Oliver Hume South East Queensland Pty Ltd v Barclay

Federal Court of Australia|2021-11-18|Before: Kerry J, Paradise P, Collier J

The third respondent pay the applicant's costs thrown away by the adjournment of the hearing of 5 March 2019, such costs to be assessed on a party and party basis.
The applicant pay the costs of the respondents of and incidental to the Transfer Application filed on 20 March 2018, such costs to be assessed on a party and party basis.
Subject to paragraph 1 of these Orders, the applicant pay the costs of the respondents of and incidental to the Consolidation and Re-Opening Applications filed on 17 November 2018, and the Strike-Out Application filed on 26 August 2016 (as amended on 18 November 2016 and 21 March 2018), such costs to be assessed on a party and party basis.
The applicant pay the costs of the first and second respondents of and incidental to the proceedings, being the costs of Supreme Court proceeding 3016/16 and Federal Court proceeding QUD438/2018 from 22 March 2016 to 17 June 2020, including reserved costs, but excluding costs in respect of which specific orders have already been made, such costs to be assessed on a party and party basis.
Subject to paragraph 1 of these Orders, the applicant pay the costs of the third respondent of and incidental to the proceedings, being the costs of Supreme Court proceeding 3016/16 and Federal Court proceeding QUD438/2018, such costs to be assessed on a party and party basis.
The applicant pay the costs of the respondents of and incidental to the preparation of submissions in respect of costs, referable to paragraphs 3 and 5 of the Orders of this Court of 23 December 2020, such costs to be assessed on a party and party basis.
All costs the subject of these Orders are to be taxed forthwith if not otherwise agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Submissions and Proposed orders 6 In written submissions the applicant submitted that, subject to an additional order as to costs of submissions as to costs, the orders that should be made were as follows: a. The applicant pay on the party and party basis: i. the respondents' costs of the applicant's application filed on 17 November 2018; ii. the respondents' costs of the respondents' application filed on 26 August 2016 and amended on 18 November 2016 and 21 March 2018 in Supreme Court of Queensland proceeding 3016 of 2016; iii. the third respondent's costs of the proceeding (being the costs of Supreme Court of Queensland proceeding 3016 of 2016 and Federal Court of Australia proceeding QUD438 of 2018), save for the costs at (b)(ii) below; iv. the first and second respondents' costs of the proceeding up to 17 June 2020 insofar as the costs solely concern the Lot 191 and Lot 170 case, including reserved costs (save for the costs at (b)(ii) below) but excluding costs in respect of which specific orders have been made. b. The respondents pay on the party and party basis: i. the costs of the applicant's application filed on 20 March 2018 in Supreme Court of Queensland proceeding 3016 of 2016; and ii. the applicant's costs thrown away by the adjournment of the hearing on 5 March 2019. 7 In written submissions the respondents submitted that the following orders should be made: (a) the applicant pay the respondents' costs on an indemnity basis of: (i) the Consolidation and Re-Opening Applications (being the applicant's consolidation and re-opening application filed on 17 November 2018); (ii) the Strike Out Application (being the respondents' strike out application filed on 26 August 2016 as amended on 18 November 2016 and 21 March 2018); (iii) the Transfer Application (being the applicant's transfer application filed on 20 March 2018). (b) the applicant pay the third respondent's costs of the proceeding on the indemnity basis (being, the costs of Supreme Court Proceeding 3016/16 and Federal Court proceeding QUD438 of 2018); (c) the applicant pay the first and second respondents' costs of the proceeding (being, the costs of Supreme Court Proceeding 3016/16 and Federal Court proceeding QUD438 of 2018) from 22 March 2016 to 17 June 2020 (including reserved costs but excluding costs in respect of which specific orders have been made) on the party and party basis; (d) the applicant pay the respondents' costs of this costs application on the party and party basis; (e) all costs the subject of the above costs orders be taxed immediately, if not agreed.

Consideration 8 There are a number of issues in dispute between the parties. Those issues are: (1) Whether the respondents' costs of the consolidation and re-opening applications and the strike-out application should be paid by the applicant on an indemnity basis or a party and party basis. (2) Whether the costs of Louvre Holdings should be paid by the applicant on an indemnity basis or a party and party basis. (3) Where costs should lie in respect of the transfer application (being the applicant's application to transfer Supreme Court proceeding 3016/16 to this court). (4) Where costs should lie in respect of the first and second respondents' costs of this proceeding to 17 June 2020, including reserved costs but excluding costs in respect of which specific orders have been made, and whether they should be assessed on an indemnity or a party and party basis. (5) Where the costs of the respondent in respect of the preparation of its submissions concerning costs (referred to by the respondents as the "costs application") should lie. (6) Whether costs should be taxed forthwith if not agreed. 9 I will examine these issues in turn.

