Abdi v Equitable Financial Solutions Pty Ltd & Anor

[2020] FCCA 2521

FEDERAL CIRCUIT COURT OF AUSTRALIA

ABDI v EQUITABLE FINANCIAL SOLUTIONS PTY LTD [ACN 151 172 039] & ANOR

[2020] FCCA 2521

Catchwords:

CONSUMER LAW – Costs – Where first respondent intends to conduct business of raising funds in relation to a Shariah-compliant investments program – where first respondent accepts appointment by applicant as its Wakeel agent to invest its funds and to repay principle and profit in consideration for agency fee – where first respondent accepts investment by applicant – where investments are not fully repaid – where condition of first respondent’s investment license was that it would participate in dispute resolution scheme conducted by Credit and Investments Ombudsman – where Ombudsman makes determination that first respondent repay investment – where first respondent does not repay monies – where proceedings ensued – proceeding allocated to Consumer Protection List – where first respondent placed in administration – where second respondent overseas and does not provide instructions when matter listed for directions – costs ordered –  where proceeding set down for hearing – jurisdiction put in issue – applicant discontinues proceeding – second respondent seeks costs on indemnity or party/party basis – applicable principles – discretionary considerations – relevance of conduct – no order as to costs – Registrar directed to supply copy of reasons for judgment to Australian Securities & Investments Commission.

Legislation:

Corporations Act 2001 (Cth), s 131A

Federal Circuit Court of Australia Act 1999 (Cth), ss 3, 21, 42, 43, 79

Federal Circuit Court Rules 2001 (Cth), rr 13.01, 21.02

Cases cited:

Ahmed v Minister for Immigration and Multicultural Affairs [2000] FCA 1436

Alrjoob v Minister for Home Affairs[2018] FCA 1144

AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675

BEL17 v Minister for Immigration and Border Protection [2020] FCA 1045

Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876

Hobson v BWL Pty Ltd (No 3) [2012] FMCA 439

Ingui v Ostara [2003] FMCA 132

JT Stratford & Son Pty Ltd v Lindley (No 2) (1969) 1 WLR 1547

Kaur v Minister For Immigration, Citizenship, Migrant Services and Multicultural Affairs (Costs), [2020] FCA 1247

MZZKH v Minister for Immigration and Border Protection [2013] FCCA 2287

O’Neill v Mann [2000] FCA 1680

Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106

Zaghoul v Jewellery & Gift Buying Service Pty Ltd [2020] FCA 1045

Applicant:

DULMAR ABDI

First Respondent:

EQUITABLE FINANCIAL SOLUTIONS PTY LTD "EFSOL"

Second Respondent:

USMAN SIDDIQUI

File Number:

MLG 2905 of 2019

Judgment of:

Judge A Kelly

Hearing date:

16 March 2020

Date of Last Submission:

24 March 2020

Delivered at:

Melbourne

Delivered on:

14 September 2020

REPRESENTATION

Counsel for the Applicant:

Mr F.C. Brimfield

Solicitors for the Applicant:

Mykyta Lawyers

Counsel for the Respondents:

Ms M. Harris

Solicitors for the Respondents:

Cordoba Legal

ORDERS

(1)     The application to set aside the order for costs made on 12 November 2019 against the second respondent, Usman Siddiqui, be dismissed.

(2)     The second respondent’s applications for the costs of this proceeding on an indemnity, alternatively a party/party, basis be dismissed.

(3)     Direct that the Registrar of the Court furnish a copy of these reasons for judgment to the Australian Securities & Investment Commission.

1. FEDERAL CIRCUIT COURT

OF AUSTRALIA

AT Melbourne

MLG 2905 of 2019

Dulmar Abdi

Applicant

And

Equitable Financial Solutions Pty Ltd "efsol"

First Respondent

Usman Siddiqui

Second Respondent

REASONS FOR JUDGMENT

Introduction

1.      These reasons for judgment explain the order for costs which is made in this proceeding.  The circumstances of this proceeding arise from decisions made by the applicant, Ms Abdi, and Ms Amina Jahad, to invest the majority of their life savings in what was described as a Shariah-compliant investment program.  They made their respective investments with the first respondent (Equitable Financial Solutions), whose sole director is the second respondent, Mr Usman Siddiqui.

