Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd

Supreme Court of NSW|2024-11-19|Before: Dhanji J, Hayne J

Dornoch Ltd [2006] NSWCA 33 Commissioner of the Australian Federal Police v Vo (2015) 302 FLR 209; [2015] NSWSC 1523 Bisstt v Director of Public Prosecutions (Cth) (Supreme Court (Vic), Hayne J, 24 February 1993, unrep) Commissioner of Australian Federal Police v Cole (No 2) [2018] NSWSC 1123 Commissioner of the Australian Federal Police v Cacu (No 2) [2015] NSWSC 1894 Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) [2024] NSWSC 482 Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 3) [2024] NSWSC 897 Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 4) [2024] NSWSC 921 Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301 Commonwealth of Australia v Gretton [2008] NSWCA 117 Diez v Director of Public Prosecutions (Cth) (2004) 62 NSWLR 1; [2004] NSWCA 452 Director of Public Prosecutions (Cth) v Adorjany [2000] NSWSC 76 Fowkes v Deputy Director of Public Prosecutions [1997] 2 VR 506 Gwe v Commissioner of the Australian Federal Police (No 2) (2020) 103 NSWLR 535; [2020] NSWCA 350 Harrison v Melham (2008) 72 NSWLR 380; [2008] NSWCA 67 Lennon v Gibson and Howes Limited (1919) 26 CLR 285; [1919] AC 709 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201 North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564 Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 Ohn v Walton (1995) 36 NSWLR 77 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Williams v Lewer [1974] NSWLR 91 Category: Consequential orders Parties: Commissioner of the Australian Federal Police (Plaintiff) HWCJ GLB Pty Ltd (First Defendant) JCJ Health Pty Ltd (Second Defendant) GSL Bud Pty Ltd (Third Defendant) Hong HZ Pty Ltd (Fourth Defendant) LJ Yin Pty Ltd (Fifth Defendant) Wenhao Globle Pty Ltd (Sixth Defendant) TJL International Pty Ltd (Seventh Defendant) XM Global Pty Ltd (Eighth Defendant)

Applicants: James Nadel (Applicant 002) Robert Brooks and Maehal Enterprises, Inc (Applicant 003) John Adams Roesch JR (Applicant 004) Dr Clifford Librach (Applicant 005) Castle Bespoke Management Limited (Applicant 006) John Squires Poelman (Applicant 007) Sukhdev Sandhu (Applicant 008) Xiao Yan Dong (Applicant 009) Brian Roy Bunzeluk (Applicant 010) Xiao Xiao (Applicant 011) Isen Chen (Applicant 012) Amy Wing Yan Lau (Applicant 013) Harwin Group Inc (Applicant 014) Mei McNeilly previously Chunmei Yang (Applicant 015) Fei Tan (Applicant 016) Gang Wu and Valuetek Inc (Applicant 017) James Michael McBrayer (Applicant 018) Quanshuai Liu (Applicant 019) Neil Richardson (Applicant 020) Paul Carney (Applicant 021) Yong-Xiao Wang (Applicant 022) Steven Michael Rubinstein (Applicant 023) Rajeev Sharma (Applicant 024) John A Amodeo (Applicant 025) Marc Christiaen van der Chijs (Applicant 026) Ching-Liu Wu (Applicant 027) Xiang Yun Luo and Sze Yu Wong (Applicant 028) Tony Chen (Applicant 029) Michael Peter Sampson (Applicant 030) Dr Yu Geng (Applicant 031) Yu Sun (Applicant 032) Xiang Liao (Applicant 033) Carlitos Soldevilla Borja (Applicant 034) Jie Bai (Applicant 035) Jeffrey Edel (Applicant 036) Ronald Lewis Myers and Digital Properties West, LLC (Applicant 037) Ravinder Sagoo (Applicant 038) Xiao Ni Xu (Applicant 039) Tom Fuh Shiong Fan (Applicant 040) Lawrence Jou (Applicant 041) Malik Greene (Applicant 042) Ven Tow Lee (Applicant 043) Humphrey Company Ltd (Applicant 044) Lanping Li (Applicant 045) Representation: Counsel: L Livingston SC with M Short (Plaintiff) L Chapman (Applicant 002) J Adamopoulos (Applicant 003) J Giles SC with H Grace (Applicant 004) CG Juebner KC (Applicant 005) T Liu with S Thomson (Applicant 007) M Hassall (Applicant 012) E Greaves (Applicant 018) R Johnson (Applicant 024) P English (Applicant 025) T Muir (Applicant 027) QM Noakhtar (Applicant 037) J Horowitz (Applicant 039) A Kirby (Applicant 043) R Reynolds (Applicant 044)

Solicitors: Australian Federal Police (Plaintiff) Rosendorff Lawyers (Applicant 002) Dentons Australia (Applicant 003) Thomson Geer (Applicant 004) Baker McKenzie (Applicant 005) Hall & Wilcox (Applicant 006) Colin Biggers & Paisley Pty Ltd (Applicant 007) No appearance (Applicant 008) Goldsea & Sands (Applicant 009) Taylor Rose Lawyers (Applicant 010) Self-represented (Applicant 011) Nyman Gibson Miralis (Applicant 012) O'Brien Criminal & Civil Solicitors (Applicant 013) Blue Ocean Law Group (Applicant 014) A McNeilly leave granted to appear (Applicant 015) Ren Zhou Lawyers (Applicant 016) Gordon Wells & Co Solicitors (Applicant 017) Manwith Legal Pty Ltd t/as Axegal (Applicant 018) Self-represented (Applicant 019) Hall & Wilcox (Applicant 020) Streeton Lawyers (Applicant 021) No appearance (Applicant 022) Swaab Lawyers (Applicant 023) Kingston Fox Lawyers (Applicant 024) Alexanders Lawyers (Applicant 025) Quinn Emanuel Urquhart & Sullivan (Applicant 026) Mitchell Lawyers (Applicant 027) M Gallegos (Applicant 028) Self-represented (Applicant 029) Hall & Wilcox (Applicant 030) Blue Ocean Law Group (Applicant 031) Self-represented (Applicant 032) Self-represented (Applicant 033) Self-represented (Applicant 034) Gavin Parsons and Associates Pty Ltd (Applicant 035) Self-represented (Applicant 036) McLachlan Thorpe Partners (Applicant 037) Blue Ocean Law Group (Applicant 038) Beswick Lynch Lawyers (Applicant 039) Self-represented (Applicant 040) Self-represented (Applicant 041) Mangioni Biggs & Co (Applicant 042) Nicholas O'Donohue and Co Lawyers (Applicant 043) Marque Lawyers (Applicant 044) Self-represented (Applicant 045) File Number(s): 2022/329752 Publication restriction: Nil

Preliminary

This is a judgment on costs. The background to the litigation is set out in my reasons in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) [2024] NSWSC 482, Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 3) [2024] NSWSC 897 and Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 4) [2024] NSWSC 921. In short, the Commissioner of the Australian Federal Police ( "the Commissioner"), the plaintiff in the matter, brought proceedings under the Proceeds of Crime Act 2002 (Cth) ("POCA") against the defendant companies, seeking restraint and ultimately forfeiture of assets of the defendants, consisting of what can be conveniently described as funds held in a number of bank accounts. The defendants took no part in the proceedings. The applicants were persons with an interest in the funds. Each brought proceedings by way of notice of motion in the substantive proceedings seeking, in essence, payment to them of that interest.
Orders having been made in the litigation in favour of the applicants on the motions, applications have been made by some of those parties for an award of costs in their favour. A variety of approaches have been taken by the applicants as to the orders sought, both as to who the costs orders should be made against (the Commissioner, the Commonwealth or the defendants) and the terms of any order.
In accordance with orders made by me, the matter is being determined on the papers. Evidence and submissions have been filed in support of the applications and by the Commissioner.

