In the matter of AMCI Investments Pty Limited

Category: Costs

Parties: Fritz R Kundrun (First Plaintiff / First Cross-Defendant)
2010 FRK CRT Investments Ltd (Second Plaintiff / Second Cross-Defendant)
AMCI Investments Pty Ltd (First Defendant)
Hans Juergen Mende (Second Defendant / First Cross-Claimant)
Jamie Frankcombe (Third Defendant)
Jose Spilimbergo Delamanha (Fourth Defendant / Second Cross-Claimant)
Stuart Terry (Fifth Defendant)

Representation: Counsel:
M Izzo SC / T Boyle (Plaintiffs / First and Second Cross-Defendants)
C Ward SC / S Constable (Second and Fourth Defendants / First and Second Cross-Claimants)
C McMeniman (Third Defendant)
Solicitors:
Corrs Chambers Westgarth (Plaintiffs / First and Second Cross-Defendants)
Hamilton Locke (Second and Fourth Defendants / First and Second Cross-Claimants)
Deutsch Miller (Third Defendant)

File Number(s): 2025/316793

JUDGMENT

1. By my judgment delivered on 5 September 2025 (Re AMCI Investments Pty Ltd [2025] NSWSC 1019), I made declarations as to the validity of a purported termination of the employment of Mr Frankcombe as both an employee and as a director of AMCI Investments Pty Ltd (“AMCI”) and declared that Mr Frankcombe remained the Managing Director of AMCI, pursuant to its constitution. Mr Frankcombe had been joined as the Third Defendant in the proceedings, although he ultimately did not take a substantive role at the hearing where allegations as to the basis of the termination of his employment were not pursued.

2. At the conclusion of my judgment, I noted that Mr Frankcombe had sought the opportunity to make further submissions as to costs and I directed the parties to bring in agreed Short Minutes of Order as to costs within seven days or, if there was no agreement, their respect draft orders and short submissions as to costs.

3. The Plaintiffs and the Second and Fourth Defendants have agreed that the Second and Fourth Defendants should pay the costs of the First and Second Plaintiffs on an ordinary basis, in an amount as agreed or otherwise assessed. I will make an order to that effect below.

4. Mr Frankcombe seeks an order for indemnity costs against the First and Second Defendants. They respond that the appropriate order as to costs is that there be no order as to costs between the Second and Fourth Defendants on the one hand and Mr Frankcombe on the other, or, alternatively, that Mr Frankcombe’s costs be apportioned equally as between the Plaintiffs on the one hand and the Second and Fourth Defendants on the other, or that any costs order should be made only on the ordinary basis and in relation to the period after the Cross-Claim and evidence was filed by the Second and Fourth Defendants on 27 August 2025.

5. I am not satisfied that an order for costs should be made in favour of Mr Frankcombe against the Second and Fourth Defendants and I need not consider any order where he does not seek any other order. I bear in mind that s 98 of the Civil Procedure Act 2005 (NSW) provides that costs are in the discretion of the Court. That section confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid; costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). A successful party in proceedings has a “reasonable expectation” of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [134]. The principle that costs should follow the event is the “guiding principle” with respect to costs, and the onus is on the losing party to establish the basis for a departure from the usual costs rule in UCPR r 42.1: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10]; Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]–[25].

6. Mr Frankcombe here reads the affidavit dated 30 August 2025 of his solicitor, Mr Stevens, in support of the costs application, and Mr Stevens refers to an allegation raised in the Points of Defence as to the basis on which Mr Frankcombe’s employment was terminated, and notes that Mr Frankcombe would have no interest in being heard in the proceedings but for that evidence.

