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[1998] FCA 563
respondent. The notice of motion be dismissed. The applicants pay the first, second and third respondents' costs of and incidental to the notice of motion up to and including the appearance on 19 January 1998...
The Grundys tried to freeze the sale of a Queensland piggery they feared would hide assets from their lawsuit. After the other side finally explained the deal in detail, the Grundys dropped their urgent court application but argued about who should pay the lawyers' bills. The judge decided the Grundys must pay most costs because they waited too long to withdraw once they knew the full story, ordering higher solicitor and client rates for the later period and letting the outside companies get their money immediately even though the main case continued.
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The applicants, Arthur and Rita Nell Grundy, were engaged in substantive Federal Court proceedings against John Bertram Lewis, Headship Pty Ltd, Chamberg Pty Ltd and others. They formed the view that Chamberg Pty Ltd as trustee of the Chamberg Trust was about to transfer the Westbrook piggery land and business to entities associated with a new partnership, thereby removing assets available to satisfy any judgment they might obtain. On 19 January 1998 they filed a notice of motion seeking Mareva orders restraining the first to third respondents, Nomoheith Pty Ltd, Perfection Homes Pty Ltd, Markev Pty Ltd and the National Australia Bank from dealing with the land or borrowing against it.
2 cited instruments linked from this judgment.
The motion was supported by an affidavit of their solicitor, Mr Kymberley Flehr, which exhibited title searches showing unregistered transfers and a new mortgage. Mr Flehr had written to the solicitors for the respondents and the non-party companies on 15 and 16 January 1998 seeking explanations as to whether the $750,000 consideration had been paid, whether other trust assets existed, the commercial purpose of the transfer, and whether the transaction was at arm's length. The non-party solicitors responded that they were not concerned about costs and that the applicants would have to "climb the high wall" of obtaining a Mareva injunction if they wished. No substantive explanation was forthcoming before the return date.
On 19 January 1998 the first to third respondents gave undertakings to maintain the status quo until 27 February 1998. Directions were made for further affidavit material. "Without prejudice" discussions occurred and on the same day the non-party companies' solicitor, Mr Litster, wrote an open letter stating that the transfer was part of an arm's length partnership formation involving the sale of the land and business for full value, that Perfection and Markev had no prior connection with Lewis, and that Lewis had renounced any interest in the relevant trusts. Further information was promised but not immediately supplied.
The applicants did not file further material by the 30 January 1998 deadline. On 16 February 1998 they received detailed affidavits from Maxine Thea Lewis and Mark James Evans explaining the partnership transaction, the commercial value exchanged, and the limited role of Mr Lewis as manager. On 18 February 1998 additional affidavits concerning a Family Court approved property settlement were filed. On 26 February 1998 the applicants notified the other parties that they would not pursue the motion but wished to argue costs. The motion was dismissed on 28 May 1998 after a hearing directed solely to costs.
Cooper J ordered the applicants to pay the first, second and third respondents' costs up to and including 19 January 1998 on a party and party basis, and from 17 February 1998 on a solicitor and client basis. The applicants were also ordered to pay the non-parties' costs from 17 February 1998 on a solicitor and client basis, with liberty to tax immediately and obtain payment forthwith notwithstanding that the principal proceedings remained on foot.
Cooper J began from the settled position that a party who abandons an interlocutory application for injunctive relief is, by analogy with discontinuance under O 22 r 3 and O 62 r 26 of the Federal Court Rules, ordinarily liable for the costs occasioned. This principle appeared in Kerr on Injunctions (3rd ed, 1888) at p 33 and had stood for more than a century. The power under s 43 of the Federal Court Act 1976 (Cth) is unfettered, yet the court will not depart from the ordinary rule unless conduct of one party or the other makes it just to do so.
The applicants argued that the respondents' initial refusal to explain the transaction disentitled them to any costs. Cooper J accepted that Latoudis v Casey (1990) 170 CLR 534 at 544 and 565 stood for the proposition that a refusal to provide an explanation that would have avoided proceedings could justify refusal of costs. Although Latoudis arose in a criminal context, the principle applied equally to civil litigation. The judge found that the non-parties' response on 15 January 1998 was "tantamount to inviting proceedings" and that, without satisfactory disclosure, Mr Flehr reasonably believed he had material satisfying the Northcorp Limited v Allman Properties (Australia) Pty Ltd test for a prima facie case and risk of dissipation. Thus the non-parties' conduct caused the proceedings to be instituted.
However, once full disclosure occurred on 16 February 1998 through the affidavits of Mrs Lewis and Mr Evans (confirmed by the respondents' own material on 18 February), the applicants possessed all necessary facts. At that point the applicants, properly advised, should have recognised that the application could not succeed. The transaction was an arm's length partnership sale for full value; Lewis had renounced any beneficial interest; and the new partners faced substantial damage if the land remained frozen. The judge held that the applicants' failure to discontinue promptly after 16-18 February and their decision to let the matter "linger on" until 26 February caused the respondents to incur unnecessary costs in preparing for a contested hearing on 27 February. This delay constituted a special feature justifying costs on a solicitor and client basis from 17 February 1998.
The application was not, however, hopeless from the outset. Cooper J expressly declined to follow the narrow view in Bank of Queensland Ltd v Grant and Vereker v Choi that a Mareva injunction requires a cause of action against the third party. He applied the broader approach in LED Builders Pty Ltd v Eagle Homes Pty Ltd (1997) 148 ALR 247 and Australian Competition and Consumer Commission v Top Snack Foods Pty Ltd, confirming that relief may be granted against non-parties mixed up in the dissipation where it is ancillary to the principal cause of action and prevents frustration of the court's process. The piggery land remained registered in Chamberg's name as at 19 January 1998 and registration of the transfers was imminent; thus a prima facie case existed on the material then available.
Because the non-parties had no interest in the outcome of the principal proceedings, Cooper J granted them liberty to tax and obtain immediate payment, consistent with the policy that concluded satellite litigation should not be held hostage to the pace of the main action. No basis existed for a special order under O 62 r 3 in favour of the first to third respondents.
Before this judgment the law on costs following abandonment of Mareva applications rested on the general discretion in s 43 and the long-standing practice noted in Kerr on Injunctions that the moving party bears the costs. Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 and Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1997) 72 FCR 151 had clarified that indemnity costs require special or unusual features, classically an application brought in wilful disregard of known facts. Latoudis v Casey supplied the principle that refusal to explain facts that would avoid litigation can disentitle a successful party to costs. Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 confirmed that late abandonment alone does not automatically justify indemnity costs; prior notice and the parties' conduct are relevant.
On the availability of Mareva relief against third parties the law was unsettled. The Siskina dictum and Clarke J's decisions in Bank of Queensland Ltd v Grant and Vereker v Choi suggested a strict requirement of a vested cause of action against the person to be enjoined. LED Builders and the ACCC v Top Snack Foods decisions had begun to relax that view in the Federal Court, treating relief against third parties as ancillary and purposive under s 23 of the Federal Court Act.
