Gillfillan v Australian Securities and Investments Commission

Costs of the CA Penalty Hearing 8The Australian Directors submit that ASIC should pay their costs of the remitted appeals in this Court (the "CA Penalty Hearing"). They do so on the basis that each was substantially successful in his or her appeal and that costs should follow the event. 9The written submissions filed on behalf of Ms Hellicar and Mr Brown advance the principal arguments in support of this contention. They say that they made good their contention that the primary Judge erred in his approach to imposing penalties for the contravention of s 180(1) of the Corporations Act. Upon this Court re-exercising the discretion as to penalties, the period of disqualification in each case was reduced from five years to two years and three months and the pecuniary penalty from $30,000 to $25,000. 10Ms Hellicar and Mr Brown acknowledge that at the first hearing of the appeals to this Court from the orders made by the primary Judge ("CA Liability Hearing"), they submitted that they should be relieved from liability for the breaches of the Corporations Act found against them by his Honour. However, they point out that they abandoned this contention in written submissions filed in this Court on 23 July 2012, some four months prior to the CA Penalty Hearing. Since the contention was abandoned well in advance of the CA Penalty Hearing, so they argue, they should not lose any portion of the costs to which they would otherwise be entitled. 11Ms Hellicar and Mr Brown further submit that their entitlement to costs should not be reduced merely because not all of their submissions in the appeal were successful. They contend that their success in setting aside the orders made by the primary Judge and in having the penalties reduced warrants a costs order in their favour. 12ASIC's answer to these submissions is that Ms Hellicar and Mr Brown did not in substance enjoy substantial success on the appeal. ASIC submits that Ms Hellicar and Mr Brown asked the Court, in the event that the primary Judge's orders were set aside, not to impose a period of disqualification exceeding the time already served (about 18 months) and not to impose a pecuniary penalty greater than $15,000 on each of them. 13In the result, this Court took the view (at [253]) that a period of disqualification of three years was appropriate. The precise period of disqualification imposed on Ms Hellicar and Mr Brown and the other Australian Directors took account of the fact that during the period from 17 December 2010 (the date of the CA Liability Judgment) until 3 May 2012 (the date of the High Court's decision), they were subject to practical constraints on their ability to act as directors notwithstanding that during this period no orders imposing penalties were in force. This was because ASIC's appeal to the High Court was pending and both the Australian Directors and the US Directors faced the prospect that the appeal would be allowed and the penalties imposed by the primary judge reinstated (as in fact occurred). 14ASIC submits that each party enjoyed partial success at the CA Penalty Hearing and, on that basis, it is appropriate that the Australian Directors and ASIC should bear his or her or its own costs of the proceedings. ASIC further submits that such an order is supported by the "relatively late" withdrawal by the Australian Directors of their contentions that they should have been relieved from liability under ss 1317S and 1318 of the Corporations Act. 15In my opinion, the costs order in relation to the CA Penalty Hearing should reflect the success enjoyed by Ms Hellicar and Mr Brown in setting aside the penalties imposed by the primary Judge and in having this Court substitute reduced penalties for their contraventions. On the other hand, Mr Hellicar and Mr Brown did not succeed in having the penalties reduced to the level they contended was appropriate. This is not a case in which their failure on some issues, such as their attempt to diminish the gravity of their contraventions, was immaterial to the result. On the contrary, their failure on some issues meant that the outcome of the appeal was significantly less favourable to them than if their arguments had been accepted. Nor was the time required to deal with these issues trivial. 16In these circumstances, Ms Hellicar and Mr Brown should have the majority but not the whole of their costs of the CA Penalty proceedings. I think an order that ASIC pay two thirds of the costs of Ms Hellicar and Mr Brown in the CA Penalty proceedings would be a fair reflection of the outcome of the appeal. 17I do not think that any of the other three Australian directors is in a substantially different position to that of Ms Hellicar and Mr Brown. Each succeeded in having the primary Judge's orders set aside, but did not succeed in persuading the Court to reduce the penalties to the level they submitted was appropriate. 18Contrary to my original impression, I do not think that there should be any reduction in the proportion of costs payable by ASIC to the Australian Directors by reason of what was described in the CA Penalty Judgement as the "relatively late" withdrawal of the appellants' submissions that they should be relieved from their contraventions of the Corporations Act. ASIC does not suggest that the timing of the withdrawal of those submissions led to it incurring any significant costs in relation to the CA Penalty Hearing.