2.      When Equitable Financial Solutions did not redeem their investment, Ms Abdi and Ms Jahad sought to resolve the matter by means of external dispute resolution by the then Credit and Investments Ombudsman.  They obtained a determination that the balance of monies due to them be repaid.  Equitable Financial Solutions, which did not comply with that determination, is now in liquidation. 

3.      Ms Abdi and Ms Jahad then instituted a proceeding in this Court which has been discontinued for the substantive reason that Equitable Financial Solutions is insolvent and in circumstances where the liquidator has invited the investors to lodge claims for compensation with a financial regulator to whom he has directed them.  In all of those circumstances, the applicants correctly consider that the pursuit of the litigation is futile. 

4.      Mr Siddiqui seeks to recover his costs of and incidental to this proceeding on an indemnity, alternatively a party/party, basis, doing so in the circumstances described below including that he accepts the applicants have not been repaid the monies due to them in accordance with the Ombudsman’s determination but contends it to be a fact of life that some capital investments fail.  It is also the fact that the liquidator of Equitable Financial Solutions has formed the preliminary view that since 1 July 2016 the company had traded whilst insolvent and that its sole director, Mr Siddiqui, may be liable for certain criminal offences and liable for certain civil claims.

Background

5.      Ms Abdi, the applicant in this proceeding MLG 2905 of 2019, and Ms Jahad, the applicant in proceeding MLG 2906 of 2019, are members of the Somali Islamic community in Melbourne who have migrated to Australia.  Ms Abdi has eight children while Ms Jahad has six children.  There is no evidence that either of them has a spouse. 

6.      The applicants entered into investment agreements on 5 October 2016 and 16 September 2017 respectively.

7.      Ms Abdi’s investment agreement was embodied in a document entitled Investment Management Agreement and Origination Deed.  While it is unnecessary to examine its terms in particular detail, the recitals to the deed provided that Equitable Financial Solutions intended to conduct a securities backed program for the purposes of raising funds to invest as part of its Shariah-compliant investments program. 

8.      The deed recorded that the company could only successfully undertake its program by using funds pledged by the applicant and that the applicant had accepted an invitation from the company to appoint it as her Wakeel (agent) to invest her funds for a term of 6 months whereupon she would be repaid her principal and the profit generated.

9.      The investment term and details set out in the deed recorded that: Ms Abdi had agreed to invest, and not seek to withdraw, $60,000 for a term of 6 months; her monies would be invested in Shariah compliant investments with the dividend/profit (if any) to be paid to her at monthly intervals. The operative provisions of the deed confirmed that the subject matter of the “Wakala” was the investment of the applicant’s funds for a term of 6 months and that the company would be entitled to a fee of “up to 2.5% . . . as its management fee.”

10.    By cl 5.6 of the deed, the company made the representations and gave the warranties set out in sch 1 which included relevantly that it held and would maintain all consents and licenses necessary to enable it to carry on its business and that it was solvent and able to pay its debts as they became due.  It is now considered that the company was insolvent by 1 July 2016; that is, some months before Ms Abdi made her investment.

11.    Ms Abdi invested $90,000 with the company of which $74,144.60 remains outstanding.

12.    Ms Jahad’s investment agreement was embodied in a document entitled Easy Home Application made on 16 September 2017 (again, being some 14 months after the company was considered to be insolvent).

13.    By the terms of this agreement, Ms Jahad invested $80,000 with the company.  From the details recorded in the agreement, Ms Jahad lives in rented accommodation, has employment as a carer at a family day care centre and responsibility for 6 dependents under the age of 17 years.  Certain terms of the agreement may suggest that the purpose of the investment was to assist her in purchasing a property at the sum of $400,000.  A notable feature of the agreement is that she became obliged to pay fees and charges in excess of $9,000 in relation to her investment.

14.    Following Ms Jahad’s request for repayment of her investment, certain monies were repaid to her by a number of payments made in the period between July 2018 – February 2019.

15.    One of the consents which was said to be necessary to enable the company to carry on its business in Australia was that it would participate in an external dispute resolution scheme.  To that end, it entered into a scheme conducted by the then Credit and Investments Ombudsman (which has now amalgamated with the Australian Financial Complaints Authority (AFCA).  Each applicant sought AFCA’s assistance to resolve their attempts to recover their investments.

16.    On 29 October 2018, the company and Mr Siddiqui entered into an agreement with Ms Jahad, each promising to repay her $73,500 which sum was not repaid within the time in which they had agreed to do so.