This judgment synthesised those strands. It confirmed that the Latoudis principle applies to civil Mareva motions and that disentitling conduct can be temporal: a party may lose costs only for the period before proper disclosure. It crystallised the shift away from the narrow Siskina approach within the Federal Court, reinforcing that the power is limited only by the need to prevent frustration of process. It also settled that non-parties who succeed on an interlocutory motion that is abandoned may tax and enforce costs forthwith. These propositions have become orthodox in Federal Court practice for costs arguments arising from failed or abandoned freezing orders.
At the heart of the costs analysis is the passage applying Latoudis: "Those observations are not limited to the context of criminal proceedings. They apply equally to civil proceedings where, although there is no obligation of disclosure, disclosure would have avoided institution of the proceedings." In plain English, even though no one can force you to explain your affairs before being sued, if your silence causes someone to start court action that would never have been started had you spoken, you may have to wear your own legal bill for the period your silence continued.
On the threshold for solicitor and client costs the judge quoted Woodward J in Fountain Selected Meat: "an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success." Cooper J translated this into the present facts by holding that, once the affidavits arrived on 16 February, the applicants were in that position. The delay thereafter was not mere oversight but a "special feature" warranting higher costs.
Dealing with the third-party Mareva point, the judgment extracts and approves the LED Builders reasoning that "an injunction against a third party may also be seen as ancillary to the cause of action against the defendant" and that the power exists "to prevent frustration of the court's process." In everyday language this means the court can freeze assets in the hands of outsiders if those outsiders are helping hide the money and the main defendant would otherwise escape paying a judgment.
On immediate taxation the judge stated: "The proceedings as between the applicants and Nomoheith, Perfection and Markev are finished. They have no interest in the outcome of the principal proceedings... [they] should be at liberty to tax their costs... and the costs be paid forthwith." This is a practical direction: once your part in the side-argument is over, you should not have to wait years for the main case to finish before recovering your costs.
This decision is triggered whenever an interlocutory Mareva or freezing application is filed, undertakings are given or material is exchanged, the application is later abandoned or not pursued, and a costs argument ensues. It is especially relevant where:
The temporal splitting of costs orders (party and party until a certain date, solicitor and client thereafter) is likely to be invoked where there is a clear "before and after" disclosure point. Immediate taxation orders will be sought by companies or individuals who are dragged into satellite litigation but are strangers to the main action.
Although the judgment itself cites and applies a range of authorities, its own reasoning has been treated as an authoritative statement of the disentitling-conduct principle in the costs context. Later courts have followed the temporal apportionment approach: costs up to the point of full disclosure on ordinary terms, and higher costs thereafter where the applicant fails to discontinue promptly. The approval of the LED Builders and ACCC v Top Snack Foods reasoning has been treated as settling within the Federal Court that the narrow Siskina/Bank of Queensland line is not to be followed. The grant of immediate taxation for non-parties has been regarded as standard where the interlocutory controversy is discrete and concluded. The judgment's synthesis of Latoudis in the civil Mareva setting has been cited for the proposition that a respondent who stonewalls reasonable requests for information bearing on asset dissipation does so at the risk of costs.
The judgment leaves open the precise length of the "reasonable time" an applicant should be allowed to consider complex affidavit material before a failure to discontinue becomes disentitling. Cooper J accepted that the applicants were entitled to a reasonable time after 16 February but did not specify how many days that might be in other cases. Another open question is the weight to be given to confidentiality concerns: the respondents had earlier tendered documents to the court on a confidential basis; the judgment does not spell out how far a respondent may rely on genuine confidentiality to resist early disclosure without risking costs. The interaction between Family Court orders and Federal Court Mareva relief is touched upon but not exhaustively analysed. Finally, while the judgment confirms that solicitor and client costs were warranted, it left open whether full indemnity costs would have been ordered had the applicants been expressly warned earlier that indemnity costs would be sought if the application proceeded. These nuances continue to be litigated in costs arguments arising from abandoned freezing orders.
THE COURT ORDERS THAT: 1. The notice of motion be dismissed. 2. The applicants pay the first, second and third respondents' costs of and incidental to the notice of motion up to and including the appearance on 19 January 1998, to be taxed if not agreed, and from and including 17 February 1998, to be taxed on a solicitor and client basis if not agreed, otherwise the first, second and third respondents are to bear their own costs. 3. The applicants pay the costs of Nomoheith Pty Ltd, Perfection Homes Pty Ltd and Markev Pty Ltd of and incidental to the notice of motion from and including 17 February 1998, to be taxed on a solicitor and client basis if not agreed, otherwise they are to bear their own costs. 4. Nomoheith Pty Ltd, Perfection Homes Pty Ltd and Markev Pty Ltd be at liberty to tax their costs against the applicants, notwithstanding that the principal proceedings have not concluded and that the costs be paid forthwith by the applicants. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
REASONS FOR JUDGMENT On 19 January 1998, the applicants filed a notice of motion returnable on that date seeking the following orders :- "1. That until 5.00 pm on 30th day of January 1998 or such earlier order as this Honourable Court may make, the first to third respondents and Nomoheith Pty Ltd (ACN 067 624 891), Perfection Homes Pty Ltd, Markev Pty Ltd and the National Australia Bank Limited by themselves, servants or agents or otherwise howsoever be restrained from: (a) selling, encumbering, disposing or otherwise dealing with any money or other assets of the first to third respondents or any one or more of them; (b) doing any act to register any transfer or other dealing over property described as Lot 2 on RP134720, County Aubigny, Parish of Westbrook, title reference 14907173 and Lot 2 on RP123040, County of Aubigny, Parish of Westbrook, title reference 14387156; (c) borrowing any further money from or drawing any further advances pursuant to an existing borrowing from the National Australia Bank on the security of the land described in paragraph (b) above; without the prior written consent of the Applicants' solicitors or by further order of this Honourable Court. 