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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- Case
- [2021] FCA 156
- Decision Date
CaseChat Overview and Summary
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
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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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.