Goo v Kim

1. The respondent is to pay the appellant's costs of and incidental to the hearing on Monday, 12 December 2022 of the interlocutory application for security for costs dated 24 October 2022 on the ordinary basis, as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

HALLEY J: 1 On 22 December 2022, I made orders dismissing an application for security for costs filed by the respondent and providing that, subject to the filing of an application by either party for a special or alternative costs order, the respondent pay the appellant's costs of and incidental to the hearing of the respondent's application for security for costs. These reasons are to be read with my reasons for judgment: Goo v Kim [2022] FCA 1562 (J). 2 The appellant now seeks costs on an indemnity basis and the respondent seeks an order that costs be reserved. 3 The appellant relies on the following offers that it communicated to the respondent for the provision of security for costs: (a) $5,000 on 29 September 2022; (b) $10,000 on 11 October 2022; and (c) $15,000 on 15 December 2022. 4 The appellant submits that an order for indemnity costs should be made because (a) each offer constituted a genuine compromise of the dispute with respect to security for costs, (b) the respondent did not achieve a better result from litigating the issue, and (c) the respondent acted unreasonably in not accepting the offers given the appellant's articulation of the reasons why security should not be granted. 5 The respondent submits that the costs of its application for security for costs should be reserved until the question raised in the appeal is resolved. It submits that the public interest in answering that question was a significant reason why security for costs was not ordered and the Court "may well find against" the appellant. 6 As Jagot J explained in Vector Corrosion Technologies Limited v E-Chem Technologies Ltd [2022] FCA 519 at [38]: The Court has a broad power to award costs in proceedings, including indemnity costs, under s 43 of the Federal Court of Australia Act 1976 (Cth). While the purpose of an indemnity costs order remains compensatory, the basis for such an order is a conclusion that the unreasonable conduct of a party (be it bringing or persisting in a case the party should have known was hopeless, causing unnecessary costs to be incurred, prolonging a hearing, bringing or persisting in a case for an ulterior motive, or otherwise) should result in full compensation to the other party for the costs incurred. 7 I am not satisfied that an order for indemnity costs should be made. 8 It is readily apparent that if the respondent had accepted any of the three offers made by the appellant it would have achieved a better result than proceeding with its application for security for costs. The relevant question is, therefore, whether the failure of the respondent to accept any of the offers made by the appellant was unreasonable. The answer to that question largely turns on the reasons why security for costs was not ordered and the reasons provided by the appellant in its three offers for why security should not be ordered or should only be ordered in amounts much less than the amount sought by the respondent. 9 I declined to order that the appellant provide security for costs on the basis that (a) an order requiring the appellant to provide security for costs would likely stifle the appeal, (b) the appeal raised a reasonably arguable and discrete substantive point of law, and (c) there is a public interest that the issue be determined: at J [27]. 10 The appellant's reasons that accompanied and sought to justify each of its offers to the respondent were primarily directed at the quantum of security to be provided. They did include a contention that any order for the provision of security would stifle the appeal. Yet at the same time, the solicitors for the appellant maintained "Our client has the financial resources to meet any adverse costs order to your client in relation to the Proceedings". The appellant's reasons did not extend to (a) any explanation of the merits of the question raised in the appeal, other than to observe it was narrow and not considered by the primary judge, or (b) any reference to the appeal raising a question of public interest. 11 This was not a case in which an order for security for costs was made in an amount less than the amounts offered by an appellant or applicant. Rather, this was a case in which the Court ultimately declined to order security on the ground that the appeal raised a question of significant public interest but the appeal would likely be stifled if an order were made to provide security in a sum that was sufficient to meet any adverse costs order. Moreover, I am not satisfied that the appellant has established that the amounts offered by way of security were sufficient to meet any likely adverse costs order against the appellant. 12 For the foregoing reasons, I am not satisfied that the respondent's conduct in declining to accept the offers was sufficiently unreasonable to justify the making of an indemnity costs order. 13 Nor am I satisfied that costs should be reserved until after the final determination of the appeal. The application for security for costs raised an inherently discrete issue, it was the subject of a contested hearing, the respondent was wholly unsuccessful and it was not sufficiently tied to the final resolution of the appeal to justify a reservation of costs. 14 For these reasons, an order is to be made that the respondent is to pay the appellant's costs of the security for costs application on the ordinary basis, as taxed or agreed. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.