COSTS
9 Queensland North submits that it has succeeded in having the Panel's orders set aside on the ground of want of procedural fairness. It submits that the Federal Court has jurisdiction to award costs in all proceedings before it. Subsection 43(3)(e) of the Federal Court of Australia Act 1976 (Cth) (the "Federal Court Act") provides that an award of costs may be made in favour of, or against, a party whether or not that party is successful in the proceedings. Queensland North refers to the reasons of Black CJ and French J (as his Honour then was) in Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11] where their Honours observed:
Within the general discretion of the courts to award costs it is accepted by decisions in both Australian and English jurisdictions that:
• Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.
• Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
• A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.
…
At [15] and [16] their Honours observed:
[15] Usually the circumstances in which a successful party is denied all or part of its costs have to do with its conduct of the proceedings. … Within the general discretion to award costs, costs may be refused where, for example, the applicant has made an exaggerated claim which has occupied a significant proportion of the proceedings and has succeeded only on a minor aspect of its original claim. Costs may be apportioned according to success or failure on particular distinct or severable issues: … . And a trial judge may award only a proportion of the successful party's costs if the conduct of that party at trial was such as to unreasonably prolong the proceedings: … .
[16] The costs of an appeal, like those at first instance, are in the discretion of the appellate court. If an appeal succeeds then in the ordinary course the Court will order the respondent to pay the costs of the appeal and of the action at first instance: … . An order for payment of the costs of the successful party may, as in the case of proceedings at first instance, be refused or the costs ordered reduced. The discretion conferred on the Court enables it to respond to the wide variety of circumstances that may arise in relation to the making of costs orders. …
10 Queensland North also refers to the decision of the Full Court in State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8] where the Court (Emmett, Kenny and Middleton JJ) said:
We do not consider that the outcome of the issue [on which the appellants had failed] … justifies departure from the ordinary position. The outcome of this issue did not relevantly qualify the success of either appellant on its appeal. Both appellants were ultimately wholly successful. The mere fact that a court does not accept all of a successful party's arguments does not make it appropriate to deal with costs on an issue by issue basis. It cannot be supposed that the issue in question was unreasonably raised at trial or on appeal. There is nothing else disclosed in the circumstances of the case that would support the proposition that the court should depart from the usual order as to costs … .
11 These decisions treat the success or failure of the relevant party as being the starting point in consideration of the question of costs. However they contemplate at least three distinct categories of situation in which a successful party might be deprived of costs, or even ordered to pay the costs of the other side. One such category is where the applicant has been only partially successful in that it has not obtained all of the relief sought. The second category is where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief. Of course, it is possible that a particular outcome will fall into both categories. A third category involves consideration of the successful party's conduct of the case.
12 Queensland North submits that it has been wholly successful, in the sense that the primary Judge's decision, and consequently the Panel's decision, are to be set aside for the Panel's failure to accord procedural fairness. It submits that it is unlikely that the additional grounds (upon which it was unsuccessful) added significantly to Court time and cost. Thus it submits that it should have its costs as a successful party. However it concedes that it abandoned a significant number of grounds of appeal after the parties had prepared, filed and exchanged submissions, and that it may be appropriate to reduce its costs on that basis. It submits that a discount of 10% would be appropriate. No order for costs is sought against the Panel or the President. Neither of those parties seeks any order for costs.
13 The Club submits that because Queensland North was successful only on, "one out of its nine original grounds of appeal", because various grounds were abandoned shortly prior to the hearing and because the appellants had contravened the law, (as found by the Panel and the primary Judge, and not challenged on appeal), Queensland North ought to pay 90% of its costs. At para 6 of its outline it submits:
The classic statement considering what constitutes 'the event' is that of McPherson JA in Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd & Ors [2001] QCA 191. In particular his Honour, in considering the historical authorities, adopts the statements of Lord Finlay LC in Reid Hewitt & Co v Joseph [1918] AC 717:
"… The words " follow the event" were to be read "distributively", by which his Lordship meant that, where there were two or more issues or questions in the action, each of them was, or gave rise to, an "event" for which the costs were to be determined separately. So, in Reid Hewitt & Co v Joseph, the order substituted on appeal ([1918] AC 717, 744) was that the defendant should have the costs of the issue on which they had succeeded." (emphasis added)
(Emphasis in original.)
