Babscay Pty Ltd v Pitcher Partners (No 3)

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FEDERAL COURT OF AUSTRALIA

Babscay Pty Ltd v Pitcher Partners (No 3) [2021] FCA 156

File number: VID 1188 of 2017
Judgment of: ANASTASSIOU J
Date of judgment: 3 March 2021
Catchwords:

PRACTICE AND PROCEDURE – costs application in relation to discontinuance of representative group proceeding – whether Applicant liable to pay costs of Respondent and Cross-Respondents consequent upon discontinuance – default position in respect of costs under r 26.12(7) of the Federal Court Rules 2011 (Cth) – whether reason to displace default position under r 26.12(7) of the Rules

PRACTICE AND PROCEDURE – indemnity costs – whether unusual or special feature to justify indemnity costs – whether conduct of litigation consistent with overarching purpose of Federal Court of Australia Act 1976 (Cth) – no basis for award of indemnity costs – quantification to be referred to a Registrar of the Court for mediation

Legislation:

Federal Court of Australia Act 1976 (Cth), ss 33V, 37M, 37N, 43

Federal Court Rules 2011 (Cth), rr 15.11, 26.12(7)

Cases cited:

Aristotite v Gladstone Park Shipping Centre Pty Ltd [1984] FCA 175; 2 FCR 334

Armstrong v Australian Community Pharmacy Authority [2012] FCA 577

Australian Competition & Consumer Commission v The Maritime Union of Australia [2001] FCA 1549; 114 FCR 472

Babscay Pty Ltd v Pitcher Partners [2020] FCA 1610

Babscay Pty Ltd v Pitcher Partners (a firm) [2019] FCA 480

Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; 46 FCR 225

El-Debel v Secretary, Department of Immigration and Border Protection [2014] FCA 474; 141 ALD 611

Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116

Ngarluma Aboriginal Corporation RNTBC v State of Western Australia [2013] FCA 946

Ragata Developments Pty Ltd v Westpac Banking Corporation [1993] FCA 115; 217 ALR 175

Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 41
Date of hearing: 28-29 October 2020
Counsel for the Applicant: Mr W. A D Edwards and Mr D. J Fahey
Solicitor for the Applicant: Maurice Blackburn
Counsel for the Respondent: Mr. M Osborne QC
Solicitor for the Respondent: SBA Law
Counsel for the First, Third, Fourth, Sixth, Seventh and Eighth Cross-Respondents: Ms C. Van Proctor
Solicitor for the First, Third, Fourth, Sixth, Seventh and Eighth Cross-Respondents: MinterEllison
Solicitor for the Second and Fifth Cross-Respondents: Gordon Legal
Counsel for the Ninth Cross-Respondent: Mr A. Roe
Solicitor for the Ninth Cross-Respondent: Corrs Chambers Westgarth
Solicitor for the Intervener: Mr N. Evans of Aptum Legal

ORDERS

VID 1188 of 2017
BETWEEN:

BABSCAY PTY LTD

Applicant

AND:

PITCHER PARTNERS

Respondent

AND BETWEEN:

PITCHER PARTNERS

Cross-Claimant

AND:

SLATER & GORDON LTD (and others named in the Schedule)

First Cross-Respondent

VANNIN CAPITAL OPERATIONS LTD

Intervener

ORDER MADE BY:

ANASTASSIOU J

DATE OF ORDER:

3 MARCH 2021

THE COURT NOTES THAT:

A.The Applicant’s claim against the Respondent was discontinued pursuant to Orders dated 5 November 2020.

B.The Respondent’s cross-claims against the Cross-Respondents are discontinued.

C.The First, Third,…

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Details
Case
[2021] FCA 156
Decision Date

CaseChat Overview and Summary

Babscay Pty Ltd and Vannin Capital Operations Ltd (collectively, the Applicant) brought a representative group proceeding against Pitcher Partners and a number of their clients (the Cross-Respondents). The Applicant discontinued the proceeding and brought an application for an order as to costs. The Respondent, Pitcher Partners, and the Cross-Respondents applied for an order that the Applicant should pay the Respondent’s costs, the costs of the Cross-Respondents, and the costs of a cross-claim brought by the Cross-Respondents. The Applicant opposed the application, contending that they should not be liable for the costs of the Cross-Respondents and that they should not be liable for the Respondent’s costs on an indemnity basis.

