CONSIDERATION
25 A successful party is ordinarily entitled to an award of costs in his or her favour: Hart v Commissioner of Taxation (No 2) [2019] FCAFC 191 per Kenny, Kerr and Moshinsky JJ (at [5]) and see also r 40.04 of the Federal Court Rules 2011 (Cth). As noted in Oshlack v Richmond River Council (1998) 193 CLR 72 by McHugh J (at [67]), that principle is grounded in reasons of fairness and policy and reflects the primary purpose of an award of costs, which is to indemnify (not necessarily fully) the successful party. Oshlack was a suggested public interest claim warranting departure from the usual rule; but the discussion in relation to costs is otherwise generally applicable.
26 The onus is usually on an unsuccessful party, if it seeks to dissuade the Court from making the usual order as to costs: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 per Brereton J (at [10]).
27 Additionally, as McHugh J observed in Oshlack (at [70]):
Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won. For present purposes it is not necessary to attempt to list any further exceptions to the principle of the usual order as to costs. The question at issue in this appeal concerns only the suggested public interest nature of the litigation. This factor may often be alternatively expressed in terms of the plaintiff's motives in commencing the litigation being grounded in the public interest rather than self-interest. Does this factor, however expressed, constitute or provide partial support for a further exception to the principle of the usual order as to costs? In my view, both authority (in the form of Latoudis) and principle compel the conclusion that the public interest nature of the litigation is irrelevant to the exercise of the costs discretion.
(Emphasis added, citations omitted.)
Also to be noted are the remarks of Ipp AJA, with whom Foster AJA agreed, in Arian v Nguyen [2001] NSWCA 5 (at [37]):
37 The making of an order that a successful party pay his or her opponent's costs requires strong justification (Ottway v Jones [1955] 1 WLR 706 at 708, 714, Scherer v Counting Instruments Limited [1986] 1 WLR 615 at 618) and exceptional circumstances must exist before a party will not only be deprived entirely of costs but also required to pay part of the opponent's costs (Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201; Robinson v Australian Association of Social Workers Limited [2000] SASC 239). Where a party raises issues or makes allegations improperly or unreasonably, this may constitute misconduct such that the court may not only deprive it of its costs but order it to pay the whole or a part of the unsuccessful party's costs: Trade Practices Commission v Nicholas Enterprises Pty Ltd at 208 per Fisher J, Re Elgindata Limited (No 2) [1993] 1 All ER 232 at 237 per Nourse LJ; Ashby v Marshall, (unreported, SC(SA), 28 November 1991); Popovic v Murray (unreported SC(Tas), 15 March 1991).
28 More recently, and specifically on the question of apportioning costs, in Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd (costs) [2020] FCAFC 74 (at [6]-[9]) the Full Court (McKerracher, Markovic and Anastassiou JJ) said:
6 A realistic view of the appeal is that it failed. It is not accurate, in our view, to describe Neptune as having succeeded on a third of the issues. In reality and in terms of practical outcomes, the respondents succeeded in resisting the appeal. In our reasoning in Neptune No 1 (at [175]), we described Neptune's success on the appeal as being minor. We concluded that the primary judge was correct in the orders that were made at first instance and that those orders should not be disturbed. We accept Kanki's submission that, contrary to Neptune's contention, the Court should not 'cast undue analysis upon whether a successful party has been unsuccessful on "particular issues" in the context of its predominant success in the controversy overall': N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1295 per Greenwood J (at [17]). Generally speaking, a court will only deprive the successful party of the usual order for costs to follow the event when an issue was dominant or separable: Monie v Commonwealth (No 2) [2008] NSWCA 15 per Mason P, Beazley and Campbell JJA (at [63]-[66]).
7 We would also take into account, as contended by Kanki, those observations of the Full Court in The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 where Emmett, Kenny and Middleton JJ (at [8]), said:
We do not consider that the outcome of the issue as to whether the impugned provisions burdened transactions in trade and commerce between Victoria and the Northern Territory justifies departure from the ordinary position. The outcome of this issue did not relevantly qualify the success of either appellant on its appeal. Both appellants were ultimately wholly successful. The mere fact that a court does not accept all of a successful party's arguments does not make it appropriate to deal with costs on an issue by issue basis. It cannot be supposed that the issue in question was unreasonably raised at trial or on appeal. There is nothing else disclosed in the circumstances of the case that would support the proposition that the court should depart from the usual order as to costs: compare Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385 at 402-403 [99]-[100] (Campbell JA, with whom Macfarlan and Young JJA agreed).