The applicants seeking costs

Applications for an award of costs have been brought by the following applicants who were legally represented in the proceedings:

James Nadel (Applicant 002)
Robert Brooks and Maehal Enterprises, Inc (Applicant 003)
John Adams Roesch JR (Applicant 004)
Clifford Librach (Applicant 005)
Castle Bespoke Management Limited (Applicant 006)
John Squires Poelman (Applicant 007)
Xiao Yan Dong (Applicant 009)
Brian Bunzeluk (Applicant 010)
Isen Chen (Applicant 012)
Harwin Group Inc (Applicant 014)
James Michael McBrayer (Applicant 018)
Neil Richardson (Applicant 020)
Steven Michael Rubinstein (Applicant 023)
Rajeev Sharma (Applicant 024)
John Amodeo (Applicant 025)
Marc Christiaen van der Chijs (Applicant 026)
Ching-Liu Wu (Applicant 027)
Michael Peter Sampson (Applicant 030)
Yu Geng (Applicant 031)
Jie Bai (Applicant 035)
Ronald Lewis Myers and Digital Properties West, LLC (Applicant 037)
Ravinder Sagoo (Applicant 038)
Xiao Ni Xu (Applicant 039)
Mallik Greene (Applicant 042)
Ven Tow Lee (Applicant 043)
Humphrey Company Ltd (Applicant 044)

The following unrepresented applicants have sought their costs:

Mei McNeilly previously Chunmei Yang (Applicant 015)
Lanping Li (Applicant 045)
Jeffrey Edel (Applicant 036) [1]

Insofar as unrepresented applicants have sought costs, such costs are limited to their legal expenses such as filing fees and fees paid to lawyers for advice or some service in preparing the matter. The legal expenses of unrepresented applicants do not include any aspect of the time those persons expended on their own behalf in pursuing the litigation.
The various applications present something of a quandary in the context of litigation that was conducted co-operatively between the Commissioner and the applicants in the absence of the parties truly at fault, that is, the defendants. This, and the available legislative alternatives, has led to a variety of approaches being taken by the costs applicants where uniformity in the orders would appear both desirable and appropriate.
Presumably, in large part based on the manner in which the Commissioner conducted the litigation, the vast majority of applicants did not seek costs against him. Only applicants John Squires Poelman (Applicant 007), Xiao Yan Dong (Applicant 009, and then only in reply), Ching-Liu Wu (Applicant 027), Ronald Lewis Myers (Applicant 037), and Xiao Ni Xu (Applicant 039) sought an order against the Commissioner. All of these applicants, however, also sought costs against the Commonwealth, and in some cases, as an additional option, against the defendants.
A majority of the costs applicants sought costs against the defendants. Those that did not were John Squires Poelman (Applicant 007), Harwin Group Inc (Applicant 014), Steven Michael Rubenstein (Applicant 023), John Amodeo (Applicant 025), Marc Christiaen van der Chijs (Applicant 026), Ching-Liu Wu (Applicant 027), Yu Geng (Applicant 031), Jie Bai (Applicant 035), Ravinder Sagoo (Applicant 038) and Humphrey Company Ltd (Applicant 044). None of the applicants however, ultimately sought costs exclusively against the defendants with the exception of Ven Tow Lee (Applicant 043). That is, each of the applicants seeking costs against the defendants, with the exception of Ven Tow Lee, did so as one of two or more options (and most commonly as an alternative).
All of the applicants seek costs against the Commonwealth, at least as one of multiple available options, with the exception of Ven Tow Lee (Applicant 043). Two applicants, James Nadal (Applicant 002) and James Michael McBrayer (Applicant 018) did not initially seek costs against the Commonwealth but modified their positions in circumstances discussed later in these reasons.

Costs - some general principles

The parties were generally united as to the ordinary principles to be applied with respect to the award of costs in civil proceedings. The determination of costs involves the exercise of a discretion. That discretion is to be exercised judicially: Oshlack v Richmond River Council (1998) 193 CLR 72 at 81; [1998] HCA 11. The discretion is to be exercised "according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy" (citations omitted): Williams v Lewer [1974] NSWLR 91 at 95.
In Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25, the High Court said, at [25]: "A guiding principle by reference to which the discretion is to be exercised - indeed, 'one of the most, if not the most, important' principle - is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs." (footnotes omitted)
The ordinary rule is that costs follow the event. This is reflected in r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). In Commonwealth of Australia v Gretton [2008] NSWCA 117, Hodgson JA said (at [121]): "In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach." See also Commissioner of Australian Federal Police v Cole (No 2) [2018] NSWSC 1123 where the above passage was set out by Schmidt J in the context of litigation under the POCA; Commissioner of the Australian Federal Police v Vo (2015) 302 FLR 209; [2015] NSWSC 1523; Commissioner of the Australian Federal Police v Cacu (No 2) [2015] NSWSC 1894; Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301 at [71]-[72].
The costs applicants have each been, at least to an extent, successful in their actions (subject to some arguable exceptions where the amount recovered was either modest or disproportionate to the costs incurred). As a general proposition, as successful parties in civil litigation they would ordinarily expect an award of costs in their favour.
In expressing this general proposition, I am aware that the costs incurred by the applicants were, in some cases, substantial. There also appears to be a significant variation in costs incurred. Without commenting further, the incurring of costs and their quantum was, to at least an extent, the result of the absence of any practical alternative to the bringing of applications in this Court under the POCA. There is no suggestion that it was other than appropriate for the Commissioner to take action under the POCA against the defendants. The reality is that once action is taken by the Commissioner under the POCA there is no practical alternative method of recovery available for victims of crime such as the applicants in the present matter. Having been, in a practical sense, compelled to bring their applications, the applicants assumed an evidentiary burden. In the case of a number of applicants, evidence relied on to satisfy that burden was filed prior to them becoming aware of the Commissioner's position, with a consequent impact on the nature and detail of the evidence filed. The decision of the applicants to bring their motions of course involved a forensic choice. In a limited number of cases where a relatively small amount was recovered, the Commissioner questions this forensic choice and, consequently, the entitlement of the applicant to costs. It will be necessary to return to this issue after dealing first with the applicants who might be more readily described as successful on their applications.
Before determining whether the ordinary approach to an application for costs by a successful party in civil litigation applies in the present circumstances, it is necessary to consider the statutory provisions with application or potential application to the present circumstances.

Costs - potentially applicable statutory provisions

The POCA contains a specific provision in relation to costs in s 323. It is convenient to consider this provision first.

