Fitzpatrick v Isaacs (No 2)

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FEDERAL COURT OF AUSTRALIA

Fitzpatrick v Isaacs (No 2) [2024] FCA 1454

File number: QUD 365 of 2023
Judgment of: DERRINGTON J
Date of judgment: 18 December 2024
Catchwords: COSTS – costs following review of Registrar’s decision – where Registrar ordered security for costs against two plaintiffs – where security only ordered against one plaintiff on review – whether costs should be in the cause
Legislation: Federal Court of Australia Act 1976 (Cth)
Cases cited:

Australian Trade Commission v Disktravel [2000] FCA 62

BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219

HP Mercantile Pty Ltd v Dierickx (No 2) [2012] NSWSC 1430

Kazar, in the matter of Frontier Architects Pty Limited (in liq) (No 2) [2010] FCA 1474

Newtimber (Operations) Pty Ltd v Tarong Energy Corporation Limited (No 2) [2011] FCA 363

O’Keeffe Nominees Pty Ltd v BP Australia Ltd (No 2) (1995) 55 FCR 591

Oshlack v Richmond River Council (1998) 193 CLR 72
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 31
Date of last submissions: 6 December 2024
Date of hearing: Determined on the papers
Counsel for the Plaintiffs and the Second Cross-Defendant: Mr A Kirby
Solicitor for the Plaintiffs and the Second Cross-Defendant: Nicholas O’Donohue and Co
Counsel for the Defendants and the Cross-Claimant: Mr E Olivier
Solicitor for the Defendants and the Cross-Claimant: S&A Law
Counsel for the First Cross-Defendant: The First Cross-Defendant did not appear

ORDERS

QUD 365 of 2023
BETWEEN:

HEATH FITZPATRICK

First Plaintiff

TOR CAPITAL PTY LTD (ACN 632 062 885)

Second Plaintiff
AND:

SIMON ISAACS

First Defendant

OSCARSUN PTY LTD (ACN 164 998 556) AS TRUSTEE FOR THE ISAACS FAMILY TRUST

Second Defendant

EBROKER.COM.AU PTY LTD (ACN 606 329 800)

Third Defendant
AND BETWEEN:

EBROKER.COM.AU PTY LTD (ACN 606 329 800)

Cross-Claimant
AND:

VINE CAPITAL PTY LTD ACN 633 897 408 (and another named in the Schedule)

First Cross-Defendant

ORDER MADE BY:

DERRINGTON J

DATE OF ORDER:

18 DECEMBER 2024

THE COURT ORDERS THAT:

1.The second plaintiff is to pay 80% of the defendants’ costs of the application for security for costs, both before the Registrar and before the Court, to be taxed or agreed.

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


REASONS FOR JUDGMENT

DERRINGTON J:

  1. On 17 October 2024, the defendants obtained an order requiring the second plaintiff to provide security in the sum of $160,000 in respect of the costs of the proceedings brought against them.  That decision followed a review of a determination of a Registrar of this Court made on 4 December 2023, which had required that both plaintiffs provide security in that sum.

  2. The parties now ask the Court to determine the question of costs on the papers.  The defendants seek an order that they be entitled to their costs of…

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Details
Case
[2024] FCA 1454
Decision Date

CaseChat Overview and Summary

In Fitzpatrick v Isaacs (No 2), the plaintiffs, Mr Fitzpatrick and Tor Capital, sought review of a decision by the Registrar that they provide security for costs against the defendants. The defendants sought an order that they be entitled to their costs of the application for review, while the plaintiffs sought an order that those costs be the parties’ costs in the cause. The legal issues before the court were whether the court should exercise its broad discretion to award costs and, if so, how to apportion the costs between the parties, given the mixed success of the plaintiffs in their application for review. The court held that a 20% discount was appropriate given the quantum of importance of the issues which were directly relevant to the claim against Mr Fitzpatrick or which also involved Mr Fitzpatrick in a way that increased the relevance of the issue to the overall outcome. Consequently, the court ordered that the second plaintiff, Tor Capital, pay 80% of the defendants’ costs of the application for security for costs, both before the Registrar and before the court, to be taxed or agreed.

The court found that the decision of the Registrar was part of the one decision-making process, and the overall outcome of the application could be taken to be the yardstick by which the costs were determined. The court acknowledged the broad discretion it has in relation to making orders for the costs of any proceedings, but also recognised the general rule that costs should follow the event, in that they are usually awarded in favour of the successful party. However, where there are multiple parties or issues, and the victor has met with mixed success, the court’s legitimate discretion extends to the making of a single order for costs, albeit apportioned to reflect the partial success. The court also considered the extent to which particular issues contributed to the costs and the extent to which a party was ultimately successful.

