Australian Securities and Investments Commission v Kyriackou

The Australian Securities and Investments Commission (ASIC) filed an application for costs in the Federal Court of Australia following the discontinuance of proceedings against several companies within the Australvic Group and Mr Kyriackou, a former director of some of these companies. ASIC had initially sought various forms of relief under several sections of the Corporations Act, the ASIC Act, and the Federal Court Act, including the winding up of the companies, removal of the liquidator, and injunctions to restrain the disposal of assets and destruction of books. The proceeding was discontinued by consent, but there was a dispute as to the costs of the proceeding. The central issue before the Court was whether the usual rule that the prevailing party in a litigation is entitled to their costs should apply in circumstances where the proceeding had been discontinued by consent and there had been no trial of the proceeding on the merits.

The Court considered whether ASIC's case was bound to fail from the outset, whether ASIC had surrendered their case, and whether the Court should depart from the usual rule. The Court found that ASIC's case was not necessarily bound to fail from the outset, as ASIC had a legitimate concern that the Australvic Group and Mr Kyriackou were operating an unregistered managed investment scheme in contravention of the Corporations Act. Furthermore, the Court did not find that ASIC had surrendered their case, as ASIC had proceeded with the application for costs to protect their interests and to address the significant public interest in the matter. The Court held that it had the discretion to award costs in favour of the defendant where there had been no trial of the proceeding on the merits, and that in this case, it was appropriate to depart from the usual rule. The Court held that the defendants should pay ASIC's costs of and incidental to the motion to discontinue the proceeding, but that otherwise there should be no other orders as to the costs of the proceeding.

In summary, the Court found that the defendants should pay ASIC's costs of and incidental to the motion to discontinue the proceeding, but that otherwise there should be no other orders as to the costs of the proceeding. The Court exercised its discretion to award costs in favour of the defendants where there had been no trial of the proceeding on the merits, and departed from the usual rule that the prevailing party in a litigation is entitled to their costs.