17.    On 21 December 2018, AFCA made a determination that the company must repay Ms Jahad $73, 500.

18.    On 18 March 2019, AFCA made a determination that the company must repay Ms Abdi $74,144.60.

19.    The company did not repay either applicant the amounts as determined.

Procedural history

20.    On 4 September 2019, each of the applicant’s instituted a proceeding in this Court seeking to recover their investments.

21. As framed by their statements of claim, the relief sought by each applicant was for the recovery of the sums represented by the determinations as made by AFCA with alternative claims being made for the recovery of damages and compensation pursuant to ss 236-237 of the Australian Consumer Law. In addition, Ms Jahad made a claim for the sum which each of the respondent had agreed to pay her pursuant to the settlement agreement. Mr Siddiqui was said to be liable as an accessory.

22.    Following the institution of the proceeding, on 23 October 2019, a resolution was passed by Mr Siddiqui appointing administrators to the company.  This appointment operated to stay the proceeding as against Equitable Financial Solutions.  The fact of Mr Siddiqui having passed a resolution and the precise status of the company was not completely clear at the time the matter was the subject of its first directions hearing. Nonetheless, the Court was informed in general terms that the solvency of the company was, by then, in issue.  The date on which the company was placed in liquidation is also not known.

23.    On 12 November 2019, the proceedings came before the Court for case management and directions.  The applicants were represented by counsel.  The company, having been placed in administration did not appear; however, Mr Siddiqui’s solicitor, who practised in Sydney, attended by telephone explaining that his client was overseas and that he had little in the way of instructions.  An order was made that Mr Siddiqui pay the applicant in each proceeding costs fixed at $1,650 (Costs Orders). 

24.    The proceedings were set down for hearing on 28 January 2020.

25.    Shortly afterward, Mr Siddiqui’s lawyers communicated with the Court his desire to apply for summary dismissal of each proceeding.  As later appeared, the stated basis on which Mr Siddiqui would contend that the Court had no jurisdiction to entertain either claim was that each of the Investment Management Agreement and Easy Home Agreement related to a “financial service product” within the meaning of Pt 7 of the Corporations Act 2001 (Cth) which, by force of s 131A of that Act, was said to be excluded from the operation of the Australian Consumer Law. 

26.    Responding to those requests, the Court indicated that Mr Siddiqui should first communicate with the applicants and their counsel and seek to resolve any issues respecting the claims out of Court, including, if necessary, by the filing of amended statements of claim.

27.    On 18 November 2019, Mr Siddiqui’s lawyer wrote to the applicant’s lawyer identifying why it was said the claims could not be pursued in this Court and inviting the applicant’s to either discontinue their proceedings (and pay costs), or to file proposed amended statements of claim.  Notably, the letter dated 18 November 2019 advised as follows:

If your clients do not intend to do either of the above, then you should notify us of that position by midday on 20 November 2019, at the very latest.  Should your clients take that position, this will provide us with sufficient time to draft, file and serve an application to strike out the points of claim and/summary judgment on the matter under rule 13.10 of the Federal Circuit (sic) Rules. (Emphasis in original)

The brevity of the time allowed for a considered response is apparent.

28.    The applicant’s lawyer responded to that letter on the date it was sent and advised that she had not been afforded sufficient opportunity to consider or respond to the matters which had been raised.

29.    On 20 November 2019, Mr Siddiqui’s lawyers filed two applications in a case seeking summary dismissal of each proceeding together with an affidavit made by his lawyer exhibiting the letter which he had written on 18 November 2019 and the email reply from the applicant’s solicitor.  By each application in a case, Mr Siddiqui also sought an order to set aside the Costs Orders made against him on 12 November 2019.

30.    The application in a case was listed for mention on 3 December 2019; however, on 12 November 2019 the Court made administrative directions which afforded the applicants time to file any proposed amended statements of claim and for each party to file and serve an outline of submissions addressing the issues raised by the application.

31.    The applicants filed and served proposed amended points of claim. 

32.    On 3 December 2019, the parties agreed in orders vacating the hearings listed for 28 January 2020 (doing so as they sought to resolve the matter).  Instead, the applications in a case were listed for hearing on that date. 