Section 323 of the POCA

Section 323 of the POCA provides: Costs (1) If: (a) a person brings, or appears at, proceedings under this Act before a court in order: (i) to prevent a * forfeiture order or * restraining order from being made against property of the person; or (ii) to have property of the person excluded from a forfeiture order or restraining order; and (b) the person is successful in those proceedings; and (c) the court is satisfied that the person was not involved in any way in the commission of the offence in respect of which the forfeiture order or restraining order was sought or made; the court may order the Commonwealth to pay all costs incurred by the person in connection with the proceedings or such part of those costs as is determined by the court. (2) The costs referred to in subsection (1) are not limited to costs of a kind that are normally recoverable by the successful party to civil proceedings.
Some propositions may be shortly stated. First, the provision provides for a discretion to award costs to a person who satisfies the preconditions in s 323(1) (a), (b) and (c). This is made apparent by the word "may" in s 323(1). While "may" will sometimes mean "must", that is not the case here, for the reasons given in Diez v Director of Public Prosecutions (Cth) (2004) 62 NSWLR 1; [2004] NSWCA 452 at [32]-[34] in the context of a relevantly identical provision in the earlier Proceeds of Crime Act 1987 (Cth) ("the 1987 Act"). Secondly, there is no issue the costs applicants satisfy s 323(1). Thirdly, the expression "all costs" is properly understood to mean indemnity costs: Gwe v Commissioner of the Australian Federal Police (No 2) (2020) 103 NSWLR 535; [2020] NSWCA 350 at [11]; Diez at [38]. The result is that I have a discretion to award costs, to be paid by the Commonwealth, up to and including indemnity costs, to the costs applicants.
Whilst not denying the existence of the discretion, the Commissioner submitted that I would not award costs against the Commonwealth. It will be necessary to consider the Commissioner's arguments in this regard in due course.

Section 98 of Civil Procedure Act 2005 (NSW)

Section 98 of the Civil Procedure Act provides a general power in relation to costs in civil proceedings. The Commissioner submitted that while no order should be made against him, an alternative is available to award costs pursuant to this provision against the defendants. The Commissioner submitted that the Court "can and should" make costs orders against the defendants in favour of each of the successful applicants. The submission assumes the availability of the general costs provision in the present context. Consistent with the Commissioner's assumption, in Diez it was held, contrary to the argument of the Director of Public Prosecutions (Cth), in that case, that s 101 of the 1987 Act did not exclude the operation of the more general power to award costs. In coming to that view, the Court overturned the earlier authority of Commonwealth Director of Public Prosecutions v Adorjany [2000] NSWSC 76 at [14]. Santow JA in Diez also noted that Hayne J in Bissett v Director of Public Prosecutions (Cth) (Supreme Court (Vic), 24 February 1993, unrep) appeared to express doubt as to whether s 101 left room for the award of costs on some other basis.
The reasoning of Santow AJ in Diez was heavily reliant on a reading of s 101 of the 1987 Act in the context of the Act more generally. In particular, his Honour relied on the unavailability of s 101 with respect to various applications under the 1987 Act. While s 323 of the POCA is in the same terms as s 101 of the 1987 Act, it does not exist within the same context. It is not self-evident that the issue would have been decided the same way in the context of the current Act. Against that, the legislature has chosen to use a form of words in s 323 of the POCA which has been subject to judicial scrutiny. As Mason P observed in Harrison v Melham (2008) 72 NSWLR 380; [2008] NSWCA 67 at [131]: "There is a principle of statutory interpretation supporting a presumption that a legislature intends to attach the same meaning to the same words when used in a subsequent statute in a similar connection." (citations omitted) See also Lennon v Gibson and Howes Limited (1919) 26 CLR 285; [1919] AC 709 at 711-712.
In the present context, a further issue arises. Section 323 makes provision for the award of costs against the Commonwealth. Here, the Commissioner contend there is a general power to award costs, not in the context of a potential award of costs against the Commonwealth (which gave rise to the issue in Diez), but rather, against the defendants. There is a sound argument that even if s 323 provided the exclusive power for an award of costs against the Commonwealth, it does not impinge on the general power to award costs against other parties.
Given the principle of statutory construction to which I have referred, and in the absence of argument on the issue, I am prepared to assume the existence of a power pursuant to s 98 of the Civil Procedure Act to award costs against a defendant in proceedings for exclusion of an applicant's interest from a restraining order brought pursuant to s 29 of the POCA. I would, similarly, accept that s 98 provides a power to award costs against the Commissioner as a party to the litigation.

Costs against the defendants?