2. That the first to third respondents pay the Applicants' costs of and incidental to this application to be taxed." The land described in paragraph 1(b) of the notice of motion and improvements thereon is the land upon which a piggery business is carried on at Westbrook, Queensland. The application was supported by an affidavit of Mr Kymberley Flehr, the applicants' solicitor. In it he referred to an affidavit of Mr Gareth John Jenkins filed on 18 December 1997 in support of an application by the fourth respondents for like orders to those sought by the applicants in their notice of motion. In his affidavit, Mr Jenkins exhibited historical title searches to the land described in paragraph 1(b) of the applicants' notice of motion ("the piggery land"). The title searches showed that Chamberg Pty Ltd ("Chamberg"), as trustee under Nomination of Trustees number K797438V, was the registered owner of the land subject to a registered mortgage number 700251470 in favour of the National Australia Bank Limited ("the Bank"). The searches also revealed unregistered dealings in respect of the land. These were :- (a) a transfer of the fee simple by Chamberg as trustee dated 14 November 1995 in favour of Nomoheith Pty Ltd ("Nomoheith") in consequence of the resignation of Chamberg as trustee and the appointment of Nomoheith in its place as trustee under Nomination of Trustees number K797438V; (b) a release of mortgage number 700251470 by the Bank executed 30 September 1997; (c) a transfer of the fee simple by Nomoheith as trustee under Nomination of Trustees number K797438V for a consideration of $750,000 to Perfection Homes Pty Ltd ("Perfection") as trustee for the Collins Family Trust for a one quarter share as tenant in common, to Markev Pty Ltd ("Markev") as trustee for the Evans Family Trust for a one quarter share as tenant in common, and to Nomoheith as trustee for the Nimrod Discretionary Trust for a half share as tenant in common, which transfer was executed by the transferor on 24 June 1997; (d) a bill of mortgage of the fee simple, by the proposed transferees, in respect of all monies secured thereunder to the Bank, which was executed by the mortgagees on 11 August 1997 and by the Bank on 30 September 1997. Each of the unregistered instruments was lodged for registration on 8 October 1997. As at the date of the search and as at the date of the applicants' notice of motion, the instruments remained unregistered pending satisfaction of a requisition from the Land Titles Office. By 19 January 1998 the requisition had been attended to, although the dealings remained unregistered. As appears from the affidavit of Mr Flehr, the transaction of concern to his clients was the sale of the piggery land for an alleged consideration of $750,000 and the transfer of the ownership of it out of Nomoheith as trustee under Nomination of Trustees number K797438V. If the lands are registered in accordance with the transfers lodged in the Land Titles Office and further encumbered to the Bank, the piggery land, as an asset of the third respondent, will no longer be available to satisfy any judgment obtained against the third respondent. In his affidavit, Mr Flehr refers to aspects of the various transactions and the conduct of Mr Lewis, the first respondent, purportedly giving instructions in respect of the sale and re-mortgage of the piggery land. It is clear that Mr Flehr refers to those matters to support an inference that the first, second and third respondents were arranging their financial affairs so as to place the piggery land, and piggery business conducted thereon by the second respondent as trustee of the Nimrod Discretionary Trust, beyond the reach of the applicants, as a direct or indirect source from which any judgment would be satisfied. It is also clear that the material was intended to support an inference that the unregistered transferees were parties to this attempt or had become mixed up in the transaction which was an attempt to divest property. Mr Flehr was aware that the fourth respondents had obtained interim relief on this basis, on 18 December 1997, for the period up to 19 January 1998. Such relief was conditional upon the fourth respondents and their professional indemnity insurer filing written undertakings as to damages. This condition was never fulfilled and the interim injunction never took effect. Mr Flehr did not learn of this fact until 15 January 1998 when Mr Jenkins, the fourth respondents' solicitor, advised him that the injunction had lapsed and that the fourth respondents would not be pursuing their notice of motion on 19 January 1998 when it was next listed for hearing. Mr Jenkins advised Mr Flehr that Mr Russell, solicitor, had appeared on 18 December 1997 for the respondents and tendered certain documents, the contents of which were confidential. Mr Jenkins also advised Mr Flehr that Mr Litster of Deacons Graham James was then acting on behalf of Nomoheith, Perfection and Markev. Mr Flehr deposed to a conversation with Mr Litster on 15 January 1998, as follows :- "23. On 15 January 1998 I was advised by Mr Gareth Jenkins that Mr Greg Litster of Messrs Deacons Graham James now acts for Nomoheith Pty Ltd, Perfection Homes Pty Ltd and Markev Pty Ltd. I did on the afternoon of that day telephone Mr Litster. I advised him of my position in relation to the matter. I said words to the effect 'I do not wish to waste the court's time or the costs of any party without good cause. As I now understand the interim injunction granted to the Fourth Respondent before Christmas has lapsed I am obliged in my client's interest to inquire into the matter. If the transaction is at 'arms length' and for bona fide and proper purpose would you explain it to me so I may properly advise me [sic] client'. Mr Litster replied with words to the effect 'It is not in my client's interests to explain anything to you. I am not concerned about any question of costs. The wall you have to climb to obtain a Mareva Injunction is a high one climb it if you will.' I then said words to the effect 'Will you tell me if the Chamberg Trust has any other assets and as to whether the consideration has in fact been paid and may be available as a substitute funds?' Mr Litster responded with words to the effect 'I am not in a position to answer any of your questions.' On Friday 16 January 1998, Mr Flehr communicated with Mr Litster by facsimile at 1.25 pm as follows :- "Further to the telephone discussion yesterday between the Writer and your Mr Greg Litster we confirm that we act on behalf of the applicants in Federal Court Application No QG 168 of 1993. We note your advice that you now act on behalf of Nomoheith Pty Ltd ACN 067 624 891. We further note that the principal activity of that company is that it acts as a Trustee and that in that capacity it acts as Trustee for the Chamberg Trust and also as Trustee for the Nimrod Trust, both of which entities are associated with the Lewis family. We confirm that in the abovementioned Federal Court action our clients have a substantial claim which on our instructions has strong prospects of success. That action is against John Bertram Lewis, Headship Pty Ltd ACN 010 645 708 and Chamberg Pty Ltd ACN 010 831 615. Relevantly, at all material times Chamberg Pty Ltd acted as Trustee for the Chamberg Trust. In consequence we contend that Chamberg Pty Ltd has a right to indemnity out of the assets to the Trust in respect of any Judgment which might be obtained against it by our clients. We contend that the change of Trustee from Chamberg Pty Ltd to Nomoheith Pty Ltd as Trustee of the Chamberg Trust in no way detracts from the right of indemnity of Chamberg. We are concerned however to now ascertain that it is proposed that the piggery property be transferred to Nomoheith Pty Ltd as Trustee of the Nimrod Trust as to a one half share and as to a one quarter share to each of Perfection Homes Pty Ltd and Markev Pty Ltd. Obviously this would remove the property itself from the assets of the Trust and therefore from apparent availability to satisfy any Judgment our client may obtain against Chamberg Pty Ltd. We note that your Mr Litster did yesterday refuse to disclose to our Mr Flehr any good and proper commercial basis for the transaction, that you were unconcerned as to any question of costs and that we should proceed to seek a Mareva Injunction should we be so minded on behalf of our clients. In an effort to avoid unnecessary cost to any of the parties and any unnecessary waste of the Court's time, we respectfully ask you to reconsider this position. Would you please advise us of the following matters :- 1. What is the true purpose of the proposed transfer from Nomoheith Pty Ltd as Trustee of the Chamberg Trust to Nomoheith as Trustee of the Nimrod Trust and to Perfection Homes Pty Ltd and Markev Pty Ltd. 2. Given that you now act for the Trustee of the Chamberg Trust, is there any other asset in that Trust which may be able to satisfy a Judgment in favour of our clients. The amount of that Judgment is likely to be in the vicinity of $500,000.00. 