33.    Each of the parties filed submissions in relation to the application for summary dismissal of the proceedings which I have considered.  Notably, Mr Siddiqui submitted that as the proceeding should never have been brought, the costs order made against him was “inappropriate”.  The submission ignored the circumstances in which the Costs Orders were made.  Irrespective of the question whether the proceeding had been brought before a Court which was said to have no jurisdiction to decide it (or whether the claims, if defective, could be cured by amendment), a Court always has jurisdiction to determine whether it has jurisdiction and once seized of the matter is obliged to address the issues raised before it.  The submission failed to recognise the importance in terms of case management that parties be properly prepared, and their lawyers properly instructed, to assist the Court in identifying the real issues in dispute and the manner in which the proceedings might be most efficiently brought forward for determination.  Instead, having passed the resolution on 23 October 2019 to appoint administrators to the company, Mr Siddiqui apparently resisted attempts to effect personal service of the proceedings upon him and travelled overseas without providing his solicitor with instructions in the matter.

34.    The orders for costs were not made for any reason connected with the question whether the Court had jurisdiction.  Rather, the Costs Orders were made in circumstances where Mr Siddiqui, being overseas, had not provided any adequate instructions to enable the matter to be dealt with when it was listed for its first directions hearing in November 2019, the proceedings having been commenced on 4 September 2019.

35.    On 23 January 2020, the applicants discontinued their proceedings.  Responding to this step, Mr Siddiqui’s lawyers enquired whether leave to discontinue the proceedings had been sought or granted.

36.    On 7 February 2020, Mr Siddiqui filed an application seeking an order for payment of his costs in the proceeding together with an affidavit made by his lawyer on that date in which he deposed that his client did not and would not have consented to discontinuance of the proceedings.  This affidavit assumed that consent or leave to discontinue was required. 

37.    The affidavit exhibited a large volume of material in support of the application for costs.  Included within the exhibits was a stream of correspondence in which the parties debated the relative merits of the contentions respecting the applicants’ claims for recovery of their investments and the Court’s jurisdiction to grant relief.

38.    In answer to that affidavit, the applicant’s solicitor filed an affidavit on 12 March 2020 in which she deposed to the efforts made by Mr Siddiqui to avoid personal service of process in the proceeding in his insistence that he be served personally, notwithstanding that he had appointed a lawyer to act for him in the proceeding. 

39.    The applicant’s lawyer exhibited the administrators’ report as to creditors dated 19 November 2019, the executive summary which described the business model as being “never sustainable”, “undercapitalised from an early stage”, “loss-making for several years and reported a deficiency in net assets.”  The administrators reported to creditors that their investigations had revealed several potential director related offences including those respecting potential claims for trading whilst insolvent and that they had “determined a number of potential unfair preferences, commercial transactions and unreasonable director related transactions.”  Mr Siddiqui appears to be the only director. 

40.    The administrators, who recommended that creditors should resolve to place the company in liquidation, advised that they may be able to participate in a government backed compensation scheme and recommended they immediately lodge a complaint with AFCA.

41.    From the various communications which were exhibited to the lawyer’s affidavits (and which were not subject to objection), it appeared that, as at 2 December 2019, Mr Siddiqui, whilst expressing willingness to enter into meaningful settlement negotiations, was insistent that “any settlement will need to involved (sic) a complete and irrevocable deed of release against my Client.”  Further, on 3 December 2019, it appears that the parties’ counsel discussed resolution of the matter on the basis that both proceedings be dismissed with no order as to costs and setting aside previous costs orders.  Common sense might have prevailed.

42.    On 16 March 2020, the parties’ counsel made submissions respecting Mr Siddiqui’s application for indemnity costs in the proceeding.  The applicants submitted that they had twice offered to discontinue their proceedings with no order as to costs and that those offers were rejected by Mr Siddiqui who, on 2 December, 2019, had demanded that he was provided a complete and irrevocable release of all claims by the applicants.  It may be observed that irrespective of the jurisdictional objection to the proceeding, it was less than clear why Mr Siddiqui believed he was entitled to any release of liability.

Consideration

43.    The Court has jurisdiction to award costs in all proceedings before it, including those which are dismissed for want of jurisdiction: Federal Circuit Court of Australia Act 1999 (Cth), s 79(2). By that Act, except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Court: s 79(3).

44.    It is undesirable that applicants should be compelled to litigate against their will: Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876, 879. This principle is to be considered in the context of the objects of the Act which include that the Court should operate as informally as possible, use streamlined procedures, encourage dispute resolution and seek to avoid protracted litigation: Act, ss 3(2), 42, 43.