Orders 37The appellants' written submissions, other than those of Mr Willcox and Mr O'Brien, attach the form of orders they consider to be appropriate. ASIC's submissions do not attach draft orders. 38The appellants' draft orders used proceeding numbers for the CA Liability Hearing that do not match the numbers used either in the CA Liability Judgment or in the orders made on 12 November 2012. I use the identification numbers in the CA Liability Judgment at [1156]. If that is an error, the parties have liberty to send up agreed orders within seven days correcting the error. 39I have redrafted the orders made in Leda Pty Ltd v Weerden (No 2) in the manner I think is correct. If the adaptation is inapt, the parties also have leave to send up agreed orders within seven days correcting the error. 40The following orders should be made: Ms Hellicar's Appeal (CA 2012/194856)

The respondents ("ASIC") pay two thirds of Ms Hellicar's costs of this appeal (being CA 2012/194856).
There be no order as to costs in CA 2009/298427 in relation to the issues of exoneration and penalty.
Ms Hellicar repay to the Commonwealth of Australia the sum of $2,965.31, being five sixths (5/6) of the interest paid to her by ASIC in December 2010.
Ms Hellicar pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298427. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Ms Hellicar to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Ms Hellicar has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298427. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Ms Hellicar, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S176/2011). Mr Brown's Appeal (CA 2012/194824)
The respondents ("ASIC") pay two thirds of Mr Brown's costs of this appeal (being CA 2012/194824).
There be no order as to costs in CA 2009/298428 in relation to the issues of exoneration and penalty.
Mr Brown repay to the Commonwealth of Australia the sum of $3116.82, being five sixths (5/6) of the interest paid to him by ASIC in January 2011.
Mr Brown pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298428. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr Brown to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr Brown has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298428. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr Brown, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S177/2011). Mr Terry's Appeal (CA 2012/194902)
The respondents ("ASIC") pay two thirds of Mr Terry's costs of this appeal (being CA 2012/194902).
There be no order as to costs in CA 2009/298425 in relation to the issues of exoneration and penalty.
Mr Terry repay to the Commonwealth of Australia the sum of $3,072.62, being five sixths (5/6) of the interest paid to him by ASIC on 5 January 2011.
Mr Terry pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298425. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr Terry to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr Terry has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298425. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr Terry, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S175/2011). Mr Willcox's Appeal (CA 2012/195065)
The respondents ("ASIC") pay two thirds of Mr Willcox's costs of this appeal (being CA 2012/195065).
There be no order as to costs in CA 2009/298524 in relation to the issues of exoneration and penalty.
Mr Willcox repay to the Commonwealth of Australia five sixths (5/6) of the interest paid to him by ASIC in or about December 2010 or January 2011.
Mr Willcox pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298524. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr Willcox to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr Willcox has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298524. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr Willcox, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S181/2011). Mr O'Brien's Appeal (CA 2012/194958)
The respondents ("ASIC") pay two thirds of Mr O'Brien's costs of this appeal (being CA 2012/194958).
There be no order as to costs in CA 2009/298442 in relation to the issues of exoneration and penalty.
Mr O'Brien repay to the Commonwealth of Australia five sixths (5/6) of the interest paid to him by ASIC in or about December 2010 or January 2011.
Mr O'Brien pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298442. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr O'Brien to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr O'Brien has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298442. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr O'Brien, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S180/2011). Mr Gillfillan's Appeal (CA 2012/194766)
Each party pay his or its costs of this appeal (being CA 2012/194766).
There be no order as to costs in CA 2009/298440 in relation to the issues of exoneration and penalty.
Mr Gillfillan repay to the Commonwealth of Australia the sum of $2,479.61, being two thirds (2/3) of the interest paid to him by ASIC in January 2011.
Mr Gillfillan pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298440. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr Gillfillan to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr Gillfillan has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298440. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr Gillfillan, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S178/2011). Mr Koffel's Appeal (CA 2012/195054)
Each party pay his or its costs of this appeal (being CA 2012/195054).
There be no order as to costs in CA 2009/298441 in relation to the issues of exoneration and penalty.
Mr Koffel repay to the Commonwealth of Australia the sum of $2,494.41, being two thirds (2/3) of the interest paid to him by ASIC in January 2011.
Mr Koffel pay interest to ASIC on the costs the subject of Order 4 made on 12 November 2012 on the following basis: In this Order: X equals the total amount of costs and disbursements paid or liable to be paid to ASIC's legal advisers in connection with CA 2009/298441. Y equals the total amount of costs and disbursements allowed on assessment to ASIC in accordance with Order 4 made on 12 November 2012. The Allowed Percentage equals ((Y/X) x 100)%. Mr Koffel to pay to ASIC interest on costs and disbursements, at the rates set out in Schedule 5 to the UCPR, on the Allowed Percentage of each amount for or on account of costs and disbursements actually paid to ASIC's legal advisers by or on behalf of ASIC from the date of payment of each such amount until the first to occur of (a) such time as Mr Koffel has paid the costs due to ASIC under Order 4 made on 12 November 2012, or (b) any further order relating to interest on costs in proceedings CA 2009/298441. Reserve liberty to apply on seven days' notice for any further order in relation to paragraph (b).
Grant certificate to Mr Koffel, if otherwise qualified, under the Suitors' Fund Act 1951 in respect of the appeal to the High Court (S179/2011).

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Judgment (7 paragraphs)

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Cases Cited (8)