Costs of the Consolidation and Re-Opening Applications and of the Strike-Out Application 10 While the parties agree as a general proposition that the applicant should pay the costs of the respondents in respect of the consolidation and re-opening applications and the strike-out application, the respondents submit that those costs should be assessed on an indemnity basis, whereas the applicant submits that those costs should be assessed on a party and party basis. 11 The respondents' submissions, in summary, were as follows: (1) It was evident that the only reason the applicant brought the consolidation and re-opening applications was to defeat the strike-out application. Before Bond J, the applicant conceded that if the proceedings were not consolidated, the respondents' strike-out application should succeed because it would be an abuse of process to continue the Investa proceeding (QUD 231 of 2011) and this proceeding in parallel. In his Honour's reasons for judgment in the transfer application, Bond J noted the concession. (2) The respondents' success in the strike-out application arose following this Court's conclusion that the relevant parts of the applicant's pleading gave rise to cause of action estoppel, Anshun estoppel or were an abuse of process. An award of indemnity costs is appropriate in such circumstances. (3) The current proceeding was commenced in March 2016, against the background of the Investa proceeding (which in turn was commenced in 2011). The applicant has been represented by experienced solicitors and counsel at all stages of the Investa proceeding, but nonetheless has persisted in pursuing allegations in this proceeding. (4) The respondents have previously put the applicant on notice that indemnity costs would be sought in respect of the strike-out application. Prior notification by the successful party of an intention to seek indemnity costs if the unsuccessful party persists with an application was a relevant consideration in deciding whether to make such an order. (5) There was never a realistic prospect of the consolidation and re-opening applications succeeding (see interlocutory judgment at [38], [39] and [60]). 12 In summary, the applicant submitted that: (1) The reasons given by the respondents fell well short of justifying an indemnity costs order. (2) The consolidation and re-opening applications were arguable. (3) It cannot be stated that the rationale for the consolidation and re-opening applications was tactical. (4) It cannot be stated that an award of indemnity costs follows as a matter of course from a finding of Anshun estoppel, abuse of process or res judicata. (5) There is no basis for the respondents suggesting that the applicant should never have pursued its allegations in the proceeding. (6) The respondents have failed to demonstrate misconduct or delinquency on the part of the applicant. (7) The respondents are wrong in submitting that there was never a realistic prospect of the consolidation and re-opening application succeeding. (8) The applicant has lost valuable rights in relation to Lot 170, namely the ability to pursue the respondents in respect of profits flowing from Mr Barclay's breaches of fiduciary duty. The applicant had in that sense been punished for its inaction in not pursuing its claims earlier. To order indemnity costs against the applicant would exacerbate its punishment, and punishment is not the purpose of an indemnity costs award. (9) There remained a live prospect that Mr Barclay compounded his serious misconduct as an errant fiduciary by giving false evidence before the Court and failing to make proper disclosure in the Investa proceeding as to whether he and/or associated entities derived profits referable to Lot 170. 13 Section 43(1) of the Federal Court of Australia Act 1976 (Cth) provides that the Court or a Judge has jurisdiction to award costs in all proceedings before the Court, other than in respect of exceptions which are not relevant here. Further, s 43(2) provides that, except as provided by any other Act, the award of costs is at the discretion of the Court or Judge. Notwithstanding this broad discretion, it is not unfettered, and the discretion must be exercised judicially. Customarily in litigation costs tend to follow the event, assessed on a party and party basis (see, for example, Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25, Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11). 14 Recently in Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112 the Full Court revisited principles referable to payment of costs on an indemnity basis: 30. In Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225, Sheppard J said (at 233-234): 4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. ... Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in Ragata (supra). 5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. 31. A failure to comply with obligations to make discovery has been recognised as a class of case in which an order for indemnity costs may be appropriate (National Australia Bank Ltd v Petit‑Breuilh (No 2) [1999] VSC 395 at [15]; Masha Nominees Pty Ltd v Mobile Oil Australia Pty Ltd (No 2) [2006] VSC 56 at [17]-[21]). We also refer to the discussion by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[10] and the detailed discussion of the relevant principles in Dal Pont at 16.46 and following. The point which we wish to emphasise is that to justify a special costs order, there must be conduct deserving of criticism and resulting in greater expense to the innocent party. Reference was made to the overarching purpose in s 37M and the provisions of s 37N(1) and (4) of the Federal Court of Australia Act 1976 (Cth). As important as those provisions are, we are not disposed to think that they add a great deal in this context. The ongoing failure to make proper discovery is clear. 15 Relevantly, in Morad v El-Ashey (No 2) [2017] FCA 1612, Kenny J also observed: 6. Under s 43(2) of the FCA Act, the disposition of costs is at the discretion of the Court, although it is well-established that this discretion must be exercised judicially: see, for example, Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 (Ruddock v Vadarlis (No 2)) at [9]. The Court may order that costs awarded against a party are to be assessed on an indemnity basis: see s 43(3)(g). 7. In exercising the discretion to award costs, the Court must take account of any failure by a party to comply with its obligation to conduct the proceeding in a way that is consistent with the overarching purpose of the civil practice and procedure provisions, namely, to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see FCA Act, ss 37N(4) and 37M(1). 8. In the ordinary course costs will follow the event and, if a party to an application succeeds, then the Court will order the respondent to pay the costs of that application, assessed on a party and party basis, unless there are special circumstances justifying some other order: Ruddock v Vadarlis (No 2) at [11]-[16] (Black CJ and French J). Ms El-Ashey contends that such circumstances exist here and that they justify an order for costs on an indemnity basis. 