Andrews v Australia and New Zealand Banking Group Limited

MIDDLETON J: 1 On 1 December 2017 the Court ordered in relation to the disputed issues in this proceeding concerning costs as follows: The applicants pay the respondent's costs up to and including 16 March 2017 of the causes of action or claims for relief that were struck out and dismissed in Order 3 of the Orders made on 17 March 2017: (a) including the respondent's costs of and incidental to the hearing and determination of the Separate Questions; and (b) excluding the costs of and incidental to the preparation of the evidence described in Schedule A to the costs orders made by Gordon J on 7 February 2012. 2 These are the reasons for the making of those costs orders. 3 I will not repeat the history or background to the proceedings, or how the issues for determination on 1 December 2017 arose - this is set out adequately for present purposes in the judgments of Andrews v Australian and New Zealand Banking Group Limited [2011] FCA 1376, Andrews v Australia and New Zealand Banking Group Ltd [2012] FCA 59 and Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205. The references to 'Separate Questions', 'Schedule A' evidence and 'Exception Fees' are those referred to by the trial judge in Andrews [2012] FCA 59. 4 The only costs issue remaining for determination on 1 December 2017 was who should pay what costs in this proceeding, which involved two sub-issues: (i) who should pay the costs of and incidental to the hearing of the Separate Questions (that matter having been reserved by the High Court for consideration by a judge of this Court), (ii) do extant orders of the Federal Court require the respondent to bear its own costs of the 'Schedule A' evidence, and if not, the appropriate costs order to make in relation to the 'Schedule A' evidence. 5 Looking at the costs issue concerning the Separate Questions first, it can be accepted that when a discrete and separate issue or question for determination is finalised, it may be appropriate to order costs in favour of the successful party on that issue or question even before the proceeding is finalised. 6 In this instance, the relevant final hearing has now occurred, and the question of costs of the Separate Questions can and should be considered in context of the whole litigation. So this can occur is often a reason for not ordering costs to be paid at the interlocutory stage immediately after the disposal of a separate question - see generally Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 at [7]-[9]. 7 The reasons of the trial judge in Andrews [2012] FCA 59 on the question of costs of the Separate Questions, handed down on 7 February 2012, necessarily viewed the matter from the point of view of the position at that time. Much has occurred since. 8 However, it must be remembered that even before the trial judge, the applicants did not achieve a favourable position on the issue of costs. The effect of the trial judge's judgment at first instance was to determine the applicants' claims in respect of 13 of 17 Exception Fees in favour of the respondent. The trial judge ordered that the applicants pay 50% of the respondent's costs of and incidental to the hearing at first instance. 9 At [13] the trial judge said in support of her conclusion that: Having regard to the emphasis placed on the separate and prior determination of the penalty claims by the Applicants; the time dedicated to the "Expanded Penalty Case" on which the Applicants failed and that ANZ was successful in relation to 13 of the 17 Exception Fees, I consider that substantial justice warrants an order that the Applicants pay 50% of ANZ's costs of and incidental to the hearing of the Separate Questions, such costs to be taxed in default of agreement. 10 In the High Court of Australia, it was held that the applicants' claims in respect of the Exception Fees required further consideration. The trial of the Separate Questions did not finally determine rights and obligations that would not be the subject of further litigation. The High Court obviously did not award costs, as the applicants were not completely successful in that aspect of the overall litigation, but ordered that the costs of the Separate Questions hearing be remitted for determination following the further conduct of the proceeding. The further conduct of the proceeding resulted in the respondent succeeding on all claims including the claims to which the Separate Questions related. 11 The High Court of Australia made this clear at [87] in Andrews v Australia and New Zealand Banking Group Limited (2012) 247 CLR 205: The primary judge made a costs order and gave comprehensive reasons for doing so. So much of those orders as require the applicants to pay fifty percent of the costs of the ANZ of and incidental to the hearing of the separate questions should be set aside. The making of a substituted costs order should be for the primary judge upon the further conduct of the trial. 12 Then the High Court relevantly ordered that: … 3. Save as to sub-paragraphs (f)(i), (g), (h), (i), (k), (o)(i), and (p)(i) of order 1, set aside orders 1 and 2 of the orders made by the Federal Court of Australia on 13 December 2011, and in their place declare that the circumstances: (a) that the honour, dishonour, non-payment and over limit fees were not charged by the respondent upon breach of contract by its customers, and (b) that the customers had no responsibility or obligation to avoid the occurrence of events upon which these fees were charged, do not render these fees incapable of characterisation as penalties. 4. Set aside the orders with respect to the costs of the Separate Questions made by the Federal Court of Australia on 7 February 2012, and in their place order that the question of costs be reserved for consideration by a judge of that Court. 13 I accept that the High Court did replace the answers given by the trial judge, and in one sense, in favour of the applicants: see eg [84] of Andrews (2012) 247 CLR 205. However, it is apparent from the reasoning of the High Court and the orders of the High Court that the Separate Questions themselves were not answered in favour of the applicants. It is also to be recalled that the respondent before the trial judge opposed the hearing and determination of the Separate Questions. The ultimate determination of the Court and the events which occurred after consideration of the Separate Questions could be said to have vindicated this opposition. In any event, this is not a situation in which a discrete issue had been finally resolved, and hence the High Court of Australia referred the question of costs back to the Federal Court of Australia for consideration after the further conduct of the trial. 14 I should make it clear that just because the applicants ultimately failed in this proceeding is not the sole basis upon which I considered the costs of the Separate Questions should be paid by the applicants. I accept that costs of a separate question on which one party is successful may be made in favour of that party even though that party fails in the overall litigation. However, in this proceeding, the reasoning and orders of the High Court of Australia make it clear that the Separate Questions were not discreet issues, were addressed by the trial judge over the opposition of the respondent, and were not answered as Separate Questions in favour of the applicants. The evaluation of the real degree of success and failure of the hearing and determination of the Separate Questions in light of the overall litigation (including the appeal to the High Court) indicated in my view that it would be fair for the applicants to pay the respondent's costs of and incidental to the hearing and determination of the Separate Questions. 15 I now turn to the Schedule A evidence. 16 The Schedule A evidence was a subset of the evidence sought to be tendered at the trial of the Separate Questions by the respondent, which had been rejected by the trial judge as inadmissible: Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 1376 at [141]-[142]. 17 Order 1 made by the trial judge on 7 February 2012 was that, subject to Order 2, the applicants pay 50% of the costs of and incidental to the hearing of the Separate Questions. Order 2 was that the respondent should bear its own costs of the preparation of the 'Schedule A' evidence. 18 As I have indicated, in relation to those orders the High Court said at [87] that: [s]o much of those orders as require the applicants to pay 50 per cent of the costs of the ANZ of and incidental to the hearing of the separate questions should be set aside. 19 The order made by the High Court was: Set aside the orders with respect to the costs of the Separate Questions made by the Federal Court of Australia on 7 February 2012, and in their place order that the question of costs be reserved for consideration by a judge of that Court. 20 The Orders made by the High Court did not set aside Order 2 - a specific order that the respondent should bear the costs relating to inadmissible evidence. Whilst the order made by the High Court referred to the setting aside of the "orders" (plural) with respect to costs made by the trial judge, it is clear that, when the whole of the order is read together with the reasons, all that was set aside was Order 1. 21 It was my view that Order 2 made by the trial judge remained extant and in any event should not be disturbed. After all, the reason Order 2 was made by the trial judge was because the 'Schedule A' evidence was rejected as inadmissible, and this was a fair approach to adopt in exercising the discretion in considering the incidence of costs. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.