8 This approach has been pursued more recently in PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 per Besanko, Banks-Smith and Stewart JJ.
9 Although Neptune raised and argued 22 grounds of appeal asserting that the primary judge erred by arriving at the various findings he did, the seven grounds on which Neptune succeeded comprised two discrete issues. Grounds 3 and 4 were simply a small subset of the 'financial information' grounds of appeal and grounds 5 to 9 were all directed to the 'catering agreement' grounds. These grounds occupied a very small part of the overall argument in support of the appeal, both orally and in written form. Certainly, they could not be described as constituting clearly dominant or separate claims. Little time was spent on them and the success on them did not affect the outcome of the appeal.
(Emphasis added).
29 The defendants argued that the relief should not be granted if the costs of the appointment of receivers were to be borne by the creditors and also if the interim appointment afforded a mechanism of investigating possible criminal activity. This they say, resulted in ASIC amending its claim to relief and omitting reliance upon such matters. I accept that those arguments, as I perceive the situation, caused ASIC to drop those parts of its application. The arguments in my view had some merit. I do not accept however, the defendants' contention that this amendment to the relief sought by ASIC is cause for any costs adjustment so as to require ASIC to pay costs to the defendant. It is entirely appropriate for a party to amend the relief it seeks so as to confine the issues before the Court. This is particularly so in this instance where, as will be made clear below, there is no basis for the defendants' claim that this matter could have been resolved between the parties if ASIC's amended relief had been sought initially.
30 The defendants also succeeded on the argument as to whether or not the Marco 2020 affidavit could not be relied upon by ASIC in any regard. These matters on which the defendants succeeded were of some significance, but as the matter was resolved on the papers, it cannot be said that a great deal of hearing time was incurred in relation to arguments concerning those matters. I accept, certainly, that research and presentation of written submissions aided in the determination of those confined aspects of the arguments in favour of the defendants.
31 But on proper application of the principles just examined, at best these factors might warrant a small reduction in the proportion of party and party costs payable to ASIC.
32 I accept ASIC's submission that there is no basis whatever for any order that costs be paid to the defendants. The defendants were wholly unsuccessful in their opposition to the basic orders sought by ASIC. They have raised no suggestion, beyond a mere assertion as to the possibility that they would have consented to the appointment of interim receivers but for the two factors referred to above (at [29]). There was no disentitling conduct on the part of ASIC which would justify an order that ASIC pay the defendants' costs.
33 ASIC contends that the defendants' submissions on costs proceed on the basis of a selective account of the procedural history of the interlocutory process. In particular ASIC asserts that :
(a) the procedural chronology ought to include reference to Mr Marco's extensive Marco 2020 affidavit of some 35 pages, and in excess of 373 pages of annexures, which necessitated the reply evidence referred to at [6(b)] above;
(b) the chronology also fails to acknowledge that when the defendants' responsive submissions were filed on 9 March 2020, some seven days prior to the hearing, the defendants simply abandoned their reliance upon the Marco 2020 affidavit and, as a result, fundamentally changed the basis upon which they resisted the application;
(c) the summary of the basis of the defendants' ultimate opposition also ought to include reference to:
(i) the defendants' contention that leave to amend the originating application should be refused; and
(ii) the defendants' primary arguments against the appointment of the interim receivers that such an appointment was not necessary because of the existence of the asset preservation orders, ASIC's investigative powers and, importantly, because '[t]here [was] no evidence before the court to justify the court taking the 'extraordinary' or 'drastic' step of appointing receivers'.
34 There is some merit in these observations. At the very least they add relevant background to the costs issue. I accept the contention for ASIC that in circumstances where the defendants put ASIC to proof on the necessity and desirability of the appointment of interim receivers at all stages of the application, recast their opposition to the application a week prior to the hearing and were ultimately unsuccessful, it is difficult to understand how it could be contended that ASIC's conduct of the application exhibited exceptional circumstance or disentitling conduct.
35 As noted, the defendants did not consent to the orders that ASIC sought as a result of its position on the costs of the interim receivers. Instead, they submitted that there was no evidence before the Court to justify the Court taking the step of appointing interim receivers.
36 In their written submissions filed following the hearing, the defendants continued to resist the contentions advanced by ASIC in support of the appointment of interim receivers. It cannot be contended that the application would not have been opposed had ASIC not sought an order that the interim receivers' costs be paid from the assets of the defendants in its original interlocutory process.