Accepting the general power to award costs against the defendants pursuant to s 98 of the Civil Procedure Act, there remains a practical problem. HWCJ GLB Pty Ltd ("HWCJ GLB") is the only defendant with respect to which an exclusion application was made with funds standing to its credit after allowing for payments to the applicants pursuant to my orders.
The Commissioner submitted an order could be made against the defendants making each defendant jointly and severally liable for the applicants' costs. This would allow for payment to be made from funds in the accounts of HWCJ GLB (or other defendant) to any applicant, irrespective of whether that applicant had a claim against that defendant. There is an attraction to doing so given that all the funds to the credit of HWCJ GLB would appear to be the result of its wrongdoing. The costs applicants generally (with the exception of Mr Roesch (Applicant 004)) embraced the Commissioner's position, at least in the alternative. This was not surprising given it was in their interest to do so.
There were a total 15 applicants who had an interest in property held by HWCJ GLB. Thus, the majority of the applicants had interests limited to interests in property held by defendants other than HWCJ GLB. The funds held by those defendants have been exhausted. Any award of costs to those applicants against a defendant against which they recovered their interest will be frustrated by the absence of any funds held by that defendant to meet the order.
The Commissioner submitted that, while the funds of the defendants with respect to which exclusion applications had been brought, with the exception of HWCJ GLB, had been exhausted, it would nonetheless be open to the Court to make costs orders in favour of each of the costs applicants against the defendants, including HWCJ GLB "regardless of the fact that they did not obtain an exclusion order against HWCJ [GLB]…". It was submitted that such an order was open for the Court to make in the exercise of its discretion and that, while that discretion must be exercised judicially, the Court was not constrained as it was in making exclusion orders pursuant to s 29 of the POCA, on an account by account basis (as to which see Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2) at [49]-[50]). While I am not constrained to award costs only from an account into which an applicant deposited funds, it is not clear on what principled basis I could order one defendant to pay costs to an applicant that had no relationship with the defendant.
I accept that in the ordinary course, where there are multiple defendants, a costs order may be made against those defendants who will be jointly and severally liable. While that may apply in the case of a plaintiff in an action against multiple defendants, is not clear how it can apply here where the plaintiff brought his action against multiple defendants, but applicants brought their motions only with respect to their interest in property held by particular defendants.
In coming to my conclusion on this issue, I acknowledge my suspicion that the various defendants may be linked, and there may well have been common natural persons operating as the corporate mind of the various defendants. But I do not have evidence of this. Indeed, the Commissioner suggested that the involvement of the defendants was likely to have been as launderers of the funds as opposed to having a direct involvement in the frauds themselves. The result is that I do not accept that the funds in the accounts held by HWCJ GLB (or any other defendant) constitute a pool from which all applicants can draw for the purposes of costs.
The Commissioner also submitted that the fact that a defendant does not have the means to pay a costs order would not lead me to decline to make an order against it. The Commissioner submitted that courts do not generally regard the impecuniousness of an unsuccessful party as a reason for declining to order damages against them, referring to Sangare at [34]-[35]. So much can be accepted. However, at least part of the reasoning underpinning the decision in Sangare is that a costs order against an impecunious party will create a debt which is of itself a benefit to the creditor such that the successful party will be "better off with the benefit of the order than without it". In that case the choice was between a costs order against an impecunious party or no costs order at all. That is not this case. I do not read anything in the reasons of the High Court in Sangare that supports the proposition that the unlikelihood of recovering against one party is not a relevant consideration in determining whether a costs order should be made against another party (either jointly with the impecunious party or not).
A further matter militating against an award of costs against HWCJ GLB, or the defendants generally, is the added complexity involved. As acknowledged by the Commissioner, if costs orders were made against the defendants, it would be necessary for ancillary orders to be made in accordance with s 39(1)(a) and s 39(1)(e)(i) of the POCA, varying the property covered by the restraining order to exclude sufficient funds to meet the costs orders, together with a direction to the Official Trustee in bankruptcy to pay a portion of those funds to each of the costs applicants as appropriate. Clifford Librach (Applicant 005), while content for an order to be made against the defendants, also sought what was described as a "backstop" order, requiring the Commissioner to pay his costs in the event that the necessary application under s 39 of the POCA is refused. Applications to vary the property covered by the restraining order could be brought by either the costs applicants pursuant to s 39(2)(d) or the Commissioner (pursuant to s 39(2)(a)) of the POCA.
The added complexity of an award of costs against the defendants, while acknowledged, should not be overstated. I note in this regard that the Commissioner undertook to make the application in the event costs orders are made against the defendants. Any added complexity should, however, be seen in the context of what might be described as the practical reality. In the event that a costs order is made against the defendants, that will, in the circumstances of this case, simply have the effect of reducing the funds available for forfeiture to the Commonwealth. Consequently, the net result to the Commonwealth of a costs order against the Commonwealth, or a costs order against the defendants, will be the same. While that is the net result, I accept there are practical differences. The funds forfeited under the POCA will be paid into the confiscated assets account: s 296. Section 297 of the POCA provides the exclusive purposes for which funds in the confiscated assets account may be debited. They cannot be provided to the AFP for the purposes of meeting a costs order. (Nor are the funds able to be used for costs incurred in proceeding under the POCA other than for the express purpose specified in s 297(ga), which is not presently relevant.) It should, however, be noted that s 297 allows for payments under a program approved by the Minister under s 298. Section 298(2) sets out the purposes for which the Minister may approve programs for the expenditure of money in the Confiscated Assets Account. Those purposes are limited, but relevantly include "crime prevention measures" and "law enforcement measures", with the result that it is possible (perhaps likely) that the AFP benefits through funding received under the POCA scheme.
On the evidence led by the Commissioner, the costs order made in a prior matter (Gwe v Commissioner of the Australian Federal Police (No 2)) was met by the relevant AFP litigation group (although it was also acknowledged that the costs order in that case was made against the Commissioner, rather than against the Commonwealth). That was not however, a result mandated by the legislation. Whether the AFP should be required to meet a costs order made against the Commonwealth in the present matter will be a matter for the Commonwealth.
As is apparent from the above, an order against the defendants rather than an order against the Commissioner or the Commonwealth will benefit the AFP in the event that in the latter cases, the Commonwealth requires the AFP to pay the costs from its budget without recompense. Against that, the net position of the Commonwealth is the same, while an order against the defendants will involve the added complexity I have discussed above. To that complexity might be added the need for a different approach to be taken with respect to different costs applicants, depending on the defendant holding the funds in which that applicant held an interest. Such additional complexity is contrary to the "just, quick and cheap resolution" of the proceedings: s 56, Civil Procedure Act.
I note the Commissioner's submission that the defendants should be considered the unsuccessful parties in the proceedings and consequently, the appropriate entities against which an order for costs should be made. I accept that the defendants have been unsuccessful in the proceedings in that they have had their property restrained. That restraint has been in effect for a period well in excess of six months. The defendants are consequently liable to have that property forfeited to the Commonwealth pursuant to s 47 and/or s 49 of the POCA. While there are additional requirements (beyond the property having been restrained for six months or more) in both s 47 and s 49, in the present case where there has been no appearance on behalf of the defendants (for reasons almost certainly connected with their involvement in serious crime) it can be accepted that forfeiture orders will be made. Given that the defendants have not participated in proceedings against them and consequently appear to be entirely agnostic as to whether the property is forfeited to the Commonwealth or paid out to the applicants, they would not, in ordinary parlance, be described as either successful or unsuccessful on the applicants' motions. That said, perhaps more relevantly, I accept that the defendants were the entities who were, on the Commissioner's submission, "truly responsible for each of the [c]osts [a]pplicants incurring costs in the proceedings."
Having regard to the matters discussed above I have serious reservations in acceding to the Commissioner's submission that the costs award should be made against the defendants in favour of all applicants pursuant to the general power to award costs in s 98 of the Civil Procedure Act. Whether I should make such an order depends, at least in part, on the suitability of available alternatives.

Principles as to costs against a public authority generally

As noted above, all of the applicants with the exception of Ven Tow Lee (Applicant 043), seek a costs order against the Commonwealth either as a primary or secondary position while a limited number also submitted an order could be made against the Commissioner. In approaching an application for costs against a public authority, it is relevant to note the observations of McHugh J in Oshlack v Richmond River Council at [92]: "The law judges persons by their conduct not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle. The fact that a successful respondent is a public authority should not make a court less inclined to award costs in its favour. Gone are the days when one could sensibly speak of a public authority having 'available to them almost unlimited public funds.'"
In the same vein it follows that an award of costs should not be made against the Commissioner, or the Commonwealth on the basis of their identity. What is required in the present case is affected by "traditional principle" as referred to by McHugh J, and any additionally relevant statutory provisions. In the present case, the relevant statutory provisions are, as discussed above, the generally applicable provisions in s 98 of the Civil Procedure Act and relevant rules of the UCPR, in addition to s 323 of the POCA.
It is necessary then to consider the arguments of the parties as to the making of a costs order against either the Commissioner or the Commonwealth without opting for an order against the Commissioner or the Commonwealth simply on the basis of identity.

Should costs be awarded against either the Commissioner or the Commonwealth in this case?

