Furniss v Blue Sky Alternative Investments Limited (No 2)
[2021] QSC 121
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Furniss v Blue Sky Alternative Investments Limited (No 2)[2021] QSC 121
- Add to List
Furniss v Blue Sky Alternative Investments Limited (No 2)[2021] QSC 121
Furniss v Blue Sky Alternative Investments Limited (No 2)[2021] QSC 121
SUPREME COURT OF QUEENSLAND
CITATION: | Furniss v Blue Sky Alternative Investments Limited (No 2) [2021] QSC 121 |
PARTIES: | DAVID FURNISS (applicant) v BLUE SKY ALTERNATIVE INVESTMENTS LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (RECEIVERS AND MANAGERS APPOINTED) ACN 136 866 236 (respondent) |
FILE NO/S: | BS No 10824 of 2020 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 27 May 2021 |
DELIVERED AT: | Rockhampton |
HEARING DATE: | On the papers |
JUDGE: | Crow J |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – GENERALLY – where the applicant was successful in being granted leave to inspect books of a company under s 247A of the Corporations Act 2001 (Cth) – where the applicant seeks their costs under the general rule – where the respondent company seeks an order that each party bear their own costs – where, on the morning of the hearing, several categories of documents sought by the applicant were abandoned – where the scope of further categories was narrowed – whether the usual order as to costs ought to be applied Corporations Act 2001 (Cth), s 247A Uniform Civil Procedure Rules 1999 (Qld), r 681 Furniss v Blue Sky Alternative Investments Limited [2021] QSC 46, cited Hughes v Western Australian Cricket Associate Inc [1986] ATPR 40-478, applied Ingram v Ardent Leisure Ltd [2020] FCA 1302, cited Interchase Corp Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26; [2001] QCA 191, applied London City Equities Limited v Penrice Soda Holdings Limited (2011) 281 ALR 519; [2011] FCA 674, cited Lonergan & Anor v Friese [2020] QLAC 3, cited Mighty River International Ltd v Mesa Minerals Ltd [2015] FCA 462, cited Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222; [2013] QLAC 3, applied Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, followed Re Sirrah Pty Ltd [2017] NSWSC 1683, cited Satz v ACN 069 808 957 [2009] NSWSC 1459, cited Style Ltd, Re; Merim Pty Ltd v Style Ltd (2009) 255 ALR 63; [2009] FCA 314, cited |
COUNSEL: | E Goodwin for the applicant A Crowe QC, with P Ahern, for the respondent |
SOLICITORS: | Piper Alderman for the applicant Gilbert + Tobin for the respondent |
- [1]On 19 March 2021, I granted an application made by Mr Furniss, a shareholder, pursuant to s 247A of the Corporations Act 2001 (Cth) to inspect various books of the respondent company, Blue Sky Alternative Investments Limited.[1] The parties were directed to provide a draft order reflecting my reasons including, if agreement could be reached, the costs of the application within 14 days.
- [2]For various reasons, not the least being the complexity of the matter, the parties were granted several extensions of time in which to provide their draft order. The draft was provided on 6 May 2021 and perfected on 12 May 2021; however, no agreement could be reached regarding costs.
- [3]The parties have since provided written submissions on costs; this judgment concerns the determination of that issue.
- [4]The successful applicant seeks their costs, principally relying on r 681 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) and submits that costs ought to “follow the event”. The applicant further submits that it is “common” for unsuccessful s 247A respondents to pay the applicants’ costs.[2]
- [5]It is also not uncommon for parties, even where successful, to bear their own costs.[3]
- [6]Conversely, the respondent submits that each party ought to bear their own costs of the application. The respondent bases this submission on essentially a two-tier basis, that is:
- (a)The sheer number of documents originally sought by application was so broad that the opposition was justified on the basis that compliance would have been both too onerous and costly.
- (b)The scope of documents originally sought by the applicant significantly narrowed (both just prior to the hearing and following the judgment), such that neither party could be considered wholly “successful”; and
- (a)
- [7]The respondent submits that it would be too difficult to fashion a costs order which deals with each discrete issue, as such an order that each party bears their own costs would be appropriate.
