Costs Decision
23 Each of the persons now seeking a costs order in respect of the Hewsons' access application is not a party to the proceeding or to the Interlocutory Process by which the Hewsons' access application was made. Each of those persons was given leave to be heard at the hearing of the Hewsons' application upon the basis that he would not, by reason of being granted that leave, become a party (as to which see r 2.13(1) of this Court's Corporations Rules).
24 It has been held that costs may be awarded against a non-party to litigation (Knight v FP Special Assets Ltd (1992) 174 CLR 178) and that, under s 43 of the Federal Court of Australia Act 1976 (Cth), this Court has the power to award costs in favour of a non-party (O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [17]-[26] per Nicholson J and the authorities referred to therein).
25 The guiding principles for the award of costs in favour of a non-party were explained by Emmett J in Fletcher and Barnet; In the matter of Octaviar Ltd (Receivers and Managers Appointed) (In Liq) and Octaviar Administration Pty Ltd (In Liq) (No 4) [2012] FCA 344 at [12] where his Honour said:
" ... the making of an order for costs in favour of a non-party will be exceptional and any application for such an order must be treated with considerable caution. Regard must be had in each case to the particular circumstances and the requirements of reason and justice, and the nature of the relationship between the non-party and the litigation will be relevant in that regard (see O'Keeffe v Hayes Knight GTO Pty Limited [2005] FCA 1559 at [24]). In general, a special factor outside the ordinary and expected course of events, engendering a justifiable expectation, in the mind of a non-party, of compensation for costs, must exist before an order will be made for costs in favour of a non-party against a party. In general, a person who seeks, and is granted, leave under rule 2.13 of the Corporations Rules to appear and be heard, thereby limiting exposure to an order for costs, can have little expectation of being awarded costs (see Re Pan Pharmaceuticals Limited; Selim v McGrath (2004) 48 ACSR 681 at [20])."
26 The observations of Emmett J which I have extracted at [25] above captured the reasoning and statements of principle developed by Barrett J in a number of authorities: Re Pan Pharmaceuticals Limited; Selim v McGrath (2004) 48 ACSR 681 at [11]-[20], 684-686 esp at [20] 686; Re HIH Casualty and General Insurance Ltd [2006] NSWSC 6 at [8]-[16]; and Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 691 at [2]-[5]).
27 In the present case, until they filed their Interlocutory Process on 19 October 2012, the Hewsons were strangers to this proceeding. They were, of course, interested in the subject matter of the proceeding and in the question whether the Receivers or the liquidators or ASIC would pursue causes of action against some of the former directors of Allco in the interests of its contributories and creditors. By making their application, the Hewsons resuscitated a proceeding which was, by October 2012, to all intents and purposes, moribund. While it was convenient and appropriate to use this proceeding as the vehicle for their application, the action which they took inevitably resulted in other interested parties (Dr Fell, Mr Coe, Mr Lennox and Mr Lewis) being drawn into the litigation and wanting to be heard. The Hewsons must have foreseen that at least some of the persons who had been examined by ASIC pursuant to s 19 of the ASIC Act would wish to be heard in opposition to the access orders which they were seeking. In particular, given that they had identified Dr Fell and the other interveners as potential defendants in the actions which the Hewsons had in mind commencing, the Hewsons must be taken to have appreciated that all of those persons would inevitably have wanted to be heard.
28 None of ASIC, the Receivers or the liquidators wished to be heard in relation to the Hewsons' access application. Each of those persons and ASIC informed the Court that they neither consented to nor opposed the relief sought by the Hewsons. In those circumstances, the only contradictors who appeared at the hearing of the Hewsons' application were Dr Fell, Mr Lennox and Mr Lewis.
29 I regarded the presence of at least one contradictor to be essential to the proper and fair disposition of the Hewsons' application. I found the evidence tendered by the contradictors and the submissions made on their behalf to be of considerable assistance in determining that application. I consider that the interveners and their legal representatives conducted themselves efficiently and appropriately at all times.
30 Prior to the hearing before me, the legal representatives for Messrs Lennox and Lewis had sought to clarify whether the Hewsons really intended to sue their clients but had not received a satisfactory answer to their enquiry. It was only at the hearing itself that Senior Counsel for the Hewsons finally did state with clarity that his clients did not intend to sue either Mr Lennox or Mr Lewis. By then, Messrs Lennox and Lewis had incurred the costs of the hearing.
31 It seems to me that, in truth, by making their application, the Hewsons initiated an inter partes contest with their principal protagonists, Dr Fell, Mr Coe, Mr Lennox and Mr Lewis. Those persons comprised the available contradictors whose participation would be necessary for the fair disposition of the Hewsons' application. The contradictors succeeded in their opposition to the relief claimed by the Hewsons. Because of that success, they now seek their costs. Because they were the only contradictors and because they had a direct and substantial interest in the outcome of the Hewsons' application, I am of the view that the interveners would have been justified in thinking that, if they succeeded in persuading the Court not to grant the relief sought by the Hewsons, they ought to get the benefit of an order for costs in their favour.
32 The Hewsons resist the interveners' claim for costs and submit that there should be no order as to costs. They contend that:
(a) The primary ground upon which the Court decided the matter against the Hewsons was not relied upon by those opposing relief and had been conceded by them in favour of the Hewsons;
(b) By way of amplification of subpar (a) above, it was submitted that I had decided not to accept and thus apply the observations of Santow J made by his Honour at [39] and [43] of Re New Cap, his Honour being an experienced corporations law judge who had expressed views in relation to national legislation the correctness of which had not been challenged by those opposing the relief sought. This could not have reasonably been anticipated by the Hewsons.
33 As I have already mentioned (at [19]-[21] above), I did decide that s 596F(1)(e) was not engaged in the circumstances of this case and thus proceeded upon a basis which was not advanced by the interveners. Nonetheless, had s 596F(1)(e) been engaged, the discretionary factors upon which I ultimately relied in order to refuse access would have inevitably led to a refusal to make any direction under that subsection in favour of the Hewsons. Further, had s 596F(1)(e) been engaged, other matters raised by the interveners would have been weighed in the balance against granting access. As I endeavoured to make clear at [59]-[60] of the principal judgment, the result would have been the same even if I had considered s 596F(1)(e) to have been engaged.
34 Here, although the interveners chose to participate in the Hewsons' application as non-party interveners and thereby put themselves in the best position to resist an order for costs against them, had the Hewsons succeeded in that application, I cannot ignore the circumstance that the interveners were the only contradictors and that they performed that function appropriately. Had they not participated as they did, the Court may well have had to require ASIC to appear and to act as contradictor. It would have been wholly undesirable for the Hewsons' application to have proceeded unopposed.
35 For the above reasons, I think that the interveners would have been justified in expecting an award of costs in their favour in the event that they successfully resisted the Hewsons' application. The case is closest to the facts in Re HIH Casualty. In that case, after considering the contribution made by the non-parties (at [12]-[14]), Barrett J made orders in favour of the interveners to the extent of one-half of their costs. His Honour did not make an order covering all of the interveners' costs because he considered that, in that case, there had been some unproductive duplication of effort as between groups of interveners. In the present case, I do not think that the two groups of interveners were in precisely the same position. For this reason, although there were some features of their respective positions which they enjoyed in common, there were other features peculiar to each particular grouping. The most obvious of these was the initial uncertainty as to whether Messrs Lennox and Lewis would ever be sued and then the clarification that they were not going to be sued.
36 Because the Receivers did not participate at all in the present contest, there should be no order as to costs as between the Hewsons and the Receivers.
37 There will be orders accordingly.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.