Background
In an earlier judgment, the Court held that WLLHLL Holdings Pty Ltd had established oppressive conduct in the affairs of Lanmar Pty Ltd. The Court declined to order the third and fourth defendants to buy WLLHLL’s shares because neither side’s expert evidence adequately established their value. It instead appointed a receiver to sell all shares in Lanmar, observing that otherwise it would have ordered the company wound up on the just and equitable ground.
The parties could not agree on costs. WLLHLL argued that costs should follow its practical success in proving oppression and obtaining relief. The defendants contended that each party should bear its own costs because WLLHLL did not obtain its originally preferred buyout relief and sought the receiver-sale remedy only late in the proceedings. Alternatively, they sought separate treatment of the substantial costs incurred on share valuation.
The Court’s Holding
Black J held that WLLHLL was the substantially successful party. The defendants had denied oppression and required WLLHLL to prove it at a contested hearing; WLLHLL succeeded on several significant matters and obtained consequential relief. The defendants’ later consent to a receiver selling the shares did not justify an order that each party bear its own costs.
The Court nevertheless treated valuation as a substantial and separable issue. Considerable hearing time, lay and expert evidence, documentary material, submissions, cross-examination and likely disbursements were devoted to valuing Lanmar’s shares, but WLLHLL failed to establish a valuation and that evidence did not advance the remedy ultimately granted. The defendants were therefore ordered to pay WLLHLL’s costs on the ordinary basis, except its costs associated with lay and expert evidence concerning share valuation, as agreed or assessed.
Key Takeaways
- For costs purposes, the relevant event is ordinarily the practical result of the claim, not whether the successful party obtained every form of relief originally sought.
- A party that proves shareholder oppression and obtains consequential relief may be treated as substantially successful even when the court rejects its preferred buyout remedy.
- A successful party may be denied costs for a substantial, separable issue on which it failed, particularly when that issue consumed significant evidence, hearing time and disbursements.
Why It Matters
The decision illustrates the NSW Supreme Court’s broad discretion to make issue-specific costs orders in complex corporate disputes. Overall success ordinarily carries costs, but parties cannot assume that an unsuccessful evidentiary case—especially an expensive and discrete valuation exercise—will be funded by the losing side.
For oppression proceedings, the judgment also underscores the costs consequences of contesting liability. A defendant’s willingness to accept particular relief only after oppression is established may not offset the costs caused by requiring the plaintiff to prove the underlying wrongdoing.