- [8]While the court has a wide discretion as to costs, it must be exercised judicially, and departures from the usual rule are exceptions typically based on some conduct by the successful party which disentitles to them a favourable order, or due to “special or exceptional” circumstances.[4]
- [9]The respondent do not submit, quite appropriately, that the applicant has conducted himself in such a way to disentitle him from a favourable costs order, rather, as mentioned above, the broadness of the original scope, and its subsequent narrowing, was significant enough to justify the opposition to the application and conclude that (following the abandonment of several categories) no party wholly succeeded.
Cost and Onerousness of Order
- [10]The respondent also makes a somewhat parallel argument that the original scope was too large, such that opposition was necessary due to the cost and great burden that compliance would have placed upon the respondent.
- [11]With regard to the onerous nature of orders under s 247A, it is of course a relevant consideration, but it is only one of many. Any assessment of whether the imposition of such an order would be onerous is a relative one, an order requiring the inspection of thousands of documents or the searching of terabytes of data is not onerous per se; it is entirely dependent on the size of the company. Here, Blue Sky AI had many billions of dollars’ worth of assets, it was a large investment company, such that I do not consider the various searches required[5] would have (had the categories not been narrowed or abandoned entirely) been too onerous on the respondent company.
- [12]It is immaterial, as I stressed in my original judgment, whether the documents are sought by a small or large shareholder, the rights remain the same.
- [13]In any event, several categories were abandoned or narrowed, and the respondent maintained their opposition, so it is difficult to accept that the opposition was based purely on the breadth of the orders sought.
- [14]As to the costs of complying with inspection orders under s 247A, it is common practice that the applicant pay the costs of compliance so I do not consider that it is an appropriate reasons for opposing an application under s 247A, except where there is a suggestion that the applicant could not pay the reasonable costs; but that was not the case here.
Scope Narrowed – Before Hearing
- [15]By his application filed 9 October 2020, the applicant sought 13 categories of documents. On the morning of 9 December 2020, the hearing date, six categories were abandoned. These included:
- (a)Item 5: “All valuations of the Projects in the period from the date of the inspection of each of the funds the subject of each Project”;
- (b)Item 6: “All documents recording or relating to the decision to sell or exit investments relating to: (a) Blue Sky AI’s retirement living projects and Blue Sky’s interests in Aura; and (b) Blue Sky AI’s student accommodation projects and Blue Sky’s interest in Atira”;
- (c)Item 8: “Documents recording or relating to the decisions to cancel or defer the Projects”; and
- (d)Item 12: “All documents recording or relating to the notification of claims, or the notification of circumstances that might give rise to claims, under the Insurance Policies.”
- (a)
- [16]In my original judgment, I made no determination in respect of those categories but did note that they were “couched in very broad terms”.[6]
- [17]The respondent points to both the broad terms in which the abandoned categories were couched, and to Derrington J’s decision in Ingram v Ardent Leisure Ltd,[7] where his Honour said in respect of insurance documents (the kind sought by Item 12 above) that a case would have to be “somewhat exceptional” to warrant inspection of such documents.[8] These factors, in the respondent’s submission, support a conclusion that the respondent was successful in their opposition of those categories.
- [18]The 13 categories originally sought could be divided into two groups: Item 11 and 12 which contained documents relating to insurance policies and the other 11 categories which dealt with, as I said in my original judgment, “investment and audit documents”.[9] The respondents submissions on the investment and audit documents were made as a whole, mostly concentrating on the shareholding being disproportionate to the quantum of the applicant’s likely claim, without addressing each category piecemeal. This had the effect of, upon the applicant abandoning the six categories, limiting the scope of documents which the court had to consider (without necessarily limiting the scope of issues) and placed the respondent in a position that it had little time to consider. Accordingly, despite the abandonment by the applicant of six categories, the respondent’s position remained the same.
Scope Narrowed – After Judgment
- [19]Following the delivery of the original judgment, the parties agreed that the scope of the categories which I ordered be inspected should be, once more, further narrowed.[10] Again, the respondent submits that the narrowing of the documents post the delivery of my judgment is “significant success” for the respondent. The applicant submits, and I accept their submission, that the parties’ pragmatic approach after the court has delivered judgment is an irrelevant consideration in determining the appropriate costs order relating to a proceeding before judgment. Of course, post-judgment conduct may be relevant where such conduct would be best described as misconduct, of the sort referred to in Oshlack, but that is not the case here. The further narrowing post-judgment shows proper and reasonable conduct by both parties in compliance with r 5 of the UCPR.
