In the matter of Bailey Roberts Group Pty Ltd (in liq)

[2025] NSWSC 831

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

In the matter of Bailey Roberts Group Pty Ltd (in liq) [2025] NSWSC 831

Hearing dates:

15 July 2025

Date of orders:

28 July 2025

Decision date:

28 July 2025

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Indemnity costs ordered in 2021 Proceedings and 2023 Proceedings; third party costs order not made; gross sum costs order made in favour of one party in 2023 Proceedings; orders for payment of security for costs out of Court made in 2023 Proceedings.

Catchwords:

COSTS — application for costs on an indemnity basis — whether indemnity costs should be ordered.

COSTS — whether indemnity costs should be awarded against Plaintiff on basis of Calderbank principles —whether unreasonable not to accept Calderbank offer(s)

COSTS — whether third party costs order should be made.

COSTS — security for costs — payment of funds out of Court.

Legislation Cited:

- Civil Procedure Act 2005 (NSW), ss 98(1)(c), 98(4)

- Uniform Civil Procedure Rules 2005 (NSW), rr 42.2, 42.5

Cases Cited:

- Alora Davies Developments 104 Pty Ltd (in liq) v Raphael [2024] NSWSC 735

- Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131

- Calderbank v Calderbank [1975] 3 All ER 333

Christofidellis v Zdrilic [2000] FCA 679

- Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498

- Galati v GC NSW Pty Ltd (No 2) [2020] NSWSC 420

- Hadid v Lenfest Communications Inc [2000] FCA 628

- Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97

- Hamod v New South Wales [2011] NSWCA 375

- Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

- Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199

- Kostov v Zhang (No 2) [2016] NSWCA 279

- KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare on Haig v Bowden (No 3) [2020] NSWCA 158

- Leichhardt Municipal Council v Green [2004] NSWCA 341

- MCG Group Pty Ltd v Ftrus Pty Ltd [2017] FCA 359

- Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816

- Ofria v Cameron (No 2) [2008] NSWCA 242

- Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

- ReAlsafe Security Products Pty Ltd (atf Alsafe Trust) (in liq) [2016] NSWSC 575

- Re Bailey Roberts Group Pty Ltd (in liq) [2025] NSWSC 227

- Re Beverage Freight Services Pty Ltd [2020] NSWSC 797

- Re H & H Funding Pty Ltd (in liq) (rec and mgr apptd) [2024] NSWSC 248

- Re Mobius Distilling Pty Ltd (in liq) (No 2) [2025] NSWSC 649

- Sheridan v Colin Biggers & Paisley [2019] NSWSC 621

- Short v Crawley (No 40) [2008] NSWSC 1302

- Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811

- Skelin v Self Care Corporation Pty Ltd (No 2) [2022] FCA 50

Category:

Costs

Parties:

Proceedings 2021/238607
Financialstrategy.com.au Pty Ltd) formerly known as Bailey Roberts Financial Pty Limited (Plaintiff)
Bailey Roberts Group Pty Limited (First Defendant)
Bailey Roberts Financial Management Pty Limited (Second Defendant)
LAT Wealth Holdings Pty Limited (Third Defendant)
Bailey Wealth Management Pty Ltd (Fourth Defendant)
Sustain Holdings Pty Ltd (Sixth Defendant)

Proceedings 2023/163417
Financialstrategy.com.au Pty Ltd (Plaintiff)
Ian Roy Bailey (First Defendant)
Leith Anthony Thomas (Second Defendant)

Representation:

Counsel:

Proceedings 2021/238607
S Hartford-Davis / B Dziubinski (Plaintiff)
R D Turnbull (Second – Sixth Defendants)

Proceedings 2023/163417
S Hartford-Davis / B Dziubinski (Plaintiff)
E Hyde (First Defendant)
R D Turnbull (Second Defendant)

Solicitors:

Proceedings 2021/238607
HWL Ebsworth (Plaintiff)
Watson Webb (Second – Sixth Defendants)

Proceedings 2023/163417
HWL Ebsworth (Plaintiff)
Addisons (First Defendant)
Watson Webb (Second Defendant)

File Number(s):

2021/238607
2023/163417

Judgment

1. In two proceedings heard together in February 2025, the Plaintiff, Financialstrategy.com.au Pty Ltd (“FPL”) brought claims of breach of contract and oppression in relation to the affairs of Bailey Roberts Group Pty Ltd (in liq) (“BRG”). The two proceedings address successive time periods. The earlier proceedings (“2021 Proceedings”) were brought by FPL with leave against BRG, which is in liquidation; Bailey Financial Management Ltd (“BFM”); LAT Wealth Holdings Pty Ltd (“LAT”); Bailey Wealth Management Pty Ltd (“BWM”); Fumar Pty Ltd (“Fumar”) (which has since been deregistered) and Sustain Holdings Pty Ltd (“SHL”). I will refer to those parties (other than Fumar) as the “2021 Defendants”. Claims brought against two individuals, Mr Bailey and Mr Thomas, in the 2021 Proceedings were previously dismissed, but further claims were brought against them in the later proceedings (“2023 Proceedings”).

