Australian Securities and Investments Commission v BHF Solutions Pty Ltd

1. The respondents are to pay the applicant's costs (including reserved costs) of the proceeding (both at first instance and on remittal) as agreed or, failing agreement, as taxed.
2. The respondents are to pay the applicant's costs of and incidental to the costs' hearing on 15 August 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A. Introduction 1 The only issue remaining to be determined in these proceedings is the question of the costs of the hearing at first instance and the remittal hearing following the successful appeal of the applicant, the Australian Securities Investment Commission (ASIC), to the Full Court of this Court. 2 These reasons assume a familiarity with the reasons in Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2021] FCA 684 (first instance hearing or J1), the hearing of the remittal of these proceedings in Australian Securities and Investments Commission v BHF Solutions Pty Ltd (No 2) [2023] FCA 787 (remittal hearing or J2), and the reasons of the Full Court of this Court in Australian Securities and Investments Commission v BHF Solutions Pty Ltd (2022) 293 FCR 330; [2022] FCAFC 108 (FFC). 3 The Full Court allowed ASIC's appeal and made orders that the first respondent, BHF Solutions Pty Ltd (BHFS), and the second respondent, Cigno Pty Ltd (Cigno), pay its costs of the appeal. The Full Court remitted the proceedings to the primary judge for determination of ASIC's allegations against Cigno, relief, and the costs of the first instance hearing. 4 On 12 July 2023, I delivered judgment in the remittal hearing in which I expressed a preliminary view that the respondents should pay ASIC's costs of both the first instance hearing and the remittal hearing: at J2 [170]. I made orders, specifically in Orders 6 and 7 of the orders made on 12 July 2023, that in the absence of agreement as to costs, the parties should exchange written submissions and the question of costs would be determined on the papers, unless a party requested an oral hearing. 5 The parties agreed that the respondents should pay ASIC's costs of the remittal hearing but were not able to agree orders for costs of the first instance hearing. The parties exchanged written submissions and Cigno requested an oral hearing, rather than a determination on the papers. 6 ASIC seeks an order that the respondents pay its costs of the first instance hearing. 7 BHFS seeks an order that the respondents pay 80% of ASIC's costs of the first instance hearing. 8 Cigno submits that there be no order as to the costs of the first instance hearing. Alternatively, it seeks a costs order that the respondents pay 50% of ASIC's costs of the first instance hearing. 9 The principal issue for determination in the first instance proceedings was whether the fees and charges payable to Cigno were fees and charges "for providing credit" within the meaning of s 5(1) and s 6(5) of the National Credit Code (Code) in Sch 1 of the National Consumer Credit Protection Act 2009 (Cth) (Construction Issue). Related, but less significant issues, were whether (a) BHFS and Cigno were carrying on a business, (b) ASIC could rely on the extended definition of contract (Extended Contract Issue), (c) Australian Securities and Investments Commission v Teleloans Pty Ltd (2015) 234 FCR 261; [2015] FCA 648 (Logan J) is distinguishable from the first instance proceeding, or the relevant reasoning was plainly wrong, and (d) Cigno acted as the agent of BHFS or the agent of Ms Leah Morrow (Agency Issue). 10 The principles governing the discretion to award costs are well established. They were recently restated by the Full Court of this Court in Construction, Forestry, Maritime, Mining and Energy Union v Fair Work Ombudsman (The Botany Cranes Case) (No 2) [2023] FCAFC 56 at [4] (Bromberg, Moshinsky, and Bromwich JJ). Their Honours cited with approval the following statements by the Full Court in Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (No 2) [2017] FCAFC 158 at [9]-[11] (Greenwood, Rares, and Moshinsky JJ): 9 Section 43(3)(e) of the Federal Court of Australia Act 1976 (Cth) provides that an award of costs may be made in favour of, or against, a party whether or not that party is successful in the proceeding. The approach usually taken is that costs follow the outcome of an appeal: see Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; see also Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [303]; Oshlack v Richmond River Council (1998) 193 CLR 72 at [66]-[68]. 10 In Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370, Dowsett, Middleton and Gilmour JJ, after referring to Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 and State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174, said at [11] that these decisions treat the success or failure of the relevant party as being the starting point in consideration of the question of costs, but contemplate at least three distinct categories of situation in which a successful party might be deprived of costs, or even ordered to pay the costs of the other side. These were identified as follows: One such category is where the applicant has been only partially successful in that it has not obtained all of the relief sought. The second category is where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief. Of course, it is possible that a particular outcome will fall into both categories. A third category involves consideration of the successful party's conduct of the case. C After referring to the decision of Finkelstein and Gordon JJ in Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107, Dowsett, Middleton and Gilmour JJ in Queensland North Australia then said at [18]: [Section 43 of the Federal Court of Australia Act] does not mention costs following the event. In Ruddock, Bowen Investments and Sportsbet, the Court proceeded on the basis that ordinarily, the successful party may reasonably expect to receive its costs, whether that outcome be described as costs following the "event" or otherwise. The question of costs is within the Court's discretion. As we have said, relevant factors include the extent of a party's success, the extent of its success or failure on individual issues and its conduct of the proceedings. (Emphasis in original.)