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[2010] FCA 1316
Federal Court of Australia
2010-11-30
McKerracher J
Original judgment source is linked above.
INTRODUCTION 1 In Sartori v BM2008 Pty Ltd (No 2) [2010] FCA 1160 (Sartori No 2) I gave leave, amongst other things, for various parties to be added as applicants, leave for the joinder of various respondents, leave to amend the application and leave to amend the statement of claim. I ordered that costs of the motion be in the cause (or in the proceeding). I also ordered that any party wishing to make costs submissions to the contrary should file and serve submissions within 14 days, failing which the costs order would stand. 2 My reasoning in relation to costs was expressed in [62] of Sartori No 2 as follows: Although Mr Sartori and now the proposed applicants have ultimately succeeded on this motion, that success has come about only after a period of extensive and repeated delay and disregard for directions made by the Court by Mr Sartori and formerly by Mr Small. The final form of the relief as argued orally differed on a significant point of principle from that initially pursued and did so on a basis raised, correctly, by the respondents (for example, the addition of rather than substitution of the assignee applicants). In all those circumstances, I consider the most appropriate costs order is that costs be in the cause. I will allow any party who disagrees with such an order to make submissions within 14 days, failing which the order will stand. 3 The applicants and the second to fifth respondents (not the first respondent) have each pressed for costs orders in their respective favour.
RESPONDENTS' ARGUMENT 4 For those respondents it is noted that the manner in which the applicants presented oral argument on 20 August 2010 differed in significant respects from the written submissions and previous form of the motion because of matters 'raised correctly, by the respondents [for example the addition of rather than substitution for the assignee applicants]'. 5 The submissions also note my observation that the prosecution of the motion was extensively and repeatedly delayed by the applicants and accompanied by disregard for the directions of the Court. 6 The respondents contend that costs being in the cause would, if the applicants are successful at trial, allow them to recover costs of the motion including wasted costs consequence upon the alterations to the motion and prevent the respondents from recovering those wasted costs unless they are ultimately successful at trial and notwithstanding that they raised, correctly, substantive matters which required amendment to the motion. 7 The second to fifth respondents make the following submissions: The respondents can be seen to have been successful in their opposition to the motion at least to the extent that they correctly raised points about the addition of, rather than substitution of, the assignee applicants and they should be entitled to recover their costs to that extent irrespective of the outcome of any trial. The application for 'substitution of applicants' was mooted at the directions hearing on 11 December 2009. A notice of motion was filed on 20 January 2010 seeking to substitute applicants. The first mention was on 8 February 2010 but was adjourned to 11 March 2010 (the applicants were ordered to pay the respondent's costs). A further adjournment was granted on 11 March 2010 (again the applicants were ordered to pay the respondent's costs). On 14 April 2010 the matter was adjourned for hearing listed on 12 May 2010. There were no orders as to costs of that attendance. The date for the hearing was rescheduled administratively to 14 May 2010. On 12 May 2010, the second to fifth respondents had filed written submissions opposing the order sought by the 20 January 2010 notice of motion. The fundamental point raised was that the causes of action then pursued could not be assigned and therefore substitution was inappropriate. On 14 May 2010 the matter was further adjourned to 28 May 2010 (again the applicants were ordered to pay the respondent's costs (in any event)). The applicants filed an amended notice of motion on 21 May 2010, seeking to add parties (rather than substitute applicants). The applicants also filed written submissions on 21 May 2010. On 28 May 2010 the matter was again adjourned to allow the applicants to file a minute of amended statement of claim and supporting affidavits. The motion was adjourned to 12 August 2010 (the costs were reserved). The date for the hearing was rescheduled administratively to 20 August 2010. The applicants provided a minute of amended application and statement of claim on 29 June 2010. The applicants did not file any further written submissions. It is accepted that the applicants were ultimately successful at the hearing on 20 August 2010, but that was only after they argued orally on a significantly different point of principle from that initially pursued (or indeed was apparent from the minute of amended statement of claim). The oral reformulation of the basis of applicants' motion (that the proposed applicants could pursue causes of action held in their own right) differed from the written submissions filed by the applicants on 21 May 2010 and effectively rendered superfluous the second to fifth respondent's written submissions. 8 On that basis, the second to fifth respondents seek an alternative order for costs, namely: 1. the costs of the appearance be costs in the cause; 2. the applicants do pay the costs of the second to fifth respondents in relation to any costs thrown away as a consequence of the amendment to the application and the statement of claim (in respect of which leave was granted by paragraph 3 of the orders set out in Sartori No 2; 3. the applicants do pay the second to fifth respondents' costs in relation to the attendances on 14 April 2010 and 28 May 2010 in any event; 4. the applicants do pay the second to fifth respondents' costs in relation to the preparation of the written submissions dated 12 May 2010 in any event; 5. the costs ordered in paragraph 3 and paragraph 4 be taxed and paid forthwith.
THE APPLICANTS' ARGUMENT 9 The applicants note that the judgment did recognise that there were reasons for some of the delay of the prosecution of the notice of motion including proceedings in Victoria and actions taken by the liquidator. 10 The applicants make the point that the respondents have already clearly identified dates on which the applicants have already been ordered to pay costs associated with any adjournment caused by the conduct of the applicants. The orders sought by the respondents, they argue, would be a form of 'double dipping'. 11 The applicants' submissions go into detail as to the reasons for various adjournments. I do not propose to exhaustively record and consider those matters. The applicants argue that costs thrown away by reason of the amendment to the statement of claim are costs that do not need any order as they are covered by the Rules. They do not indicate which Rule covers this proposition. 12 The applicants argue that the only question arising is the costs of the day on which they succeeded in all aspects and they contend they should have the costs of the motion to be taxed and paid forthwith.
CONSIDERATION 13 I can say at once there is no basis for either party to have costs taxed and paid forthwith as each contends. 14 My reasoning on the question of costs was relatively simple and is set out in [62] of Sartori No 2. Shortly put, the conduct of the applicants in bringing this matter to a head has been significantly deficient. As against that, the second to fifth respondents unsuccessfully opposed the applicants' motion on the day. In my view a reasonable balance of the costs disposition was that costs be in the cause. 15 The applicants caused the delay prior to the hearing of the motion and the respondents lost the motion on the day when there was no particularly meritorious basis for opposing the motion as ultimately formulated. It is clear that the parties have incurred an obligation to meet legal expenses. If the applicants succeed, they should have their costs. If the respondents succeed, they should have their costs. 16 In dealing with all of this, I take into account, in any event, that in relation to some of the previously adjourned applications, a costs order in favour of the respondents was expressly made in any event. There will be no change to the costs order made in Sartori No 2. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.
Sartori
BM2008 Pty Ltd