proper scope of the costs order
8 The respondent makes four points in relation to costs.
(a) He should not have to bear the costs of the jurisdiction point, not having raised or agitated that issue.
(b) He should not have to bear any costs in relation to ground 1, on which the applicant did not succeed.
(c) The applicant did not take genuine steps to try to resolve the issues, or engage with the respondent on the ground that ultimately succeeded, before commencing proceedings.
(d) The applicant's success on ground 2 involved injustice, because the bankruptcy notice used a prescribed form for which there was no alternative.
9 As to the first point, I agree that the respondent should not be required to pay the costs of the applicant in relation to the jurisdiction point. The Court must always satisfy itself that it has jurisdiction in a matter, and will naturally look to the moving party for assistance if there is doubt. It is the moving party who has an interest in establishing the existence of jurisdiction. By observing that the applicant needed to satisfy the Court that it had jurisdiction, the respondent was not putting the point in issue.
10 As to the second point, the applicant correctly points out that costs ordinarily follow the event and are awarded on a broad brush basis. It is not usually considered appropriate to disaggregate the costs of a proceeding by reference to particular issues or grounds, unless the party who achieved overall success has failed on a genuinely discrete issue that consumed significant time and resources (see, eg, Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA)). Here, in terms of relief, the applicant succeeded completely. Ground 1 involved legal argument, on uncontroversial facts, in a hearing which in total took less than a day. This is not a case that calls for costs to be divided up according to success or failure on particular grounds.
11 As to the third point, evidence filed on the costs application shows that the applicant filed a genuine steps statement (as required by s 6 of the Civil Dispute Resolution Act 2011 (Cth)) on the day that his failure to do so was raised with him by the respondent. In any event, such a statement records, rather than constituting, steps taken to resolve the issues in dispute. Without more, the failure to file a genuine steps statement at the proper time is not a reason to depart from the usual order as to costs.
12 The more substantive aspect of the third point is an argument that the applicant did not (or did not sufficiently) engage in discussions with the respondent. This behaviour is said to be contrary to s 37N(1) of the Federal Court of Australia Act 1976 (Cth). Section 37N(1) requires parties to conduct proceedings and settlement negotiations in a way that is consistent with the "overarching purpose" in s 37M. That purpose is the just resolution of disputes (a) according to law and (b) as quickly, inexpensively and efficiently as possible. A failure to comply with the obligation in s 37N(1) must be taken into account in exercising the discretion to award costs (s 37N(4)).
13 In so far as this argument is put in relation to ground 1, it is suggested that proper engagement between the parties would likely have led to the applicant realising that the ground was unmeritorious and abandoning it. I do not think that this argument assists the respondent.
(a) Although I rejected ground 1, I do not think it follows that the point was without merit. Analysis of relevant provisions of the Bankruptcy Act 1966 (Cth) and relevant authorities was required. The point was clearly arguable.
(b) It is thus somewhat hopeful to suggest that further correspondence between the parties would have led to the ground being dropped. If the applicant had sought advice from counsel on the point, the advice would probably have been that the point was arguable and should be run.
(c) On the other hand, if the applicant had been persuaded not to run the point, that decision would probably have required further consideration, advice, and further correspondence. These processes would have generated costs which the respondent would ultimately have to pay.
(d) There was some correspondence between the solicitors for the parties concerning ground 1. It is fair to say that the solicitor for the applicant was not in a position to explain the applicant's position to any great extent. The exchange ended with the applicant's solicitor saying that the answer to the respondent's question would be a matter for final submissions in due course. No doubt this left something to be desired. However, s 37N(1) should not be regarded as being breached, so as to engage s 37N(4), whenever solicitors for the parties fall short of perfection in their dealings with each other.
14 In so far as the argument is put in relation to ground 2, it is said that the applicant did not raise this ground with the respondent prior to commencing the proceedings. Whether this engages either of the statutory provisions referred to above is doubtful. No complaint appears to be directed at the conduct of negotiations once proceedings had commenced. The lack of correspondence between the parties concerning this ground before the proceedings were commenced may have something to do with the fact that the applicant's argument built on observations in Coleman v Gannaway [2023] FCA 224, which had been handed down around four weeks before the originating application was filed (which, in turn, was only five days before the time for filing expired). The ground was articulated in the affidavit that was filed in support of the originating application. After this time (noting that the point was ultimately a winning one), it was the respondent who had the capacity to avoid unnecessary costs by making appropriate concessions.
15 As to the fourth point, I observed in my reasons for decision (at [54]) that it was possible to infer that AFSA's online portal was the only means available for the respondent to apply for a bankruptcy notice. That made it appropriate to express sympathy for the respondent's solicitor, who had done the best he could (at [54]), and regard the outcome of the case as involving injustice (at [59]). However, I do not consider that this is a basis upon which to depart from the usual order as to costs. In a proceeding in bankruptcy, the applicant was entitled to stand on his legal rights and to take whatever advantage arose from non-compliance by the bankruptcy notice with statutory requirements.
16 The limitations of the online portal left the respondent in an impossible position because of the language of s 12(2) of the Regulations and the authorities which required me to hold that those requirements were essential. The exercise of discretion in relation to costs is not the occasion to question the appropriateness of those sources of law. Nor should the applicant, having succeeded in the face of opposition, be deprived of part of his costs on the basis that the respondent may have cause for complaint against AFSA.
17 In my view, therefore, the respondent should pay the applicant's costs assessed on the usual party-party basis, discounted by an amount that reflects an estimate of the costs attributable to the jurisdiction point.