As discussed above, I proceed on the basis I have the power to order costs against the Commissioner pursuant to s 98 of the Civil Procedure Act.
While the Commissioner and the Commonwealth are separate, albeit related identities, the evidence before me is that any order against the Commonwealth or the Commissioner will be met from the AFP's budget. [2] The liability of the AFP to meet an order made against the Commonwealth is, however, as I have already observed, not grounded in the terms of the legislation. It is doubtful that this administrative arrangement should affect the proper approach to the provisions. I have also observed, above, that the AFP is able to receive funds from the Confiscated Assets Account with the result that it is at least possible for funds forfeited to the Commonwealth to make their way to the AFP, albeit earmarked to a particular program approved by the Minister.
As noted above, the Commissioner was the plaintiff in the substantive proceedings. He did not oppose the orders sought by the applicants on their exclusion applications. While he appeared at, and participated in the proceedings, I accept that rather than opposing the orders sought, the Commissioner provided substantial assistance to the Court and to the applicants, including by providing the evidence of Mr Charlie Nasr, a forensic accountant, necessary for determining the applicants' respective interests in the restrained property. Further, the Commissioner, while requiring that the applicants adduce evidence to establish their entitlement to their asserted interest in the funds, (including evidence as to the legitimacy of the funds as required under the POCA to establish their interest in the property) was explicit in indicating that he did not intend to challenge the making of orders in favour of the applicants. Considerable assistance was also provided to the Court by way of submissions.
Based on the above, the Commissioner submits that neither he, nor the Commonwealth can be described as "unsuccessful parties" to any of the exclusion applications. The Commissioner, on this basis, submitted that costs should not be awarded against him or the Commonwealth. He pointed to what was said in Latoudis v Casey (1990) 170 CLR 534 at 542-543; [1990] HCA 59 by Mason CJ: "In ordinary circumstances it would not be just or reasonable to deprive a defendant who has secured the dismissal of a criminal charge brought against him or her of an order for costs. To burden a successful defendant with the entire payment of the costs of defending the proceedings is in effect to expose the defendant to a financial burden which may be substantial, perhaps crippling, by reason of the bringing of a criminal charge which, in the event, should not have been brought. It is inequitable that the defendant should be expected to bear the financial burden of exculpating himself or herself, though the circumstances of a particular case may be such as to make it just and reasonable to refuse an order for costs or to make a qualified order for costs. As the Report of Committee on Costs in Criminal Cases (N.Z.), (1966), par.30, stated: 'Because we cannot wholly prevent placing innocent persons in jeopardy that does not mean that we should not as far as is practicable mitigate the consequences.' It will be seen from what I have already said that, in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. Most of the arguments which seek to counter an award of costs against an informant fail to recognize this principle and treat an order for costs against an informant as if it amounted to the imposition of a penalty or punishment. But these arguments only have force if costs are awarded by reason of misconduct or default on the part of the prosecutor. Once the principle is established that costs are generally awarded by way of indemnity to a successful defendant, the making of an order for costs against a prosecutor is no more a mark of disapproval of the prosecution than the dismissal of the proceedings." (citations omitted) (emphasis added by the Commissioner in his written submissions)
The passages extracted by the Commissioner should be understood to be responsive to the particular situation being dealt with in that case. I would not understand Mason CJ in the emphasised passage to have intended to circumscribe the situations in which costs will be ordered against a party. I would, however, accept that the Commissioner's role in the proceedings was quite unlike an unsuccessful plaintiff (or unsuccessful informant in a criminal matter).
Given the Commissioner's lack of opposition, I accept that he was not an unsuccessful party, at least if viewed from the narrow perspective of the motions for exclusion and ignoring the broader context of the litigation. There is, moreover, force in the submission that the Commissioner was not unlike a party who files a submitting appearance (who would not ordinarily be exposed to a costs order: see Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201.
While I accept that the Commissioner's role in the litigation is relevant in the exercise of what is a broad discretion, it is important to keep firmly in mind the compensatory nature of a costs order. That is, an award of costs is not made to punish the party against whom it is made but rather to compensate the successful party in the litigation: Sangare at [25]; Ohn v Walton (1995) 36 NSWLR 77 at 79; Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33 at [34]. That party has been put to expense in order to obtain or maintain a position to which they were legally entitled.
Some qualification must also be made with respect to the Commissioner's submission that he was not an unsuccessful party. When viewed in a broader context, the Commissioner brought the proceedings with the ultimate objective of having the property of all of the defendants forfeited to the Commonwealth. To the extent that the costs applicants succeeded in their exclusion applications (which it should be noted were made against only some of the defendants), this negatively impacted the success of the Commissioner's application for exclusion.
It is also to be observed that the majority of the applicants incurred a substantial portion of their costs prior to the Commissioner's approach to the applications being known. As I have already observed, there was, for the applicants, no practical alternative to engaging with the legislative scheme and consequent litigation to attempt to recoup their losses. Significant costs were also incurred as a result of the three-day hearing of the matter in February 2024, involving the original applicants. The primary focus of that hearing was the method by which the funds should be distributed. The applicants favoured different approaches, unsurprisingly based on the impact of each approach on their interests, as calculated by Mr Nasr. None of the parties (including the Commissioner) have, however, submitted that costs should be awarded against the parties who unsuccessfully argued for a particular method of a calculation. There is, in any event, some potential difficulty in such an approach given the late stage at which the prospect of dividing the monies by means of a "hybrid" method of distribution arose, with that method being adopted for each of the contested distributions with the exception of the GSL Bud accounts.
While the Commissioner, by instituting his actions, sought to have the whole of the property forfeited to the Commonwealth, it must also be acknowledged that in obtaining the restraining orders, the Commissioner very likely prevented the further dissipation of funds, which was to the benefit of the applicants. Further, without the intervention of the Commissioner, any costs applicant that had sought to restrain the funds themselves would likely have incurred significant legal costs in doing so (as evidenced by the costs incurred by Mr Nadel (Applicant 002) in the Victorian County Court proceedings). Alternatively they may have decided not to engage in litigation having regard to the risk of incurring costs outweighing the potential benefit. (I note that the National Australia Bank ("NAB") had been notified of the fraud by Mr Roesch (Applicant 004) and placed an administrative freeze on the HWCJ GLB USD account. Evidence led by the Commissioner however, is that the NAB could not maintain the administrative freeze on the account.) The Commissioner argues that in circumstances where he has acted in the public interest to preserve the property, s 323 of the POCA should not operate to transfer to the Commonwealth the costs (or risk) the costs applicants were able to avoid by taking action against the defendants directly (in circumstances where, as noted above, the Commissioner expects to meet any order against the Commonwealth). There is force in the Commissioner's submissions in this regard: see Oshlack v Richmond River Council; North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564 at [91] per Weinberg J.
The Commissioner also notes that resources do not allow him to take action or even investigate every matter where the POCA may have application. In making a decision, the Commissioner, unsurprisingly, engages in a cost benefit analysis to determine the most effective use of resources, considering the risk of damages, including costs, being awarded against the Commissioner (or against the Commonwealth and met by the AFP). The Commissioner submits that the potential for an adverse costs order will act as a disincentive to take action to restrain funds such as that which was taken in the present case. Any such order would of course, have to be paid in addition to the significant costs the Commissioner has incurred in conducting this litigation in the public interest.
I accept that the Commissioner will, before undertaking any litigation, engage in a cost benefit analysis of the particular action. However, in doing so, it can be expected that the Commissioner will act in the public interest. The Commissioner has a duty to administer the POCA consistently and in line with the principal objects of the POCA contained in s 5. A concern as to liability for costs on an application for exclusion ought not to play too heavily into any decision as to whether to take action under the Act.
The Commissioner also submitted that his role in the litigation was akin to a liquidator or administrator, noting that it is not generally appropriate to make an order for costs against a liquidator or administrator, but rather the ordinary principle that costs follow the event will justify an order for costs against the company. While the situation might be regarded as broadly analogous, it is no more than that. The present matter should be decided in its statutory contest having regard to generally applicable principles as to costs.