9. The principles relevant to an award of indemnity costs are well-established. In broad terms costs will be payable on a party and party basis, unless the circumstances of the case justify a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 (Colgate-Palmolive) at 233 (Sheppard J). The question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis. 10. Plainly enough, the categories in which indemnity costs may be ordered are not closed. Reference to some of the circumstances in which costs on an indemnity basis have been ordered is illustrative, however, of the occasions that have been thought capable of attracting such an award of costs. It has been held, for example, that indemnity costs may be awarded where "the applicant, properly advised, should have known that he had no chance of success" (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397 (Fountain Selected Meats) at 401; where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); and where there is "evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties" (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)). 11. The purpose of indemnity costs was explained in Hamod v State of New South Wales [2002] FCAFC 97; 188 ALR 659 (Hamod) at [20] by Gray J (with whom Carr and Goldberg JJ agreed) as follows: Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs. (Emphasis in original). 16 Notwithstanding my finding that the applications for consolidation and re-opening should be refused, and my findings in favour of the respondents in respect of strike-out of paragraphs of the applicant's pleadings, I am not persuaded that the applicant, properly advised, should have known that it had no chance of success, or that its applications were wholly untenable, or that there was evidence of particular misconduct on the part of the applicant which caused loss of time to the Court and the respondents. In my view the costs of the respondents of and incidental to the consolidation and re-opening applications and the strike-out application should be paid by the applicant on a party and party basis. I so find for the following reasons. 17 First, I do not accept that paragraphs 38, 39 and 60 of the interlocutory judgment should be read to the effect that the applications for consolidation and re-opening never had a chance of succeeding. I concluded that those applications should not succeed, however only after due consideration of the merits of the applications. 18 Second, while the respondents submitted that the applicant only commenced the consolidation and re-opening applications in order to defeat the respondents' strike-out application, the material before the Court suggests that this is not correct. The present proceedings had originally been commenced by the applicant in the Supreme Court of Queensland by filing of an originating application, and orders made in that Court for those proceedings to be transferred to this Court. The applicant's originating application in the Supreme Court had been met by a strike-out application of the respondents in respect of identified paragraphs in the pleading - the respondents were entitled to make that application. Given the history of litigation involving the same parties, in this Court, it is perhaps not surprising that subsequently the applicant sought consolidation and re-opening of earlier proceedings in this Court. 19 Consolidation and re-opening of proceedings is relatively unusual, however, it is not an unorthodox process. Indeed, before me the applications were fully argued, by experienced Counsel on both sides, by reference to accepted legal principles. Ultimately, the applicant was not successful, however, as I have already observed, that does not mean that its applications were an abuse of process, or lacking proper legal foundation. 20 In this respect I note, for example, that notwithstanding his Honour's awareness of earlier related Federal Court proceedings, Bond J in the Supreme Court of Queensland was not minded to treat the applicant's original application as an abuse of the process of that Court. Rather, in his decision of 24 May 2018, his Honour speculated that it was logical and appropriate to determine the transfer application first because if the Court were against the applicant on the transfer application then the strike-out application must succeed (as otherwise it would be an abuse of process). His Honour plainly contemplated that it was appropriate for the Federal Court to consider the merits of the respective positions of each party, and reserving costs for determination by this Court. 21 Third, while I consider it curious that Oliver Hume should have commenced proceedings in the Supreme Court when related proceedings had already been conducted over several years in this Court - and in this respect I have also expressed my views concerning the explanations of Mr Grant Dearlove, non-executive director & chairman of Oliver Hume, to which I will turn again shortly - I do not consider commencement of the proceedings in the Supreme Court to be a reason for impugning conduct in respect of the applicant, such that indemnity costs are payable. Provided claims are not by way of abusing the process of the Court, parties are entitled to commence litigation in any Court of competent jurisdiction they choose. 22 Fourth, I do not accept that the rationale of the applicant in prosecuting the consolidation and re-opening applications was "essentially tactical". The applicant, correctly in my view, pointed out that the applications were "tactical" only in the sense that they sought the relief claimed - an objective true of all applications. As matters stand the applicant has been unsuccessful, and costs should follow the event. Not necessarily, however, indemnity costs. 23 Fifth, the respondents submitted that they had put the applicant on notice that they would seek indemnity costs against the applicant in respect of the strike-out application, relying in particular on Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 249-250, where Kirby P said: The merit of the present motion is that it calls attention to the distinct possibility that, in some circumstances, a special costs order will be made, including for indemnity costs. If such an order is to be made, it would be preferable that it should follow due and timely warning by the successful party to the unsuccessful that indemnity costs will be sought: cf Insurers' Guarantee Fund NEM General Insurance Association Ltd (In Liq) v Baker (Court of Appeal, 10 February 1995, unreported). In short, if the legal representatives of parties to an appeal (particularly perhaps in commercial litigation such as the present) consider that the appeal, or points in it, are obviously hopeless and doomed to fail, they would be well advised to warn their opponents that continued prosecution of the appeal, or of the hopeless points, will result in an application