2. By my judgment delivered on 20 March 2025 (Re Bailey Roberts Group Pty Ltd (in liq) [2025] NSWSC 227) (“Primary Judgment”), I dismissed both proceedings and indicated that I would hear the parties as to costs. This judgment deals with several questions arising in respect of costs. I note, for completeness, that I was informed in the course of the hearing of this application that FPL has appealed against the order dismissing the 2021 Proceedings but no appeal has been brought in respect of the order dismissing the 2023 Proceedings.

The Principal Judgment

3. I should first note several of my findings in the Primary Judgment. I dealt with several aspects of the case put by FPL by reference to Mr Roberts’ evidence, in paragraphs [14]–[15], [18]–[19] and [23]–[24] of the Primary Judgment, as follows:

“Mr Roberts also gave evidence (Roberts 4.11.21 [87]-[88]) that:

“Works [sic] in progress, or WIP, refers to fee-paying jobs that I had been engaged by clients to undertake. The adviser (for example, myself) sets up the job and manages the job until it is completed and invoiced. In addition to WIP, there are also significant follow-up tasks required to service a client, by way of example, arranging meetings with clients, reviewing the client’s [MDA] program and creating a file note as a record, advising clients of change in super rules or change to their product that requires action. Pluto and Minerva are the platforms upon which all of this work is saved and progressed. When I lost access to those systems, I was totally unable to progress this work.

[FPL’s] business was effectively brought to a halt on the evening of 1 September 2020.”

That evidence was so misleading as to be, in substance, false where, at that time, although Mr Roberts lost access to the Pluto and Minerva systems, he had copied a significant amount of client information and client contact details and there was no reason that Mr Roberts could not continue to and he did continue to contact his clients using the information which he had copied. Mr Roberts also gave evidence (Roberts 4.11.24 [101]), which I am comfortably satisfied was also false, as to the reason that he had sought access to client information for a Ms Barit, at a time that she was associated with a third party provider of services and also with Advice Evolution. …

Mr Roberts also observed (Roberts 4.11.21 [110]-[111]) that:

“As at the date of swearing this affidavit, I am unaware as to the status of works in progress, and important information relating to client matters. Lack of access to Minerva has prevented me from contacting or providing services to [FPL’s] clients.

[FPL] has no client files and records or advice documents other than the client records sent by [an employee of BRG] to me since I was denied access on 4 September 2020. For example, I have not, and I am still currently unable to view deadlines and current matter statuses because such matters are recorded in the Minerva system. Further, if a client instructs me to withdraw funds, I need to see which accounts have available funds and, if there are insufficient funds, I need to advise the client which of their investments should be sold in order to make the fund available. This can only be done on the Pluto system.”

This evidence was also so misleading as to be false, by its omission of reference to the client information which Mr Roberts had by then copied.

Mr Roberts there noted (Roberts 4.11.21 [125]ff) that he (or, I interpolate, FPL) had subsequently become an authorised representative under the AFSL of Waterfall Way Associates (“WWA”) on a “temporary basis” on 5 December 2020 and referred to later difficulties in transitioning from WWA to another AFSL holder. He also referred (Roberts 4.11.21 [143]-[144]) to the conduct which he alleged on the part of BRG and contended that:

“Because of this conduct, [FPL] was completely isolated and shut off from existing clients and has been unable to gain new clients.”

That evidence was also false, by omission, by its failure to disclose Mr Robert’s ability at all times to maintain contact with clients and the fact that he retained a significant number of clients. …

Mr Zahra [who appeared for the 2021 Defendants and Mr Thomas] advances a lengthy attack on Mr Roberts’ credit in submissions and his submissions identify many occasions on which Mr Roberts is said to have told lies in his evidence. It is not necessary to address all of those matters, where I am comfortably satisfied that Mr Roberts was not an honest witness, and I accept that his evidence should not be accepted unless corroborated by contemporaneous documentary evidence. I accept that, as Mr Zahra points out, Mr Roberts at least gave false evidence in his affidavits and in cross-examination as to why he sought to engage Ms Barit to access client information maintained on BRG’s systems (T182-184), and as to why he did not use BRG’s staff to undertake the suggested work, where that engagement was in fact directed to copying information from Mr Roberts’ Google Drive to Advice Evolution’s Worksorted system. He gave false affidavit evidence as to the effect of the loss of client information and access to BRG’s email system on his ability to contact clients, and his limited admissions in cross-examination as to those matters do not seem to me to have been a full or frank account of the position. He also gave false affidavit evidence and false evidence in cross-examination as to the extent to which he lacked access to client information after 4 September 2020 (T201ff, T209). I accept that Mr Roberts was evasive in cross-examination, particularly in relation to his suggested lack of access to client information and the question of those clients which he continued to service after the cessation of his relationship with BRG.