- [20]Therefore, insofar as the significant narrowing of the scope of documents occurred after judgment, I do not consider that they rise to the level of “special or exceptional” circumstances.
- [21]With respect to the power of the court to award costs in respect of issues, McPherson JA said in Interchase Corp v Grosvenor Hill as follows: [11]
“[82] For this purpose it becomes necessary to consider the extent of the power of a judge to award costs of issues under r. 689(1), as well as the way in which it may be exercised. The Rule speaks, in the first place, of costs of proceedings being in the discretion of the court but as following the “event” unless the court otherwise orders. The word “event” in a context like this has spawned an immense amount of authority. Before the Judicature Act and rules, the guiding principle applied in Chancery was that costs were in the discretion of the court, while at common law, where trials took place with a jury, it was that costs followed the event. Under the Judicature Act and rules, the pre-Judicature principles were preserved in what in Queensland became O. 91 r. 1, which adopted O. LXV, r. 1 of the English rules of 1875 including the second proviso to that rule providing that costs follow the event ‘unless … the Court shall for good cause otherwise order’. Despite far-reaching later changes in the corresponding English rules governing costs, O. 91 r. 1 remained in the original form until the UCPR came into force on 1 July 1999.
[83] The impact of the second proviso was considered by Lord Finlay L.C. in Reid Hewitt & Co. v. Joseph [1918] A.C. 717, where a successful plaintiff had been awarded costs of the action, although he had succeeded on only one of two issues at the trial. Following a lengthy survey of the authorities, his Lordship concluded that the ‘event’ was not simply the result or outcome of the action, which in that instance his Lordship considered, would produce ‘such injustice that it would call for a special order under the proviso to correct it’ [(][1918] A.C. 717, 731). The words ‘follow the event’ were to be read ‘distributively’, by which his Lordship meant that, where there were two or more issues or questions in the action, each of them was, or gave rise to, an ‘event’ for which the costs were to be determined separately. So, in Reid Hewitt & Co. v. Joseph, the order substituted on appeal ([1918] A.C. 717, 744) was that the defendants should have the costs of the issue on which they had succeeded. From Lord Finlay’s approving reference to the decision in Ellis v. Desilva (1881) 6 Q.B.D. 521, it is clear that he did not regard what he was saying as confined to the costs of actions tried with a jury. Ellis v. Desilva concerned a reference to arbitration in which, like r. 589(1), the formula used was that costs should ‘follow the event’. See also Colburt v. Beard [1992] 2 Qd.R. 67, 69–71, where Thomas J. discussed this question and came to a similar conclusion on the subject of ‘issues’.
[84] These authorities show that the structure and language of the new r. 689(1) has not introduced any marked change in the practice governing awards of costs in Queensland. Costs are, as they were before, in the discretion of the court. They follow the ‘event’ which, when read distributively, means the events or issues, if more than one, arising in the proceedings unless the court makes some other order that is considered ‘more appropriate’. It is not by this intended to suggest that there has been a reversion to a regime under which costs of separate issues must now be determined. The practice of doing so was responsible for so much litigation in England that the rule was eventually altered to place costs within the general discretion of the court or judge: see Judicature Act 1925, s. 50(1). Rule 689(1) may fairly be regarded as producing the same result as prevailed before it came into force, although it now does so in somewhat different language and is structured in a slightly different way. Few civil matters are now tried by jury in Queensland, and it ought not to be assumed that, by introducing the new rule in a form that now omits reference to such trials, a fundamental change in the practice of awarding costs was intended.”
- [22]In respect of awards of costs dependent upon success or failure of issues raised in proceedings, I respectfully adopt the succinct analysis of the Land Appeal Court (Peter Lyons J, Mr PA Smith and Mr WA Isdale) in Mio Art Ltd v Brisbane City Council,[12] of the guiding decisions of Hughes v Western Australia Cricket Assoc Inc,[13] and X and Y (by her tutor X) v PAL.[14] In Mio Art, the Land Appeal Court said:[15]
“[11] The respondent relies on the decision of Toohey J in Hughes v Western Australian Cricket Association Inc, which was cited with approval by the Court of Appeal in Sochorova v Commonwealth of Australia. Toohey J noted that the discretion to award costs:
‘… must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.
- Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order (Ritter v Godfrey [1920] 2 KB 47.)
- Where a litigant has succeeded only upon a portion of his claim the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. (Forster v Farquhar [1893] QB 564; (1983) 1 QB 564.)
- A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them. In this sense, “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. (Cretazzo v Lombardi (1975) 13 SASR 4 at p 12.)’
[12] The respondent relies upon three recent Court of Appeal decisions as precedent for the court in this case to depart from the conclusion that costs should follow the event. The cases referred to are Sochorova; Queensland Construction Materials Pty Ltd v Redland City Council; and AAD Design Pty Ltd v Brisbane City Council.
[13] In each of those matters, the Court of Appeal made costs orders which reflected the relative victories of the parties.
[14] In Sochorova, an appellant which was only partially successful on appeal was ordered to pay half of the respondent’s costs. In Queensland Construction Materials, no order for costs was made in circumstances where both parties were partially successful, while in AAD an unsuccessful appellant was ordered to pay ⅓ of the respondent’s costs in circumstances where the respondent had significantly departed from its earlier contentions.
[…]
[16] The respondent neatly puts a summary of its contentions in paragraphs 17 and 18 of its submissions:
‘17. The appellant has succeeded in recovering about one-fifth of what it claimed. It failed completely on its claim for the second adjustment relating to the space between buildings, which was the largest part of its claim. The respondent conceded the first adjustment of 2600m², and only argued that on the Land Court’s approach which was necessarily approximate rather than precise, and the absence of any direct relationship between value per m² of land and value per m² of GFA, the appellant had not shown a basis for appellate intervention.
- In those circumstances, it is just as between the parties to let each of them bear their costs of the proceedings in this Court on the issue remitted by the Court of Appeal, or at best for the appellants, to order that the respondent pay one-fifth of its costs.’
[17] Mio Art says that it should receive an award of costs, as costs should follow the event. It relies in particular on the decision of McHugh J (with whom Brennan CJ generally agreed) in Oshlack v Richmond River Council where his Honour said:
‘By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs.’
[18] Mio Art also relies on the decision of Eames J in Pricom Pty Ltd v Sgarioto:
‘As a general rule costs should follow the event, and a successful party should obtain all of the costs of the action even though it failed to establish some of the alternative heads of its claim.’
[19] Reference has also been made by Mio Art to the respondent’s failure to agree to have the question of the mathematical error determined by mediation or negotiation. In this regard, Mio Art expressly referred to the reasons of Fryberg J in the Court of Appeal where he indicated his hope that the parties could resolve the issue ‘without the need for a further hearing’.
[20] We note that Justice Fryberg then went on to say:
‘If the hearing is necessary, no doubt that the Land Appeal Court will take into account not only the circumstances of the further hearing but also the cause of the misapprehension giving rise to the need for it, in determining the costs of that hearing.’
[21] Greener Investments contend, as its primary submission, that it should recover its costs as a successful appellant. In the alternative, it has referred the court to the case of X and Y (by her tutor X) v PAL.
[22] X and Y was a complex case. It involved four key issues, which the court referred to as issues (a), (b), (c) and (d). The court noted that in excess of 95% of the court’s time on appeal was taken up with issue (b), on which the appellants were unsuccessful both at first instance and on appeal. Although the appellants were successful on points (a), (c) and (d), the award of damages was only small. Had the appellants been successful on issue (b), the damages would have been very large. The respondents sought orders that the appellants pay a large proportion of the respondent’s costs. After making reference to the principles set out by Toohey J in Hughes and the court rules, Clarke JA (with whom Mahoney JA and Meagher JA agreed) had this to say:
‘Although in this case there is much to be said for the view that the normal rules should apply I am persuaded by Mr Sperling, that as the major contest between the parties concerned the issue upon which the appellants failed, it is appropriate to make a different order. I will not, however, accede to his application that the appellants pay a large proportion of the respondents’ costs. The overriding objective must be to make an order which is appropriate to the justice of the case. Bearing in mind the fact that the appellants were required to contest the case in order to recover an award, that no offer of compromise was made and that the appellants were successful in three of the four issues litigated I have concluded that it is appropriate that they receive 50 per cent of their costs of the trial and the pretrial procedures.’
