Fisher v JHT Holdings Ltd

1. Pursuant to r 40.51 of the Federal Court Rules 2011 (the FCR), the maximum party and party costs which the: a. Plaintiffs; b. First to Fourth (inclusive) and Sixth Defendants; c. Fifth Defendant; may recover from another is a. $70,000 b. $70,000 c. $60,000 respectively, noting that these amounts do not include the costs of the kind referred to in r 40.51 of the FCR.
2. The time fixed by Order 4 of the orders made on 9 October 2018 within which the Plaintiffs are to deliver to the Court two copies, and to deliver to the Defendants one copy of a paginated and indexed Tender Book of documents prepared in accordance with Orders 4, 5 and 6 made on 10 August 2018, is extended to 27 November 2018.
3. The application for security for costs is declined.
4. This matter is adjourned to a Case Management Hearing at a date and time to be fixed.
5. There be liberty to the parties to apply.
6. The costs of today's hearing, other than the costs of the application for security for costs, are costs in the cause and the costs in relation to the application for security for costs are the Plaintiffs' costs in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

WHITE J: 1 Rule 40.51 of the Federal Court Rules 2011 (Cth) (the FCR) provides that a party may apply to the Court for an order specifying the maximum costs as between party and party which may be recovered in the proceeding. 2 In this action, the Court considered making an order under r 40.51 on its own motion. To that end, on 9 October 2018, the Court directed each party to file and serve a document indicating that party's attitude to the imposition by the Court of a cap on the costs for each party for the trial and for the proceedings as a whole, and to indicate in the document the figures which the party considered appropriate in the event that the Court did decide to impose caps. At the same time, the Court indicated to the parties that it expected the proposed figures to have some proportionality to the amount in dispute in the litigation. 3 In their document filed on 26 October 2018, the first to fourth and sixth defendants, who are jointly represented, sought an order by the Court imposing a cap on the costs of the proceedings as a whole for each party in the sum of $100,000. 4 In their document filed the same day, the plaintiffs submitted that a reasonable cap would be appropriate. They suggested a cap of $30,000 for themselves, the first to fourth and sixth defendants, and for the fifth defendant in respect of the trial. In relation to the overall action, the plaintiffs submitted that a cap of $75,000 for the fifth defendant and caps of $90,000 for themselves and the remaining defendants would be appropriate. 5 In its document, the fifth defendant indicated that it opposes the imposition by the Court of any cap, and counsel has maintained that position in the submissions this afternoon. 6 In the underlying proceedings, the plaintiffs allege that conduct by the defendants in the second-half of 2016 was misleading or deceptive in contravention of s 18 of the Australian Consumer Law, or in the alternative, in contravention of s 1041H of the Corporations Act 2001 (Cth). They allege that the misleading or deceptive conduct led the first and second plaintiff to roll over their existing superannuation funds comprising $139,530.29 and $62,899.31 respectively into the third plaintiff, and in turn, to that entity transferring $175,000 of those funds to the first defendant. 7 The principal relief sought by the plaintiffs is recovery of the sum of $175,000 plus interest by way of damages or restitution. The plaintiffs bring other causes of action as well, but for present purposes, they need not be mentioned. Each of the defendants denies liability to the plaintiffs. 8 The parties contemplate a substantial trial. At the case management hearing on 9 October 2018, the Court was informed that, as things stand presently, the plaintiffs propose calling six witnesses at trial, the jointly represented defendants 10 witnesses, and the fifth defendant two witnesses. If all the evidence is taken orally, a trial of some 14-15 days is contemplated. 9 Plainly, a trial of these dimensions is wholly disproportionate to the amount in dispute. 10 The Court was told that the parties have engaged in a mediation. As is apparent, that mediation was unsuccessful. 11 The Court has reminded the parties of their obligations under ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). Section 37M contains the statement of the overarching purpose of the civil practice and procedure provisions, namely, to facilitate the just resolution of disputes according to law, but as quickly, inexpensively and efficiently as possible. One of the objectives of the overarching purpose is that the resolution of disputes be "at a cost that is proportionate to the importance and complexity of the matters in dispute" (s 37M(2)(e)). 