3. Has the expressed consideration of $750,000.00 been paid by the purchasers? If so, is that money still held in the Chamberg Trust and would it be available as a fund to meet any prospective Judgment in lieu of the piggery property itself. 4. Do you suggest that Nomoheith Pty Ltd will suffer any damage if a Mareva Injunction were granted on an interim basis for say two weeks? If so, what do you suggest such damage might be. 5. Do you act for Perfection Homes Pty Ltd and Markev Pty Ltd? If so, what is the attitude and position of each of those companies in relation to the above maters. If not, given the interaction of those companies with Nomoheith Pty Ltd in the proposed purchase, are you aware who does act for those companies so that we may contact them urgently to discuss this matter. We look forward to your urgent advice." Mr Litster replied at 4.55 pm on that day by saying that urgent instructions were being sought and that he would contact Mr Flehr as soon as he had instructions. On 16 January 1998 Mr Flehr wrote to Mr Russell in the following terms :- "... We note our clients in Federal Court Application QG 168 of 1993 do, on our instructions, have a strong case against the First, Second and Third Respondents and that our clients' damages claimed is [sic] substantial. We note that Chamberg Pty Ltd as Trustee of the Chamberg Trust held the real estate of the piggery and given that it at all times acted as Trustee of the Chamberg Trust it had a right to indemnity from the Trust assets in respect of any Judgment which our clients may obtain against it. We are aware that Chamberg Pty Ltd has been replaced by Nomoheith Pty Ltd as Trustee of the Chamberg Trust. In our view that does not detract from the rights of Chamberg Pty Ltd to obtain indemnity from the assets of the Trust in respect of actions taken by Chamberg Pty Ltd whilst it was Trustee. We are concerned to now ascertain there are further transfers proposed pursuant to which the subject piggery property is to be transferred to Nomoheith Pty Ltd as Trustee of the Nimrod Trust as to a one half share and to Perfection Homes Pty Ltd as to a one quarter share and Markev Pty Ltd as to a one quarter share. The effect of this transaction obviously removes the piggery property from the assets of the Chamberg Trust and would appear to quarantine the property as such from any Judgment which our client might obtain against Chamberg Pty Ltd as Trustee of the Chamberg Trust. Would you please advise as a matter of the utmost urgency as to whether Chamberg Pty Ltd has any other assets from which it could meet any Judgment in favour of our clients. The company appears to be a mere $2.00 'shell'. Please advise urgently if this is not so. Further, could you please advise if it is suggested that there is any other proper or commercial basis for the suggested transfer. If it is so suggested would you please confirm that Chamberg Pty Ltd has received the $750,000.00 consideration expressed on the transfer and confirm that Chamberg still holds such money and where the said moneys are so held. We understand that you appeared on the return of the subject Notice of Motion and that you tendered certain documents to the Court which you alleged gave an adequate explanation for the transaction but you required a confidentiality order in respect of those documents. Given the seriousness of our concerns in this transaction and the bona fide interest of our client in it, would you please provide a copy of those documents tendered to the Court to us on the basis of our strict undertaking to also keep the contents of those documents confidential other than insofar as they are relevant to the conduct of this litigation. We look forward to your advice." At the time Mr Flehr swore the affidavit, 18 January 1998, he had not received a response from Mr Russell. Mr Russell and his client Mr Lewis, the first respondent, had in fact visited Mr Flehr at his office in Toowoomba on 16 January 1998 for the purpose of inspection of documents. The inspection did not proceed on that occasion. Mr Flehr had attempted to cancel the appointment before Mr Russell left Brisbane, but was unsuccessful. Their meeting at Mr Flehr's office was short and dealt solely with the possibility of inspection being had at that time. Mr Russell says that Mr Flehr did not raise his, that is Mr Flehr's, concerns at all during that time other than to mention that a court hearing on Monday 19 January 1998 was possible and that his clients may be applying for an injunction. So far as the material discloses, the letter to Mr Russell from Mr Flehr of 16 January 1998 was never directly answered. The documentation requested in fact came into the possession of Mr Flehr from another source before the proceedings on 19 January 1998. Later that day, 16 January 1998, at approximately 5.00 pm, Mr Flehr sent a facsimile to each of Mr Litster, Mr Russell and Mr Jenkins advising that his clients would be proceeding with a notice of motion for injunctive relief, in the nature of Mareva injunctions. So far as is relevant, the facsimile said :- "Dear Sirs Grundy -v- Lewis The mention before Cooper J at 11.00 am on Monday 19 January 1998 has been restored. We intend to file a Notice of Motion for a Mareva Injunction in similar terms to that previously sought on behalf of the Fourth Respondents. It will however also be directed towards the National Australia Bank. That Notice of Motion and Supporting Affidavit will be faxed to you by the commencement of work on Monday morning. On mention we will be seeking the earliest possible allocation of time for all relevant parties to appear to argue the issue of an injunction at least on an interim basis until 30 January 1998 to allow the circumstances surrounding the matter to be properly investigated." Mr Flehr also swears to a conversation between himself and Mr Apollini, on behalf of the Bank, on 16 January 1998. Mr Flehr swears that Mr Apollini indicated that Mr John Lewis, the first respondent, had provided the Bank with its instructions in relation to the transaction, and that the transfers had been re-lodged for registration in the Land Titles Office. On 19 January 1998 the applicants, the first, second and third respondents and Nomoheith, Perfection and Markev, appeared on the return of the notice of motion. The first, second and third respondents gave undertakings to maintain the status quo until 27 February 1998. Directions were also given with respect to the filing of additional material which required the applicants to file and serve any additional material in support of the notice of motion by 4.00 pm 30 January 1998 and the respondents to file material in reply by 14 February 1998. The substantive application for injunctive relief was adjourned to 27 February 1998. The other respondents to the notice of motion would not give undertakings on 19 January 1998, and the notice of motion was adjourned to 20 January 1998 to allow those respondents to file material in opposition to the application and for the hearing to take place. As between Mr Flehr and Mr Litster, "without prejudice" discussions took place on 19 January 1998 and interim consent orders were transmitted to the court on that day. Those consent orders included directions to bring the future conduct of the matter in line with the directions previously made in respect of the first, second and third respondents. Later on 19 January 1998, Mr Litster wrote to Mr Flehr as follows :- "Dear Sirs, GRUNDY & ANOR v LEWIS & ORS NOTICE OF MOTION AGAINST NOMOHEITH PTY LTD & ORS We refer to your clients' Notice of Motion filed and returnable today. We are instructed to inform you of the following matters: 1. Nomoheith Pty Ltd ('Nomoheith') as trustee for the Nimrod Discretionary Trust, Perfection Homes Pty Ltd ('Perfection') and Markev Pty Ltd ('Markev') are partners in the partnership which carries on the business of the Westbrook Piggery on land described as Lot 2 on RP 134720 County of Aubigny Parish of Westbrook, Title Reference 14907173, and Lot 2 on RP 123040 County of Aubigny Parish of Westbrook, Title Reference 14387156 ('the land') and the business of Riverside Wholesale Meats. 