Any award for costs should be made against the Commonwealth

As I have observed above, I have the power to make an order for costs against the defendants or the Commissioner pursuant to s 98 of the Civil Procedure Act. I have the power to award costs against the Commonwealth pursuant to s 323 of the POCA.
The Commissioner, as I have already made clear, rather than opposing, in fact facilitated the making of orders in favour of the applicants. In doing so the Commissioner himself (or more accurately the AFP) incurred significant costs. Further, probably relatedly, many of the costs applicants did not seek costs against the Commissioner. Additionally, as discussed, under the POCA, forfeiture is to the Commonwealth (and not specifically to the AFP, although, there is the potential for indirect benefit). For those reasons, I would not favour an order against the Commissioner over an order against the Commonwealth. In stating this, I do not overlook that there may be no practical difference to the Commissioner in relation to an order against him as opposed to an order against the Commonwealth.
The question then is whether I would exercise my discretion to award costs against the Commonwealth. I again acknowledge the powerful matters raised by the Commissioner. Indeed, the reasons for not awarding costs against the Commissioner largely apply to an award of costs against the Commonwealth, including in particular the manner in which the litigation was conducted and the expense to which the state has already been put in that regard. It is, however the case that, in relation to the costs applicants whose claim was against a defendant other than HWCJ GLB, absent a costs order against the Commonwealth, the practical reality is that, despite their success in the litigation, they will not be compensated for their costs.
Section 323 of the POCA involves a discretion. The section should be understood by reference to both its terms and context. With respect to the latter, as I have stated, the principal objects of the POCA are set out in s 5 of the Act. Those objects are focussed on depriving persons of the proceeds, instruments and benefits of crime.
It should not be thought that the mere existence of s 323 creates a presumption in favour of an award of costs against the Commonwealth on the basis that the section would otherwise have no work to do, given the presence of the general costs discretion. As submitted by the Commissioner, the section can be understood as empowering an award of costs against "the Commonwealth", which will commonly not (at least directly) be a party to the proceedings, as is the case here. Further, the section limits when such an order can be made. Finally, the section makes available an order against the Commonwealth without the need to consider whether any relevant State law is "picked up" by the Judiciary Act 1903 (Cth), in particular ss 79 or 80 (albeit that the Commissioner does not deny that it is, in advocating for costs orders against the defendants).
Consistent with the above, in Gwe v Commissioner of the Australian Federal Police (No 2), the Court of Appeal, in rejecting the approach that had been taken in Fowkes v Deputy Director of Public Prosecutions [1997] 2 VR 506 at 524, said (at [14]) "that the legislation might be 'beneficial' does not mean that a presumption can or should be read into it." The Court stressed that the award of costs pursuant to s 323 is, once the preconditions have been satisfied, a question of discretion, and that it is "antithetical to the existence of a broad discretion that there should be a predisposition, because of the character of the legislation, as to how that discretion ought be exercised". While those observations were made in the context of an argument as to whether indemnity costs should be awarded, their Honours did not appear to limit their observations to that situation.
The discretion, as submitted by the Commissioner, "falls to be exercised in the light of the terms, subject-matter and purpose of the [POCA] as a whole". As discussed above, the parties accepted the relevance of general principles regarding costs.
While it is possible to compensate certain of the costs applicants with respect to their actions against HWCJ GLB, that brings with it the additional complexity to which I have referred above. Nor will such orders compensate all of the costs applicants. In circumstances where any award of costs against HWCJ GLB will correspondingly reduce the amount forfeited to the Commonwealth, it is difficult to justify this added complexity including the need for a different approach to different costs applicants.
As a result, I am of the view that the costs applicants, having satisfied the preconditions of s 323, and having regard to the various competing considerations discussed above, should receive their costs, to be paid by the Commonwealth.

Indemnity costs?

A number of costs applicants sought an award of "all costs" as described by s 323, or indemnity costs, as that expression has been interpreted. As was said in Gwe v Commissioner of the Australian Federal Police (No 2), there is no presumption in favour of indemnity costs created by the section. None of the typical circumstances which attach to the award of indemnity costs can be attributed to the Commissioner (through whom the Commonwealth acted). The costs applicants themselves generally commended the Commissioner's approach. Costs should be awarded on the ordinary basis.

A gross sum costs order?

Submissions were made in favour of a gross sum order. There is some attraction to such orders, discounted to have regard to the award of less than indemnity costs. The Commissioner has, however, raised questions of substance in relation to the amounts sought by a number of applicants. It is not possible for me to fairly resolve these questions. In these circumstances I do not favour a gross sum costs order. In other cases, where there are no such concerns raised as to the costs incurred, it can be anticipated that agreement will likely be reached between the parties. It is preferable that the parties have the opportunity to such agreement, failing which, costs may be assessed on the ordinary basis.

Mr Nadel's costs in the County Court of Victoria

In addition to seeking his costs in these proceedings, Mr Nadel (Applicant 002) seeks to be compensated for his costs in relation to proceedings brought by him in the County Court of Victoria. Mr Nadel brought proceedings in the County Court of Victoria which had the effect of preserving the funds in the GSL Bud account. I accept that, absent the action taken by Mr Nadel, the funds in that account would very likely have been very substantially if not completely dissipated. This fact was significant in my decision to apportion the funds in that account on pari passu basis, in effect advantaging Mr Nadel in the method of distribution, although it must be observed that the benefit to him in this approach over the "hybrid" approach, which I preferred in relation to the other accounts, was relatively minor.
The proceedings in the County Court of Victoria were separate to the current proceedings. The power to award costs in s 323 does not extend to the award of costs in those proceedings. In Gwe v Commissioner of the Australian Federal Police (No 2) the Court said (at [30]-[31]): "30 … The appellants submitted that the power in s 323 to award costs 'in connection with the proceedings' extended to the costs of the appellants' participation in the s 180 hearings which predated the making of the freezing orders and the filing of the Notice of Motion by the appellants. 31 In our opinion, the costs, if any, incurred by the appellants in relation to the s 180 hearings could not be described as costs 'in connection with the proceedings'. Those costs were incurred well prior to the commencement of the proceedings and without any knowledge that the proceedings would ultimately be brought."
The same applies in the present proceedings with respect to the proceedings in the County Court of Victoria.
Mr Nadel did not, presumably in the light of the above, rely on s 323. He seeks that the costs of the proceedings in the County Court be awarded against the defendants pursuant to s 98(1) of the Civil Procedure Act. Section 98 provides: 98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
Section 3 of that Act provides a number of definitions, and in relation to cost provides: costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration.
Section 98 is in Division 2 of Part 7 of the Civil Procedure Act. Part 7 is titled "Judgments and orders" while, relevantly, Division 2 is titled "Costs in proceedings". The heading of the Division forms part of the Act: Interpretation Act 1987 (NSW), s 35. The term "costs" as used in s 98(1) is used "in relation to proceedings". In addition to the definition in s 3, s 98(6) provides: (6) In this section, costs include - (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed.
The costs of the Victorian County Court proceedings are not within the definition in s 3. Further, while s 98(6) extends the meaning of "costs" by including various related proceedings such as proceedings giving rise to an appeal and proceedings in another court prior to transfer, s 98(6) does not go so far as to include any related proceedings such as those brought by Mr Nadel in the County Court. I do not accept that s 98 is sufficiently broad so as to allow for the order sought by Mr Nadel with respect to the County Court proceedings.

A proposed cap?

