AMA Group Limited v ASSK Investments Pty Limited (No 2) [2021] NSWCA 116

Catchwords: COSTS – where successful appellant succeeds on appeal on a point different to that made orally at first instance – where departure from argument made orally ( but not in writing) at first instance justifies a partial departure from usual rule that costs follow the event – question of discretion in all the circumstances of the case. Court of Appeal Supreme Court New South Wales Medium Neutral Citation: AMA Group Limited v ASSK Investments Pty Limited (No 2) [2021] NSWCA 116 Hearing dates: On the papers Date of orders: 03 June 2021 Decision date: 03 June 2021 Before: Bell P; Leeming JA; Emmett AJA Decision: The Respondent pay 50% of the Appellant’s costs of the appeal. Catchwords: COSTS – where successful appellant succeeds on appeal on a point different to that made orally at first instance – where departure from argument made orally ( but not in writing) at first instance justifies a partial departure from usual rule that costs follow the event – question of discretion in all the circumstances of the case. Cases Cited: Ex parte Hauxwell (1883) 23 ChD 626 Hussey v Horne-Payne (1878) 8 ChD 670 National Australia Bank Limited v K.D.S. Construction Services Pty Ltd (In Liq) (1987) 163 CLR 668; [1987] HCA 65 Category: Costs Parties: AMA Group Limited (Appellant) ASSK Investments Pty Limited (Respondent) Representation: Counsel: M Green SC with M Cobb-Clark (Appellant) Solicitors: Robbins Watson Solicitors (Appellant) TPS & Co Lawyers (Respondent) File Number(s): 2020/364329 Publication restriction: N/A Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity – Commercial List Citation: [2020] NSWSC 1756 Date of Decision: 7 December 2020 Before: Hammerschlag J File Number(s): 2020/155544 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment THE COURT : On 26 March 2021, the Court gave judgment in this matter, allowing the appeal brought by AMA Group Limited ( AMA ) and setting aside the orders of the primary judge: see AMA Group Limited v ASSK Investments Pty Limited [2021] NSWCA 45. These reasons assume familiarity with that judgment. The primary judge was strongly influenced in reaching his decision by a submission made or at least embraced by senior counsel for AMA, namely that the Board of AMA could withhold its approval of a contemplated transaction capriciously. At [66] of our earlier judgment, Bell P observed that: “ The key point is that, contrary to PJ [38], whilst I agree with the primary judge that the parties to the HOA should not be taken to have intended to permit the Board of AMA to act capriciously, such a construction of cl 7(b) is not required.” Earlier, at [59], Bell P had noted that “ in fairness to the primary judge, it should be recorded that in the course of the hearing before his Honour, Senior Counsel for AMA moved away from what he had originally submitted in writing and appeared to embrace a proposition put to him by the primary judge to that effect, namely that Board approval could be withheld capriciously. ” (emphasis in original). On appeal, AMA moved away from this position and back to a position it had put only in writing (and then very briefly) at first instance. It was in this context that, a t [73], Bell P noted that because of the shift in argument on appeal from that made orally at first instance and which appear ed to have contributed significantly to the primary judge ’ s reasoning, he would only have been inclined to award AMA 50% of its costs on appeal. However, the Court made an order directing the parties to file written submissions within 7 days, of no more than 3 pages each, as to whether or not the respondent, ASSK Investments Pty Limited ( ASSK Investments ) , should only be or dered to pay 50% of AMA ’ s costs of the appeal. AMA submitted that costs should follow the event, and that ASSK Investments should be ordered to pay the costs of the appeal on the ordinary basis. At para 5 of its written submissions, AMA noted that this was not a case where AMA sought to raise a new point on appeal, and that its submission on this issue on appeal was entirely consistent with its written submissions at first instance. Although that is true , it overlook s the fact that, in the course of its argument at first instance, AMA moved away from those written submissions. AMA submitted that the proposed order by the Court would “ punish AMA for its agreement with a proposition put to it by the primary judge ” . That is a weak and unattractive argument. It was a matter for judgment by AMA ’ s counsel whether or not to accede to or embrace an argument , a posited construction or an idea raised by the primary judge. If such an argument, construction or idea is accepted and embraced by counsel , as occurred in the present case, it becomes the argument or construction of the party which embraced it , and it ill-behoves that party subsequently to say it was the judge ’ s idea for which the party that embraced it should bear no consequences. AMA also submitted that its “ oral submissions at trial on this issue were not solely causative of the identified error ” and pointed out that t his Court identified a number of errors in the primary judge ’ s construction of the HOA a nd that n ot all of these errors relate d to the issue of whether AMA ’ s board could have withheld consent to the sale transaction capriciously. That is true but it is the reason why AMA should not be deprived of the whole of its costs of the appeal. In response, ASSK Investments submitted that rather than it paying 50% of AMA ’ s costs of the appeal, there should be no order in relation to the costs of the appeal, with the intent that AMA bear its own costs of the appeal. ASSK Investments submitted that it was the way in which AMA ’ s case was formulated at first instance which caused AMA to lose, and that AMA had: “…submitted that its Board had an unfettered discretion whether or not to proceed with the sale, being a discretion that could even be exercised capriciously. If that was the case then no consideration flowed to the Respondent under the [Binding Heads of Agreement] under the Appellant's construction of it and hence there would have been no binding contract. Both the Respondent and the Appellant agreed, however, that there was a binding contract, and the apparent effort invested in drawing up a lengthy and detailed [Binding Heads of Agreement] tended to bear them out in this respect. For the Appellant at first instance to simultaneously put the case that there was a binding contract and advance a construction that would mean no binding contract had only one probable outcome, being that the Appellant's construction would be rejected and the Respondent would succeed. That is indeed what occurred at first instance”. ASSK Investments submitted that on appeal, this was address ed by AMA abandoning its first instance position, which was permitted by the Court for the reason that the only prejudice that ASSK Investments could suffer by the chan g e of position was as to costs. ASSK Investments is thus seeking that this “ prejudice ” be remedied with an order as to costs. ASSK Investments submitted that the ordinary rule when an appeal succeeds by reason of a ground taken on appeal, but not at first instance, is that the appellant is not entitled to the costs of the appeal, citing Hussey v Ho rn e-Payne (1878) 8 ChD 670; Ex parte Hauxwell (1883) 23 Ch D 626 ; and National Australia Bank Limited v K .D.S . C onstruction Services Pty Ltd (In Liq) (1987) 163 CLR 668; [1987] HCA 65 ( K.D.S. Construction ) . ASSK Investments submitted that there was no reason to depart from this ordinary rule . The direction for written submissions on costs made in the principal appeal judgment was not intended to provide , and should not have been construed as providing , an opportunity or invitation to contend for an order whereby AMA was not entitled to its appeal costs at all. The parties were directed to file submissions as to whether or not ASSK Investments should only be ordered to pay 50% of AMA ’ s costs on appeal. In any event, the two cases cited by ASSK Investments do not stand for any “ ordinary rule ” . The order made in K.D.S. Construction reflected the ultimately discretionary nature of the costs jurisdiction, namely that “ in the circumstances it is proper to deny the appellant its costs of the appeal ” : at 680. In our view, nothing in the parties ’ submissions causes us to depart from the view to which Bell P inclined in the principal appeal judgment, namely that ASSK Investments should be ordered to pay 50% of AMA ’ s appeal costs. An order to that effect will be made. ********** 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: 03 June 2021