45. The Rules of Court regulate the discontinuance of a proceeding. Relevantly, Pt 13 of the Federal Circuit Court Rules 2001, address the subject, Ending a proceeding early. A party may discontinue an application by filing a notice of discontinuance which may be filed at least 14 days before the day fixed for a final hearing: rr 13.01(1)-(2)(a).

46.    In the present case, the applicants filed and served their notices of discontinuance on 23 January 2020; however, it is to be recalled that although the proceeding had initially been set down for final hearing on 28 January 2020, the parties agreed that the hearings be vacated and no further final hearing date was allocated at that stage: affidavit, Mr El Kheir made on 7 February 2020, [16].   It follows that the applicants were entitled, as of right, to discontinue their proceedings.

47.    Where a party discontinues a proceeding, another party may apply for costs: r. 13.02(1).  Rule 13 otherwise leaves unfettered the power of the Court to order costs in a proceeding that has been discontinued.  In particular, Rule 13 does not provide that costs “follow the event” where a proceeding has been discontinued and in that respect the Rules of Court are to be contrasted with the rules which govern discontinuance in the Federal Court of Australia: MZZKH v Minister for Immigration and Border Protection [2013] FCCA 2287, [5].

48.    In addressing the issue of costs, it will rarely, if ever, be appropriate in cases where there has been no trial on the merits for the Court to determine the merits for itself: Hobson v BWL Pty Ltd (No 3) [2012] FMCA 439, [41] citing JT Stratford & Son Pty Ltd v Lindley (No 2) (1969) 1 WLR 1547, 1552-4. In JT Stratford & Son, the Court of Appeal affirmed the decisions of both a Master and Judge of the Court in granting leave to discontinue with no order as to costs including that it was impracticable to assess the theoretical prospects of success had the action gone to trial.  Those principles should also apply in relation to discontinuance where complex issues such as jurisdiction arise.

49.    For like reasons, I do not determine or assume that the application for summary judgment would have been successful or doomed to fail.  Nor do I assume that the applicants’ claims were incapable of being cured.  What I do accept is the uncontradicted evidence that their claims had already been determined upon a dispute resolution procedure to which the company agreed as a condition of its licence to carry on its Shariah-compliant investment business and that those claims remain unpaid.

50.    I also agree that in the determination of an application to costs upon discontinuance it is generally more appropriate for the Court to determine whether the applicant seeking costs has acted reasonably in all of the circumstances.  In Hobson v BWL Pty Ltd (No 3) [2012] FMCA 439, [42], the Court observed that in a particular case it may be appropriate for the Court to consider, in the exercise of its discretion, the conduct of a respondent prior to the commencement of the proceeding and whether such conduct may be seen to have precipitated the litigation. In support of that proposition, reliance was placed on the statement in Hobson v BWL Pty Ltd (No 3) at [43] that the “conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs”, citing O’Neill v Mann [2000] FCA 1680, [13] (Finn J). It follows that it remains for the party applying for costs to satisfy the Court that it is reasonable for an order to be made in their favour: Ingui v Ostara [2003] FMCA 132, [31]-[32].

51.    The principles stated in Ingui v Ostara are to be considered in the broader context that, statute apart, no party to a proceeding has any, or any automatic, entitlement to their costs in a proceeding.  To the contrary, the making of an order for costs depends upon a statute enabling the order to be made and the exercise of judicial discretion that such an order is just and appropriate in the circumstances of the particular case.

52.    While it has been held that, unless the Court otherwise orders, the discontinuing party is liable to pay the costs occasioned by the discontinued claim of the persons against whom that claim was made and which were incurred before service of the notice of discontinuance, this principle derives from the operation of the Federal Court Rules which, as noted, differ from the Rules that regulate matters of practice and procedure in this Court: cf O’Neill, [2000] FCA 1680, [12]-[13]; Ahmed v Minister for Immigration and Multicultural Affairs [2000] FCA 1436. I agree in the analysis of Finn J in O’Neill that where the claim has not been so determined, “the conduct of the parties in the matter and the reasons for discontinuance can bear heavily on the exercise as to costs.”  His Honour identified a series of authorities in which:

[i]f it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.  This approach has been adopted in a large number of cases.

(Emphasis added)

Finn J endorsed the principle that it was not the Court’s function in such cases to make a prediction as to the outcome of the hypothetical case.

