Hewlett Packard Pty Ltd v GE Capital Finance Pty Ltd

REASONS FOR JUDGMENT 1 On 21 November 2003 the Court delivered judgment on this appeal and pronounced orders which included an order that the appellant pay the costs of the respondents to the appeal. No party had suggested during, or at the close of, the hearing of the appeal that this was a case in which special circumstances might suggest that the ordinary rule that costs follow the event should be departed from. 2 Nonetheless, on 21 November 2003 counsel for the appellant sought and was granted leave to file and serve submissions in support of an application that the above order as to costs be varied as between the appellant and the second respondents, the liquidators of Daisytek Australia Pty Ltd ('Daisytek'). The leave was granted by orders made by the Court later in the day on 21 November 2003 as follows: 1. The orders pronounced at 10 am, on 21 November 2003 be varied as follows: a) Orders 3 and 4 be amended by inserting "Subject to orders 5 and 6 below" at the beginning of the orders. b) Orders 5 and 6 be added in the following terms: 5. Grant leave to the appellant to file and serve written submissions as to the costs of the second respondents on or before noon, Monday 24 November 2003. 6. The second respondents file and serve written submissions in reply on or before 4 pm, Thursday 27 November 2003. 3 The appellant and the second respondents filed written submissions on the question. 4 The appellant has contended by its written submissions that the appropriate order as to costs is that the appellant pay the costs of the first respondent but that there be no order as to costs as between the appellant and the second respondents. The result in practical terms of the making of the order sought by the appellant is that, while it would pay the first respondent's costs of the appeal, the unsecured creditors generally would meet the costs of the second respondents. The appellant places reliance on the limited role played by the second respondents at the hearing of the appeal. 5 By their written submissions on the appeal, the second respondents had noted their obligation to act impartially in the interests of all creditors of Daisytek. They had observed that the appellant, being a significant creditor of Daisytek, had been, and was, the true contradictor in respect of the application made by the first respondent. The second respondents' written submissions on the appeal concluded: 'The Liquidators, however, wish to provide to the Court such information relating to Daisytek and its creditors as the Court may require to determine the appeal. To that end, the Liquidators wish to make it plain that they have not yet formed a final view as to the effect of the Subordination Deed between, inter alia, GE, Daisytek and Daisytek's US parent company Daisytek Inc.' 6 The service on the appellant of the second respondents' written submissions on the appeal provoked a facsimile transmission which stated: 'Having regard to the nature and extent of your client's written submissions and the general approach to your client to the appeal, it is our view that your client should file an appearance in the nature of a submitting appearance. Should your client fail to file such an appearance and attend at the hearing on 24 September 2003, your client should not have the benefit of any costs order made in favour of the respondents. If necessary, we intend to tender this facsimile at the hearing on the question of costs.' 7 The second respondents did not file an appearance in the nature of a submitting appearance. They were represented at the hearing of the appeal by senior counsel. They made no submissions touching on the merits of the appeal. 8 Section 43 of the Federal Court of Australia Act, 1976 (Cth) vests in the Court a wide discretion as to costs. Nonetheless the ordinary rule that, in the absence of special circumstances, costs follow the event is well established (Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 per Toohey J at 48, 136; Ruddock v Vadarlis [2001] FCA 1865; 115 FCR 229 per Black CJ and French J at [9]-[25]). 9 The appellant acknowledges that the second respondents were a proper party to the appeal. The institution of the appeal from the decision of the primary judge necessarily resulted in the incurring of costs by the second respondents. It may, we think, reasonably be expected that those costs were of a limited nature. However, they will have included solicitors' costs, including the costs of reading and considering the notices of appeal and cross‑appeal and costs in relation to the preparation of the appeal book and the chronology. 10 We are not persuaded that the second respondents ought to have filed a submitting appearance. They represent the interests of Daisytek and the unsecured creditors generally of Daisytek. They had been the administrators and, at the time of the hearing of the appeal, were the liquidators of Daisytek. It has not been demonstrated that they were wrong to take the view, as they apparently did, that issues might arise on the appeal on which it was appropriate that they be heard. 11 The limited part played by the second respondents at the hearing of the appeal might raise for consideration by the taxing officer whether the second respondents' proper costs of the appeal should include the costs of senior counsel. A taxing officer might take the view that the interests represented by the second respondents could have been properly and adequately protected at the hearing by junior counsel. That, however, is not an issue for us. 12 The application to vary the costs order made on 21 November 2003 is itself dismissed with costs. 13 We conclude by making the following observation. Order 62 r 3 of the Federal Court Rules empowers the Court to exercise its powers and discretions as to costs at any time, including after the conclusion of a proceeding. Nonetheless it is in the public interest, and in the interests of the parties to any appeal, that issues concerning the costs of the appeal should be resolved, where possible, together with the appeal. (This means additional costs and inconvenience is avoided.) It is for this reason that, where no party has signalled that the appeal might be attended by special circumstances such as to render inapplicable the ordinary rule that costs follow the event, the practice of the Full Court is to pronounce an order for costs in accordance with the ordinary rule when judgment is delivered. Should a party take the view in any particular case that, depending on the outcome of the appeal, it might wish to contend that the adoption of this course would be inappropriate, the Court should be alerted to this possibility before the close of the hearing of the appeal. It may well be that it is inappropriate to deal with the issue until after the substance of the appeal is decided. There may be a requirement for evidence; without prejudice material may have to be disclosed. Nevertheless, the Court should be alerted to the existence, or the possibility of the existence, of such an issue. Parties should expect that, if a Full Court has not been alerted to the possibility that a party may wish to contend that the usual rule as to costs should not apply, it will pronounce an order as to costs in accordance with the ordinary rule when judgment on the appeal is delivered. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.