Case: Life Therapeutics Limited v Bell IXL Investments Limited [2008] FCAFC 144
Outcome: cited
I do not consider that Bell should pay any costs on an indemnity basis. Up until the second trial, there were objective matters which gave some basis to continue with the proceedings. Finkelstein J found in favour of Bell, and as the Full Court said in Life Therapeutics Limited v Bell IXL Investments Limited [2008] FCAFC 144 at [35] : There was evidence led at trial from which it was open to the primary judge to infer that the allotment of shares was made not to benefit LFE but to support the directors and keep them in office. That inference was not inevitable but much depended on when it was to be inferred that the directors of LFE learned of the acquisition by a large shareholder of about 7% of the issued stock and what was inferred to be the state of mind of the directors at that time. The making of those inferences depended upon a number of intermediate findings of fact, none of which was made by the primary judge but, no less importantly, none of which was rejected by the primary judge. Some of those intermediate findings of fact necessarily depended upon what assessment was made of the credibility of certain evidence given by particular witnesses and, for that matter, the credibility of the witnesses generally. They are not findings of fact which this Court can make based only on the transcript of evidence. The trial before me involved the calling of further witnesses, namely Mr Milne and Mr Waller. They were important witnesses, and the acceptance of their evidence by the Court was significant in a final determination dismissing the proceeding. I do not think, in view of the approach taken by Finkelstein J and the Full Court, that Bell needed to capitulate completely at the time of the offer, especially without a complete picture of the evidence to be called before me. I do not accept the submissions of the defendants that the result in this case was inevitable which Bell ignored. The case depended on an important part of the oral evidence of the individual directors, which was appropriately tested, but in the end the evidence was accepted by the Court. Further, I do not consider that the Calderbank offer (assuming it can be so characterised) was unreasonably rejected. Obviously I take into account its rejection by Bell, but I pay higher regard to the time when the offer was made, the time allowed to consider the offer, the extent of the compromise offered, and the fact that the prospects of success as at the date of the offer were difficult to assess, involving issues of credibility and at a time before all the sworn evidence to be relied upon by the defendants was filed and served. The question then arises as to what costs order is appropriate to make as to the first trial before Finkelstein J. The Full Court determined that the matter of costs of the first trial be considered after the re-trial determination. If the rehearing was based upon the same evidence as before Finkelstein J, then in view of the result, it would be appropriate to make an order for costs in relation to the first trial in favour of the defendants. However, as I have said, the defendants did call additional witnesses, which were important to the determination of this proceeding in favour of the defendants. These witnesses could have been called by the defendants at the first trial. The Full Court, in the passage referred to above in ordering a re-trial, referred to the necessary dependence on the assessment of the credibility of witnesses. I consider that no order should be made in favour of any party as to the costs of, and incidental to, the proceedings before Finkelstein J. Finally, as to the second and third defendants, I consider that their appearances on 31 July 2008 were appropriate and prudent, and that they should be entitled to their costs of that day. The second defendant further argued that Bell commenced and continued with the proceedings without articulating how it was entitled to any remedy against the second defendant, and despite comments made by Finkelstein J at the first hearing indicting he would grant no relief against it. It was contended that in the circumstances the second defendant should be awarded costs on an indemnity basis. The second defendant made no application for summary dismissal of the proceedings against Bell on this basis, and the matter proceeded by the second and third defendants being represented by the same Counsel and solicitors for the purposes of the trial. It seems to me that the second defendant was a proper party. It sought to be heard to oppose, on behalf of the beneficial owners, the cancellation of the relevant shares. I do not accept the arguments of the second defendant seeking indemnity costs because the joinder of the second defendant as a party was appropriate. Therefore, the appropriate costs orders which I propose to make are: The plaintiff pay the costs of the first defendant of the proceeding, other than costs of and incidental to the trial before Finkelstein J. The plaintiff pay the costs of the second and third defendants of the proceeding (including of and incidental to the hearing on 31 July 2008) other than costs of and incidental to the trial before Finkelstein J. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. Associate: Dated: 8 October 2008 Counsel for the Plaintiff: Mr Mark A Robins Solicitor for the Plaintiff: Pointon Partners Counsel for the First Defendant: Mr David J O'Callaghan SC &amp; Mr Robert G Craig Solicitor for the First Defendant: Johnson Winter Slattery Counsel for the Second and Third Defendants: Mr David T Forbes Solicitor for the Second and Third Defendants: Chang, Pistilli &amp; Simmons Date of Hearing: 8 October 2008 Date of Judgment: 8 October 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/1509.html