to the Court for a special costs order. This is the practice which is uniformly followed by this Court in respect of applications for dismissal of an appeal for want of prosecution. It alerts the opposing party. It activates the provision of advice by that party's legal representatives. Properly proved to the Court, it affords the occasion for making the special order in full knowledge that the risk has been appreciated and the party has pressed on regardless. No such warning was given in the present case. 24 The observations of Kirby P are clearly qualified. It cannot be said in the case before me that the legal representatives of the respondents clearly thought that the applicant's position concerning the strike-out application was (as Kirby P said) "obviously hopeless and doomed to fail". In particular, this is because : The strike-out application followed the consolidation and re-opening applications of the applicant; No application was made in this Court for summary dismissal of the consolidation and re-opening applications on the basis that they had no reasonable prospect of success, or were otherwise doomed to fail; Rather, all applications were fully argued by both sides. 25 In any event, as Kirby P observed, indemnity costs orders will be made "in some circumstances". To reiterate Kenny J in Morad v El-Ashey (No 2), the question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis. 26 Sixth, as I have already found, ultimately a significant number of paragraphs in the applicant's pleadings were struck out on the basis of either Anshun estoppel or abuse of process. The respondents submitted that indemnity costs were appropriate in cases involving abuse of process, Anshun estoppel or res judicata, and relied on a number of authorities as supporting this proposition, being: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359; Coshott v Prentice (2014) 221 FCR 450; [2014] FCAFC 88; CG Maloney Pty Ltd v Noon [2011] NSWCA 397; Bosworth v Booth [2004] FCA 1623; Sacco trading as Globeline Automotive Service v FV Bilotto Nominees Pty Ltd [2011] FCA 1287 at [9]; Phillips v Herne [2015] QCA 236 at [10]; and MIM General Insurance Ltd v D'Anglers' Paradise P/L [2002] QSC 224 at [7]-[9]. 27 Examining the authorities on which the respondents rely in this context, I am not persuaded that the applicant's submission that indemnity costs are "properly awarded" in circumstances involving abuse of process, Anshun estoppel or res judicata is necessarily correct. 28 In Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359, Powell J relevantly observed at 362-363: Costs are of course a matter which lies in the discretion of the court. However, that discretion, being a judicial, rather than an unfettered one, must be exercised in accordance with established principle. The usual principle to be applied in inter partes litigation is that costs follow the event, those costs being taxed on a party and party basis. The circumstances in which one is justified in departing from that established principle are, as it seems to me, limited, and it seems to me that, as a general rule, an order that costs be taxed on an indemnity basis is justified only where the action taken, or the action threatened, by the defendant constituted, or would have constituted, an abuse of the process of the court, or where the actions of the defendant, in the conduct of any defence to the proceedings, have involved an abuse of the process of the court, in the sense that the court's time, and the litigants' money, has been wasted on totally frivolous and thoroughly unjustified defences. The question, then, is whether this can properly be categorised as such a case. Although it has been variously described, it has always seemed to me that the jurisprudential basis upon which the Court in the Equity Division has, over the years, granted injunctions to restrain the presentation, or prosecution, of a winding up petition, or summons, or the advertising of such a petition, or summons, in cases in which there is shown to be a bona fide dispute on reasonable grounds as to the debt claimed by the defendant, and the plaintiff is solvent, is the court's power to restrain an abuse of process. … Clearly enough the warning which I have earlier given - the last most recently as 4 May 1992 (Aust Amec Pty Ltd v Industry Uniserve Pty Ltd (Powell J, 4 May 1992, unreported)) - that resort to the threat of presentation of winding up summons in a case where the alleged debt is disputed on substantial grounds is a high risk strategy, the penalty for which, in my view, should be, not only an injunction, but an order for costs on an indemnity basis, has not yet become as widely noised abroad as in my view it might be. It is for this reason that I have, in this case, delivered a longer judgment than I might otherwise have done, for it is clear, I believe, that this is a case which should never have needed to be brought, and which, even when brought, should never have been fought, let alone as this one has been, to the bitter end. 29 Justice Powell's observations in Baillieu were, respectfully, entirely in accordance with principle, applied by his Honour to circumstances where the winding up application then before the Court was viewed by his Honour as an abuse of the process of the Court "in the sense that the court's time, and the litigants' money, has been wasted on totally frivolous and thoroughly unjustified defences". This is not the case in the present proceedings. 30 In Coshott v Prentice (2014) 221 FCR 450; [2014] FCAFC 88, in the context of bankruptcy proceedings, the Full Court observed: 21. Finally, the challenge to the order for indemnity costs against Ljiljana and James ignores the nature of the relief sought in those proceedings, namely declarations that Ljiljana and James hold the whole of the Property on trust. That being a case that was never seriously run at trial, we can see no error in the primary judge's conclusion that the proceedings were an abuse of process and no reason therefore to disturb the exercise of his discretion to award indemnity costs. (Emphasis added). 