Torc Solutions Pty Ltd v Unex Corporation doing business as Hytorc [2025] FCA 1648 | Case summary

This aspect of the application was not opposed by the non-parties. The Liquidator did not appear or seek to make submissions in relation to the lump sum costs order or the payment out of the funds in Court, presumably because the funds have vested in the Registrar and are not assets of the applicant company.
In May 2023, the respondents sought security for costs, apparently on the basis that the applicant was impecunious. On 6 June 2023, Justice Charlesworth made orders by consent that the applicant pay $115,000 as security for costs, default of which would result in the proceeding being stayed. On 30 June 2023, the applicant paid $115,000 into Court in compliance with that order.
On 21 December 2023, Registrar Colbran made orders that the applicant pay an additional $175,000 (payable in tranches) into Court as security for the respondents' costs.
Thus, a total sum of $290,000 has been paid into Court as security for the respondents' costs.
By the application, the respondents sought a lump sum costs order against the applicant in the amount of $335,000.
The respondents also sought an order that the amount of $290,000 paid into Court by way of security for costs should be released to the respondents in satisfaction of the lump sum costs order. The explanation for the difference between the lump sum costs order (in the sum of $335,000) and the amount paid into court (of $290,000) was to reflect an agreement reached between the parties under the deed of settlement.
In effect, under cl 2 of the deed of settlement, the parties agreed that, if the applicant's claim was dismissed such that it was ordered to pay the respondents' costs, then the applicant's costs liability was to be reduced by US$27,500, whether that costs liability is agreed or taxed. The AU$45,000 gap between the $335,000 sought and the $290,000 paid was filled by this pre-agreed sum of US$27,500, the exchange rate of which was calculated in accordance with the deed of settlement.
Mr Linke's evidence was that the respondents had incurred legal costs of approximately $1.6 million to date. The lump sum costs order of $335,000 was approximately 21% of the respondents' total legal costs and was the only costs order sought against the applicant. A taxation or other costs determination would require the respondents to incur further costs, which would not be recovered.
I am satisfied that in the exercise of the Court's discretion it is appropriate to make the lump-sum costs order sought by the respondents and an order that the funds in court be paid to the respondents' solicitors.

Federal Court of Australia|2025-12-19|Before: Neskovcin J

The application as against the applicant began and ended with the order for lump sum costs. It did not extend to an award for indemnity costs, which orders were sought against the non-parties only. In support of those orders, the respondents relied on three offers of compromise, each in the alternative.
First, the offer of 15 March 2024, by which the respondents were to pay US$300,000, forgive outstanding accounts of US$314,072.61 and the applicant was to retain any of the respondents' stock and remove its AU$290,000 in security for costs. The offer was open for two days.
Second, in the alternative, the offer of 5 July 2024, which was on materially the same terms as the first offer and was open for six days.
Third, in the further alternative, the offer of 11 September 2024, by which the respondents was to pay US$300,000 (exclusive of the US$27,500 owing to the applicant as a result of the settlement deed of 9 July 2024) and the applicant was to remove its $290,000 in security for costs. The third offer was open for 28 days. It was made subsequent to the 9 July 2024 resolution of the Exclusivity claim.
The offers, naturally, were as between the respondents and the applicant, and were not capable of acceptance by the non-parties in that capacity. This gap between the offers and the non-parties was said to be bridged by a statement in the offers that the respondents intended to seek non-party costs orders and, in the case of only the third offer, the "warning" letter of 11 September 2024, which was addressed to the non-parties and which made reference to the 11 September 2024 offer of compromise.
Mr Roberts submitted that r 25.14(2), set out above, applies as between an "applicant" and "respondent" and its scope should not be extended to non-parties, who were not capable of accepting an offer under the rule, which strictly speaking is made by and to a "party" to the litigation.
Having determined that I would not exercise the discretion to make a non-party costs order, it is unnecessary to deal with the respondents' application that such an order be made on an indemnity basis. The only order for costs sought against the applicant was a fixed, lump-sum costs order, which I will deal with next.