The court's reasoning was informed by the well-established principles of costs following the event, mixed success, and the broad discretion of the court. The court found that the plaintiffs' application for review was largely unsuccessful, and that the issues directly relevant to the claim against Mr Fitzpatrick or which also involved Mr Fitzpatrick in a way that increased the relevance of the issue to the overall outcome were of significant importance. The court's order reflected the mixed success of the plaintiffs' application for review and apportioned the costs accordingly. The court's decision was based on a careful consideration of the relevant legal principles and the facts of the case.

In conclusion, the court ordered that the second plaintiff, Tor Capital, pay 80% of the defendants’ costs of the application for security for costs, both before the Registrar and before the court, to be taxed or agreed. The court's decision was based on a careful consideration of the relevant legal principles and the facts of the case. The court's order reflected the mixed success of the plaintiffs' application for review and apportioned the costs accordingly. The court's decision provides guidance on the appropriate approach to costs following a review of a decision by the Registrar and the principles that should be considered in making such an order.

Orders

Orders of the court

1. The second plaintiff is to pay 80% of the defendants’ costs of the application for security for costs, both before the Registrar and before the Court, to be taxed or agreed.

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

Background

Background to the litigation

The parties now ask the Court to determine the question of costs on the papers. The defendants seek an order that they be entitled to their costs of the application for review. The plaintiffs, on the other hand, seek an order that those costs be the parties’ costs in the cause. Background The background facts relevant to the issue of costs can be briefly stated. Mr Fitzpatrick is the sole director of the second plaintiff, Tor Capital Pty Ltd (Tor Capital). Through a corporate vehicle, he also holds a 25% shareholding in it. Mr Fitzpatrick and Tor Capital commenced the present proceeding on 23 August 2023, which is essentially an oppression action. The oppression allegations are made against the third defendant company, Ebroker Pty Ltd. Mr Fitzpatrick and Tor Capital are represented by the same solicitors and counsel. On 21 September 2023, the defendants filed their interlocutory application seeking security for costs up to and including the trial of the plaintiffs’ claim. On 4 December 2023, the Registrar ordered that the plaintiffs provide security for the defendants’ costs up to but not including trial in the amount of $160,000. The plaintiffs subsequently sought a review of the Registrar’s decision. A decision on the review was given on 17 October 2024, the effect of which was that the first plaintiff, Mr Fitzpatrick, was not required to provide security, and that the obligation to provide security fell solely on the second plaintiff, Tor Capital.The appropriate order as to costs It is undoubted that, under s 43 of the Federal Court of Australia Act 1976 (Cth), the Court has a wide discretion in relation to making orders for the costs of any proceedings. However, it is also well established that, as a general rule, costs should follow the event, in that they are usually awarded in favour of the successful party: see Oshlack v Richmond River Council (1998) 193 CLR 72, 86 [35], 96 – 97 [66] – [67], 120 – 123 [134]. In that principle, the “event” is understood as referring to the “practical result” of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 [15]. Without in any way diminishing the broad discretion, it is also generally accepted that where, in a proceeding, there are multiple parties or issues, and the victor has met with mixed success, the Court’s legitimate discretion extends to the making of a single order for costs, albeit apportioned to reflect the partial success: see Kazar, in the matter of Frontier Architects Pty Limited (in liq) (No 2) [2010] FCA 1474 [10] – [13]; BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557 [11]. The task of making such an apportionment is an evaluative one: Australian Trade Commission v Disktravel [2000] FCA 62 [5]: which is necessarily “impressionistic and intuitive”, though informed by “the extent to which particular issues contributed to the costs” and the extent to which a party was ultimately successful: HP Mercantile Pty Ltd v Dierickx (No 2) [2012] NSWSC 1430 [32].

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In this case, a 20% discount is appropriate given the quantum of importance of the issues which were directly relevant to the claim against Mr Fitzpatrick or which also involved Mr Fitzpatrick in a way that increased the relevance of the issue to the overall outcome. Conclusion on the issue of the costs of the application It follows that Tor Capital should pay 80% of the defendants’ costs of the application for security for costs before the Court.Costs before the Registrar The same order for costs should be made in relation to the hearing before the Registrar. The plaintiffs resisted the making of any order for costs before the Registrar and whilst the Registrar’s order was not entirely adopted by the Court, it was substantially the same. Further, as the decision of the Registrar is part of the one decision making process, the overall outcome of the application can be taken to be the yardstick by which the costs are determined. That being so, the costs order in relation to that part of the application should also require Tor Capital to pay 80% of the defendants’ costs.Disposition In the result, it is appropriate to order that the second plaintiff pay 80% of the defendants’ costs of the application for security for costs, both before the Registrar and before the Court, to be taxed or agreed.

Ratio Decidendi

Legal Principle Established

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