Andrews v Australia and New Zealand Banking Group Ltd

REASONS FOR JUDGMENT 1 The Applicants seek an order for costs of and incidental to their Notice of Motion filed on 22 February 2011 which was the subject of reasons for decision of 19 April 2011: Andrews v Australia and New Zealand Banking Group Ltd [2010] FCA 388 (the 19 April Reasons). The Respondent, ANZ, submits that the proper course is to reserve costs. 2 The applicable principles are not in dispute. The Court's discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA) is at large and ought not be read down otherwise than in accordance with accepted principle: Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 at [3]. Costs ordinarily follow the event. An order for costs is intended to compensate the successful party, not to punish the unsuccessful party: Demetriou v Gusdote Pty Ltd (ACN 089 937 253) (2010) 78 ACSR 566 at 576, referring to Brennan CJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 75. Fairness should dictate how the discretion is exercised: Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]. Departure from the usual rule generally requires a valid special reason: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234. 3 In the present case, ANZ submits that the Applicants were not successful. They do not contend that the Court should depart from the usual rule because of any special reason. What then are the facts and matters relevant to the exercise of the Court's discretion? 4 This proceeding was filed in Fast Track on 22 September 2010. The Fast Track Statement proposed (at paragraph 4) a preliminary and initial trial of the penalty claims prior to the other causes of action alleged in the Fast Track Statement. ANZ responded on 6 and 22 October 2010. It submitted that there would be no cost saving to the Court or the parties from adopting such a course. 5 The first scheduling conference was held on 4 November 2010. The Applicants did not pursue any application for preliminary determination. Justice Finkelstein raised an alternative approach to the conduct of the proceeding whereby a number of fees would be selected by the parties and a hearing would be held on all causes of action in respect of those fees. On 10 November 2010, procedural orders were made. The matter was listed for further hearing on 15 December 2010. 6 On 15 November 2010, the Applicants informed the Court and ANZ that it no longer pursued the preliminary questions in their Fast Track Statement and would reformulate questions to facilitate the hearing proposed by Justice Finkelstein. 7 On 13 December 2010, the Applicants proposed that the Court determine separately and before any other issue a number of specific questions. The proposed questions were intended to adopt the approach suggested by Justice Finkelstein. 8 A further hearing was held on 15 December 2010. Immediately prior to that hearing, ANZ foreshadowed that the expert evidence exercise contemplated in the particulars to paragraph 55(c)(ii) of its Amended Fast Track Response (AFTR) (the subject of the 19 April Reasons) was to take more than 12 months. ANZ continued to oppose any separate determination of issues in the proceedings. Justice Finkelstein expressed the view that he wished to speak to Mr Inglis, an expert accountant engaged by ANZ, to understand better the task being performed, whether an independent expert could assist or participate in the cost allocation exercise and whether the cost allocation exercise could be shortened or divided. Costs were reserved. 9 On 9 February, the day before the next directions hearing, the Applicants foreshadowed their intention to ask the Court to consider the same preliminary questions they had advanced on 13 December, save that the cause of action to be determined would be confined to those relating to the penalty allegations. The Applicants also submitted that the Inglis exercise proposed to be undertaken was not necessary and not relevant to the determination of the penalty allegations. 10 On 10 February, without opposition from the parties, Justice Finkelstein asked Mr Inglis a number of questions. The discussion that ensued between Justice Finkelstein and Mr Inglis was lengthy. Reference is made to some of their exchanges in the 19 April Reasons. 11 At the same hearing, the Applicants also sought an order for particulars, or for an affidavit to be sworn, to allow them to understand the basis for paragraph 55(2)(c)(ii) of the AFTR. Justice Finkelstein stated he would think about the Applicants' request and let the parties know. He did not ultimately rule on either of the requests. The matter was stood over until 7 March. 