Gaffney v RSM Bird Cameron Partners (a Firm) (No 2)

The Federal Court of Australia, in the case of Gaffney v RSM Bird Cameron Partners (a Firm) (No 2) [2013] FCA 945, dealt with an application for special costs orders by the respondents, RSM Bird Cameron Partners and Birdanco Nominees, against the applicant, Angela Gaffney. The court was tasked with determining whether the respondents were entitled to indemnity costs, which are higher than the usual party and party costs, and whether these costs should be paid forthwith. The respondents sought the indemnity costs based on the dismissal of several causes of action and a previous application for summary judgment, arguing that the applicant's claims were frivolous and had no reasonable prospect of success.

The legal issues before the court involved the principles governing the awarding of costs in the Federal Court, particularly whether the circumstances of the case warranted an order for indemnity costs and if such costs should be paid immediately. The court considered whether the applicant's claims were frivolous or vexatious, whether the applicant had acted unreasonably in continuing with the proceedings despite clear indications of futility, and whether the applicant's conduct warranted the imposition of costs on an indemnity basis.

Justice Gilmour concluded that the applicant's claims were indeed frivolous and vexatious, as they were commenced and continued despite clear evidence that they had no reasonable prospect of success. The applicant had persisted with her claims despite receiving detailed evidence from the respondents refuting her allegations and despite receiving legal advice that would have indicated the futility of her claims. The court found that the applicant's conduct, including her failure to particularise serious allegations and her making of groundless claims, warranted the imposition of indemnity costs. The court also determined that the costs should be paid forthwith due to the finality of the decision on the dismissed causes of action and the interlocutory application for summary judgment.

The final orders of the court were that the applicant pay the respondents' costs on an indemnity basis for the dismissed causes of action, the interlocutory application for summary judgment, and the present application for special costs. The court did not order the stay of the remaining cause of action until the costs were paid, leaving open the possibility of such an order if the applicant failed to pay the costs after taxation.