7. Mr Ward, with whom Ms Constable appears for the Second and Fourth Defendants, rightly responds that the Plaintiffs, rather than the Second and Fourth Defendants, initiated the proceedings and joined Mr Frankcombe as Third Defendant in them. Mr Ward also refers to the fact that the evidence led by the Plaintiffs in the proceedings had raised an allegation against the Second Defendant, Mr Mende, that he had terminated Mr Frankcombe’s employment agreement for an improper purpose. In response, the Second and Fourth Defendants led evidence of the basis on which, they claimed, Mr Frankcombe’s employment was properly terminated. Mr Ward also refers to correspondence between the Plaintiffs and the Second and Fourth Defendants, by their solicitors, which addressed the basis on which Mr Frankcombe’s employment had been terminated. Subsequently, after the close of evidence and shortly before the hearing, the Plaintiffs informed the Second and Fourth Defendants that they would not read the relevant paragraphs of the affidavit that put that matter in issue, although they then proposed to tender documents relating to that matter; during the hearing, the Plaintiffs subsequently confirmed that they would not tender those documents; and the Second and Fourth Defendants then did not read the evidence relating to Mr Frankcombe.

8. In these circumstances, the Second and Fourth Defendants did not join Mr Francombe as party to the proceedings or first put the matters as to which he is concerned in issue, and I can see no basis for an order for costs in favour of Mr Frankcombe and against them, where the matters they raised in evidence were responsive to the Plaintiffs’ case; they did not read that evidence, once the Plaintiffs no longer put that matter in issue; and, in any event, there has been and will now be no determination of the matters which could support an order for costs in favour of Mr Frankcombe rather than the converse as to the merit of that issue. No question arises as to whether such an order could have been made in favour of Mr Frankcombe and against the Plaintiffs, because Mr Frankcombe does not seek such an order.

9. Mr Frankcombe responds that the Plaintiffs only joined him as party to the proceedings because he was affected by the relief sought; while that proposition may well be true, it remains that the Plaintiffs in fact joined Mr Frankcombe as party to the proceedings, rather than the Second and Fourth Defendants doing so, and they put in issue the question whether his employment was terminated on a proper basis, by alleging that it had been terminated for an improper purpose. Mr McMeniman, who appears for Mr Frankcombe, submits that it was unnecessary for the Second and Fourth Defendants to make an allegation as to his performance where the Points of Claim merely pleaded the purported termination of his employment. I do not accept that submission, where it seems to me that the Points of Claim put in issue the propriety of that termination as well as its legal validity. Mr McMeniman also submits that the Second and Fourth Defendants abandoned the allegation, on the basis that it was irrelevant and “deficient as to material facts”. I do not accept that submission, where, it seems to me, they did not press that allegation where, by reason of developments as between the Plaintiffs and themselves, that matter was no longer in issue between them.

10. No question of indemnity costs arises, because indemnity costs should not be ordered where costs on the ordinary basis will not be ordered. I will nonetheless briefly address the relevant principles and submissions. The Second and Fourth Defendants submit and I accept that an award of indemnity costs requires the presence of some special or unusual feature in the conduct of the litigation on the part of the party against which indemnity costs was sought, and no such circumstance here exists. Mr Ward refers to my summary of the applicable principles in Re Hermitage Engadine Pty Ltd [2025] NSWSC 414 at [18] as follows:

The applicable principles as to an order for indemnity costs are also well-established. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party’s conduct in proceedings is plainly unreasonable or involves an element of delinquency, and by Bell CJ in Brown v Stables Perisher Management Pty Ltd (No 2) [2022] NSWSC 902. [Counsel] also refers to my summary of the principles applicable to an award of indemnity costs in Re Allscope Concrete & Pumping Pty Ltd (in liq) [2024] NSWSC 1680 at [5], in substantially the terms that I have set out above.

11. They also note the observations of Nixon J in WAM Active Ltd v Keybridge Capital Ltd (No 3) [2024] NSWSC 1592. No special or unusual feature in the conduct of the litigation on the part of the Second and Fourth Defendants warrants an order for indemnity costs against them here.

12. For these reasons, I make the following orders:

13. The Second and Fourth Defendants pay the costs of the First and Second Plaintiffs in an amount as agreed or otherwise assessed.

14. There be no order as to the Third Defendant’s costs of the proceedings.

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