12 On 22 February, the Applicants served a Notice of Motion in respect of the 7 March hearing. Relevantly, the motion sought the orders set out at [18] and [19] of the 19 April Reasons. After the lunch adjournment on 7 March, Counsel for the Applicants proposed new preliminary questions as follows: 1. In respect of each of the Exception Fees, are the amounts payable upon breach, so as to be capable of amounting to a penalty? 2. In respect of each of the Exception Fees, are the amounts otherwise payable on the occurrence of an event within the area of obligation of the customer, such that they are capable of amounting to a penalty? 13 ANZ opposed the two orders sought by the Applicants. ANZ opposed the revised preliminary questions proposed by the Applicants after the luncheon adjournment. ANZ continued to oppose any separation of issues or trial of separate questions. 14 As the 19 April Reasons record, paragraph 55(2)(c)(ii) of the AFTR was struck out and the parties were directed to confer and agree separate questions for determination by the Court. They have now done so. 15 As is apparent, at no stage prior to the delivery of the 19 April Reasons has ANZ made any proposal to shorten or reduce the scope of the hearing or proceed otherwise than to a full trial of all issues on a date that cannot be ascertained. And, it must be recalled, the reason why the date cannot be ascertained is because ANZ did not have a pre-estimate of loss in relation to the Exception Fees, but rather now seeks to rely upon the 'Inglis Exercise': an exercise that has not been done before, and in relation to which Mr Inglis said "no one can be quite sure how long, in fact, it's going to take". As was stated in the 19 April Reasons, ANZ sought to subject the Applicants to an extended period of delay in the prosecution of their claim in the hope that evidence might be obtained that would support an ex post facto rationalisation of the amounts of charges that have been levied under contractual terms which ANZ set for itself. 16 Against that background, the application for costs is put on two bases. First, that the position adopted by the Applicants throughout the course of the proceeding to formulate separate questions has both been consistent with the overarching purpose in s 37M of the FCA, and has sought to adopt (and where thought necessary or desirable by the Applicants, adapt) proposals put forward by the docket judge. Secondly, paragraph 55(2)(c)(ii) of the AFTR was struck out following a contested application where the Court made the following findings: 1. ANZ prepared and filed paragraph 55(2)(c)(ii) of the AFTR without any material that would support any of the allegations in that paragraph: see [44] of the 19 April Reasons; 2. the pleading in that paragraph is an abuse of process: see [45] of the 19 April Reasons; 3. the case for ANZ is founded on the speculative hope that someone, somewhere might come up with evidence that would support the asserted defence to the claim now made against it: see [49] of the 19 April Reasons; and 4. to permit ANZ to delay the hearing of the core issue in these proceedings for in excess of 18 months since the issue was first raised in the hope that a factual controversy might be enlivened and determined in its favour would be contrary to s 37M of the FCA. This would make a mockery of the overarching purpose which underpins the work of the Federal Court - to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: see [64] of the 19 April Reasons. 17 In my view, the usual order that costs follow the event should be made. Over the opposition of ANZ, the Applicants succeeded in obtaining the orders they sought in their Notice of Motion. The disputed paragraph of ANZ's AFTR was struck out and separate questions have now been agreed. That would not have occurred unless the Applicants filed their motion and ANZ's opposition to the motion had failed. 18 It is necessary to take particular notice of one argument advanced by ANZ in support of its contention that costs should be reserved. ANZ submitted that the Court struck out paragraph 55(c)(ii) of the AFTR on a basis not advanced by the Applicants. That is not right. The Applicants' motion sought to have the paragraph in question struck out on various bases. The question whether there was any factual basis for the claim was one of the reasons for the hearings that took place before the Court on 10 February and 7 March 2011. The absence of any factual basis for the allegation was referred to in the Applicants' written and oral submissions. Further, the paragraph was struck out on a number of bases: see [43] - [48], [49], [61] and [64]. Each of the bases on which the paragraph was struck out was plainly and directly put in issue in the hearing of the motion. 19 The Respondent will be ordered to pay the Applicants' costs of and incidental to the motion filed 22 February 2011, such costs to be taxed in default of agreement. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.