Supreme Court New South Wales Medium Neutral Citation: Driver v Botanical Water Technologies Pty Ltd (No 2) [2024] NSWSC 1641 Hearing dates: On the papers Decision date: 20 December 2024 Jurisdiction: Equity - Commercial List Before: Ball J Decision: (1) The fifth defendant pay the second plaintiff the sum of USD8,518,852.64; (2) The fifth defendant pay the fourth plaintiff the sum of USD7,469,896.98; (3) The fifth defendant pay 90 percent of the plaintiffs' costs on the ordinary basis as agreed or assessed; (4) There otherwise be no order as to costs of the proceedings. Catchwords: COSTS — Party/Party — Bases of quantification — Ordinary basis — Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 — Whether issues subject to costs are clearly dominant or separable — Where claims are separate in a sense, but arise out of same factual matrix — Not appropriate to attempt apportioning of costs between different claims — Plaintiffs awarded 90% of costs to recognise failed or abandoned claims JUDGMENTS AND ORDERS — Interest — Award of as damages — Where fiduciary relationship — Where appropriate for interest to be calculated from date Court delivered principal judgment Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001 (Cth) Practice Note SC Gen 16 Cases Cited: BCEG International (Australia) Pty Ltd v Xiao [2022] NSWSC 972 Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409 Hagan v Waterhouse (1991) 34 NSWLR 308 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Category: Costs Parties: David Driver (First Plaintiff) Ambrosios Kambouris (Second Plaintiff) Kambouris Shares Pty Ltd (Third Plaintiff) DJD Trading Pty Ltd (Fourth Plaintiff) Botanical Water Technologies Pty Ltd (First Defendant) Botanical Water Technologies Ltd (Second Defendant) Botanical Water Technologies IP Ltd (Third Defendant) MyCo Pty Ltd (Fourth Defendant) Terry Paule (Fifth Defendant) Aqua Botanical Beverages (Australia) Pty Ltd (In Liquidation) (Sixth Defendant) Representation: Counsel: DFC Thomas SC with H Atkin (Plaintiffs) Solicitors: McCabes Lawyers (Plaintiffs) Corrs Chambers Westgarth (Third to Fifth Defendants) File Number(s): 2021/181606 Publication restriction: None JUDGMENT Introduction 1. I delivered reasons for judgment in this matter on 8 November 2024: see Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409. 2. Two issues remain to be determined. One is the question of interest. The other is costs. This judgment is concerned with those issues. It assumes familiarity with my earlier judgment and uses the same abbreviations as used in that judgment. Background 1. The claims made by the plaintiffs fell into four broad categories. 2. First, there were those claims relating to the transfer of ABBA's business to BWT without the agreement of Dr Kambouris and Mr Driver. Those claims included a claim that Mr Paule breached the ABBA Implementation Deed and that he breached an agreement reached between him and Mr Driver in Ballina. They also included a claim under ss 232 and 233 of the Corporations Act 2001 (Cth) (Corporations Act) that the affairs of ABBA were conducted in a way that was contrary to the interest of the members as a whole or in a way that was oppressive to KSP (and each other member of ABBA other than Mr Paule and Mr S Paule). Those claims were pressed at the final hearing. They failed. 3. Second, there was a claim arising from what was said to be a breach of an agreement reached in Ballina between Mr Driver and Mr Paule by which MyCo would start providing immediate funding to ABBA. That claim was not pressed at the final hearing. 4. Third, there were those claims relating to what was sometimes referred to as the second restructure, which involved the shareholders in BWT, including Dr Kambouris and DJD, transferring their shares in BWT to BWT UK and being issued the equivalent number of shares in BWT UK. Dr Kambouris and Mr Driver were directors of BWT and expected to be appointed as directors of BWT UK but never were. As part of that restructure, BWT UK raised additional capital and issued further shares to Mr Paule and his brother, the effect of which was that Dr Kambouris and Mr Driver (through DJD) lost control of the business carried on by BWT. Eventually, BWT UK sold that business to MyCo for far less than the business was worth. Dr Kambouris and Mr Driver claimed that those events gave rise to a breach of an agreement referred to as the BWT UK Agreement (they also advanced an alternative case based on estoppel). They also alleged that in engaging in that conduct Mr Paule breached fiduciary duties that he owed Dr Kambouris, Mr Driver (and DJD) and that he engaged in unconscionable conduct in contravention of ss 12CB and 12CA of the Australian Securities and Investments Commission Act 2001 (Cth). The same events also formed the basis for relief claimed under ss 232 and 233 of the Corporations Act. All of those claims were pressed at the final hearing. I found that the claim based on breach of fiduciary duties succeeded but that the other claims failed. 5. In relation to the claim based on breach of fiduciary duties, I found that Dr Kambouris and DJD were entitled to recover equitable compensation and that that compensation should be assessed at the time judgment was delivered. As at that date, I concluded that if Mr Paule had not breached his duties by participating in the capital raising he would not have gained control of BWT UK and its business would not have been sold. In that event, I concluded that Dr Kambouris's shares in the business would have been worth USD8,438,000 and DJD's shares would have been worth USD7,399,000. I also concluded that Dr Kambouris's and DJD's shares in BWT UK were now worthless, with the result that Dr Kambouris was entitled to recover USD8,438,000 and DJD was entitled to recover USD7,399,000. 6. Fourth, there was a claim that BWT IP UK breached an agreement with Dr Kambouris by failing to pay amounts said to be due under that agreement for the transfer of certain intellectual property rights to BWT IP UK, and several related claims. Those claims were not pressed at the final hearing. The claim for interest 1. Dr Kambouris and DJD seek interest in accordance with Practice Note SC Gen 16 from 31 December 2020, compounding at yearly rests. 