31 Similarly, I respectfully note that the observations of the Full Court in Coshott were entirely in accordance with orthodox principle, and of no particular application in the case presently before me. 32 In C G Maloney Pty Ltd v Noon [2011] NSWCA 397, Campbell JA (with whom Handley AJA and Tobias AJA agreed) relevantly observed: 120 In my view, the primary judge made no error of principle in taking the weakness of the case into account, as relevant in conjunction with the other factors. Whenever a case fails on the basis of an Anshun estoppel, that case is necessarily one in which there has already been litigation about issues closely related to those in the proceedings in question, and the matter at issue in the proceedings in question was so relevant to the subject matter of a previous action that it would have been unreasonable not to rely on it. That that is the nature of the litigation is a relevant and powerful matter to take into account in exercising a discretion concerning costs. It is strengthened if the case was in any event weak. It is important that in the present case the Anshun estoppel defence came to be decided following a hearing in which all issues were litigated fully. Thus the primary judge was able to reach a fully informed view about the strength or weakness of the case. If an Anshun defence came to be argued in the context of an application for summary judgment a judge would usually not be in the position to make a fully informed view about the strength of the case. 121 In the present case, when his Honour was of the view that the 2010 Proceedings failed by virtue of an Anshun defence, there was a "particularly strong case for an Anshun estoppel", CGM's claim in the 2010 Proceedings was "very weak", and there had been a forewarning that indemnity costs would be sought if the action was commenced, it was within the scope of the judge's discretion to order indemnity costs. 122 At [12] in the Costs Judgment the primary judge specifically made mention of CGM failing on two grounds besides Anshun estoppel. I would accept that when he referred to "the weakness of the case" his Honour was referring to the way that it had failed on three separate grounds. CGM has submitted in this appeal that the primary judge was mistaken in holding against CGM on each of those grounds, and I have earlier declined to give consideration to whether he was wrong in holding that the case failed because clause 15 conferred no rights on CGM, and because lack of mutuality provided a discretionary defence to the grant of an injunction. Even if the his Honour's conclusion about the effect of clause 15, and lack of mutuality were wrong, I would come to the view that the strength of the case for Anshun estoppel, coupled with the forewarning that indemnity costs would be sought, would suffice to justify an order for indemnity costs in the first instance proceedings. (Emphasis added). 33 I am not persuaded that these paragraphs in C G Maloney support the proposition that an order for indemnity costs follows as a matter of course from a finding of Anshun estoppel, abuse of process or res judicata. Indeed I note the citation by Campbell JA at [112] in that case of observations of Rein J at first instance, in particular where Rein J said: The nature of the Anshun defence (and it is applicable to res judicata as well) is that it is asserted by the defendant in such cases that the plaintiff, by bringing the fresh proceedings, is vexing the defendant for a second time and this is a category of abuse of process. I think that is a relevant and important consideration in determining whether an award of indemnity costs should be made against an unsuccessful plaintiff, but I should not be understood as saying that an order for indemnity costs should necessarily be made whenever the Anshun defence or res judicata defence is successful. (Emphasis added). 34 I respectfully adopt as correct this latter statement of Rein J, as cited by the Court of Appeal of New South Wales. 35 In Bosworth v Booth [2004] FCA 1623, Kiefel J relevantly said: 14. At the first directions hearing the applicant was put on notice, both by the respondent and by the Court, of the difficulties attendant in his case. He has elected to proceed despite these warnings. I will make an order that the applicant in the proceedings pay the respondent's costs on an indemnity basis, including reserved costs. 36 In my view this case is of no assistance to the respondents before me. 37 In Sacco trading as Globeline Automotive Service v FV Bilotto Nominess Pty Ltd [2011] FCA 1287, Dodds-Streeton J relevantly said: 9. Similarly, while the relevant rule indicates that a discontinuing party must ordinarily pay the other party's costs, costs in the usual case are awarded on a party-party basis. While an award of costs and the level thereof are discretionary matters, as is well-established, indemnity costs are typically reserved for circumstances such as baseless allegations of fraud, fraudulent conduct, abuse of process, misconduct in litigation, delay or persisting in a hopeless case (see, eg, Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 and Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189). While the current application had obvious formal deficiencies, and, subject to the question of today's costs, there is no reason why the applicant should not pay the respondent's costs of the discontinued proceeding, I am not satisfied that there are circumstances warranting a departure from the usual basis of costs. (Emphasis added). 38 I am not persuaded that the case of the applicant can be described in the manner identified by her Honour at [9]. 39 In Phillips v Herne [2015] QCA 236, McMurdo P observed: 10. Philippides J, in short ex tempore reasons, accurately identified Mr Phillips' contentions before observing that the Supreme Court had never made a finding that a de facto relationship existed. Further, her Honour noted, the deed of settlement did not state that it was entered into on the basis of a de facto relationship. Mr Phillips should not be permitted to pursue the matter. His submissions were so tenuous as to amount to an abuse of process and were frivolous. In those circumstances it was appropriate to award costs on the indemnity basis. (Emphasis added). 40 I am not persuaded that the case of the applicant can be described in the manner identified by her Honour at [10]. 41 In MIM General Insurance Ltd v D'Anglers' Paradise P/L [2002] QSC 224, Wilson J relevantly said: 7. It follows that the principle of res judicata is applicable. The respondent/third plaintiff's claim should be dismissed as an abuse of process. 8. Costs should follow the event. The applicant/defendant's counsel asked that those costs be assessed on the indemnity basis. Orders for the assessment of costs on that basis are properly made only in exceptional circumstances. In Fountain Selected Meats (Sales) v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397 at 400-401, Woodward J said:- "I believe that it is appropriate to consider awarding solicitor and client' or indemnity' costs, whenever it appears that 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 or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion." 9. I consider that the present case is one where the respondent/third plaintiff, properly advised, should have known that it had no chance of success. 42 I am not persuaded that these paragraphs support the proposition that an order for indemnity costs follows as of course from a finding of Anshun estoppel, abuse of process or res judicata. 43 Finally, I note the submission of the applicant concerning the prospect that "Mr Barclay compounded his breaches of his fiduciary duties to Oliver Hume by giving inadequate disclosure and false evidence in the Investa Proceeding". At this stage no such finding has been made, and in my view this allegation should not underpin any order of this Court at this stage.