It seems to me that the material omissions in Mr Roberts’ first affidavit as to his copying of client record held by BRG relating to clients service by FPL, his false evidence as to the nature of Ms Barit’s role and his false evidence overstating the effect of the suggested loss of access to client records (which he had copied in large part) and email (where he had access to another licensee’s email system) were not incidentally or inadvertently false, but involved a deliberate, calculated and dishonest attempt to deceive the Court. The deliberate character of that deceit undermines Mr Roberts’ credit generally and not only as to that issue and is such that Mr Roberts’ evidence should not be accepted as a whole, unless corroborated by contemporaneous records.”

4. These findings are significant, as I will note below, less because they were directed to the giving of false evidence by Mr Roberts, and more because they evidence the false premise of the case that was brought by FPL in the 2021 Proceedings and then relied upon to support its claim for loss in the 2023 Proceedings against Mr Bailey and Mr Thomas.

5. I also noted (at paragraph [95] of the Principal Judgment) various matters on which the Defendants had relied to seek to justify suspension of Mr Roberts’ and FPL’s access to BRG’s computer systems (as defined) and observed (at paragraph [96] of the Principal Judgment) that FPL admitted part but not all of that conduct by a Reply filed in the course of the hearing, shortly before Mr Roberts was to be cross-examined. It is important to recognise that the failure to admit those matters, prior to that point, put the Defendants to the costs of proving them, and substantial evidence was obtained on compulsory process, and led, in order to do so. I also referred (in paragraph [147] of the Principal Judgment) to a statement of agreed facts, as to which agreement was reached only very late in the proceedings, comprehensively demonstrated the extent to which FPL had retained information concerning, and had continued contact with, its clients notwithstanding its claim to the contrary in the proceedings.

6. I observed (at paragraphs [164]–[165] of the Principal Judgment), in findings that were partly favourable to FPL that:

“I have found that BRG in fact hindered FPL from advising clients, at least by its 4 December 2020 communication which was calculated to, and likely did, deter clients from moving with FPL from BRG to another AFS licensee. I accept that FPL and Mr Roberts had client details and contacted clients and had downloaded a substantial amount of client information his Google Drive (and then caused it to be copied to Advice Evolution’s system) but that was not sufficient to avoid the loss of several clients to BRG, although the number of clients lost is unclear. I accept that a substantial number of FPL’s clients did follow FPL to a new AFL licensee, as the evidence to which Mr Zahra refers and the statement of agreed facts makes clear, and that FPL and Mr Roberts were able to provide services to them without access to BRG’s Minerva or Pluto systems and his evidence to the contrary was false. That does not have the result that FPL suffered no loss, although it is plain that it did not, as Mr Roberts originally claimed, suffer the loss of all, or possibly most, of its client base. …

While I accept that BRG’s conduct was likely a cause of the loss of some clients to FPL, neither the evidence nor Mr Hartford-Davis’ submissions fully engage with the question which clients were “lost” or for how long, and I find below FPL has not established any quantifiable loss arising from this claim.”

7. Mr Hartford-Davis, with whom Mr Dziubinski appears for FPL, places significant weight on these paragraphs in submissions, and contends that they indicate an order for indemnity costs should not be made against FPL. I do not accept that submission. These paragraphs indicate the possibility that FPL could properly have advanced a significantly narrower case than that which it in fact advanced, which acknowledged that it had copied information relating to the relevant clients, without BRG’s authority; that it had contact information which allowed it to continue contact with many of those clients and had done so; acknowledged that, contrary to Mr Roberts’ evidence in the proceedings, it had not suffered the loss of many of its clients; and focused on those clients which it had not retained, notwithstanding that it retained their information and the ability to communicate with them. That is not the case which FPL brought, on a basis that was contrary to the facts that were known to it through Mr Roberts; it is, instead, a proper case which FPL could have, but did not, bring in the proceedings.

8. I also observed (in paragraphs [169]–[170] of the Principal Judgment), with reference to Mr Goodyer’s expert evidence that:

“Regrettably, Mr Goodyer’s expert report was founded on assumptions which have not been established, on which Mr Goodyer relied because FPL did not provide information which might have allowed an accurate assessment of its loss, and adopted a methodology which was not capable of quantifying that loss. FPL also read a supplementary expert report dated 29 July 2022 (Ex P5) of Mr Goodyer, which it will largely not be necessary to address.

In his 11 May 2022 report, Mr Goodyer described ([1.2]) the exercise undertaken by that report as calculating the past and future economic loss suffered by FPL as a result of its “loss of the Client Books”, although he did not describe what he meant by “Client Books” with any precision, and his report did not proceed on a clear or consistent basis as to what was comprised by that concept. It appears that concept at least included the 29 clients previously serviced by FPL to which I referred above, who (at least initially) remained with BRG after BRG and FPL both terminated the CAR Agreement between BRG and FPL. I accept that BRG’s breach of the provisions in the CAR Agreement relating to the transfer of clients was likely causative, in the relevant sense, of FPL’s “loss” of the revenue associated with those clients. I note, for completeness, that the evidence to which I have referred above amply establishes that, although FPL lost access to BRG’s systems from about 1 September 2020, it had not lost access to a very substantial portion of its client information relating to those 29 clients or generally from that date, because FPL and Mr Roberts had copied that information prior to that date, but a loss of access to that information is not necessary to FPL’s establishing the loss of the value of the clients which it claims.”

