Federal Court of Australia

Belconnen Lakeview Pty Ltd v Lloyd (No 2) [2021] FCAFC 218

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the appellant (Belconnen) dated 21 April 2021 be dismissed.

2.    Belconnen’s interlocutory application dated 8 November 2021 be dismissed.

3.    The matter be remitted to the primary judge.

4.    Subject to paragraph 5, the respondent (Mrs Lloyd) pay Belconnen’s costs of the appeal and the cross-appeal on a party-party basis.

5.    Belconnen pay Mrs Lloyd’s costs of Belconnen’s interlocutory applications dated 21 April 2021 and 8 November 2021.

6.    Mrs Lloyd pay the costs of the cross-appeal and the cross-cross-appeal of the second cross-respondent (Mr Hindmarsh) and the third cross-respondent (Mr Ryan) on a party-party basis.

7.    The costs referred to in paragraphs 4 to 6 above be the subject of a lump sum costs assessment, to be conducted by a Registrar.

8.    In relation to the costs of the proceeding at first instance, in lieu of paragraph 4 of the orders made on 14 May 2020, it be ordered that:

(a)    Mrs Lloyd pay Belconnen’s, Mr Hindmarsh’s and Mr Ryan’s costs of the proceeding on a party-party basis; and

(b)    The costs referred to in (a) above be the subject of a lump sum costs assessment, to be conducted by a Registrar.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

Introduction

1    On 25 October 2021, the Full Court published its reasons for judgment in relation to the appeal, the cross-appeal and the cross-cross-appeal: Belconnen Lakeview Pty Ltd v Lloyd [2021] FCAFC 187 (the October 2021 Reasons). The present reasons deal with issues concerning consequential orders and costs. These reasons should be read with the October 2021 Reasons. We adopt the abbreviations used in the October 2021 Reasons.

2    In the orders made by the Full Court on 25 October 2021, provision was made for the parties to file and serve written submissions on consequential orders and costs. Subsequently, on 8 November 2021, Belconnen filed an interlocutory application seeking, in summary: (a) an order that [194] of the October 2021 Reasons be rectified; and (b) an order that the Altitude proceeding at first instance (NSD 1417 of 2017) no longer continue as a representative proceeding, and for the sending of a notice to the Altitude Group Members. Orders were then made for the filing and service of material relating to the interlocutory application, and that the interlocutory application be determined on the papers.

3    In addition to written submissions, the parties rely on the following affidavit material:

(a)    Belconnen relies on an affidavit of Robert McGregor, a partner of HWL Ebsworth Lawyers, dated 8 November 2021; and

(b)    Mrs Lloyd relies on an affidavit of Samuel Delaney, a partner of Corrs Chambers Westgarth, dated 22 November 2021.

4    There are three matters to be dealt with in these reasons: the application for rectification of the October 2021 Reasons; consequential orders; and costs. We will deal with each of these in turn.

The application for rectification of the October 2021 Reasons

5    Belconnen seeks an order under rr 1.32 and 39.05 of the Federal Court Rules 2011 that [194] of the October 2021 Reasons be rectified by inserting certain words after the references to “Altitude Group Members”, so that the relevant part of the paragraph would read as follows (additional words underlined):

Insofar as Belconnen contends that the findings were based on a hypothetical situation and amounted to an advisory opinion, we reject this in circumstances where the draft contract provided by Belconnen to each of the Altitude Group Members who exchanged contracts with Belconnen after 12 March 2013 was prepared on an incorrect basis. For the reasons discussed above, the draft contract misrepresented the true position. In the absence of contrary information, Belconnen therefore made a misrepresentation to each of the Altitude Group Members who exchanged contracts after 12 March 2013. It was appropriate for this to be reflected in the common findings.

6    Belconnen submits, in summary, that the Full Court erred at [194] of the October 2021 Reasons by proceeding on a misapprehension as to incontrovertible facts in respect of the Altitude Group Members who entered into contracts with Belconnen before the date when Belconnen obtained the Altitude Private Ruling (12 March 2013).

7    In our view, Belconnen’s application for rectification of [194] of the October 2021 Reasons should be rejected. First, [194] was not purporting to make any findings; it was merely providing reasons for rejecting ground 7 of Belconnen’s notice of appeal.