[23] In reaching a decision in this matter, the court is mindful of the fact that the specific provisions of s. 34(1) of the Act apply rather than the UCPR. It is clearly open to this court to reach a decision on costs on the principles as outlined by Toohey J in Hughes. However, this court is aware of the words of caution expressed by Toohey J:
‘10. There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy. Also it is necessary to keep in mind the caveat by Jacobs J. in Cretazzo v. Lombardi at 16. His Honour sounded what he described as ‘a note of cautious disapproval’ of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented:
“But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues”.’
[24] It is also appropriate to consider Toohey J’s final reasoning in Hughes:
‘15. … I approach the matter on the basis that the applicant succeeded substantially in what he set out to achieve through his application. He failed on some issues in circumstances where, not only should he not have the costs of those issues, but there should be some compensation to the respondents for the time taken in meeting those issues both prior to and at the hearing.
- In my view justice would be served by awarding the applicant 75% of his costs. …’”
- [23]
- [24]However, the “final reasoning” of Toohey J in Hughes at paragraph 15 raises an important consideration as to the exercise of the discretion as to costs as to whether an applicant has substantially succeeded in what the applicant has set out to achieve through the application and in respect of issues that the respondent succeeded. In particular, with respect to the categories abandoned pre-hearing, there ought to be “some compensation to the respondent for the time taken in meeting those issues both prior to and at the hearing”.
- [25]As set out in paragraphs [15] and [18] above, the applicant abandoned six of the thirteen categories it had sought on the morning of the hearing on 9 December 2020 in circumstances where the respondent did not have much time in which to consider its approach and the respondent continued to resist the application on the basis that the application for inspection of the documents was not brought for a proper purpose within the scope of s 247A of the Corporations Act 2001 (Cth).
- [26]Broadly speaking, in terms of determining whether the applicant achieved substantially what it had set out to achieve through its application, I conclude that the applicant has succeeded in just over half (7 out of 13) categories of documents which it sought. Conversely in respect of the abandoned six categories of documents, this occurred at such a late stage that it was plain that the respondents had taken significant time in meeting those issues which were abandoned at the commencement of the hearing.
- [27]In those circumstances, in my view, the interests of justice favour an order by which the applicant is awarded 50 per cent of its costs on a standard basis.
Footnotes
[1] Furniss v Blue Sky Alternative Investments Limited [2021] QSC 46.
[2] Re Style Limited (2009) 255 ALR 63; Mighty River International Ltd v Mesa Minerals Ltd [2015] FCA 462 (affirmed on appeal); Satz v ACN 069 808 957 [2009] NSWSC 1459.
[3] Re Sirrah Pty Ltd [2017] NSWSC 1683 at [61]; London City Equities Limited v Penrice Soda Holdings Limited (2011) 281 ALR 519 at [106].
[4] Oshlack v Richmond River Council (1998) 193 CLR 72.
[5] Exhibit NJB-7; Exhibit NJB-10 to the affidavit of Nicholas John Burkett filed 9 October 2020.
[6] Furniss v Blue Sky Alternative Investments Limited [2021] QSC 46 at [21].
[7] [2020] FCA 1302.
[8] Ingram v Ardent Leisure Ltd [2020] FCA 1302 at [98]-[99].
[9] Furniss v Blue Sky Alternative Investments Limited [2021] QSC 46 at [22].
[10] Applicant’s written submissions on costs; Respondents written submissions on costs.
[11] Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26 at 60-61[82]-[84].
[12] Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222, followed by the Land Appeal Court in Lonergan & Anor v Friese (No 2) [2020] QLAC 3.
[13] [1986] ATPR 40-478.
[14] Unreported, NSW Court of Appeal, 7 June 1991 (BC 9101914).
[15] Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222 at 224-227 [11]-[24].
[16] Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26.
[17] Hughes v Western Australian Cricket Associate Inc [1986] ATPR 40-478.
[18]Hughes v Western Australian Cricket Associate Inc [1986] ATPR 40-478 at [15].