The Commissioner proposes that any order for costs be capped at 70 percent of the amount recovered. This has a superficial attraction. Costs are awarded to a successful party. Whilst a party may receive an order in their favour, the real success (certainly in matters such as the present) is measured by the amount of that order. Here, a relatively small award in the context of a greater claim does not necessarily represent success in the proceedings.
The success of an applicant's claim in the present context is, however, not attached to the merits of the dispute in the way that might ordinarily be the case. The ability of an applicant to recover in the present circumstances has nothing to do with facts being found in their favour and little to do with succeeding on a legal argument. Rather, the success of an applicant in the present matter was primarily dependent on the amount of funds available in the account from which payment was sought; the claims of other applicants on the account; and, to a lesser extent, the method of distribution applied. In some instances, the amount an applicant would have received was substantially reduced as a result of the new applicants that came forward at a time which was too late for them to participate in the hearing resulting in my judgment in Commissioner of the Australian Federal Police v HWCJ GLB Pty Ltd (No 2), which was handed down on 30 April 2024. These applicants cannot have known or predicted such events when deciding to participate in the hearing. In those circumstances it would be unfair to them to cap their costs relative to the amount awarded. To an extent, doing so is likely to add to the misfortune of claiming on an account with limited funds, the further misfortune of the expenditure of costs which cannot be recovered.
There are some cases, however, in which it was not reasonable for the applicant to incur costs from the point at which they learnt of the limits on what they might recover. The parties had some awareness of the limits of what they might recover from the time that the first affidavit of Mr Nasr, dated 15 November 2023 was served. It should be noted that such awareness was not complete. The 15 November 2023 affidavit provided only calculations for pari passu and LIBR (Lowest Intermediate Balance Rule) distributions, with the pari passu distribution calculated based on all contributors to the fund. A further affidavit of Mr Nasr dated 26 February 2024 provided calculations for a pari passu distribution involving only the active applicants. The further possibility a hybrid approach was not raised until the February hearing and the figures resulting from such an approach not provided until after the hearing, in Mr Nasr's affidavit dated 29 February 2024.
Ravinder Sagoo (Applicant 038), recovered US$111.62. That is a very modest amount. It is not substantially greater than any amount Mr Sagoo may have hoped to recover at the time of the first affidavit of Mr Nasr dated 15 November 2023. At that time, the most Mr Sagoo stood to recover was no more than US$219.65, and may have been as low as US$67.26, depending on whether the pari passu or LIBR approach was taken. The US$219.65 figure itself was in fact inflated due to an error in the affidavit as to the amount Mr Sagoo contributed. This was later corrected. Given Mr Sagoo's contribution of US$1,200.59 made up only 0.01% of the contributions to the account, it was clear that his interest in the account was always going to be a minor one. It was not reasonable for Mr Sagoo to continue to incur costs in pursuit of his claim from the time he was served with the affidavit of Mr Nasr dated 15 November 2023. Mr Sagoo should have his costs as agreed or assessed for the period up to and including the date on which the affidavit of Mr Nasr dated 15 November 2023 was served on him (including by service on his representatives).
In the case of Jie Bai (Applicant 035), an amount of US$1,862.66 was recovered. At the time the first affidavit of Mr Nasr was served, it appeared that the applicant stood to recover a maximum of US$331.33 and might receive as little as US$24.26. That figure increased to US$2,647.19 by the time of the second affidavit of Mr Nasr. While arguments for taking into account only active applicants and for employing a hybrid approach benefited Ms Bai, it was apparent from the time of the first of Mr Nasr's affidavits that the extent of any such potential benefit was limited. Further, other applicants with more substantial claims were represented in the litigation. It was not reasonable for the applicant to continue to incur costs after being served with the of Mr Nasr dated 15 November 2023. Costs should be limited to that time.
Some applicants, in the Commissioner's submission, while receiving more than the amounts received by Mr Sagoo or Ms Bai, recovered modest amounts relative to the costs incurred. The Commissioner submits that these applicants should not receive an award of costs. Submissions were made by the Commissioner in this regard with respect to the Harwin Group (Applicant 014), Xiao Ya Dong (Applicant 009) and John Squires Poelman (Applicant 007).
The Harwin Group (Applicant 014) ultimately recovered US$4,498.18 and seeks costs of (in AUS$) $9,900 comprising the costs of the filing fee ($1,234.80) and costs of its solicitor in an amount of $8,667. While I do not suggest the solicitor's costs were unreasonable for the work done (and indeed the costs appear to have been minimised, particularly when compared with some other applicants), the costs (allowing for conversion) clearly exceed the amount recovered. As noted above, at the time the application was instituted, there was necessarily some uncertainty as to the amount that would be recovered. In the case of Harwin Group, however, the contribution (which was only to the GSL Bud account) was an amount of US$9985. Obviously no more than this amount could be recovered. At the time the first affidavit of Mr Nasr was served, the amount the Harwin Group actually stood to recover when based on the different distribution methodologies ranged between as little as approximately US$62.53 and US$1409.84. While that figure rose to a maximum of US$8,860.50 in the affidavit of Mr Nasr dated 26 February 2024, in the context of the initial contribution and the figures in the affidavit of Mr Nasr of 15 November 2023, I am of the view it was not reasonable to continue to incur costs from the point that that affidavit was received. I am of the view that Harwin Group should have its costs limited to the period up to and including the date on which the affidavit of Mr Nasr dated 15 November 2023 was served.
Xiao Yan Dong (Applicant 009) ultimately recovered US$18,004.03. Costs of AUS$29,923 are sought. The Commissioner submits this is disproportionate to the outcome. The applicant contributed a total of US$310,000 to the fraudulent scheme. Of that close to US$40,000 was deposited into the GSL Bud account. The remainder was deposited into the HONGHUSD01 account which was depleted of funds such that no recovery was possible. At the time of the first affidavit of Mr Nasr it appeared Ms Dong stood to receive, at best US$5,642.89 and possibly as little as US$601.08 depending on the distribution methodology employed. The second affidavit of Mr Nasr (dated 26 February 2024) provided an improved position with a maximum possible recovery of US$35,464.26. Subsequent to the hearing a further figure, the result of the "hybrid" methodology of US$35,378 became available and was initially awarded. As a result of claims of the further applicants, the amount recovered became about US$18,000. The result is the applicant's costs (at the current exchange rate) exceed the amount recovered.
The applicant submits she made the application in response to the letter sent by the Commissioner inviting her to do so. It is submitted it was reasonable to incur costs given the invitation as, it is submitted, the invitation should not have been made if it was not commercially viable to seek recovery. The short answer to this is that it was for the applicant, not the Commissioner, to determine the commercial viability of the claim. Further, the Commissioner could not know at the time of the invitation the number of claimants and hence the amount that each claimant might ultimately receive.
The costs incurred by Ms Dong are ultimately disproportionate to the amount recovered. While Ms Dong's position improved with the second affidavit (and declined again as a result of further applicants coming forward after the February hearing) there was a limit to the extent that her position could improve. In the circumstances, I am of the view that Ms Dong should have her costs as agreed or assessed for the period up to and including the date on which the first affidavit of Mr Nasr dated 15 November 2023 was served on her.
Mr Poelman (Applicant 007) ultimately recovered approximately US$27,233. This was the recovery on a substantial investment of US$210,590 and US$580,163 to accounts from which US$4,377 and US$22,846 were recovered. (Mr Poelman also deposited monies into other accounts from which no recovery was made.) Mr Poelman submits that his claim also achieved benefits beyond the amount recovered. I do not regard any such benefit as sufficient to justify the pursuit of a commercially unjustifiable claim.
Given the amount of Mr Poelman's investment his pursuit of a claim is entirely understandable. However, by the time of the first affidavit of Mr Nasr, it appeared the amount he stood to gain was approximately US$146 or US$5,928 from one account and US$3,558 or nothing from the other. By the time of the February hearing the amounts were approximately of US$40 or US$7,800 with respect to one account and either US$147 or US$32,700 with respect to the other. After the hearing further possible figures (based on the hybrid distribution) of US$4,725 and US$28,257 became possibilities. While I accept that, prior to the February hearing, Mr Poelman had a strong interest in advocating for one of the two then competing methodologies, given the impact on the calculation of his interest, the amounts to be recovered were, at best, modest having regard to the costs likely to have been incurred. (I note I do not have evidence of the actual costs but this does not prevent me making a broad assessment of proportionality.) It should also be noted in this context that other parties, represented by competent counsel, were at that time advocating for the pari passu distribution which would have favoured Mr Poelman. In these circumstances, as with the other particular applicants discussed above, Mr Poelman should have his costs but only up to the period up to and including the date on which the affidavit of Mr Nasr dated 15 November 2023 was served on him.