53.    More recent authority confirms that where the further prosecution of a proceeding has become futile, the court should consider whether either party had acted unreasonably by continuing a proceeding to the point where futility had become apparent but that “the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings”: Kaur v Minister For Immigration, Citizenship, Migrant Services and Multicultural Affairs (Costs), [2020] FCA 1247, [4]; Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 625; Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106, [4]-[5] .

54.    In the present case, I consider that the applicants did act reasonably in seeking to vindicate their claims to recover their ‘investments’.  Even if it had been made out, I do not accept the contention that the proceedings had been issued in a Court which had no jurisdiction to hear them (and upon which there has been no determination), would necessarily impel a conclusion in all cases that the applicants had acted unreasonably in the institution or prosecution of their proceedings.  On the principles stated above, it would be erroneous to embark upon a deliberation of whether the jurisdictional objection was valid.  Further, there was nothing in the applicants’ conduct with the proceeding which persuades me that their conduct was unreasonable. By contrast, Mr Siddiqui’s conduct has been somewhat high-handed and inflexible.

55.    I am not prepared to regard the discontinuance as an acknowledgment by the applicants that their claims were without merit or likely to fail.  I am also satisfied that the discontinuance occurred in circumstances where the objective reasons for the discontinuance were properly explained by the company being placed in liquidation and the direction of AFCA that the applicants should pursue claims for compensation with a regulator and the resultant futility of this proceeding.  However, adopting a broad brush approach to the issue, I consider that the possible prejudice to Mr Siddiqui of his being called upon to defend himself from claims of accessory liability that are futile will be ameliorated by allowing him an amount for costs incurred on a party/party basis prior to the service of the notice of discontinuance. 

56.    Part 21 of the Rules, which concerns the issue Costs provides, in Div 21.02, that an application to costs may be made at any stage in a proceeding and that in making an order for costs, the Court may set the amount of those costs, set the method by which they are to be calculated, refer the issue for taxation or set a time for their payment: r 21.02(1)-(2). Where the Court determines that the power to order costs is engaged and that it should exercise its discretion to do so, it is the invariable practice of the Court to fix costs: Alrjoob v Minister for Home Affairs [2018] FCA 1144 [20] (Collier J). There is no requirement, in either the Act or the Rules, that as a condition to the exercise of its discretion to award costs there should first be production of an itemised bill: AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675, [44] (Burley J).

57.    In fixing a lump sum for costs, the Court is to approach the task as one of estimation and assessment and not of arithmetic calculation or precision and is of a more broad brush approach than that which is to be taken upon taxation.  Accepting those principles to be settled, the approach must be logical, fair and reasonable: Zaghoul v Jewellery & Gift Buying Service Pty Ltd [2020] FCA 1045, [172] (Banks-Smith J); see also BEL17 v Minister for Immigration and Border Protection [2020] FCA 1045, [26].

58.    Each of the parties was afforded an opportunity to provide an itemised list demonstrating how the costs being sought by Mr Siddiqui ought be calculated.  Mr Siddiqui’s lawyers furnished a table which itemised the basis upon which he sought to recover costs in the proceedings of $9,911.  The applicants’ submissions, whilst opposing any Costs Orders, suggested that the costs should be no more than $3,500 but that such costs should be set-off against the Costs Orders made in November 2019.  Upon the principles identified above, and having regard to the relative merits of the parties’ conduct both before and during the proceeding, I conclude that there should be no order as to costs.

Conclusion

59.    In my view the claim for indemnity costs was entirely devoid of merit.  Having examined the facts and circumstances of the claims and the proceedings, I was not satisfied that the conduct of the applicants or of Mr Siddiqui militated in favour of a conclusion as to support a favourable exercise of discretion to the costs. Moreover, I conclude that the interests of justice do not support a conclusion that Mr Siddiqui should be allowed his costs in this proceeding. 

60.    I have also determined that these reasons for judgment should be referred to the Australian Securities & Investment Commission.  While it may be acknowledged that the claims in the proceedings do not involve very substantial sums, of far greater significance is that they represented nearly the whole of the life savings of two refugee Somali women, each of whom has a large number of dependents and who had turned to Mr Siddiqui who apparently ran a Shariah-compliant investment fund but which was in fact insolvent at the time he accepted their money.  While this Court has not embarked upon the determination of their claims, on one view, their cases may be emblematic of a serious cultural abuse of trust of two women whose vulnerability may have been obvious.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge A Kelly

Associate: 

Date: 14 September 2020.