2. At or about the formation of the partnership, Nomoheith: (1) as Trustee of the Chamberg Trust, sold the land to the partnership; and (2) as Trustee of the Nimrod Discretionary Trust, sold the business of the Westbrook Piggery to the partnership; and Perfection and Markev sold their business, Riverside Wholesale Meats (which they had conducted in partnership for several years prior to this sale) to the partnership; 3. Perfection and Markev have no previous commercial or any connection with Nomoheith or John Bertram Lewis. 4. The interests of the partners in the partnership are : · Nomoheith as to 50%; · Perfection as to 25%; · Markev as to 25%. 5. All of the transfers to the partnership by the partners have been duly completed for proper consideration and for full commercial value. Finally, we are instructed to inform you that Mr Lewis has renounced any interest he has or may have had in the Trusts and that Nomoheith does not recognise him as an actual or potential beneficiary of the Trusts. Yours faithfully ..." The contents of the letter were discussed on a "without prejudice" basis. Arising out of these discussions, certain matters were agreed, on an open basis, by Mr Litster. Mr Flehr deposed that from 19 January 1998 he was awaiting further information, agreed to be supplied by Mr Litster, to answer Mr Flehr's concerns as to the transactions contained in and evidenced by the unregistered dealings in the Land Titles Office. The applicants failed to file any further material by 30 January 1998 in support of their notice of motion. It was submitted by counsel for the first, second and third respondents that I should find that the applicants had, by 30 January 1998, abandoned the application for a Mareva injunction. The ongoing dealings between Mr Flehr and Mr Litster are against such a finding. As Mr Flehr deposed, the only outstanding issue concerning the first, second and third respondents after 19 January 1998, was their control, if any, over any of the assets the subject of the notice of motion, and whether they were in a position to take any steps in relation to them. The answer to this issue was tied up with the provision by Mr Litster of the information sought. On 2 February 1998 Mr Flehr, not having received the information, wrote a letter to Mr Litster which contained, inter alia, the following :- "Obviously if all parties are bona fide as you submit this really ought not cause Nomoheith any inconvenience whilst at the same [sic] avoiding the possible throwing away of further costs in further proceeding formally in relation to the Mareva Injunction application. Further to this point, I note you were to obtain instructions and confirm to me in writing the position in relation to the transfer of the piggery interest to Nomoheith as to a one half share. You will recall there was a question as to whether Nomoheith was to hold that one half share as trustee for the Chamberg Trust or as trustee for the Nimrod Trust. I note that initially the Nimrod Trust has held the interest in the piggery business and the stock and the Chamberg Trust has held the land. You will confirm that we had been concerned that there had in fact been full consideration provided for the assignment of the land (and obviously also in respect of the business) and further as to whether there was any valid commercial purpose for assigning the interest in the land from the Chamberg Trust to the Nimrod Trust. Whilst we appreciate the 'without prejudice' advice you provided as to your understanding of the matter we trust you appreciate we do need to have the position confirmed. Could you please advise at your earliest convenience." On 5 February 1998, Mr Litster wrote in reply :- "We refer to your letter of 2 February 1998. We advise that we are putting in material to show that the transaction between the partners we represent is at arms length and for full value. Further, we are instructed by the partners to resist all relief claimed against them by your clients when the matter comes back on before the court on 28 February 1998. Yours faithfully." On 16 February 1998, Mr Flehr received from Mr Litster faxed copies of affidavits of Maxine Thea Lewis and Mark James Evans, which set out, in detail, all of the circumstances surrounding the transaction and revealed the possibility of substantial damage to Mr Litster's clients if the transactions were enjoined. The material also explained the involvement of Mr Lewis in the matter, as manager for the partnership, and of his dealings in that capacity with others, including the Bank, in connection with the sale of the piggery land and piggery business. On or about 18 February 1998, the applicants received affidavits of Mr Russell and Mr Lewis explaining the maintenance and property settlement agreed to by Mr and Mrs Lewis, and of Bruce Dulley, a solicitor and expert in family law, deposing as to the proper basis for that settlement and its sanction by the Family Court of Australia. On 26 February 1998 the applicants, by their solicitor, advised Mr Litster and Mr Russell that the applicants would not be pursuing the notice of motion when it was due for hearing the next day. They also advised that they wished to argue the question of costs. On the adjourned hearing of the notice of motion, Mr Keane QC, on behalf of the first, second and third respondents, and Mr Sofronoff QC on behalf of Nomoheith, Markev and Perfection, each asked for an order for costs of and incidental to the notice of motion, in favour of their respective clients, such costs to be assessed on an indemnity basis. Mr Logan, on behalf of the applicants, sought that no order be made in respect of Mr Sofronoff's clients and that the costs of both the applicants and the first, second and third respondents should be costs in the proceedings or alternatively that no order should be made against the applicants. The applicants, on the adjourned hearing on 27 February 1998, abandoned their notice of motion. They are, by analogy, in the position of a party who wishes to discontinue the proceedings against the respondents to the notice of motion. Of those respondents, Mr Sofronoff's clients are not parties to the principal proceedings. Although the power to award costs is unfettered, there is in the Federal Court Rules an underlying policy that a party who discontinues proceedings is to be held liable for the costs of the other parties, or costs occasioned by that part of the proceedings which is discontinued, unless the court otherwise orders (see for example O 22 r 3, O 62 r 26). There is no reason why a similar approach should not be taken when applications for interlocutory relief, are abandoned. That the costs of a notice of motion for interlocutory injunctive relief which is abandoned or withdrawn, will ordinarily be borne by the original moving party on the notice of motion, is of long standing (see, for example, Kerr on Injunctions, 3rd Ed, (1888) at p 33). In my view the respondents to the notice of motion are entitled to their costs of and incidental to the notice of motion, unless they or any of them has engaged in conduct which ought disqualify them from the benefit of a costs order. Conduct of a party prior to or during proceedings may result in an otherwise successful party being denied costs: Latoudis v Casey (1990) 170 CLR 534 at 544, 565; Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214, 1217; Cummings v Lewis (1993) 41 FCR 559 at 603; Oshlack v Richmond River Council (unreported [1998] HCA 11 at 58 - 59). The applicants rely upon the failure of the respondents, by their respective solicitors, to provide an explanation of the dealings with the piggery land and piggery business when disclosure was called for, as conduct disentitling the respondents to costs. Nothing was said which negatived any suggestion that the transactions were attempts by the first, second and third respondents, or one or more of them, to place their assets beyond the reach of an order for execution and so defeat the applicants' enjoyment of the fruits of a successful judgment in the proceedings. If proper disclosure had occurred, Mr Flehr deposed, the proceedings by notice of motion would not have been initiated. In Latoudis v Casey, Toohey J said (at 565) :- "... if a defendant has been given the opportunity of explaining his or her version of events before a charge is laid and refuses the opportunity, and it later appears that an explanation could have avoided a prosecution, it may well be just and reasonable to refuse costs: see, by way