Costs of Louvre Holdings 44 In the interlocutory judgment I dismissed the proceedings against the third respondent, Louvre Holdings. The applicant conceded that it should be ordered to pay, on a party and party basis, the costs of Louvre Holdings of the proceedings (except in respect of the costs of Oliver Hume thrown away by the adjournment of the hearing of 5 March 2019). The respondents submitted however that the applicant ought pay the costs of Louvre Holdings on an indemnity basis. 45 Paragraphs in the applicant's statement of claim concerning Louvre Holdings were struck out in their entirety on the basis of Anshun estoppel or an abuse of process. 46 As I observed earlier in this judgment, the assessment of costs on an indemnity basis does not follow as a matter of course from findings of Anshun estoppel or an abuse of process. In the circumstances I am not persuaded that the applicant's case against Louvre Holdings was baseless, or hopeless, or constituted misconduct on the part of the applicant. While clearly Louvre Holdings is entitled to its costs, in my view the appropriate order is for the costs of Louvre Holdings to be assessed on a standard party and party basis.

Costs of the Transfer Application 47 In relation to the costs of the transfer application, the respondents submitted that although the applicant was "successful" in obtaining an order transferring the Supreme Court proceeding to this Court, in the exceptional circumstances of this case, the applicant should be ordered to pay the respondents' costs of the transfer application. Further, the respondents' submitted that those costs should be ordered to be assessed on an indemnity basis, in summary, for the following reasons: In March 2016, the applicant commenced the Supreme Court proceeding. Two years later, in March 2018, the applicant applied to transfer the proceeding to this Court. The applicant never offered any explanation for its decision to commence the proceeding in the Supreme Court, rather than the Federal Court. Insofar as it relied on the affidavit of Mr Dearlove to explain the failure to claim an account of profits from Mr Barclay, the explanation in that affidavit has been comprehensively rejected by both this Court and the Supreme Court. The sole purpose of the transfer application was to enable this Court to hear and determine the applicant's consolidation and re-opening applications regarding the Investa proceeding and this current proceeding. Plainly, had the applicant commenced the proceeding in the Federal Court instead of the Supreme Court, there would have been no need for the transfer application. Had the applicant not made the allegations concerning Lot 170, allegations that were ultimately struck out by this Court on the basis of an estoppel or as an abuse of process, the transfer application would have been unnecessary. When making the orders on the transfer application, Bond J expressly considered the question of costs, refused the applicant's application that the respondents pay its costs of the transfer application notwithstanding that a transfer order was made, and expressly contemplated that, in the circumstances, the applicant may be ordered to pay the respondents' costs, and on an indemnity basis. 48 Further, the respondents submitted that Bond J, in the course of concluding that the respondents would suffer no significant prejudice if the Supreme Court proceeding were transferred to the Federal Court, said at p 7, ll 35-38: … it may be that a case can be advanced in the Federal Court that costs, including costs on an indemnity basis should be awarded in favour of the defendants [respondents]. I express no view on that … 49 The applicant submitted that the costs of the transfer application should follow the event; therefore, the respondents ought pay the applicant's costs of the application, to be assessed on the party and party basis. In support, the applicant submitted, in summary: The costs of the application would have been saved had the respondents not pursued arguments opposing the transfer order and instead focused upon the merits of the ultimate case management relief sought by the applicant in this Court. Although the respondents submitted that the explanation in the affidavit of Mr Dearlove had been comprehensively rejected by both this Court and the Supreme Court, this was an embellishment and was quite unfair. Justice Bond expressly reserved the costs of the transfer application because his Honour considered it more appropriate for costs to be determined once the position became clearer. The position that has emerged is that the applicant's "success" in the transfer application has been rendered otiose and the transfer unnecessary because the applicant was ultimately unsuccessful in the consolidation and re-opening applications. In these circumstances, the respondents should have their costs of that unnecessary application. 50 In my view the applicant should pay the costs of the respondents in respect of the transfer application, on a party and party basis. 51 Relevantly, Bond J observed at p 8, ll 9-30 of his reasons for judgment that: So far as the question of costs is concerned, paragraph 2 of the application reflected [Oliver Hume] seeking an order that the [respondents] pay their costs of and incidental to the application. In one sense, there is some merit to that, because the application was resolutely opposed by the [respondents] and lost. So in the normal course, the costs should follow the event. On the other hand, the [respondents] say that Oliver Hume has obtained an advantage, having conceded that there is, absent being given the benefit of this order, no way for it to resist the strikeout application, which was the other matter before me. I am not persuaded that the argument about having obtained an advantage is sufficient to make an order in favour of the defendants. On the other hand, it is compelling to think that there might well be a number of aspects of costs thrown away or wasted, viewed from the point of view of the [respondents], consequent upon the choices, poorly explained as they have been, that had been made by the [Oliver Hume]. I am not going to make an order trying to isolate out now what those costs might be. I think that position will become more clear once the Federal Court has, as I said in my reasons on the merits of this application, eventually worked out to what extent, if at all, Oliver Hume is permitted to prosecute claims in relation to lot 170 against Mr Barclay or the parties who are the second and third defendants in the Supreme Court proceedings, other than the claims already advanced in the Federal Court. 52 While the applicant was entitled to commence proceedings in the Supreme Court of Queensland, those proceedings were commenced in the Supreme Court against a background of earlier extensive litigation in this Court which had resulted in multiple determinations by this Court both at first instance and by the Full Court. The sole purpose of the transfer application was to enable this Court to hear and determine the applicant's consolidation and re-opening applications regarding the Investa proceeding and this current proceeding. While the applicant argued that the position that has emerged is that the applicant's "success" in the transfer application has been rendered otiose and the transfer unnecessary in light of the dismissal of the consolidation and re-opening applications, the ultimate otiosity or otherwise of the transfer application does not negate the fact that the respondents incurred costs in respect of the transfer application. 53 To the extent that Bond J expressly reserved the costs of the transfer application because his Honour considered it more appropriate for costs to be determined once the position became clearer - the position has now become clearer. The applicant was comprehensively unsuccessful. In my view, costs in respect of the transfer application should fall in accordance with the ultimate outcome of the interlocutory applications heard by this Court, to which the transfer application was related. 54 Further, and contrary to the submission of the applicant, I consider that the evidence of Mr Dearlove was unsatisfactory. It was for this reason that at [57] of the interlocutory judgment I observed that it should be accorded little weight, and there explained why. I also note that Bond J referred to the "poorly explained" position of the applicant - in this respect I am satisfied his Honour was similarly unpersuaded by evidence of Mr Dearlove. 55 I am not, however, persuaded that the applicant should be required to pay the respondents their costs on an indemnity basis. Rather, I consider that the basis on which these costs should be assessed should be the same as in respect of the interlocutory applications determined by this Court.