Interchase is reported at [2003] 1 Qd R 26, the cited passage appearing at 60 - 61.
14 The Club further submits that the "issue by issue" approach was adopted by Finkelstein and Gordon JJ in Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [3] to [5]. Their Honours said at [5]:
So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. It is not suggested that such an approach requires a precise arithmetical apportionment of the costs as between the winner and loser of discrete issues. No doubt the assessment will often be rough and ready. But it will have the virtues of both fairness and reasonableness, which are often lacking in the application of the traditional rule.
15 At [2] and [3] of their reasons, their Honours said:
[2] The respondent first of all contends that, as regards the trial, the appellant failed on most of the grounds it had pleaded and argued and, accordingly, the appellant should pay a substantial proportion of the respondent's costs (it suggests 50 to 80 per cent) or alternatively that there should be no order as to costs.
[3] We think there is force in the argument that the appellant should not benefit from the usual rule that costs follow the event. For many years the traditional rule has been that the winner (once the winner is properly identified) is entitled to recover his costs of the trial. It sometimes happens that there is a departure from the traditional rule and the costs order takes account of the success of the parties on particular issues. But to date the award of costs on an issue by issue basis has only been accepted in limited cases and then only when the circumstances are exceptional.
16 Clearly, their Honours proceeded upon the basis that the "traditional" or "usual" rule was that "costs follow the event", and that the "event" was the overall outcome of the case. The thrust of their Honours' reasons was that costs should, in some cases, be awarded so as to reflect success or failure on particular issues, as opposed to "following the event". However, as McPherson JA demonstrates in Interchase at 60 - 61, the historical meaning of the proposition that costs should "follow the event" was that they should be dealt with by reference to success or failure on individual issues and not by reference to the overall outcome. In Interchase, McPherson JA observes that the amendment of the English provisions to place costs, "within the general discretion of the court or judge", was designed to avoid the complications of an award which followed the "event", such an award requiring that the costs reflect success or failure on individual issues. Notwithstanding this historical usage, it seems that in this Court, the expression, "costs follow the event", has been used to describe an award of costs based on the overall outcome, rather than success or failure on individual issues.
17 Section 43 of the Federal Court Act provides:
(1) The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs must not be awarded. This is subject to:
(a) subsection (1A); and
(b) section 570 of the Fair Work Act 2009; and
(c) section 18 of the Public Interest Disclosure Act 2013.
(1A) In a representative proceeding commenced under Part IVA or a proceeding of a representative character commenced under any other Act that authorises the commencement of a proceeding of that character, the Court or Judge may not award costs against a person on whose behalf the proceeding has been commenced (other than a party to the proceeding who is representing such a person) except as authorised by:
(a) in the case of a representative proceeding commenced under Part IVA - section 33Q or 33R; or
(b) in the case of a proceeding of a representative character commenced under another Act - any provision in that Act.
(2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.
(3) Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following:
(a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;
(b) make different awards of costs in relation to different parts of the proceeding;
(c) order the parties to bear costs in specified proportions;
(d) award a party costs in a specified sum;
(e) award costs in favour of or against a party whether or not the party is successful in the proceeding;
(f) order a party's lawyer to bear costs personally;
(g) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise;
(h) do any of the following in proceedings in relation to discovery:
(i) order the party requesting discovery to pay in advance for some or all of the estimated costs of discovery;
(ii) order the party requesting discovery to give security for the payment of the cost of discovery;
(iii) make an order specifying the maximum cost that may be recovered for giving discovery or taking inspection.
…
18 The section does not mention costs following the event. In Ruddock, Bowen Investments and Sportsbet, the Court proceeded on the basis that ordinarily, the successful party may reasonably expect to receive its costs, whether that outcome be described as costs following the "event" or otherwise. The question of costs is within the Court's discretion. As we have said, relevant factors include the extent of a party's success, the extent of its success or failure on individual issues and its conduct of the proceedings.