The court considered the default position under r 26.12(7) of the Federal Court Rules 2011 (Cth) that a party who discontinues a proceeding is liable to pay the costs of each other party to the proceeding. The court held that there was no dispute that the Applicant should pay the Respondent’s costs, and that the Respondent should pay the Cross-Respondents’ costs. The court rejected the Applicant’s contention that they should not be liable for the costs of the Cross-Respondents, finding that the phrase ‘each other party to the proceeding’ in r 26.12(7) included parties joined by the cross-claim. The court held that there was no basis for awarding indemnity costs, as the conduct of the litigation was not inconsistent with the overarching purpose of the Federal Court of Australia Act 1976 (Cth). The quantification of the costs was to be referred to a Registrar of the Court for mediation.

The court ordered that the Applicant and Vannin pay the Respondent’s costs of and incidental to the proceeding. The Respondent was to pay the Cross-Respondents’ costs of and incidental to the cross-claims, including the costs of their respective cross-claims against the Applicant and the costs of the Respondent’s application, on a party-party basis. The Applicant and Vannin were to pay to the Respondent a sum equivalent to the sum paid by the Respondent to the Cross-Respondents. The parties were to attend a mediation before a Registrar of the Court to resolve any dispute concerning the quantification of the costs.

Orders

Orders of the court

1. The Applicant and Vannin Capital Operations Ltd pay the Respondent’s costs of and incidental to this proceeding.

2. The Respondent pay the Cross-Respondents’ costs of and incidental to the cross-claims, including the costs of their respective cross-claims against the Applicant and the costs of the Respondent’s application dated 22 July 2020 (as amended on 28 August 2020), on a party-party basis, to be taxed if not agreed.

3. The Applicant and Vannin pay to the Respondent a sum equivalent to the sum paid by the Respondent to the Cross-Respondents pursuant to paragraph 2 of these orders.

4. The parties attend a mediation before a Registrar of the Court at the first available date after 3 March 2021 for the purpose of resolving, if possible, any dispute concerning the quantification of the costs referred to in paragraphs 1 and 2 of these orders.

5. The Registrar inform the Court of the outcome of the mediation as soon as practical thereafter.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

I also note that the Second and Fifth Cross-Respondents did not appear at the Costs Application, mindful of minimising costs in circumstances where the orders they sought were the same as those sought by the First, Third, Fourth, Sixth, Seventh and Eighth Cross-Respondents. The Second and Fifth Cross-Respondents acknowledged that they were nevertheless bound by any orders made by the Court.CONSIDERATION The power of the Court to award costs is conferred by s 43 of the Act. That power includes a discretion to award costs on an indemnity basis or otherwise: s 43(3)(g) of the Act. The prima facie position in respect of a discontinued proceeding is reflected in r 26.12(7) of the Rules, which provides:Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.[emphasis added] In El-Debel v Secretary, Department of Immigration and Border Protection [2014] FCA 474; 141 ALD 611 at [17], Foster J explained that r 26.12(7) was introduced to reflect: …a more general policy of the law to the effect that a party should always be permitted to discontinue its proceedings but, in the modern setting, should usually have to pay the costs of the other parties occasioned by the bringing of the proceedings and their subsequent abandonment. This is not to gainsay the broad discretion in respect of costs given to the Court by s 43 of the Federal Court of Australia Act 1976 (Cth). Nonetheless, the Court should give effect to this general policy when making costs orders unless there is some good reason for declining to do so. Accordingly, there was no dispute that Babscay and Vannin should pay Pitcher Partners’ costs under r 26.12(7) of the Rules, consequent upon the discontinuance of the proceeding. There also was no dispute that Pitcher Partners should pay the Cross-Respondents’ costs, including the costs of any cross-claim by a Cross-Respondent. The Cross-Respondents made no claim for costs to be assessed on an indemnity basis as against Pitcher Partners. The contest between the parties in relation to costs was thus narrowed to the following questions:(1)whether Babscay and Vannin should be liable for Pitcher Partners’ liability to pay the Cross-Respondents’ costs; and (2)whether Babscay and Vannin should pay Pitcher Partners’ costs on an indemnity or party-party basis. I consider those questions below. Liability for costs of Cross-Respondents Babscay and Vannin opposed the application that they be liable for the costs of the Cross-Respondents on essentially two grounds. First, they submitted that on the proper construction of r 26.12(7) of the Rules, the phrase ‘each other party to the proceeding’ means each party to the claim and does not include any parties joined by the cross-claim. They contended that weight should be given to the prima facie position that the cost consequences apply only in relation to the parties to the discontinued proceeding when considering whether to impose liability on Babscay and Vannin in relation to the costs of the Cross-Respondents.