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[2016] FCA 739
Federal Court of Australia
2016-06-23
Mr J, Markovic J
Original judgment source is linked above.
The application to set aside the subpoena 15 I do not come to the same conclusion in relation to the Inspector-General's application to set aside the subpoena. 16 The applicants submit that there is no special reason or unusual feature that would warrant an award of costs on an indemnity basis in relation to this application. However, prior to filing her application the Inspector-General pointed out the issues which, in her view, arose in relation to the subpoena. The subpoena was not withdrawn and the steps that the Inspector-General suggested ought be taken to bring the documents before this Court were not taken. The Inspector-General then, as foreshadowed, filed her application to set aside the subpoena. After the hearing of that application there was an attempt to settle the matter. 17 The issues that arose in relation to the subpoena could have been resolved by the applicants taking the steps that were urged upon them by the Inspector-General. Ultimately the subpoena was set aside because of the very issues that the Inspector-General had raised. The applicants chose not to withdraw the subpoena and to defend the application. Their conduct caused loss of time to the parties and the Court in relation to a matter that could have been resolved by taking some practical steps. The applicants took no steps until late in the process to attempt to address the issues that clearly arose and that had been raised by the Inspector-General. 18 In the circumstances, in my opinion, there are special reasons why the Court would depart from the usual practice in awarding costs in relation to this application. There was a level of imprudence or unreasonableness in the conduct of the applicants in not accepting the issues raised by the Inspector-General and the offer put initially to resolve this aspect of the matter. The later attempt to resolve the matter never came to fruition. The reasons for that appear not only to relate to what I will call the mechanics of dealing with the relevant documents but costs issues. 19 I will vary the orders I made on 12 May 2016 in relation to payment of the Inspector-General's costs of her application to set aside the subpoena to reflect my decision that those costs should be paid on an indemnity basis. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.
SCHEDULE OF PARTIES NSD 1222 of 2015 Applicants Fourth Applicant: ROBERT GILBERT COSHOTT
Fewin Pty Ltd
Burke
MARKOVIC J: 1 On 12 May 2016 I made orders and gave judgment in three interlocutory applications which have been filed in these proceedings: see Fewin Pty Ltd v Burke [2016] FCA 503 (Fewin v Burke). Two of those interlocutory applications concerned the Inspector-General in Bankruptcy (the Inspector-General). In relation to those interlocutory applications I made the following orders: (1) I dismissed the applicants' application for joinder of the Inspector-General to the proceedings and ordered the applicants to pay the Inspector-General's costs of that application; and (2) I set aside a subpoena to produce documents issued on 18 December 2015 at the request of the applicants to the Inspector-General and ordered the applicants to pay the Inspector-General's costs of the interlocutory application to set aside the subpoena. 2 At the time of handing down of the judgment, the Inspector-General made an application that her costs of the applicants' interlocutory application to join her to the proceedings and her interlocutory application to set aside the subpoena be paid on an indemnity basis. The applications were made after pronouncement of orders but prior to their entry. Pursuant to r 39.04 of the Federal Court Rules 2011 the Court is able to vary the costs orders already made: see Yevad Products Pty Ltd v Brookfield [2005] 147 FCR 282 at [25]-[32].
legal principles 3 The Court's power to award costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth). Section 43(2) gives a broad discretionary power to the Court to award costs and s 43(3) provides that, without limiting the discretion of the Court or a judge in relation to costs, the Court or Judge may, among other things, order that the costs awarded against a party be assessed on an indemnity basis or otherwise. 4 The usual rule is that an order for costs is made on a party and party basis. However, the Court has recognised that an order for indemnity costs can be made in an appropriate case. That is where it can be shown that there is a reason to depart from the ordinary rule: see Colgate Palmolive Co v Cussens Pty Ltd (1993) 46 FCR 225 at 233 (Colgate Palmolive) (Shepherd J); Silverfox Co Pty Ltd v Lenard's Pty Ltd (No 3) (2004) 214 ALR 621 at [26] (Mansfield J). 5 In Colgate Palmolive Shepherd J observed at 234 that in determining whether to make an award of costs on an indemnity basis "[t]he question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis". At 233, after observing that the categories of cases in which the discretion to award indemnity costs are not closed, his Honour set out some of the circumstances where an exercise of the discretion had been warranted including where allegations of fraud had been made, knowing them to be false or irrelevant; where there was evidence of particular conduct which caused loss of time to the court or the parties; where proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law; where allegations that ought not to have been made are made or proceedings are unduly prolonged by groundless contentions or where there is an imprudent refusal of an offer of compromise. 6 In Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 11) [2009] FCA 590 Collier J observed the following at [7] to [8] in relation to an award of indemnity costs: 7. In Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 8) [2008] FCA 1556 I discussed in some detail principles relevant to the award of indemnity costs by the Court in appropriate circumstances. A number of those key principles are: • the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made; • the usual rule is that costs should be on a party-party basis, but that the Court has a wide and unfettered discretion to award costs on an indemnity basis in appropriate cases in particular circumstances; • each case depends upon its own particular facts; • indemnity costs can be awarded where it appears that a proceeding is commenced or continued in circumstances where the applicant properly advised should have known there was no chance of success. 8. As I also observed in Citrus (No 8) [2008] FCA 1556, a long - and non-exhaustive - list of relevant issues for the Court in considering whether to award indemnity costs can be found in such cases as Colgate-Palmolive v Cussons (1993) 46 FCR 225 and InterTAN Inc v DSE (Holdings) Pty Ltd [2005] FCAFC 54.
(1993) 46 FCR 225
(2004) 214 ALR 621