Meneses v Directed Electronics OE Pty Ltd

1. The respondent pay the appellants' costs of the application for leave to appeal and the appeal.
2. The costs of the application before the primary judge be reserved for determination by the judge who hears and determines the application upon remittal or, in the alternative, the trial judge. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 On 1 November 2019, the Court published reasons for judgment in relation to this matter: Meneses v Directed Electronics OE Pty Ltd [2019] FCAFC 190. The orders of the Court included that the applicants have leave to appeal and that the appeal be allowed. In relation to costs, the relevant part of the costs order made by the primary judge was set aside and the parties were ordered to file and serve written submissions dealing with the costs of the application before the primary judge and the costs of the application for leave to appeal and the appeal. These reasons, which should be read together with the reasons for judgment dated 1 November 2019, deal with the issue of costs. We adopt the abbreviations used in the 1 November 2019 reasons. 2 The positions of the parties may be summarised as follows: (a) The Meneses parties contend that Directed OE should pay their costs of the appeal, on the basis that costs should follow the outcome of the appeal. The Meneses parties also seek their costs of the application below. (b) Directed OE contends that, in keeping with an approach approved in Commissioner of Taxation v AusNet Transmission Group Pty Ltd (No 2) [2015] FCAFC 124 (AusNet) at [8], the appropriate order is: The costs of the application before the primary judge, together with the costs of the application for leave to appeal and the appeal, are to be costs of the re-determination referred to in paragraph 7 of the orders made 1 November 2019. 3 The principles regarding the award of costs are well established. Ordinarily, a successful party is entitled to an award of costs in its favour in the absence of special circumstances justifying some other order: see Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11] per Black CJ and French J; Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] per McHugh J, at [134] per Kirby J; Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [6]-[7] per Emmett, Kenny and Middleton JJ; AusNet at [10] per Kenny, Edmonds and Greenwood JJ. Where an appellate court orders that there be a new trial, an approach often adopted is to order that the costs of the first trial follow the outcome of the new trial: see Electrolytic Zinc Co of Australasia Ltd v Cieslak [1969] Tas SR 50 (Electrolytic); Wardle v Agricultural and Rural Finance Pty Ltd (No 2) [2012] NSWCA 388 at [31] and the cases there cited. 4 We will deal first with the costs of the application for leave to appeal and the appeal. In relation to these costs, the usual order would be that Directed OE pay the costs of the Meneses parties, given that the appeal has been allowed. Directed OE resists such an order on three bases. It is submitted, first, that the issue raised by the application for leave to appeal (and the appeal) concerned a claim by Mr Meneses that he is entitled to invoke the privileges to resist an order for production of documents; by failing on ground 5, the Meneses parties were deprived of the practical result they had sought, namely that a one-person company be effectively immune from producing documents in its control. Secondly, Directed OE submits that the practical outcome of the Meneses parties' privilege claims is not yet known. Thirdly, it is submitted that the error identified by the Full Court in relation to questions 1 and 2 below arose from the Meneses parties' failure to distinguish whether the documents were in the control of OE Solutions or Mr Meneses, or both. 5 We do not consider any of these matters to provide a proper basis to depart from the usual order as to costs. In our view, the Meneses parties were substantially successful in the appeal and the three matters referred to by Directed OE do not detract from that proposition. Accordingly, it is appropriate to order that Directed OE pay the Meneses parties' costs of the application for leave to appeal and the appeal. 6 We note for completeness that we do not consider it appropriate in the circumstances of this case to order that the costs of the application for leave to appeal and the appeal follow the outcome of the application upon remittal. Although that approach was adopted in AusNet at [8], that was in circumstances where the parties consented to such an order. In contrast, in Electrolytic, the costs of the appeal were dealt with in the usual way (with costs following the event) even though an order was made for the costs of the first trial to be at the discretion of the judge at the second trial. In the present case, for the reasons we have indicated above, we consider it appropriate for the costs of the appeal to follow the outcome of the appeal. 7 We now turn to consider the costs of the application before the primary judge. In circumstances where the outcome of the application is not yet known (as the application is to be re-determined) it is premature to form a view as to which party should pay the costs of that application. For this reason, we do not accept the submission of the Meneses parties that there should be a costs order in their favour. 8 In the circumstances, we consider it appropriate to reserve the costs of the application before the primary judge, for determination by the judge who hears and determines the application upon remittal or, in the alternative, the trial judge. The reason for including the alternative that the issue be determined by the trial judge is to cover the possibility that the application may not proceed to be re-determined. It is preferable to leave the matter in the discretion of the judge who hears and determines the application upon remittal (or the trial judge), rather than to order that the relevant costs follow the outcome of the re-determination (as sought by Directed OE), as there may be considerations that make it appropriate to make a different order as to costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moshinsky, Wheelahan and Abraham.