2. As to the date from which interest should run, they submit that they are entitled to interest from the date of breach which was the date on which the shares in BWT UK were issued to Mr Paule and his brother which had the result that Dr Kambouris and Mr Driver (through DJD) lost control of that company. They submit that Mr Paule's breach of duty caused Dr Kambouris and DJD to lose the entire value of the property they held as at 31 December 2020 and it is therefore appropriate that interest should run from that date to compensate them for that loss of value. 3. In the alternative, the plaintiffs submit that interest should run from 27 December 2023, which is the date on which Mr Paule on behalf of BWT, BWT UK and BWT IP UK accepted MyCo's offer to purchase the assets of the BWT Group. In their submission, it would be unprincipled to award interest from the date on which my reasons for judgment were delivered, since that date is arbitrary because it depends on "the happenstance of when reasons for judgment came to be delivered". 4. As to compounding of interest, they submit that compound interest is normally awarded on equitable compensation in similar cases: see, for example, Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10; Hagan v Waterhouse (1991) 34 NSWLR 308 at 393 per Kearney J; BCEG International (Australia) Pty Ltd v Xiao [2022] NSWSC 972 at [394] per Rees J. 5. In my opinion, interest should run from the date that I delivered reasons for judgment. The approach I took was that equitable compensation should be assessed as at the date of judgment. It was on that basis that I took account of subsequent events that had the effect of reducing the value of Dr Kambouris's and DJD's shares to zero. To permit them to recover interest from the date of breach implies that they had lost the full value of their shares as at that date. However, I made no such finding. 6. There is, perhaps, more force in the submission that interest should run from the date on which Mr Paule accepted MyCo's offer to purchase the assets of the BWT Group, since by that date it might be said that Dr Kambouris's and DJD's losses had crystallised. However, that was not the date at which their loss was assessed and it was open to either party to lead evidence of events between that date and the date of judgment (or, perhaps more accurately, the end of the hearing) relevant to the assessment of equitable compensation. Interest should run from the date of assessment. That date is best seen as the date on which I delivered reasons for judgment – that is, 8 November 2024. Costs 1. The plaintiffs seek their costs of the proceedings against Mr Paule. Otherwise they submit that there should be no order for costs. 2. The defendants submit that Mr Paule should be ordered to pay 50 percent of the plaintiffs' costs and that MyCo and BWT UK IP should have their costs of the proceedings, since they were wholly successful in defending the claims against them. 3. So far as the plaintiffs' claim for costs is concerned, the relevant principles relating to an order for costs are not in dispute. The Court will normally only deprive the successful party of the costs relating to an issue on which the successful party lost if that issue is clearly dominant or separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 per Campbell JA at [64] (Beazley JA and Mason P agreeing). 4. In my opinion, it is appropriate in this case that Mr Paule pay 90 percent of the plaintiffs' costs. In general, I do not think that this is an appropriate case in which to attempt to apportion costs between the different claims. All the claims made in the case arose from the same factual matrix. As I have explained, several of the claims concerned the same events as those that formed the successful claim based on breach of fiduciary duties. In substance, they were different causes of action brought against Mr Paule in respect of the same conduct. They could not be described as clearly separable or dominant. 5. The claims concerning ABBA and BWT IP UK were in a sense separate. However, they still arose out of the same factual matrix. For example, evidence concerning the meeting in Ballina formed part of the context of the breakdown in the relationship between Mr Paule and Mr Driver, which in turn was said to be relevant to the existence of a fiduciary relationship. Moreover, those claims occupied a relatively minor part of the case. 6. Having said that, some of the claims were not advanced against Mr Paule at all and either failed or were not pressed. The claim that MyCo breached the ABBA Implementation Deed and the claims against BWT IP UK are the principal examples. It would not be appropriate to order Mr Paule to pay the costs of those failed or abandoned claims. An order that Mr Paule pay 90 percent of the plaintiffs costs recognises that fact. 7. On the other hand, I do not think that it is appropriate to order that MyCo and BWT IP UK recover their costs of the failed claims against them. They are companies controlled by Mr Paule. They were not separately represented and there is no evidence that their costs were separated from those of Mr Paule. If a costs order were made in their favour, it would have to be limited to the costs of work that was relevant to the claims against them alone (and not Mr Paule). Costs falling within that category would be difficult to identify and are likely to be small. In the circumstances of this case, they do not justify a separate costs order. Conclusion and orders 1. It is common ground that judgment should be given in United States dollars. 2. Interest on the amount recoverable by Dr Kambouris between the date of my earlier judgment on 8 November 2024 and the date of this judgment at court rates is USD80,852.64. Interest on the amount recoverable by DJD between those dates is USD70,896.98. Accordingly, Dr Kambouris is entitled to be paid the sum of USD8,518,852.64 and DJD is entitled to be paid the sum of USD7,469,896.98. 3. The orders of the Court, therefore, are: 1. The fifth defendant pay the second plaintiff the sum of USD8,516,012.34; 2. The fifth defendant pay the fourth plaintiff the sum of USD7,467,406.41; 3. The fifth defendant pay 90 percent of the plaintiffs' costs on the ordinary basis as agreed or assessed; 4. There otherwise be no order as to costs of the proceedings. ********** Amendments 20 December 2024 - "Third plaintiff" changed to "fourth plaintiff" in order 2 of paragraph 24 and coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2024