12 Section 37N(1) imposes a positive obligation on all parties to a civil proceeding to conduct the proceeding, including negotiations for settlement of the dispute to which the proceeding relates, in a way which is consistent with the overarching purpose. Section 37N(2) imposes specific obligations on parties' lawyers with respect to the overarching purpose. Section 37N(4) provides that, in exercising the discretion to award costs in a proceeding, the Court may take account of any failure to comply with the duty imposed by subs (1) or (2). That includes a power to order that a party's lawyer pay costs personally (subs (5)). 13 The principles which guide the Court's approach to applications under r 40.51 have been discussed in a number of authorities: Maletic v Comcare [2016] FCA 1111; King v Virgin Australia Airlines Pty Ltd [2014] FCA 36; Shurat HaDin, Israel Law Centre v Lynch (No 2) [2014] FCA 413; and Haraksin v Murrays Australia Ltd [2010] FCA 1133, (2010) 275 ALR 520. It is not necessary to repeat those principles presently. 14 A principal purpose sought to be achieved by the imposition of a cap on costs is that the provision to the parties of an incentive to litigate in accordance with the principles of civil litigation contained in s 37M, to focus on the real issues, to identify the shortest path between those issues to trial and to remove incentives, to spend time on procedural, rather than substantive matters. 15 Naturally, in any decision concerning caps on costs, the Court also takes account of the complexity of the litigation and the interests of the parties in both prosecuting and defending the litigation. 16 In my view, this is a case in which it is appropriate for the Court to impose caps on the costs which may be recovered on a party/party basis. A number of matters indicate that this is so. 17 First, there is the sheer disproportion between the amounts which the parties anticipate expending in litigating their dispute on the one hand, and the amount in dispute, on the other. The plaintiffs' submissions as to appropriate caps produces an aggregate of $255,000. The jointly represented defendants' proposal of a cap of $100,000 for each party produces an aggregate of $300,000 overall. Those figures by themselves illustrate the lack of proportion between the amount to be expended in resolving the dispute and the amount in dispute itself. 18 It should go without saying that litigants should strive to achieve some proportionality between costs, on the one hand, and the amount in dispute on the other. With all respect to the parties, that does not seem to have occurred in the present case. I accept that the Court may not be aware of everything that each party has done with respect to facilitating the expeditious conduct of the matter. Mr Hackett for the jointly represented defendants has mentioned some things that have been done. But I cannot help observing that there seems to have been hardly any initiative proposed by a party at the various case management hearings as to the way in which the dispute may be resolved inexpensively and efficiently. Instead, the parties seem intent on a full-scale trial. The fifth defendant's submission that it should, in effect, be permitted to defend the proceedings without limit as to the recoverability of its party and party costs is, perhaps, some indication of an attitude that has been taken thus far. 19 Secondly, while I accept that there may be some complexity in the litigation, I think it also fair to say that, considered objectively, this case cannot be regarded as being amongst the more complex misleading or deceptive conduct cases which have come before the Court. There may well be complex factual issues but ultimately, that is what they are likely to be; issues concerning fact, rather than issues of law or of principle. 20 In my opinion, there is a sound basis upon which the costs of the fifth defendant should be capped at a figure less than that of the other parties. The fifth defendant's role in the pre-trial procedures has been less than that of the other defendants. It is also reasonable to anticipate the costs to be incurred by the fifth defendant may be less than that of the other defendants, if only because it anticipates calling only two witnesses, compared with the six and 10 by the plaintiffs and the joint represented defendants respectively. 21 The parties have not provided the Court with a breakdown of their respective costs estimates or proposals for caps. That being so, the Court must rely on its own general experience and knowledge of costs. 22 I accept the cautions sounded by both Mr Hoile for the plaintiffs and by Mr Hackett for the jointly represented defendants, made in different ways, that proportionality cannot be the only consideration in the fixing of caps. That is so because there are cases in which, given the relatively small amounts in dispute, the costs of litigating the dispute will exceed them. 23 Doing the best I can, I consider that caps of the following order are appropriate with respect to the whole action: $70,000 with respect to the plaintiffs and the jointly represented defendants and $60,000 with respect to the fifth defendant. Those are the caps pursuant to r 40.51 which I will order. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.