Costs sought only against the defendants - Ven Tow Lee

As noted above, initially three applicants, Ven Tow Lee (Applicant 043), James Nadel (Applicant 002) and James Michael McBrayer (Applicant 018), sought costs against only the defendants (or a defendant). Of those, Mr McBrayer and Mr Lee brought successful claims against HWCJ GLB Pty Ltd, which has substantial funds in its name. Despite that fact, for the reasons discussed above, I am of the view that the appropriate order is for costs to be ordered against the Commonwealth pursuant to s 323 of the POCA. Given that the Commissioner did not oppose an order for costs against the defendants (and the defendants did not appear) a decision not to award costs against the defendants carried with it a risk of procedural unfairness being occasioned to the three applicants concerned. In these circumstances, on 13 September 2024, I caused an email to be sent to the costs applicants in the following terms: "This email is directed to you on the basis that you are the only costs applicants who seek an order for costs against a defendant or the defendants generally and do not seek an order against the Commonwealth, either as a primary or secondary position. His Honour seeks clarification of your position in the event his Honour determines that costs orders should be made but that those orders should not be made against the defendants. In particular does it remain your position that costs are not sought against the Commonwealth?"
The email was copied to all parties, but a response sought only from the three applicants concerned. Of those three applicants, only Mr Lee did not change his position. Mr Lee's representatives sent an email in response on 18 September 2024, the body of which stated in its entirety, "I confirm that Applicant 43 does not seek costs against the Commonwealth".
Given Mr Lee's position I do not propose to make an order for costs against the Commonwealth in his favour. The result is perhaps regrettable, given the Commissioner's lack of opposition to an order for costs being made against the defendants as sought by Mr Lee. The result is, however, one which follows from my reasoning above, in circumstances where Mr Lee was given the opportunity to modify his position and chose not to do so. Whether the adverse consequences to Mr Lee resulting from my decision not to award costs against the defendants can be avoided, possibly by an application pursuant to UCPR r 36.16, will be a matter for him, presumably on advice from his representatives.

The new applicants

It is regrettable that applicants that came forward after the February 2024 hearing did not join the proceedings prior to that hearing. The Commissioner submits that each was informed of the option of seeking a restraining order prior to that time, did not participate in the February hearing, and have not provided an explanation for their failure to do so. That correspondence was sent prior to the February hearing does not mean that the applicants were aware of the correspondence, other than in the case of Xiao Ni Xu (Applicant 039), who instructed her solicitors in October 2023. In the case of Ms Xu, while she has provided some explanation for her failure to participate in the February hearing, I have reservations as to the adequacy of that explanation. The reality, however, is that there were multiple new applicants. The existence of one such (meritorious) applicant would have required the reopening of the proceedings. Additionally, while there has been inconvenience caused, in any individual case, the costs of the new applicants are likely less than they would have been had they participated in the three day hearing in February. Balancing the competing considerations, I would not treat the new applicants differently to the original applicants.
The Commissioner raises an issue as to certain of the costs incurred by the new applicants. There appears to be some substance to the Commissioner's concerns as to the costs incurred by at least some of the new applicants. As I propose that costs be awarded as agreed or assessed, it is not necessary to address these issues.

Orders

I make the following orders: 1. Pursuant to s 323 of the Proceeds of Crime Act 2002 (Cth), the Commonwealth is to pay the costs of the following applicants as agreed or assessed: 1. James Nadel (Applicant 002) 2. Robert Brooks and Maehal Enterprises, Inc (Applicant 003) 3. John Adams Roesch JR (Applicant 004) 4. Clifford Librach (Applicant 005) 5. Castle Bespoke Management Limited (Applicant 006) 6. Brian Bunzeluk (Applicant 010) 7. Isen Chen (Applicant 012) 8. Mei McNeilly previously Chunmei Yang (Applicant 015) 9. James Michael McBrayer (Applicant 018) 10. Neil Richardson (Applicant 020) 11. Steven Michael Rubinstein (Applicant 023) 12. Rajeev Sharma (Applicant 024) 13. John Amodeo (Applicant 025) 14. Marc Christiaen van der Chijs (Applicant 026) 15. Ching-Liu Wu (Applicant 027) 16. Michael Peter Sampson (Applicant 030) 17. Yu Geng (Applicant 031) 18. Jeffrey Edel (Applicant 036) [3] 19. Ronald Lewis Myers and Digital Properties West, LLC (Applicant 037) 20. Xiao Ni Xu (Applicant 039) 21. Mallik Greene (Applicant 042) 22. Humphrey Company Ltd (Applicant 044) 23. Lanping Li (Applicant 045) 1. Pursuant to s 323 of the Proceeds of Crime Act 2002 (Cth), the Commonwealth is to pay the costs of the following applicants as agreed or assessed, limited to the period up to and including the date on which the complete affidavit of Mr Nasr dated 15 November 2023, including any annexures, was served on that applicant: 1. John Squires Poelman (Applicant 007) 2. Xiao Ya Dong (Applicant 009) 3. Harwin Group Inc (Applicant 014) 4. Jie Bai (Applicant 035) 5. Ravinder Sagoo (Applicant 038)

Endnotes

Corrected under the "slip rule" pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW)
Affidavit of Philip Harley Pope sworn 14 June 2024, [27].
Corrected under the "slip rule" pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW)

Amendments 19 November 2024 - [5] and [89] Order 1 - Corrected under the "slip rule" pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 November 2024

Proceeds of Crime Act 2002(Cth)ss 5, 39, 47, 49, 297, 323

Civil Procedure Act 2005(NSW)ss 3, 56, 98

Judiciary Act 1903(Cth)ss 79, 80

(2020) 103 NSWLR 535

At a glance

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Judgment (22 paragraphs)

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Legislation Cited (6)

Cases Cited (28)