First and Second Respondents' Costs of the Proceedings to 17 June 2020 56 In respect of the costs of the first and second respondents of the proceedings, including reserved costs, to 17 June 2020, but excluding costs in respect of which orders have already been made, the respondents submitted that the applicant should be ordered to pay their costs on a party and party basis. The respondents submitted so for the following reasons: The practical effect of the interlocutory judgment and orders made on 17 June 2020 was that the proceeding started afresh. The parties were in the same position had the applicant never included the Lot 191 and Lot 170 allegations in its original statement of claim filed in March 2016. To that date the respondents had not filed a "substantive" defence in response to the statement of claim originally filed in the Supreme Court, or any of the amended statements of claim. Rather, the respondents had only filed a short defence on 20 April 2016 contending that the allegations about Lot 170 and Lot 191 were, inter alia, an abuse of process and ought be struck out. Disclosure had not occurred. Although applications were made in the Supreme Court to set aside notices of non-party disclosure, remove caveats and for disclosure, each of those issues were resolved, and specific costs orders were made. The exceptional circumstances of the case warranted the order sought by the respondents. 57 The respondents accepted that Louvre Holdings should pay the applicant's costs thrown away by the adjournment on 5 March 2019 on a party and party basis, as Louvre Holdings' de-registration occasioned the adjournment. 58 The applicant conceded that the appropriate order was that the applicant pay the costs of the proceeding on a party and party basis, but only insofar as they concerned Lot 191 and Lot 170. The applicant reasoned, in summary: The applicant's pleaded case as to Lot 71 and Lot 246 would proceed. The costs sought by the respondents were therefore sought in respect of an extant proceeding. There was no justification for ordering the applicant to pay the costs of bringing an extant proceeding. 59 In my view the respondents should pay the costs of the applicant thrown away by the adjournment of the hearing of 5 March 2019, in light of the de-registration of Louvre Holdings and the subsequent re-registration of Louvre Holdings. 60 Otherwise, I am satisfied that the applicant should pay the reserved costs of the first and second respondents, to 17 June 2020, other than those in respect of which orders have already been made. 61 While the applicant submitted that its case would continue in respect of Lots 71 and 246, the manner in which the case was argued to the point of the interlocutory judgment had the result that, in my view, it would be artificial to endeavour to separate costs incurred in respect of those Lots from the balance of the case. Practically, as the respondents submitted, the effect of the interlocutory judgment and orders made on 17 June 2021 was that the proceeding would start afresh, and the parties were in the same position they would have been in had the applicant never included the Lot 191 and Lot 170 allegations in its original statement of claim filed in March 2016. 62 Those reserved costs should be assessed on a party and party basis.