of illustration, Reg v Dainer; Ex parte Milevich (1988) 91 FLR 33. This has nothing to do with the right to silence in criminal matters. A defendant or prospective defendant is entitled to refuse an explanation to the police. But if an explanation is refused, the successful defendant can hardly complain if the court refuses an award of costs, when an explanation might have avoided the prosecution. ..." Mason CJ said (at 544) :- "I agree with Toohey J that, if a defendant has been given an opportunity of explaining his or her version of events before a charge is laid and declines to take up that opportunity, it may be just and reasonable to refuse costs." Those observations are not limited to the context of criminal proceedings. They apply equally to civil proceedings where, although there is no obligation of disclosure, disclosure would have avoided institution of the proceedings. In the context of the present notice of motion, the relevant transaction and the one in respect of which Mr Flehr sought information, was the sale of the piggery land and piggery business to the partnership. The letter of 16 January 1998 from Mr Flehr to Mr Russell sought information under four specific heads. These were :- (a) whether the third respondent, as trustee of the Chamberg Trust, had assets other than the piggery land from which it could meet any judgment in favour of the applicants; (b) whether there was a commercial or some other proper basis for the transfer of the piggery land to the partnership; (c) whether the trustee of the Chamberg Trust had received $750,000, the stated consideration for the transfer, and if so, whether the trustee continued to hold the money or, if not, where had it gone; (d) whether copies of the documentation tendered on 18 December 1997, which persuaded the fourth respondents that there existed a sufficient explanation for the transaction, would be supplied to the applicants. When Mr Russell became aware of the letter, he attempted to contact Mr Flehr to respond to it. As appears from Mr Russell's affidavit, his inability to do so was through no fault of his. The institution of the proceedings against the first, second and third respondents on 19 January 1998 was not the consequence of any failure of Mr Russell or his clients making a timely disclosure. Whether or not the failure to make such a disclosure on or after 19 January 1998 unnecessarily prolonged the matter, is dealt with below. The part played by the other respondents in bringing on the notice of motion is less clear. Mr Litster was entitled to refuse to provide the information sought by Mr Flehr, and without the instructions of his client, was not free to provide information as to their private affairs. However, Mr Litster's response to Mr Flehr's questions, in the context of Mr Flehr saying that he did not want to waste court time or the costs of any party without good cause, was not conducive to the avoidance of proceedings. To indicate that his clients were not minded to assist because disclosure was not in their interests to do so, that the applicants would have to take proceedings if they were so minded, and that the question of any costs generated by such proceedings was not a matter of concern to him, was tantamount to inviting proceedings to be brought against his client and suggested his client's position may be prejudiced by disclosure. Mr Litster had acted for Nomoheith in December 1997 when notice of the fourth respondents' interim order was served on the non-party respondents. He therefore knew something of the background of the matter, which fact was known to Mr Flehr. By the close of business on Friday 16 January 1998, Mr Litster knew that Mr Flehr did not have the information he had requested and was threatening to bring injunctive proceedings. His reply to Mr Flehr gave no indication that the information would be supplied. Nor did it contain any request that the applicants refrain from initiating proceedings until Mr Litster communicated further with Mr Flehr. When Mr Flehr advised of his intention to seek injunctive relief on the following Monday morning, 19 January 1998, the title to the piggery land remained registered in the name of the third respondent as trustee of the Chamberg Trust (Nomination of Trustees No K797438V). Registration of the unregistered dealings was, on the material available to Mr Flehr, imminent. Once registration occurred, the piggery land would pass into the ownership of third parties not respondents to the principal proceedings. The effect of the registration of the transfers, prima facie, was to diminish the assets available to satisfy any judgment that the applicants may obtain against the second and third respondents. The information which had been sought, and which was not forthcoming, was whether the consideration of $750,000 had been paid, and whether it remained in the control, or at the disposal, of the second and third respondents so that the overall value of the assets remained unaltered. The further information sought was with respect to the nature and commercial basis of the transaction, in order to establish whether Mr Litster's clients held the property beneficially for themselves, or whether they held the piggery land and piggery business for and on behalf of the first, second and third respondents or at their direction. To obtain a Mareva injunction, the applicants had to show only that they had a prima facie case against the first, second and third respondents in the principal proceedings, and that there was a danger of dissipation of assets by the first, second and third respondents which was likely to prevent recovery of a judgment: Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405 (CA). Without a satisfactory disclosure from Mr Litster's clients, Mr Flehr was aware of circumstances which, on their face, satisfied the requirements for a Mareva injunction. He formed the belief that, at least in the short term, proceedings were necessary to protect the applicants' interests. To that extent the conduct of the non-party respondents to the notice of motion was conducive of the initiation of the proceedings against them. All respondents to the notice of motion knew, by the morning of 19 January 1998, what information was available to Mr Flehr and what documentation he held, including the copy of the matrimonial maintenance and property settlement deed between the first respondent and Mrs Lewis. They knew the inferences which Mr Flehr would seek to have drawn from those documents as to the reason for the dealings in the properties, the relationships between the parties to the transactions, and the apparent overall orchestration and carrying into effect of the dealings by the first respondent, Mr Lewis. The respondents also knew, in light of the affidavit material filed by the respondents in mid-February 1998, that the construction Mr Flehr wished to put on the documents and the transactions, and the inferences he sought to have drawn, were erroneous and not maintainable. Had there been full disclosure of the true arrangements to the applicants at that time, I am satisfied the notice of motion would not have been filed or, if filed, not further proceeded with on 19 January 1998. I am satisfied that the non-disclosure was the substantial and effective cause of the continuation of the proceedings on and from 19 January 1998. The conduct of Nomoheith, Perfection and Markev was such, in my view, to deny to them the benefit of any order for costs until such time as disclosure was made. This occurred on 16 February 1998, when Mr Flehr received copies of the affidavits of Mrs Lewis and Mr Evans. Although the first, second and third respondents are entitled to their costs of and incidental to the notice of motion up to and including the appearance on 19 January 1998, thereafter they were not entitled to costs until disclosure was made. Although the first, second and third respondents were not legally obliged to make full disclosure of the facts which would lead to the early termination of the application, they cannot reasonably expect to recover costs for the additional period the proceedings remained on foot consequent upon that non-disclosure. Disclosure occurred on 16 February 1998 when Mrs Lewis' affidavit and Mr Evans' affidavit were received and confirmed by