8    Secondly, read in context, it is clear that the relevant passage of [194] was referring to contracts exchanged after Belconnen obtained the Altitude Private Ruling. This is clear, for example, from the words “was prepared on an incorrect basis”.

9    For these reasons, rectification of [194] is unnecessary.

10    For the avoidance of doubt, we would add the following. Insofar as Altitude Group Members may wish to contend that Belconnen engaged in misleading or deceptive conduct in a situation where the contract was exchanged before the Altitude Private Ruling was obtained and settlement took place after the Altitude Private Ruling was obtained, [194] should not be seen as foreclosing that contention. In summary, [194] was not intended to add to, or subtract from, the primary judge’s findings.

Consequential orders

11    The orders made on 25 October 2021 did not include an order that Belconnen’s interlocutory application dated 21 April 2021 (seeking to have the Court receive further evidence on appeal) be dismissed. An order to this effect should be made.

12    Belconnen seeks an order pursuant to ss 23, 33N(1) and/or 33ZF of the Federal Court of Australia Act 1976 (Cth) that the proceeding at first instance no longer continue as a representative proceeding. Belconnen also seeks ancillary orders, including that the solicitors acting for Mrs Lloyd give notice to Altitude Group Members in the form of Annexure A to Belconnen’s interlocutory application dated 8 November 2021.

13    In support of these orders Belconnen submits, in summary, that: there are no other common questions to be resolved; with the dismissal of the lead applicant’s claim and the resolution of the common questions, the proceeding below is now spent; the Full Court should therefore bring the representative proceeding to an end.

14    In our view, these matters are more appropriately dealt with by the primary judge, rather than the Full Court. Based on the submissions filed by Mrs Lloyd, there appears to be a need for oral and written submissions to be made and evidence to be filed. Further, there is likely to be a need for submissions to be made about the form of the notice to Altitude Group Members. We note that Mrs Lloyd in her submissions characterises the notice as “highly contentious”. In circumstances where there is a live dispute about the orders that Belconnen seeks, we consider it beyond the role of the Full Court to deal with these matters. Accordingly, Belconnen’s application for orders that the proceeding at first instance no longer continue as a representative proceeding is rejected. We will instead make an order that the matter be remitted to the primary judge.

15    It follows from the above that Belconnen’s interlocutory application dated 8 November 2021 is to be dismissed.

Costs

16    In relation to the costs of the appeal, the cross-appeal and the cross-cross-appeal, Belconnen and Messrs Hindmarsh and Ryan contend that costs should follow the event (in other words, that Mrs Lloyd should pay their costs) and that the costs should be ordered on an indemnity basis having regard to two Calderbank letters (see Calderbank v Calderbank [1975] 3 All ER 333). The letters are dated 29 April 2019 and 1 April 2021. In relation to the costs of the proceeding at first instance, Belconnen and Messrs Hindmarsh and Ryan contend that costs should follow the event (that is, Mrs Lloyd should pay their costs) and that the costs should be payable on an indemnity basis, relying on the first of the Calderbank letters.

17    Mrs Lloyd accepts that Messrs Hindmarsh and Ryan are entitled to their costs of the cross-appeal, the cross-cross-appeal, and the proceeding at first instance. In relation to Belconnen, Mrs Lloyd contends that there should be a 25% discount to Belconnen’s costs of the appeal, the cross-appeal and the proceeding at first instance, having regard to: Belconnen’s lack of success on certain appeal grounds and in respect of its interlocutory application seeking to adduce further evidence; the findings of misleading or deceptive conduct on the part of Belconnen, which were upheld by the Full Court; and the findings recorded in the Schedule to the 14 May 2020 orders. Mrs Lloyd opposes the application for costs on an indemnity basis.

18    In our view, there is no basis to depart from the ordinary position that costs follow the event in relation to the appeal and the cross-appeal. Accordingly, subject to the following matter, we consider it appropriate to order that Mrs Lloyd pay Belconnen’s costs of the appeal and the cross-appeal. We consider it appropriate to deal separately with Belconnen’s two interlocutory applications, namely the interlocutory application dated 21 April 2021 and the interlocutory application dated 8 November 2021. Each of these was unsuccessful. Costs should also follow the event in relation to these interlocutory applications.