The Respondents' Costs of the "Costs Application" 63 In respect of the respondents' costs of preparing costs submissions, the respondents sought an order that the applicant pay their costs on a party and party basis. The respondents submitted that, if the costs orders sought by them were made by the Court, then there would be no reason why the applicant should not be ordered to pay the respondents' costs of this costs application also. 64 The applicant submitted that the costs associated with submissions as to costs should fall in accordance with the outcome as to the areas of disagreement. 65 In my view the respondents ought to have their costs of and incidental to the preparation of submissions in respect of costs. While there was no formal separate application in respect of costs filed by the respondents, the issue of costs was always an issue in the resolution of the interlocutory applications before the Court. Further, while I have not accepted the respondents' claims relating to assessment of costs on an indemnity basis, the respondents have ultimately been substantially successful in respect of the award of their costs. I agree with the respondents that it would be impractical to carve up and proportionally allocate the costs of relevant submissions by reference to the outcome of each individual issue in dispute between the parties. 66 Those costs should be paid by the applicant on a party and party basis.

Whether Costs to be Taxed forthwith, if not agreed 67 The respondents also sought an order from the Court that their costs be taxed forthwith, if not otherwise agreed by the parties. The respondents submitted that, in summary, in the present case: The first and second respondents are individuals who have been meeting the present proceedings for several years. The applicant amended its statement of claim on multiple occasions, thus prolonging the proceedings. Effectively, the proceedings were started afresh. The relevant issues were discrete. 68 The applicant opposed the immediate taxation of costs, in summary on the basis that this was not an appropriate case for orders that the costs be taxed immediately, if not agreed, and that there was insufficient justification for departing from the ordinary position as to the taxation of costs. The applicant also submitted that the authorities on which the respondents relied did not support immediate taxation of costs. 69 In considering the issue I note the following. 70 First, the general rule in respect of taxation of costs of interlocutory proceedings is set out in r 40.13 of the Federal Court Rules 2011 (Cth) which provides: 40.13 Taxation of costs awarded on an interlocutory application If an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished. Note: The Court may order that costs of an interlocutory application be taxed immediately. 71 It follows that while the general rule is that taxation of costs of interlocutory proceedings should not occur until the proceeding is finished, the Court can dispense with this requirement. This power to dispense was explained by Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV (No 5) [2018] FCA 19, where his Honour said: 5. … The Court's power to disengage Rule 40.13 springs, however, not from the note which is after all just a note, but from Rule 1.35 which allows the Court to make an order inconsistent with the FCR, or from Rule 1.34 which allows the Court to dispense with compliance with any of the Rules: 72 Second, I approach with some caution the earlier cases on which the respondents relied. I respectfully note and adopt the observation of Robertson J in Armit v Jeminex Limited (No 3) [2012] FCA 1330, where his Honour said: 8. In my view it would be an error to proceed by reference to the particular facts of other cases where the judicial discretion has been exercised in favour of an order that costs be taxed forthwith or immediately. Prior decisions in this area are useful only for statements of principle. 73 In this context I particularly have regard to the statement of Kiefel J in All Services Australia Pty Ltd v Telstra Corporation [2000] FCA 375, where her Honour relevantly said: 11. The making of an order under O 62 r 3 is justified where a Court can conclude that a party in whose favour costs orders have been made to date should not be required to wait until the finalisation of the proceedings to obtain payment of them. This may be so where, through no fault of that party, there has been substantial delay in the proceedings, having the effect of substantially postponing a final determination in the matter. This most commonly arises where an applicant has attempted a number of versions of the statement of claim with the result that additional directions hearings were necessary, which should not have been; interlocutory applications had to be brought; and, moreover, substantial delays were incurred in the attempt to plead a case: see Life Airbag Company of Australia Pty Ltd v Life Airbag Company (NZ) Ltd (Branson J 22 May 1999 unreported); Harris v Signa Insurance Australia Ltd (1995) ATPR 41-445; Batten v CTMS Ltd (1999) FCA 1576 and generally McKellar v Container Terminal Management Services Limited (1999) FCA 1639. In Batten, the effect of the delay was that the matter could not advance, since the respondent could not be required to plead to the statement of claim in its earlier forms. That there has been some delay in a proceeding does not itself suggest an order for payment, in the interim, of costs is appropriate. 74 More recently, Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV (No 5) [2018] FCA 19 reviewed the development of the law in this area, and explained: 7. The principles guiding the exercise of the discretion involved are well established. First, at a high level of generality, Rule 40.13 confers a discretion which 'should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice...' (Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 291; (1992) 36 FCR 297 at 312). 8. Secondly, in the exercise of the discretion, the Court should bear in mind the twin policy considerations underpinning Rule 40.13. These are that the Court should avoid exposing the parties to the perils of multiple taxation proceedings (Vasyli v AOL International Pty Ltd [1996] FCA 804) and should keep in mind that subsequent events in the litigation may generate costs orders going in the opposite direction and in respect of which set-offs may ultimately be available (Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at 145 [37]). A corollary of that latter consideration - particularly relevant to this case - is that prior costs orders may be available to set off the interlocutory costs order sought to be taxed. On the other hand, where no credit risks attend the parties to the litigation, this set-off consideration may be somewhat less significant (Courtney v Medtel Pty Limited (No 3) [2004] FCA 347 at [24]). 9. Thirdly, a range of factors may justify departure from the ordinary rule: where the final determination of the proceedings is far away: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5] ('It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time.'); where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in handling the proceeding with competence and diligence (Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 ('Life Airbag')); where, following a successful amendment application, a case is essentially a new proceeding (McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [19] and [40]); where a discrete issue has been resolved (Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425 at [7]); or where there is some reason to think that interlocutory disputation is having the effect of draining the ability of one side to conduct the litigation (Clipsal at [12]). 75 Turning now to the present case, I consider that this is an appropriate case for the Court to order that costs be taxed forthwith if not otherwise agreed. I take this view because: The first and second respondents are individuals. It is not in dispute that they have been dealing with the proceedings for several years, both in the Supreme Court and this Court, and at all times have been represented by solicitors and counsel. Although there is no evidence before me as to their resources, I accept that litigation can be a significant burden for individuals (see, for example, Clark v ING Life Limited [2007] FCA 1960 at [23], Dixon Projects Pty Ltd v Hallmark Homes Pty Ltd [2002] FCA 1206 at [18]-[19]). The respondents were successful, almost comprehensively, in opposing the interlocutory applications before the Court, and in respect of their costs being paid by the applicant. It is not in dispute that the applicant has amended its statement of claim on multiple occasions, requiring the respondents to engage with repeated amendments to the pleadings over several years. Any responsibility in respect of the requirement of the applicant to amend its statement of claim cannot be laid at the feet of the respondents. Although the proceedings have been on foot for a number of years, as matters presently stand, the litigation is on-going. Following the interlocutory judgment, the third respondent, Louvre Holdings, is no longer a party, and is entitled to receive its costs rather than await the outcome of the substantive proceedings. While subsequent events in this litigation may generate future costs orders, as matters presently stand, following the interlocutory judgment the proceeding has effectively started afresh. To that extent I consider that this is an appropriate point at which to draw a line under costs incurred.

Conclusion 76 In the circumstances, I am satisfied that the respondents are entitled to costs, on a party and party basis, in accordance with these reasons. Those costs should be taxed forthwith, if not otherwise agreed. I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Collier.

Courts (Cross-Vesting) Act 1987(Qld)

At a glance

Court

Decision date

Before

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Judgment (11 paragraphs)

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Legislation Cited (4)

Cases Cited (49)