This aspect of the application was not opposed by the non-parties. The Liquidator did not appear or seek to make submissions in relation to the lump sum costs order or the payment out of the funds in Court, presumably because the funds have vested in the Registrar and are not assets of the applicant company.
In May 2023, the respondents sought security for costs, apparently on the basis that the applicant was impecunious. On 6 June 2023, Justice Charlesworth made orders by consent that the applicant pay $115,000 as security for costs, default of which would result in the proceeding being stayed. On 30 June 2023, the applicant paid $115,000 into Court in compliance with that order.
On 21 December 2023, Registrar Colbran made orders that the applicant pay an additional $175,000 (payable in tranches) into Court as security for the respondents' costs.
Thus, a total sum of $290,000 has been paid into Court as security for the respondents' costs.
By the application, the respondents sought a lump sum costs order against the applicant in the amount of $335,000.
The respondents also sought an order that the amount of $290,000 paid into Court by way of security for costs should be released to the respondents in satisfaction of the lump sum costs order. The explanation for the difference between the lump sum costs order (in the sum of $335,000) and the amount paid into court (of $290,000) was to reflect an agreement reached between the parties under the deed of settlement.
In effect, under cl 2 of the deed of settlement, the parties agreed that, if the applicant's claim was dismissed such that it was ordered to pay the respondents' costs, then the applicant's costs liability was to be reduced by US$27,500, whether that costs liability is agreed or taxed. The AU$45,000 gap between the $335,000 sought and the $290,000 paid was filled by this pre-agreed sum of US$27,500, the exchange rate of which was calculated in accordance with the deed of settlement.
Mr Linke's evidence was that the respondents had incurred legal costs of approximately $1.6 million to date. The lump sum costs order of $335,000 was approximately 21% of the respondents' total legal costs and was the only costs order sought against the applicant. A taxation or other costs determination would require the respondents to incur further costs, which would not be recovered.
I am satisfied that in the exercise of the Court's discretion it is appropriate to make the lump-sum costs order sought by the respondents and an order that the funds in court be paid to the respondents' solicitors.

For the foregoing reasons, in the exercise of the Court's discretion, there will be orders that the applicant pay a portion of the respondents' costs of the action fixed in the sum of AU$335,000 and that the sum of AU$290,000 held in the Litigants' Fund be paid to the respondents' solicitors in satisfaction of the lump sum costs order. The application should otherwise be dismissed.

I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Neskovcin.

Court of Australia Act 1976

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; [1993] FCA 801

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Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) (2012) 200 FCR 154; [2012] FCAFC 50

Fewin Pty Ltd v Burke (No 3) [2017] FCA 693

FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340

Hardingham v RP Data Pty Limited (Third Party Costs) [2023] FCA 480

Hooke v Bux Global Ltd (No 8) [2019] FCA 671

Innes v Aal Aviation Ltd (No 2) [2018] FCAFC 130

PMWorks Pty Ltd v Management Services Australia Pty Ltd (t/as Peak Performance PM) [2018] NSWCA 168

Re Modena Properties Pty Ltd v Modena Properties Pty Ltd (No 2) [2018] FCA 1461

Seven Network Ltd v News Ltd (2009) 182 FCR 160; [2009] FCAFC 166

Torc Solutions Pty Ltd v Unex Corporation doing business as Hytorc [2025] FCA 1124

Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685; [1997] FCA 760

Yates v Boland [2000] FCA 1895

This is not intended as more than an observation that the costs consequences usually fall on the parties to the litigation or that such an order is outside of the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense - see: Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39; [2005] 4 All ER 195 at [25]; KSMC Holdings at [44]; Skelin at [19]. It is, accordingly, not particularly helpful to state that a third party costs order is rare and exceptional. When there is a sufficient connection between the litigation and a third party, and the circumstances are such that the making of a costs order is fair in all the circumstances, the making of a third party costs order is normal. Certainly, it is not exceptional to order costs against a litigation funder who facilitates litigation for their own commercial gain. Indeed, this has become increasingly common.

Torc Solutions Pty Ltd v Unex Corporation doing business as Hytorc

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