9. I also referred (at paragraphs [172] and [175] of the Principal Judgment) to difficulties with Mr Goodyer’s report, including that:

“The methodology which Mr Goodyer adopted did not quantify the loss of earnings from identifiable lost clients, and instead attributed any reduction in FPL’s financial performance recorded in its balance sheet to a loss of clients, without making any attempt to distinguish any losses arising from any loss of clients from other causes of deterioration in FPL’s financial performance. Using that methodology, it did not matter to Mr Goodyer how many clients had been lost, because he was, in truth, not quantifying a loss arising from any loss of clients individually or collectively, as distinct from the deterioration in FPL’s financial performance over that period. This approach was, in my view, not capable of providing a proper basis for quantifying FPL’s loss, even on an approximate basis, since the assumption that the decline in FPL’s revenue was linked only with a loss of clients was neither provable not proved. …

… Mr Goodyer was asked to assume [(3.2)] that FPL had no other email accounts it could utilise to contact its customers after it was prevented from accessing FPL’s email account and no other record of the contact details of its clients. Both assumptions were false, although they did not advance the calculation which he had made, given its methodology was not referable to a loss of client revenue for the reasons noted above, other than to add an apparent plausibility to the figures derived from it.”

10. I also observed (at paragraph [180] of the Principal Judgment) that:

“Although it is likely that some client relationships were lost by FPL as a result of BRG’s conduct, it will be apparent from the matters to which I have referred above that Mr Goodyer’s report neither establishes the value of any client relationships lost by BRL nor provides any rational basis for the Court to determine that value for itself. This is not a case where damages could not be proved by reference to information that was reasonably available to FPL. FPL could have made information available concerning the client accounts which it contended were lost to it, after seeking and obtaining any necessary client consent or obtaining those documents on compulsory process from the clients or BRL; it would have been readily possible to calculate the revenue that was in fact lost from those accounts and to project the future loss in respect of those accounts for the relatively short period until FPL ceased to be an authorised representative of any AFS licensee and could not provide further financial services to those clients or earn revenue by doing so; and it would readily have been possible for FPL to calculate its loss limited to the period in which that loss was in fact suffered. Where FPL could have calculated this loss on a rational basis but has not done so, and has instead adopted an approach that would have radically overstated that loss, FPL has not established the loss or damage which it claims for breach of contract. The parties did not submit that there would be any utility in a award of nominal damages, where BRG is now in liquidation and an award of nominal damages would not advance FPL’s claim in the 2023 Proceedings.”

11. Mr Hartford-Davis relies on several of these observations to contend, in effect, that FPL failed in its claim only because its expert evidence did not properly quantify its loss. That proposition is radically incomplete. FPL failed because the fundamental premise of its case, derived from Mr Roberts’ evidence, was that BRG’s conduct had deprived it of any information concerning its clients and the ability to contact those clients, and it had thereby lost a significant number of clients. That proposition was false, although I have noted above that a different and substantially narrower case would have been available to FPL, namely that it lost a number of clients notwithstanding that it had copied their information without authority and retained the ability to contact them. The false basis of FPL’s case, arising from Mr Roberts’ evidence and then reflected in FPL’s instructions to Mr Goodyer, had the consequence that the parties and the Court, were required to address allegations as to a course of events which plainly had not occurred rather than the narrower questions which would have arisen on a properly founded case.

12. I also observed, in respect of FPL’s claim for compensation for oppression (at paragraph 203 of the Principal Judgment) that:

“As I noted above, FPL seeks an order pursuant to s 233(1) or s 233(1)(j) of the Act that the Second-Sixth Defendants pay them compensation or an order for damages. There was a degree of uncertainty in the parties’ closing submissions as to whether this issue still arose in the 2021 Proceedings, or now only in the 2023 Proceedings. As I understand the position, both on FPL’s pleaded case and as a matter of its underlying structure, this claim needs to be addressed in the 2021 Proceedings so far as it underpins FPL’s claim for compensation in the 2023 Proceedings. The possibility of a compensation order is open where I have found above, with considerable hesitation, that oppression is established. However, FPL cannot succeed on this claim, where its quantification of that loss is the same as the loss claimed its contract claim, by reference to the value of its lost “client book” and it has not established either that it lost that “client book” or the amount of the loss that it suffered in respect of those clients that were retained by BRG, at least for a period, and lost to it. ...”

13. In respect of the 2023 Proceedings, I observed (at paragraphs [231] – [233] of the Principal Judgment) that:

“By its Originating Process filed in 22 May 2023 the 2023 Proceedings, FPL now seeks only an order under s 233(1) or s 233(1)(j) of the Act that the Defendants in those proceedings, Mr Roberts and Mr Thomas, or either of them pay compensation to FPL and interest under ss 100 and 101 of the Civil Procedure Act 2005 (NSW). This claim relates to events after the commencement of the 2021 Proceedings.