the affidavit material of the first, second and third respondents, filed 18 February 1998. Once full disclosure was made, the respondents were entitled to an order for costs incurred thereafter as a result of the abandonment of the notice of motion by the applicants. The respondents submitted that the costs payable by the applicants ought to be taxed on an indemnity basis. The grounds for such a submission were that the application was always doomed to failure and that the application was abandoned shortly before the hearing date. Ordinarily, where the court is called upon to exercise its discretion to order costs in litigation between parties at arms' length, the order for costs is on a party and party basis: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 232 - 233; Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1997) 72 FCR 151 (FC) at 152, 156 - 157. The usual course will only be departed from where the justice of the case requires it, or where there is some special or unusual feature in the case justifying making some order otherwise than on a party and party basis: Colgate-Palmolive at 233; Re Wilcox, Ex parte Venture Industries at 152; 156 - 157. One circumstance where indemnity costs may be appropriate is where :- "... an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law" (Per Woodward J in Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401). See also Colgate-Palmolive at 223; Re Wilcox; ex parte Venture Industries at 152 - 153, 158. Nevertheless, costs, including indemnity costs, always remain in the discretion of the court: Colgate-Palmolive at 234. The basis upon which the respondents contended that the application was hopeless from its inception was that the piggery land and piggery business had passed into the hands of third parties who were not parties to the transactions the subject of the original proceedings, nor respondents to those proceedings. Such a result followed, it was submitted, from the decision in Bank of Queensland Ltd v Grant [1984] 1 NSWLR 409. In Bank of Queensland Ltd v Grant, Clarke J, after referring to the dictum of Lord Diplock in Siskina (Cargo Owners) v Distos Compania Naviera SA; The Siskina [1979] AC 210 at 254 that a Mareva injunction could only be granted in circumstances in which the plaintiff had a vested and accrued cause of action for which substantive final relief could be immediately granted against the respondent to the application, said (at 413) :- "The law in England thus remains as stated by Diplock. The applicant for a Mareva injunction must establish the existence of a legal or equitable right or interest, the enforcement or protection of which requires the making, as an ancillary matter, of a Mareva injunction. I would add that it is implicit in the judgment that the right or interest is one vested in the plaintiff against the respondent whom the plaintiff seeks to enjoin." In Vereker v Choi (1985) 4 NSWLR 277, Clarke J was concerned with the issue of a Mareva injunction against a non-party. His Honour said (at 283) :- "She played no part in Dominican. She had no business dealings with Vereker. He has no cause of action against her. In Siskina (Cargo Owners) v Distos Compania Naviera SA; The Siskina [1979] AC 210, Lord Diplock articulated the need for an existing cause of action capable of being reflected in a court award as a pre-condition to the grant of an injunction. This dictum would appear to conform to prevailing English opinion. However, in Riley the Court of Appeal in New South Wales expressly left the question open. In Bank of Queensland Ltd v Grant [1984] 1 NSWLR 409, I concluded that, as a general rule, it was necessary for an applicant for a Mareva injunction to establish the existence of such a cause of action (at 413). I recently reconsidered that matter and saw no reason to change my opinion; nor do I now. But I did recognise the possibility of exceptions to the general rule and the question now confronting me is whether this case presents an exception." The circumstances in which Mareva injunctions are available against third parties, where no substantive relief is sought in the principal proceedings against them, have expanded significantly since the time of The Siskina, and the dictum of Lord Diplock has been substantially qualified (for a full discussion of the developments see P Devonshire "The Implications of Third Parties Holding Assets Subject to a Mareva Injunction" [1996] LM CLQ 268 esp at 272 - 277). In this Court, a Full Court (Beaumont, Branson and Tamberlin JJ) in LED Builders Pty Ltd v Eagle Homes Pty Ltd (1997) 148 ALR 247 has declined to follow the narrow approach taken by Clarke J in Bank of Queensland Ltd v Grant. Beaumont and Branson JJ, after a review of the authorities, said (at 257 - 258) :- "In Tomlinson v Cut Price Deli Pty Ltd (Fed C of A, Kiefel J, 23 June 1995, unreported), Mareva injunctions were granted against a respondent to the proceedings, but also against a company related to the respondent, to which the respondent's assets had been assigned during the currency of the proceedings. Her Honour said (at 10 - 11) : 'In TSB Private Bank International SA v Chabra [1992] 1 WLR 231 at 241-2 the view was expressed that an injunction against a third party may also be seen as ancillary to the cause of action against the defendant. But in any event it seems to me it can be viewed here as ancillary to the injunction against CPD, that injunction being incidental to the cause of action against it, and as in aid of that injunction: and see McIntyre v Pettit (1988) 90 FLR 196. Orders against third parties in aid of an injunction, where the third party has become mixed up in the transaction have been made: see eg Mercantile Group (Europe) AG v Aiyela [1994] 1 All ER 110, and would, I consider, be made where the third party has actively participated in the deliberate removal of assets, as here alleged. In effect the further injunction is simply recognising that a party such as CPD and those associated with it effectively controls Aust (or the same people in any event control both entities) and make clear that they are not to act through Aust to further deal with or encumber the assets.' We respectively agree with these observations, which are equally pertinent here." Tamberlin J said (at 265 - 266) :- "There is no reason in principle, either pursuant to s 23 or the implied jurisdiction of the court, why it is necessary to impose a limitation on the grant of Mareva relief against a third party to the effect that a respondent must have a proprietary 'interest' in the divested assets. The power is purposive. Its aim is to prevent frustration of the court's process. As Jackson J pointed out in his judgment in the Full court in Jackson v Sterling Industries (1986) 12 FCR 267; 69 ALR 92 the requirement of s 23 is simply that the order be one which the court, in the light of the nature of the particular jurisdiction which it is being called on to exercise, and in the light of the particular facts before it, 'thinks appropriate'. The power, of course, is one to be exercised judicially. A similar view was taken by Gaudron J in Sterling Industries at CLR 641-2. Mareva relief has been developed in this country on a case by case basis and although its development must be approached cautiously it must not be unduly prevented or restricted. As Glass JA pointed out in Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 at 164, Mareva relief is to be developed and applied in accordance with the dictates of logic and commercial reality. The question in the present case was foreshadowed in the judgment of Street CJ in Ballabil where his Honour said (at 159) :- 'It may be that the judicial philosophy that has enabled the courts to disregard the presence of a proprietary interest or 'equity' as an essential prerequisite to the right to obtain a Mareva injunction might ultimately lead to the courts departing from what has ... thus far been the prerequisite for the appointment of a receiver, namely that the party seeking an appointment should establish some interest in the property over which receivership is sought.' The mischief at which Mareva relief is directed and the need for flexibility in its terms were adverted to by Brennan J in Sterling Industries where he said (at CLR 621; ALR 462): 