the plaintiff, Queensland Mining Corporation Ltd (QMCL), was entitled under s 200J of the Corporations Act 2001 (Cth) (Act) to recover termination payments from the first and second defendants, Mr Howard Renshaw and Butmall Pty Ltd (the Renshaw defendants). The payments were recoverable on the ground that they were made in contravention of s 200B of the Act and are held on trust by the recipients for QMCL: Queensland Mining Corporation Ltd v Renshaw [2014] FCA 365 (QMCL (No. 1)). I also dismissed the cross-claim by the Renshaw defendant. However, I deferred the making of final orders pending the submission by the parties of short minutes of order that gave effect to the reasons of the Court. 2 The parties were unable to agree minutes of order and leave was granted for the parties to provide short submissions in support of their proposed minutes of order, as I explain in Queensland Mining Corporation Ltd v Renshaw (No. 2) [2014] FCA 438 (QMCL (No. 2)) at [2]. Furthermore, while accepting that QMCL should be entitled to its costs on the cross-claim, the Renshaw defendants included short submissions to the effect that each party should bear their own costs on the application for recovery of the termination benefits under s 200J of the Act. While I had intimated at [186] of my reasons in QMCL (No. 1) that I would award the plaintiff its costs, I considered that it was fair in all of the circumstances to permit the Renshaw defendants to raise the issue. Accordingly, following receipt of the Renshaw defendants' submission, the Court advised the parties that it would hear short submissions on costs on 5 May 2014: see QMCL (No. 2) at [4]. 3 I have considered the submissions by the parties as to the question of whether the plaintiff should recover all or part of any of its costs from the Renshaw defendants. 4 In support of its submission that it is entitled to its costs, QMCL emphasised, first, that it was ultimately successful on all grounds. Secondly, QMCL submitted that, while it was a party to the settlement deed and to the payment of the moneys found to have been given in breach of s 200B of the Act, I had found that the Renshaw defendants had the benefit of legal advice and had proffered a draft settlement deed prepared by their legal representatives. I had also found that Mr Renshaw would not have signed the settlement deed and resigned his position as managing director if the moneys had not, in fact, been paid on the same day. Thirdly, QMCL pointed to my findings that there had been no threat of dismissal of Mr Renshaw if he did not resign and that Mr Renshaw had indicated that he would not resign until he was happy with the terms and conditions. Fourthly, it was said, based upon my findings at [180] – [184], that Mr Renshaw's conduct in requiring payment on the day that the Deed was signed was the act that precluded either party from obtaining shareholder approval. Finally, QMCL submitted that the direct cause of the litigation to recover the moneys paid was the failure by the Renshaw defendants to comply with the obligation imposed by section 200J of the Act to immediately repay the benefit. 5 The principles by which the Court must exercise its discretion on the matter of costs are well-settled. I was referred to two cases which appear to be particularly apposite. 6 First I was taken to the decision of the High Court in Latoudis v Casey (1990) 170 CLR 534 and in particular to the reasons of McHugh J at 568. His Honour there held that: In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the court thinks that some other order should be made. But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the unsuccessful party except for a reason connected with the case... 7 Similarly, in Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 235, Black CJ and French J held that: The award of costs to a successful party is principally by way of perceived restorative justice. The general rule assumes that where an applicant succeeds it will have incurred costs because the respondent's conduct made it necessary for the applicant to bring the proceedings... 8 In the present case, it can be said that the Renshaw defendant's conduct, in failing to comply with the obligation under section 200J to repay the moneys, made it necessary for the applicant to bring the proceedings. 9 Nonetheless, I do not accept that QMCL's conduct, in freely entering into the Settlement Deed and paying over the moneys, is too remote for me to take it into account in determining an appropriate award of costs. In this regard, while at the end of the day I did not consider it appropriate or necessary for a declaration to be made that QMCL acted in breach of s 200B of the Act, the reason for that was that there was no utility in making such a declaration. The finding was still made that there was a breach of that provision by QMCL and that lead to the circumstances on which the litigation was brought. I consider that the part played by QMCL in creating the situation leading to the need for recovery proceedings should fairly find reflection in the order for costs. 10 Balancing that consideration against the fact that QMCL was successful on all grounds in the litigation and the other considerations referred to, I consider that the appropriate order is that the Renshaw defendants pay 80 per cent of the reasonable costs incurred by QMCL in the proceedings, as agreed or assessed. 11 As to the third defendant, while initially it appeared that costs were sought against QMCL in submissions filed prior to judgment on the basis that the third defendant should not have been joined, that position was not pressed at trial; nor were costs sought on that basis at the conclusion of the hearing. At the hearing on costs, the third defendant indicated that it would abide the decision of the Court on the issue. 12 I consider in all the circumstances, including that no order for costs is sought and that it is questionable whether there was a need for the third defendant to be present throughout the hearing, that the appropriate order is that there be no order as to costs with respect to the third defendant's costs. In so finding, I do not in any way impugn the propriety of the third defendant's conduct in the litigation. 13 For these reasons I make the orders that the Renshaw defendants pay 80 per cent of the reasonable costs incurred by QMCL in the proceedings, as agreed or assessed, and that there be no order as to costs in favour of the third defendant. 14 As to the security for costs order, in the circumstances there is little that could be said to resist an order in the terms proposed. I therefore make the further order that the sum of $50,000 that was paid to the Federal Court of Australia, on or about 6 September 2013, by QMCL as security for the Renshaw defendants' costs, be remitted forthwith to the plaintiff. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry. Associate: Dated: 22 October 2014