It would be possible to deal briefly with the 2023 Proceedings, because Mr Hartford-Davis fairly accepts, in closing submissions that:

“… the 2023 Proceeding[s] assumes that BRG breached [FPL’s] CAR Agreement in the manner alleged in the 2021 Proceedings … . The 2023 Proceeding[s] assumes that [FPL] suffered loss as a result of those breaches. … The 2023 Proceeding is only viable if the Court finds that BRG breached [FPL’s] CAR Agreement, and that the breach caused loss and damage to [FPL]. [FPL] relies upon its submissions in the 2021 Proceedings in relation to those matters.

While I have found above that BRG breached the CAR Agreement with FPL, I have not found that that breach caused substantive loss and damage to FPL and the 2023 Proceedings must therefore fail. I will nonetheless address the issues raised in these proceedings at greater length.”

14. I also dealt with several matters put by FPL in the 2023 Proceedings that were alleged to constitute oppression, which I held were either not established or did not support the relief sought or both. Although FPL’s failure on those matters would not in itself have warranted an order for indemnity costs in favour of Mr Bailey and Mr Thomas in the 2023 Proceedings, I find below that the fact that the claim in the 2023 Proceedings wholly depended on the claim in the 2021 Proceedings, which had the false basis which I have noted above, whether alone or combined with those matters, warrants an order for indemnity costs in favour of Mr Bailey and Mr Thomas and against FPL.

Affidavit and other evidence

15. I now turn to the evidence read in this application and then deal successively with the several applications brought by the 2021 Defendants, Mr Bailey and Mr Thomas.

16. Mr Bailey, who seeks orders as to costs in the 2023 Proceedings, reads the affidavit dated 28 April 2025 of his solicitor, Mr O’Connor, who referred to his experience, the terms of his firm’s engagement in the proceedings, the evidence led by FPL in the 2021 Proceedings and then in the 2023 Proceedings, and my findings as to aspects of the evidence given by Mr Roberts in respect aspects of FPL’s case. Mr O’ Connor also refers to my findings in several paragraphs of the Principal Judgment, to which I have referred above. Mr O’Connor also gave evidence as to the costs incurred by Mr Bailey in the defence of the proceedings, which was not challenged in any material respect in this application, although I will refer below to the submissions made by FPL in opposition to Mr Bailey’s gross sum costs application in the 2023 Proceedings. Mr O’Connor also gave evidence that at least 85% of his firm’s actual professional fees and all of Counsels’ fees and disbursements were likely to be recoverable on an indemnity basis, and that a lesser percentage of his firm’s professional costs and Counsels’ fees and all of the disbursements would be recoverable on an ordinary basis. Mr O’Connor also outlined calculations of costs that would be recoverable on an alternative bases, in reliance on a Calderbank [Calderbank v Calderbank [1975] 3 All ER 333] letter, and alternatively on an ordinary basis. Mr O’Connor also gave evidence, as to which no serious challenge was raised, of the costs that Mr Bailey would incur in this application. Mr Bailey tendered a bundle of invoices issued by his solicitors (Ex 1D.1) and also tendered paragraphs in each of Mr Roberts affidavits dated 24 April 2024 and 26 November 2024 (Ex 1D.2) where Mr Roberts indicated that he was the sole director and shareholder of FPL and was authorised to make the affidavit on FPL’s behalf.

17. The 2021 Defendants, who seeks costs orders in the 2021 Proceedings, and Mr Thomas, who seeks costs orders in the 2023 Proceedings, read the affidavit dated 6 May 2025 of Mr Thomas, which referred to several unsuccessful attempts to resolve the proceedings with Mr Roberts. Mr Thomas there referred to a conversation with Mr Bailey in October 2023 (Thomas 6.5.25 [11]) in which Mr Roberts said, in the context of reference to settlement, that “both [Mrs Roberts] and I are committed to seeing this through to the end”. Mr Thomas also referred to a conversation on the second day of the hearing on 5 May 2025 when Mr Roberts said (Thomas 6.5.25 [15]) that:

“I think our case is very strong. I have a benefactor funding the litigation, who is fully across the case, who also thinks our case is strong and they are as committed as I am to taking this all the way. If we lose, with the support of my benefactor, who has very deep pockets, we’ll appeal”.

18. Mr Thomas also refers to Mr Roberts’ claim to wish to drive industry “change” by the proceedings and to his saying that:

“Unless my benefactor and I get what we want, we will be going all the way”.

Mr Thomas also referred to Mr Roberts responding to a question whether his benefactor wanted money back “[n]o they don’t”. There is a contest as to whether the reference to a “benefactor” was to a friend of Mr Roberts who made an offer of funding, to which reference was made in the earlier security for costs application, or to Mrs Roberts. It is not necessary to resolve that dispute since, even if that reference was to Mrs Roberts, I would not make a third party costs order against her for the reasons noted below.

