Fine China Capital Investment Limited v Qi (No 7)

[2025] FCA 185

FEDERAL COURT OF AUSTRALIA

Fine China Capital Investment Limited v Qi (No 7) [2025] FCA 185

File number(s):

VID 560 of 2023

Judgment of:

NESKOVCIN J

Date of judgment:

13 March 2025

Catchwords:

COSTS – application by the applicant to join a non-party as a respondent – where joinder an indulgence – applicant to pay costs of the joinder application

Legislation:

Federal Court Act 1976 (Cth) s 43

Cases cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Australian Securities and Investments Commission v Cassimatis (No 7) [2016] FCA 624

Bowen Energy Limited v 2KD Drilling Pty Ltd [2012] FCA 275

Fine China Capital Investment Limited v Qi (No 4) [2024] FCA 343

Fine China Capital Investment Limited, in the matter of Fine China Capital Investment Limited [2024] FCA 1523

Gumm v Commissioner of Taxation (No 2) [2024] FCA 72

Main-Road Property Group v Pelligra & Sons Pty Ltd [2009] VSC 174

Media Ocean Limited v Optus Mobile Pty Limited (No 6)[2009] FCA 1319

Division:

General Division

Registry:

Victoria

National Practice Area:

Commercial and Corporations

Sub-area:

Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs:

18

Date of last submission/s:

11 February 2025

Date of hearing:

Determined on the papers

Counsel for the Applicant:

L D Ferrari

Solicitor for the Applicant:

AJH Lawyers

Counsel for the Respondents:

N Ferrett KC and H Clift

Solicitor for the Respondents:

Carswell & Company Solicitors

ORDERS

VID 560 of 2023

BETWEEN:

FINE CHINA CAPITAL INVESTMENT LTD

Applicant

AND:

TAO QI

First Respondent

MAWF AUSTRALIA PTY LTD (ACN 661 987 864)

Second Respondent

ORDER MADE BY:	NESKOVCIN J
DATE OF ORDER:	13 MARCH 2025

THE COURT ORDERS THAT:

1.The applicant pay the first respondent’s costs of the application dated 2 December 2024 to join MAWF Australia Pty Ltd as the second respondent.

2.The applicant pay the first respondent’s costs thrown away by reason of the third further amended originating application and third further amended statement of claim.

3.The applicant pay the first respondent’s costs of the first respondent’s application for security for costs dated 30 October 2024.

4.The costs of the applicant’s request for discovery are reserved.

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

REASONS FOR JUDGMENT

NESKOVCIN J:

1. On 24 December 2024, I made orders granting leave to the applicant under r 9.05 of the Federal Court Rules 2011 (Cth) to join MAWF Australia Pty Ltd as the second respondent (joinder application) and that the respondents provide discovery of the categories of documents in Schedule A of the orders, and I published my reasons: see Fine China Capital Investment Limited, in the matter of Fine China Capital Investment Limited [2024] FCA 1523.

2. After I made the orders, the parties asked to be heard on the question of costs. The applicant did not dispute that the applicant should pay the first respondent’s costs of the security for costs application, referred to in Fine China at [61].

3. For the reasons outlined below, I would make orders that the applicant pay the first respondent’s costs of the joinder application, and costs thrown away by reason of the third further amended originating application and third further amended statement of claim, and I would reserve the costs of the applicant’s request for discovery (discovery request) from the first respondent (Mr Qi) and MAWF (collectively, the respondents).

   Joinder application

4. The applicant submitted that the respondents should pay the costs of the joinder application or, alternatively, costs should be reserved or be in the cause, for the following reasons.

5. First, the applicant was wholly successful in the joinder application. The respondents, on the other hand, failed on every substantive ground raised in opposition and, acting reasonably, there should have been no opposition by the respondents.

6. Secondly, the applicant, at all times, had a distinct and independent cause of action against MAWF and it would have been open to it to commence legal proceedings against MAWF, which it submitted is a “fundamental right”: Main-Road Property Group v Pelligra & Sons Pty Ltd [2009] VSC 174 at [11] (Bell J).

7. Thirdly, the joinder application ensured that all relevant parties were joined to the proceeding, that the real questions in controversy were properly agitated and able to be determined and has avoided wasted costs, and delay or multiplicity of proceedings, in accordance with the principles in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [23], [30] (French CJ), [95], [97] (Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ).

