Australian Securities and Investments Commission v Diploma Group Limited (No 3)

The Australian Securities and Investments Commission (ASIC) filed proceedings against Diploma Group Limited (No 3) and others, alleging breaches of the Corporations Act. The fifteenth defendant, who was among those sued, sought to discontinue the proceedings and argued that ASIC should bear its own costs. The Federal Court considered the circumstances under which the discontinuing party might be exempt from paying costs.

The court examined whether ASIC’s conduct was reasonable and if there were sufficient grounds to order that each party bear its own costs. ASIC argued that it acted reasonably and that the proceedings were based on a premise that was either incorrect or not proven. However, the court found that ASIC’s assumption that the fifteenth defendant was part of the Diploma Group was incorrect or unproven, and ASIC had not taken steps to verify this before initiating proceedings. The court held that ASIC's failure to confer with the fifteenth defendant prior to the litigation did not warrant a departure from the usual rule that the discontinuing party bears the costs.

The court determined that ASIC was not entitled to be exempt from paying the costs of the discontinued proceedings against the fifteenth defendant. The reasoning focused on ASIC’s incorrect premise and lack of reasonable steps to verify facts before initiating the litigation.

ORDERS:
1. The plaintiff pay the costs of the fifteenth defendant, to be assessed if not agreed.