19. The 2021 Defendants and Mr Thomas also read the affidavit dated 7 May 2025 of their solicitor, Mr Webb, who refers to the history of the proceedings, previous costs orders made in the proceedings, and the substantial costs incurred by the 2021 Defendants and Mr Thomas in the 2021 Proceedings and the 2023 Proceedings. Mr Webb expresses his view that the costs incurred by these parties in the proceedings were reasonable, by reference to several matters, although the 2021 Defendants and Mr Thomas do not bring a gross sum costs application so it is not necessary to determine that matter. He also estimates the costs of this application and refers to offers made by the 2021 Defendants and Mr Thomas on which they rely to support alternative claims for indemnity costs. Mr Webb also there addressed the position in respect of FPL and observed that Mrs Roberts is a 50% shareholder in FPL, which is the trustee of the Roberts Family Trust, and Mr Roberts and Mrs Roberts are two discretionary beneficiaries of the Roberts Family Trust. Mr Webb refers to the profit and loss statements of the Roberts Family Trust, produced pursuant to a notice to produce, which indicate that Mrs Roberts has lent substantial amounts to the family trust in the financial years ended 30 June 2022 – 30 June 2024; the trust suffered a net loss of $175,309 in the financial year ended 30 June 2024 and has negative net equity of $632,980. Mr Webb also refers to a submission previously made by Mr Hartford-Davis (who also appeared for FPL and Mrs Roberts in the security for costs application) that Mrs Roberts stood behind FPL. Mr Webb also referred to a spreadsheet produced on subpoena (Ex J1, CB 251; MFI 4) which records numerous loans from Mrs Roberts to FPL, a substantial payment to the Department of Justice in respect of security for costs and at least three payments by Mrs Roberts to the trust account of FPL’s solicitors. I proceed on the basis that Mrs Roberts made a substantial contribution to the funding of the proceedings.

20. FPL and Mrs Roberts in turn read the affidavits dated 30 May 2025 and 15 July 2025 of their solicitor, Mr Wallman. Mr Wallman’s evidence, in his first affidavit, is that the invoices rendered by his firm in these proceedings had been rendered to FPL, and implicitly not to Mrs Roberts, although that is not inconsistent with Mrs Roberts funding FPL’s payment of those invoices and she made some direct payments to Mr Wallman’s firm. By his second affidavit, Mr Wallman gave evidence that he did not receive instructions from Mrs Roberts in relation to any aspect of the conduct of the litigation, other than the third party costs application against her; his instructions were received solely from Mr Roberts; and Mrs Roberts had informed him (plainly directing her attention to relevant factors identified in the case law) that:

“(a)   Her motivation for providing funding to [FPL] for the purpose of paying legal expenses was her natural affection for her husband, and her desire to support him in litigation where he felt he had been wronged by his former business partners; and

(b)   She did not expect to receive any final financial interest in the outcome of the litigation other than the repayment of the loans.”

21. Mr Wallman also gave evidence, on information and belief from Mr Roberts, that the “benefactor” to which Mr Roberts had referred in conversations with Mr Thomas was a family friend, to whom reference had been made in the security for costs application as I noted above. Mr Wallman’s evidence was also that Mr Roberts had also used that term to refer to that friend in discussions with Mr Wallman in the course of the proceedings and that Mr Wallman had no contact with that friend and received no instructions from him in the course of the proceedings.

22. FPL also tendered an independent expert report of Mr Goodyer (Ex P1 in this application) on which it relied in the proceedings, which I had addressed in paragraphs [169]ff of the Primary Judgment. Mr Goodyer’s report referred to Mr Roberts’ affidavit filed on 4 November 2021 in the primary proceedings (marked MFI 2 in this application); Mr Roberts’ (false) evidence as to his inability to contact his customers after he was prevented from accessing FPL’s databases and email account on 1 September 2020; and to his claim that FPL had lost 27 managed discretionary account (“MDA”) clients from its client books as a result of the actions taken by the Defendants. Mr Goodyer also there referred to the instructions given to him, including that:

“As a result of the actions taken by BRG [FPL] has lost a total of 170 clients consisting of:

(a)   43 MDA clients;

(b)   50 insurance clients; and

(c)   75 personal super clients (“Client Books”).”

23. Mr Hartford-Davis in turn drew attention to other aspects of Mr Roberts’ evidence in his affidavit dated 4 November 2021, to which I had referred in the Primary Judgment, including that FPL was servicing 168 clients as at 1 September 2020, which comprised 43 MDA clients and 125 retail and brokerage clients (Roberts 4.11.21 [122]) and that only 16 of the 43 managed discretionary account clients that FPL was servicing as at 1 September 2020 had reengaged FPL’s services (Roberts 4.11.21 [123]). It appears that the difference between the 43 MDA clients serviced at 1 September 2020 and those 16 clients gives rise to the reference to 27 MDA clients in Mr Goodyer’s expert report. The Defendants in turn refer to Mr Roberts’ evidence (Roberts 4.11.21 [147]) that, given the losses that he claimed that FPL had suffered, he and Mrs Roberts had to utilise their retirement savings to keep the business afloat and pay legal fees, as a matter relevant to the impecuniosity of FPL.