8. Fourthly, the joinder application was fundamental to the proceeding and was not, and should not, be characterised as an “indulgence”. Furthermore, the joinder of non-parties to an existing proceeding, rather than commencing separate proceedings, is to be encouraged, whereas an order for costs against an applicant for joinder would discourage such applications: Main-Road at [9]–[11], [40] (Bell J).

9. Fifthly, there is no strict time within which an application to join a non-party must be brought. Furthermore, the respondents have been on notice of the applicant’s intention to join MAWF to the proceeding since on or about October 2023 and, as such, the joinder of MAWF is of no real prejudice to the respondents.

10. The issue of joinder of MAWF was first agitated before O’Callaghan J: Fine China Capital Investment Limited v Qi (No 4) [2024] FCA 343 at [62]–[65]. The applicant had sought to add MAWF as a respondent by filing a further originating application and further amended statement of claim. The purported joinder of MAWF in this way was refused. The applicant was on notice that if it wished to add MAWF as a party to the proceeding, it should do so in the ordinary way. The joinder application was the first time the joinder of MAWF was raised since then.

11. The joinder of MAWF as the second respondent and proposed amendment of the applicant’s originating application and statement of claim is an indulgence. The party seeking such an indulgence is usually required to pay the opposing party’s costs, including costs “thrown away” by reason of the amendment, where the opposition is not unreasonable: Media Ocean Limited v Optus Mobile Pty Limited (No 6)[2009] FCA 1319 [34] (Jagot J); Bowen Energy Limited v 2KD Drilling Pty Ltd [2012] FCA 275 at [22] (Katzmann J); Australian Securities and Investments Commission v Cassimatis (No 7) [2016] FCA 624 at [4] (Edelman J); Gumm v Commissioner of Taxation (No 2) [2024] FCA 72 at [20] (Derrington J).

12. The applicant successfully obtained leave to join MAWF as the second respondent, over opposition from the respondents. In my assessment, the respondent’s opposition could not be described as unreasonable. Furthermore, the joinder was an indulgence and was granted in circumstances where there has been a delay in bringing the joinder application. Although the respondents have been on notice of the intention to join MAWF, I do not accept the delay is inconsequential.

13. In my assessment, the applicant should pay the first respondent’s costs of the joinder application and costs thrown away by reason of the third further amended originating application and third further amended statement of claim.

    Discovery application

14. The applicant sought discovery from the respondents of 19 categories of documents, which were largely in the nature of financial statements, bank statements, loan agreements, correspondence, and other communications. Prior to the hearing, the applicant unilaterally reduced the number of categories for which discovery was sought by the respondents to seven categories. The respondents resisted the discovery sought.

15. The applicant submitted that the costs of the discovery request should be reserved for the following reasons. First, of the 19 categories of documents originally sought by the applicant, which were reduced to seven at the commencement of the hearing, orders were made for the respondents to make discovery of four categories. Secondly, the respondents at all times, including at the hearing, opposed the categories of discovery sought by the applicant and it was only during the contested hearing that a single concession was made by the respondents’ counsel, in respect of category 6A. Thirdly, the applicant was substantially successful at the hearing in obtaining orders for discovery in respect of the remaining categories pressed, despite the opposition by the respondents.

16. The respondents submitted that the applicant should pay the respondents’ costs of the discovery request because the applicant sought expansive discovery, most of which was irrelevant and successfully opposed. As a result of the respondents’ substantial success in opposing the discovery request, it was submitted, they should be entitled to their costs.

17. The applicant was forced to bring the discovery request given the lack of agreement by the respondents. Although the categories for which discovery was sought were broad, they were narrowed prior to the commencement of the hearing. The contest at the hearing was largely in relation to the scope of the remaining categories. Ultimately, the respondents made only one concession late in the piece and were otherwise ordered to provide discovery of four categories. For those reasons, it is not apt to describe the respondents as a successful party who should have their costs. While the categories for which discovery was sought were broad, and were not narrowed until late in the piece, the categories for which discovery has been ordered are seemingly relevant to the issues in dispute. In my assessment, it is appropriate to reserve the costs of the discovery request.

    CONCLUSION

18. For the reasons outlined above, I would make orders that the applicant pay the first respondent’s costs of the joinder application and costs thrown away by reason of the third further amended originating application and third further amended statement of claim. I would reserve the costs of the applicant’s discovery request. The applicant did not oppose the order that it pay the first respondent’s costs of the security for costs application.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Neskovcin.

Associate:

Dated:       13 March 2025