Plate Glass Holdings Pty Limited as trustee for the R Gregg Family Trust v Fraser Gordon Investments Pty Limited

REASONS FOR JUDGMENT 1 This is a proceeding commenced by an Originating Application and a Statement of Claim filed on 4 May 2012. 2 The hearing commenced on 29 August 2012. The Defence of the First Respondent, Fraser Gordon Investments Pty Limited, was "withdrawn" during the course of the proceeding on 10 September 2012. Orders were then made for the disposition of the proceeding. Those orders relevantly included: an order that the First Respondent was to pay the costs of the Applicant, Plate Glass Holdings Pty Limited, either as agreed or assessed; and an order reserving liberty to apply to be released from undertakings in respect to documents that had been previously subpoenaed. Thereafter, liberty to apply was invoked. An Interlocutory Application was filed on 29 October 2012. 3 That Interlocutory Application was amended on 30 October 2012. Reasons for decision in respect to the Amended Interlocutory Application were published on 21 December 2012: Plate Glass Holdings Pty Limited v Fraser Gordon Investments Pty Limited & Ors [2012] FCA 1487. The orders to be made in respect to the costs of the application were reserved. 4 Written submissions in respect to the questions of costs were received by the Court in February 2013. It was common ground that the Applicant was to pay the costs of the First Respondent thrown away by reason of the amendment of the Interlocutory Application. Other than that order, the Applicant seeks an order that it be otherwise entitled to its costs; the First Respondent seeks an order that each party pay its own costs. 5 Other than the order in respect to costs thrown away by the amendment to the Interlocutory Application, it is concluded that the First Respondent should be ordered to pay 75% of the Applicant's costs. 6 The power to order costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). The discretionary power there conferred is absolute and unfettered - although it "must be exercised judicially and not arbitrarily or capriciously": Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213 at 219 per Fisher J. See also: Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496 at 505 per Davies J. 7 Costs normally "follow the event" such that an "award of costs to a successful party is principally by way of perceived restorative justice" and is "compensatory": Ruddock v Vadarlis (No 2) [2001] FCA 1865 at [12], 115 FCR 229 at 235 per Black CJ and French J. Costs may, however, be "apportioned according to success or failure on particular distinct or severable issues…": [2001] FCA 1865 at [15], 115 FCR 229 at 236. A successful party who "relies on different legal rules in pursuit of a single outcome, and who achieves that outcome … should not have his or her entitlement to costs qualified by reference to the rules under which his or her case was not successful": Peterson v Merck Sharpe & Dohme (Australia) Pty Ltd (No 5) [2010] FCA 605 at [44], 87 IPR 234 at 246 per Jessup J. 8 Any allocation of costs in a case of mixed results where neither party is wholly successful can never be done with mathematical precision: Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No 2) [2005] FCA 1400 at [7], 225 ALR 569 at 570 per Crennan J. Appl'd: Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (No 2) [2010] FCA 277 at [4] per Jacobson J. To "a considerable extent matters of impression and judgment" are involved: Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823 at [19] per Gilmour J. 9 The release from the "implied undertaking" which was ultimately sought in the Amended Interlocutory Application was to enable the use of identified documents that had been produced on subpoena - not for the purposes of the proceeding which had been resolved - but rather for the purposes of: tracing the assets and determining the liabilities of Suckinvoice Pty Limited; investigating and/or determining whether breaches of duty have been committed towards Suckinvoice Pty Limited; and reporting "breaches" to the "relevant authorities", including the New South Wales Legal Services Commissioner, the New South Wales Police and the Australian Securities and Investments Commission. The reasons for decision published in December 2012 largely acceded to the release sought only in respect to the first two of these purposes. 10 In concluding that the First Respondent should be ordered to pay 75% of the costs of the Applicant, other than those costs associated with the amendment of the Interlocutory Application, consideration has been given to a number of factors, including: the facts and submissions as set forth in the December 2012 judgment, together with the written submissions which were provided in February 2013; the fact that the Applicant did not achieve total success, but only partial success, in seeking a release from the "implied undertaking"; and the fact that the Applicant's unsuccessful claim to be released from the "implied undertaking" so that reliance could be placed upon subpoenaed documents for the purposes of reporting "breaches" to the "relevant authorities" was not an insignificant part of either the hearing itself or the orders sought. Although it may readily be accepted that the Applicant achieved some considerable measure of success in respect to securing a release from the "implied undertaking", its lack of success on a discrete issue is such that it should not be entitled to the entirety of its costs. Any reduction in its costs, however, should not be fixed or approached by reference to success on "two out of three" issues. The time spent on each issue was not the same and the primary objective pursued by the Applicant was its purpose in seeking a release from the "implied undertaking" so that it could use the "Deed of Release" and associated documents to determine potential causes of action. 11 In concluding that the Applicant should be entitled to 75% of its costs, it is accepted that there may well be a lack of "mathematical precision" in the percentage fixed. The percentage has nevertheless been fixed by reference to both the degree of success the Applicant achieved and the degree of success achieved by the First Respondent. Although the Applicant has been largely successful in obtaining a release from its "implied undertaking" in respect to specified documents and for two of the three purposes it sought to pursue, it was not successful in obtaining a release for the purposes of reporting "breaches" to "the relevant authorities". The analogy sought to be drawn by the Applicant between a party "who relies on different rules in pursuit of a single outcome", it is respectfully concluded, is not persuasive. On the facts of the present case, the Applicant sought a release from the "implied undertaking" for a variety of "outcomes" and not a "single outcome". The Applicant was not successful in achieving a release from the "implied undertaking" for each of the "outcomes" it sought to achieve. The percentage also takes into account the fact that the documents the subject of the order as made were more confined than those originally sought by the Applicant. 12 To order that each of the parties was to bear its own costs, being the order as sought by the First Respondent, it is respectfully concluded, would do less than justice to the Applicant and the success it achieved. A principal focus of the Applicant's submissions was its ability to use a "Deed of Release" which had been produced on subpoena and associated documents for the tracing of assets and the determination of liabilities. On this it was successful.