24. The parties tendered a chronological bundle in both proceedings which included without prejudice except as to costs correspondence on which the Defendants relied for an alternative claim to indemnity costs (for example Ex J1, CB 138, 142, 154, 216); financial statements for the Roberts Family Trust for the year ended 30 June 2024 (Ex J1, CB 174), which establish that Mrs Roberts has lent substantial sums to the Trust which presently has a significant deficiency in assets against liabilities; the Trust tax return for the year ended 30 June 2024 (Ex J1, CB 189) which indicates that the Trust incurred a significant taxable loss of $173,454 in that financial year and had current liabilities in excess of $1 million which substantially exceeded its current assets of $25,356 and its total assets of $372,789; and had incurred tax losses in each of the financial years since 1 July 2020.

The 2021 Defendants’ application for indemnity costs application in the 2021 Proceedings

25. First, by their interlocutory process filed on 7 May 2025 in the 2021 Proceedings, the 2021 Defendants seek an order that FPL pay their costs of the whole of the proceedings on the indemnity basis. Mr Turnbull, who appeared for the 2021 Proceedings, accepted in the course of the submissions that that order would require modification since Williams J had previously ordered that FPL pay the 2021 Defendants costs of a security for costs application on an ordinary basis until 2 August 2023 and on an indemnity basis from that date.

26. The applicable principles are well-established and were not in dispute. Section 98(1)(c) of the Civil Procedure Act 2005 (NSW) (“CPA”) permits the Court to order costs on an ordinary or an indemnity basis. Rule 42.2 of the Uniform Civil Procedure Rules (“UCPR”) provides that, unless the Court orders otherwise or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 of the UCPR deals with an order for costs on an indemnity basis. Costs are awarded on an ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341. An order for indemnity costs is not made to punish an unsuccessful plaintiff for persisting with a case that fails, but to compensate a successful defendant fully for costs incurred, when the Court takes the view that it was unreasonable for the plaintiff to have subjected that party to the expenditure of costs: Hamod v New South Wales (2002) 188 ALR 659; [2002] FCAFC 97 at [20]. Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at 89; [1998] HCA 11. In Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) (2008) 65 ACSR 324; [2008] NSWSC 199, McDougall J observed (at [24]) that there must usually be some special or unusual feature to justify departure from the ordinary rule as to costs, and that delinquency is not necessary for an order for indemnity costs, but is relevant to whether it should be made. The relevant principles were also considered by the Court of Appeal in Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6], where the Court observed that an order for indemnity costs may be made where a party’s conduct in proceedings is plainly unreasonable or involves an element of delinquency. I have here drawn on my summary of these principles in Sheridan v Colin Biggers & Paisley [2019] NSWSC 621 at [16].

27. Mr Hyde, who appears for Mr Bailey, draws attention to the applicable case law and submits that:

“Circumstances in which indemnity costs may be awarded include:

(a)   where a party has made allegations that ought never to have been made;

(b)   where an action has been commenced or continued where the plaintiff, properly advised, should have known the applicant had no chance of success; and

(c)   where proceedings have been commenced in wilful disregard of known facts or clearly established law.

An award of indemnity costs serves the purpose of compensating a party fully for costs incurred when the Court takes the view that it was unreasonable for the party against whom the order was made to have subjected the innocent party to the expenditure of the case: Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009 at [45] per Ward P.”

28. Mr Hartford-Davis in turn submits that:

“The Court should only depart from the general rule that costs are assessed on the ordinary basis (Uniform Civil Procedure Rules 2005 (NSW) r 42.2) if the party against whom costs are sought has engaged in conduct that is “plainly unreasonable” or involves some “relevant delinquency”: Dunstan v Rickwood (No 2) [2007] NSWCA 266 at [44] (McColl JA, Beazley JA, and Ipp JA agreeing); Bale v Kimberley Developments Pty Ltd (No 2) [2022] NSWSC 1009 at [44] (Ward CJ In Eq).

The impugned conduct must be connected with the proceedings and related to the way in which they were conducted [citing Twigg by her tutor Elizabeth Flintoft v Pitcher Partners Holdings Pty Ltd (No 8) [2025] NSWSC 379 at [8]].”

29. Mr Hartford-Davis also submits, by reference to authority, and I accept that, an adverse credit finding, on its own, is insufficient to justify an order for indemnity costs: Christofidellis v Zdrilic [2000] FCA 679 at [29]; MCG Group Pty Ltd v Ftrus Pty Ltd [2017] FCA 359 at [14]; Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [137] (“Harrison v Schipp”); Short v Crawley (No 40) [2008] NSWSC 1302 at [15].

30. Mr Turnbull, who appears for the 2021 Defendants, in turn submits that:

“Where proceedings have been brought and conducted in a manner which is plainly unreasonable or involves some delinquency, an indemnity costs order is capable of being justified: Oshlack v Richmond River Council (1998) 193 CLR 72, [44]. The justification for that approach is that it was unreasonable for the plaintiff to have subjected the defendants to the expenditure of costs to defend the proceedings: Hamod v New South Wales (2002) 188 ALR 659, [20].”