19 Once it is accepted that failure on some issues is not necessarily a basis for depriving Queensland North of its costs, one must ask why, in this case, such failure should result in the discretion being exercised so as to deprive it of the bulk of them. Whilst we accept that the presence of the additional grounds probably increased time spent in preparation, and in the hearing at first instance and on appeal, it is difficult to quantify such increase. In Sportsbet, the Court observed at [8] that "[i]t cannot be supposed that the issue in question was unreasonably raised at trial or on appeal". We understand the "issue in question" to be an issue on which the successful party failed. In this case no attempt has been made to demonstrate that any of the unsuccessful grounds was unreasonably advanced. However it may be inferred from the late abandonment of some grounds of appeal, that a decision which should have been taken at an early stage was unduly deferred. That may be cause for some reduction in the costs to be recovered by Queensland North. It concedes as much.
20 The Club also submits that Queensland North should be penalized in costs because of its apparent breach of s 606 of the Corporations Act. ASIC makes a similar submission, relying upon the decision of the Court of Appeal in Ritter v Godfrey (1919) 36 TLR 144. In that case, Atkin LJ (as his Lordship then was) observed at 145 that a successful defendant might be deprived of his or her costs if he or she had:
(1) brought about the litigation, or
(2) had done something connected with the institution or conduct of the suit calculated to cause unnecessary litigation or expense, or
(3) had done some wrongful act in the course of the transaction of which the plaintiff complained.
At 146, his Lordship observed that:
… (2) and (3) might possibly overlap; (2) would include improper conduct in or connected with the litigation calculated to defeat or delay justice. Such conduct would also be included in (3), which further extended to cases where the facts complained of, though they did not give the plaintiff a cause of action, disclosed, a wrong to the public … by which he (his Lordship) understood some criminal or quasi-criminal misconduct such as a fraud or crime or preparation of a fraud or crime. Such conduct must, however, be in the course of the transaction complained of.
(Emphasis in original.)
21 Queensland North's alleged misconduct falls short of being, "fraud or crime or preparation of a fraud or crime". Nonetheless we accept that in some circumstances, the Court might well take into account the fact that a successful party's conduct has led to proceedings which might otherwise not have been necessary. In this case, it was for the Panel or ASIC to take appropriate steps to deal with any breach of the Corporations Act. Unfortunately, the Panel chose a particular path, but did not proceed in accordance with law. The necessity for the proceedings at first instance and on appeal is attributable to the Panel's conduct, and not to that of Queensland North.
22 ASIC otherwise submits that costs should be awarded:
on an issue by issue basis;
having regard to the late abandonment of some grounds of appeal; and
having regard to ASIC's role in the proceedings.
23 We have already dealt with the first two matters. As to ASIC's role it submits that its intervention was purely to protect the public interest, and that it should not have to bear, "the entirety of its own costs and the costs of [Queensland North] in the appeal and proceeding below". We accept that ASIC acted in the public interest. However that proposition leads us to the conclusion that the public should bear the costs incurred as a result. That result can only be achieved by an order for costs against ASIC. ASIC also submits that if an order is made against the Club and ASIC as unsuccessful parties, they should not be jointly and severally liable for the whole amount. Rather, each should be liable to pay half of the total.
24 Given the absence of any basis for holding that pursuit of the unsuccessful grounds at first instance and on appeal was unreasonable, we see no reason to adjust the order for costs to reflect such pursuit. We accept that the late abandonment of some grounds probably added to the costs of the appellants and the respondents. Queensland North (and the other appellants) should not recover their costs associated with those issues on appeal. Further, the order should be adjusted to reflect the fact that the Club and ASIC incurred costs with respect to these matters. For the reasons which we have given we do not intend to adjust the order to reflect the alleged breach of s 606 or ASIC's role in the proceedings.
25 As to the apportionment of costs between the Club and ASIC, the latter's submission has no regard to the position of Queensland North. The proposed order would result in its having to recover its costs from two sources rather than one. It would also be exposed to the risk of not recovering costs awarded against the Club, without having recourse to ASIC. We do not know if there is any reason to doubt the Club's capacity to pay, but as far as we can see, the only possible reason for ASIC's concern must be a fear that if it meets all of the costs awarded to Queensland North, it will not be able to recover a half share of the relevant amount from the Club. Both resisted Queensland North's application at first instance and on appeal. They should be jointly and severally liable for its costs.