Medical Defence Association of Western Australia Inc v Australian Securities & Investments Commission

Declaration 3 It is not inherent in this conclusion that the applicant will be able to meet the evidentiary requirements; nor does it detract from the force of s 601BC(9), which provides that 'evidence lodged in accordance with subsections (7) and (8) must be satisfactory proof to ASIC of the matters referred to in those subsections'. For these reasons any declaration consistent with the reasons I have given must necessarily be narrowly expressed. 4 The draft declaration put forward by the applicant is: 'On the proper construction of section 601BC of the Corporations Act 2001, evidence by the Applicant, a body incorporated under the Associations Incorporation Act 1987 (WA), of consent of its members in accordance with sub-section 601BC(8)(f) of the Corporations Act 2001, is evidence under the law of the Applicant's place of origin that the transfer of the Applicant's incorporation to the Corporations Act 2001 is authorised pursuant to sub-section 601BC(8)(d) of the Corporations Act 2001.' 5 The respondent's draft declaration is: 'The evidentiary requirements of ss 601BC(8)(d), (e) and (f) of the Corporations Act 1901 [sic] (Cth)would be met by evidence that satisfied the Australian Securities and Investments Commission that the members of the Medical Defence Association of Western Australia Inc had given their consent to the transfer of incorporation in accordance with the requirements stated in s 601BC(8)(f) of that Act. 6 In my view the respondent's draft declaration is expressed too broadly. While I accept that the evidentiary requirements could be met by the evidence referred to in the respondent's draft declaration, I am not in a position to say that they would be met. It may be, for instance, that other requirements of State law or of the applicant's constitution, that have not been brought to my attention, need to be met in order to authorise the transfer and to satisfy ASIC on the point. The issue before me was whether the applicant's inability to provide evidence of authorisation by the State meant that it was impossible for it to meet the requirements of s 601BC and therefore precluded ASIC considering its application for transfer of its incorporation. My essentially negative conclusion does not support such a positive declaration.

7 The applicant's draft is narrower in that it confines itself to the requirement that the application be accompanied by evidence of the matters referred to ss 601BC(8)(d), (e) and (f) and does not attempt to encompass the requirement in s 601BC(9). Under that subsection once the evidence is lodged in accordance with subsections (7) and (8), it is a matter for ASIC whether it is satisfactory proof of the matters referred to in those subsections. For that reason I prefer the applicant's approach which recognises that evidence of the members' consent is evidence of authorisation within the meaning of the statute but does not preclude ASIC's right to determine if that evidence is satisfactory. I therefore propose to make a declaration in the form submitted by the applicant.

Costs 8 In general the award of costs is a matter for the discretion of the judge; Federal Court of Australia Act 1976 (Cth), s 43(2). However the principles governing the exercise of that discretion are well settled. Ordinarily costs follow the event although a party who is only partially successful may not receive all its costs and may even be required to pay part of the other party's costs; see generally Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1997) 72 FCR 151. 9 In this case the applicant challenged ASIC's view that because there is no express legislative provision for transfer of incorporation in Western Australia, it was not empowered to register the applicant as a company under the Corporations Act. As is clear from the terms of the declaration in [4] above, the applicant's challenge succeeded albeit for reasons somewhat different from those it put forward. The applicant submits that it should therefore be awarded costs in the normal way 10 The respondent strongly submits that the course of the proceeding prior to the hearing was such that the applicant should pay the respondent's costs incurred prior to the hearing of the matter. In support of this submission the respondent makes a number of points including that: · the original application did not properly invoke the jurisdiction of the Court and, initially, the applicant declined to amend the application although the defect was identified by the respondent and communicated to the applicant; · it was not until the respondent had filed a notice of objection to competency and that notice was listed for hearing at a directions hearing that the applicant accepted the point and amended its application; · the applicant changed the orders sought and its arguments as to why ASIC's position was incorrect including on the day of the hearing; and · the Court's reasons for judgment are inconsistent with the applicant's arguments. 11 The circumstances in which a successful party will be deprived of its costs and the relevant authorities were comprehensively canvassed by Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [52]-[55]. I do not propose to discuss those authorities in any detail however I am conscious of Cooper J's observation in Cummings v Lewis (1993) 41 FCR 559 at 603 that: 'It is within the discretion of a trial judge to award only a proportion of a successful party's costs if the conduct of that party in the trial was such as to unreasonably prolong the proceedings'. 12 In Cretazzo v Lombardi (1975) 13 SASR 4 at 16 Jacobs J injected a note of caution saying: '[T]rials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.' 13 The only aspect of the conduct of this proceeding that suggests to me that the applicant should have its entitlement to costs reduced is that the proceeding was commenced on 10 August 2004 by filing an application that did not invoke the jurisdiction of the Court. The issue was raised at a directions hearing on 3 September and the respondent filed a notice of objection to competency on 28 September 2004. Despite this issue being brought to the applicant's notice it did not file an amended application until 2 November 2004 on which date the notice of objection was dismissed with the consent of the parties. 14 In my view the respondent should not have been put to the cost of dealing with the application filed on 10 August 2004. It was not until 2 November that the respondent had a competent application to which it could respond. For this reason I will order that the applicant should pay the respondent's costs incurred up to and including 2 November 2004 and thereafter the applicant should be entitled to its costs. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 14 February 2005 Counsel for the Applicant: Mr J Sackar QC and Mr M Dawson

Solicitor for the Respondent: Australian Securities and Investments Commission