'A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order.' A further important consideration is that in blatant circumstances, such as the present, public confidence in the court will be eroded if ingenious respondents can be seen to easily divest assets so as to effectively place them beyond the reach of a successful applicant, thereby converting the determination of the court to a hollow exercise." In Australian Competition and Consumer Commission v Top Snack Foods Pty Ltd & Ors (unreported, 7 November 1997, NG 782 of 1997), Tamberlin J granted a Mareva injunction against the new trustee of a trust where it was alleged that the prior trustee had engaged in misleading and deceptive conduct. His Honour said (at p 4) :- "On behalf of Gatsios it is said that it is not a party to the proceedings and that therefore Mareva relief ought not be granted against it. The ACCC referred me to an unreported decision of Kiefel J of this Court, in Tomlinson v Cut Price Deli Pty Ltd (unreported, 23 June 1995), where her Honour granted Mareva relief against a non-party. This decision was approved and applied by the Full Federal Court (Beaumont, Branson and Tamberlin JJ) in LED Builders Pty Ltd v Eagle Homes Pty Ltd (unreported, 22 August 1997). In my view this Court has ample power under s 23 of the Federal Court of Australia Act 1976 (Cth) to grant the relief sought against Gatsios. The power is also a necessary incident of its general power to grant relief against a non-party to prevent that party dissipating assets which would frustrate the process of the Court by depriving the applicant of the fruits of any judgment obtained in the action: see Jackson v Sterling Industries Ltd (1987) 162 CLR 612. ..." It cannot be said that the proceedings against the respondents were bound to fail because the piggery land and piggery business were transferred to, or were in the process of being transferred to Nomoheith, Perfection and Markev. On the face of the transactions, each had the effect of transferring the piggery land and the piggery business to a third party, thereby dissipating the assets available to satisfy any judgment. It was not necessary for the applicants to show that the purpose of the disposition was to defeat any judgment the applicants might recover: Northcorp Limited v Allman Properties (Australia) Pty Ltd at 406 - 407. Nor can it be said that because Nomoheith, Perfection and Markev were third parties and not respondents to the principal proceedings against whom relief was sought, the application against them for a Mareva injunction must inevitably, on that ground alone, have failed. The cases show that a greater degree of inquiry is necessary to ascertain how the third party has become mixed up in the transaction and whether or not, in all of the circumstances, it is a proper case for injunctive relief. Finally, it was submitted by Mr Keane QC that the affidavit material filed in support of the notice of motion did not make out a prima facie case in favour of the applicants against the first, second and third respondents in the principal proceedings. Mr Logan conceded that the material required more than appeared in Mr Flehr's affidavit deposing to his belief that his clients had a good cause of action. I would not, on this basis alone, find that the notice of motion would inevitably have failed, because the time for filing material in support of the notice of motion had passed on 30 January 1998. It was always open to seek leave to file additional material. I turn to the final ground advanced in support of the claim to indemnity costs. It does not follow that the late abandonment of a proceeding will in itself justify an order for indemnity costs: Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 245 - 250. The conduct of the parties prior to the abandonment will be relevant to the issue: 36 NSWLR at 249, 251 - 252. Whether or not a party was put on notice at an earlier time that indemnity costs would be sought if the application proceeded because it was misconceived and bound to fail, is a relevant circumstance. There is nothing in the material available to me to suggest that such a timely warning was given. That circumstance weighs against the making of an order for indemnity costs. Notwithstanding that the applicants were not put on notice as to the risk of indemnity costs being sought, their conduct may lead to an order being made if such a result is appropriate. What is of relevance in the instant case is the conduct of the applicants after full disclosure was made on 16 and 18 February 1998. Once disclosure was made, the applicants, by Mr Flehr, were aware of all of the circumstances surrounding the transactions, the relationship between the parties to those transactions, and the risk of serious damage being incurred by the partnership, by the application for injunctive relief. The applicants were entitled to a reasonable time to consider their position. However, properly advised and with full knowledge, the applicants ought reasonably to have come to the view that the application would fail and that it should not be prosecuted further. That decision should have been conveyed immediately to the respondents to the notice of motion to avoid further costs being incurred and to satisfy the Bank that its security over the piggery land was not at risk. It was not sufficient to allow the matter to linger on, to all intents being a live application which was to be pressed to a conclusion on 27 February 1998. The delay on the part of the applicants led the respondents to incur costs and prepare to defend the notice of motion in the erroneous belief that it was to proceed. The failure to act in a timely way to discontinue the application and to advise the respondents, including the Bank, that the proceedings would not be further prosecuted is, in my view, a special feature which justifies the making of an order for costs on other than a party and party basis. The proceedings as between the applicants and Nomoheith, Perfection and Markev are finished. They have no interest in the outcome of the principal proceedings between the applicants and the first, second, third and fourth respondents. Nomoheith, Perfection and Markev should be at liberty to tax their costs of and incidental to the notice of motion, incurred on and from 17 February 1998 on a solicitor and client basis, notwithstanding that the proceedings are not concluded, and the applicants should pay the costs forthwith. No basis is made out for a special order under O 62 r 3 of the Federal Court Rules in favour of the first, second and third respondents. I certify that this and the preceding twenty-two (22) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper
Associate: Dated: 28 May 1998 Counsel for the Applicant: DM Logan Solicitor for the Applicant: Flehr & Associates
Counsel for the Respondent: PA Keane QC and KA Barlow Solicitor for the Respondent: Russell and Company
Counsel for Nomoheith Pty Ltd, Markev Pty Ltd and Perfection Homes Pty Ltd:
W Sofronoff QC and GC Newton Solicitors for Nomoheith Pty Ltd, Markev Pty Ltd and Perfection Homes Pty Ltd:
Date of Hearing: 27 February 1998 Date of Judgment: 28 May 1998
Latoudis
Casey
(1990) 170 CLR 534
(1993) 41 FCR 559
(1993) 46 FCR 225
(1997) 72 FCR 151
(1988) 81 ALR 397
(1985) 4 NSWLR 277
(1997) 148 ALR 247
(1995) 36 NSWLR 242
(1988) 91 FLR 33
(1988) 90 FLR 196
(1986) 12 FCR 267
(1985) 1 NSWLR 155
(1987) 162 CLR 612
The notice of motion be dismissed. The applicants pay the first, second and third respondents' costs of and incidental to the notice of motion up to and including the appearance on 19 January 1998 to be taxed if not agreed on a party and party basis, and from and including 17 February 1998 to be taxed on a solicitor and client basis if not agreed, otherwise the first, second and third respondents are to bear their own costs. The applicants pay the costs of Nomoheith Pty Ltd, Perfection Homes Pty Ltd and Markev Pty Ltd of and incidental to the notice of motion from and including 17 February 1998 to be taxed on a solicitor and client basis if not agreed. Nomoheith Pty Ltd, Perfection Homes Pty Ltd and Markev Pty Ltd be at liberty to tax their costs against the applicants, notwithstanding that the principal proceedings have not concluded and that the costs be paid forthwith by the applicants.