19    Further, as is common ground, there should be an order that Mrs Lloyd pay Mr Hindmarsh’s and Mr Ryan’s costs of the cross-appeal and the cross-cross-appeal.

20    In relation to the proceeding at first instance, we see no basis to depart from the ordinary position that costs follow the event. Accordingly, in lieu of paragraph 4 of the orders made by the primary judge on 14 May 2020, there should be an order that Mrs Lloyd pay Belconnen’s, Mr Hindmarsh’s and Mr Ryan’s costs of the proceeding.

21    Belconnen seeks, and Mrs Lloyd does not oppose, an order that the costs be the subject of a lump sum costs assessment, to be conducted by a Registrar.

22    Insofar as indemnity costs are sought, we do not consider it to be in the interests of justice to make such an order in the present case: see generally, Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [5]-[8]. We are not satisfied that it was unreasonable for Mrs Lloyd to reject either of the Calderbank letters.

23    The first Calderbank letter was made at about 6.00 pm on 29 April 2019 and expired at 10.00 am on 1 May 2019, which was the morning of the trial. It provided for Belconnen and Messrs Hindmarsh and Ryan to pay $1.2 million (inclusive of costs and interest) in full and final settlement of the proceeding in respect of all group members. In our view, Mrs Lloyd’s non-acceptance of this offer was not unreasonable. The offer was open for acceptance for only one business day. It was made over 18 months after the proceeding had commenced and at a time when Mrs Lloyd’s costs had been substantially incurred. The parties have put forward competing calculations as to the extent of any return to group members (after taking into account funding and legal costs) had the offer been accepted. The evidence suggests that the return to group members would have been (at best) only a small fraction of their claims. Further, from a practical perspective, even if there had been an in-principle settlement, it would have taken some time (most likely in the order of four months) to prepare a notice to group members, have this approved, dispatch the notices, give group members time to consider the proposed settlement, and seek Court approval. It would have been necessary to vacate the trial date while this occurred. If the in-principle settlement fell through, this would have led to considerable delay, inefficiency and cost.

24    The second Calderbank letter was made on 1 April 2021 and expired on 12 April 2021. It provided for Belconnen and Messrs Hindmarsh and Ryan to pay $1,150,000 (inclusive of costs and interest) in settlement of the appeal and the proceeding at first instance in respect of all group members. By this stage, Mrs Lloyd had succeeded at trial. As with the first offer, the evidence suggests that the return to group members would have been (at best) only a small fraction of their claims. Further, as with the earlier offer, even if there had been an in-principle settlement, it would have taken some time to take the relevant steps referred to above. It would have been necessary to vacate the appeal hearing date while this occurred. Again, if the in-principle settlement fell through, this would have led to considerable delay, inefficiency and cost.

25    For these reasons, we reject the application for the costs to be ordered on an indemnity basis.

Conclusion

26    We will therefore make orders to the following effect:

(a)    Belconnen’s interlocutory application dated 21 April 2021 be dismissed.

(b)    Belconnen’s interlocutory application dated 8 November 2021 be dismissed.

(c)    The matter be remitted to the primary judge.

(d)    Subject to paragraph (e) below, Mrs Lloyd pay Belconnen’s costs of the appeal and the cross-appeal on a party-party basis.

(e)    Belconnen pay Mrs Lloyd’s costs of Belconnen’s interlocutory applications dated 21 April 2021 and 8 November 2021.

(f)    Mrs Lloyd pay Mr Hindmarsh’s and Mr Ryan’s costs of the cross-appeal and the cross-cross-appeal on a party-party basis.

(g)    The costs referred to in paragraphs (d) to (f) above be the subject of a lump sum costs assessment, to be conducted by a Registrar.

(h)    In relation to the costs of the proceeding at first instance, in lieu of paragraph 4 of the orders made on 14 May 2020, it be ordered that:

(i)    Mrs Lloyd pay Belconnen’s, Mr Hindmarsh’s and Mr Ryan’s costs of the proceeding on a party-party basis; and

(ii)    The costs referred to in (i) above be the subject of a lump sum costs assessment, to be conducted by a Registrar.

Associate:

Dated:    1 December 2021

SCHEDULE OF PARTIES