31. Mr Turnbull also submits, implicitly in support of the 2021 Defendants’ application for indemnity costs, that:

“These two sets of proceedings were misconceived from the beginning and ought never have been brought. That is because of [FPL’s] and Mr Roberts’ own conduct in preparing to exit [BRG]) in the lead up to early September 2020, at which point Mr Roberts’ access to certain sources of information had been restricted because of Messrs Bailey and Thomas’ concerns that he was providing confidential client information to competitors, without the clients’ consent. Mr Roberts gave false evidence in support of his claim. Had that evidence not been given, the claim would never have proceeded, and the defendants would not have been put to the expense of defending these proceedings. An order for indemnity costs is justified by … Mr Roberts’ own false evidence and pursuit of its claims …”

32. I do not necessarily accept that the case would not have proceeded had Mr Roberts not given false evidence in support of FPL’s claim; however, I accept that any case brought by FPL on the basis of a true account of events, which acknowledged that it had not lost access to client information and had not lost its ability to contact the clients, would have been entirely different to the case to that which FPL brought.

33. Mr Turnbull also refers to several of the adverse credit findings that I made in respect of Mr Roberts, to which I referred above, and submits that:

“Mr Roberts—and through him—the plaintiff was found to have attempted to deceive the Court … That conduct ought to be deprecated, and the Court ought to do so by ordering the payment of costs on the indemnity basis.

All of that conduct means that [FPL] pursued these proceedings largely on a false premise. This loss case was tied to the loss of clients. Those clients were not lost. Costs should be awarded on the indemnity basis.”

34. Mr Hartford-Davis responds that, as I noted above, the adverse credit findings made in the Principal Judgment were made in respect of Mr Roberts, who is the sole director and shareholder in FPL, rather than FPL, and are not sufficient in themselves to justify an order for indemnity costs. I accept that submission. However, as I find below, the matters which were the subject of the false evidence given by Mr Roberts were directed to central elements of FPL’s claim that BRG’s conduct had caused FPL to lose access to information concerning its clients, had prevented it contacting its clients, and had brought about the loss of a substantial number of those clients in that way. Mr Roberts’ false evidence as to those matters falsified the fundamental premise of the case put by FPL, even if it left open the possibility that a substantially narrower case could have been advanced by FPL had Mr Robert given honest evidence. I return to that matter below.

35. As I noted above, Mr Hartford-Davis responds to Mr Turnbull’s submission that FPL’s claim for loss case was tied to the loss of clients, by pointing to my finding that BRG’s conduct was likely a cause of the loss of some clients to FPL, and that FPL had failed to quantify the loss attributable to the clients that were lost. That submission does not answer the difficulty that FPL’s case was not merely that many clients were lost, but that they were lost because BRG’s conduct deprived it of client information and the ability to contact those clients, and both those propositions were false. Here, FPL chose to bring its case on that false basis, rather than by reference to the loss of some clients that occurred notwithstanding (contrary to the case it put) it had neither lost access to client information nor the ability to contact its clients. Mr Hartford-Davis also submits that FPL’s case failed on the basis that it had not adequately quantified its loss. While it is true that that was one cause of the case’s failure, another cause of its failure was the fact that its case, as put, was advanced on a false basis, and FPL never sought to develop a narrower case based on a true account of events.

36. In summary, I have observed above that the fundamental premise of FPL’s case, derived from Mr Roberts’ evidence, was that BRG’s conduct had deprived it of any information concerning its clients and the ability to contact those clients and that it had thereby lost a significant number of clients. That proposition was false; FPL (through Mr Roberts) must have known that it was false; and it had the consequence that the parties were required to address allegations as to a course of events which plainly had not occurred rather than the narrower questions which would have arisen on a properly founded case. I am satisfied that is a sufficient basis to order that FPL pay the 2021 Defendants’ costs of the 2021 Proceedings on an indemnity basis, excluding those costs of the security for costs application that are already payable on an ordinary basis.

The 2021 Defendants’ alternative application for indemnity costs

37. Alternatively, the 2021 Defendants seek orders for costs on an indemnity basis, over several periods, by reference to several Calderbank letters. There was here no dispute as to the applicable principles. Mr Hyde submits that:

“The relevant legal principles concerning a Calderbank offer are also well established. In exercising its costs discretion to make a more favourable costs order than normal in favour of a party who does better than an offer of compromise made by the party, the Court will have regard to two matters. First, whether the offer was a genuine offer of compromise. Second, whether it was unreasonable for the offeree not to accept it: Miwa Pty Ltd v Siantan Properties Pty Ltd (No. 2) [2011] NSWCA 344 at [6]; Ziegler as trustee for the Doris Gayst Testamentary Trust v Cenric Group Pty Ltd [2020] NSWCA 85 at [68] to [69].

It is accepted that the reasonableness or otherwise of the party’s conduct in not accepting the offers is to be assessed at the time of each offer, without the benefit of hindsight. The Defendants, as the offeror, bear the burden of persuading the Court that [FPL’s] failure to accept the offer was unreasonable in the circumstances at that time.”

38. Mr Turnbull similarly submits that:

“The making of a Calderbank offer enlivens the Court’s discretion to make a special costs order: Lawrence v Gunner [2015] NSWSC 1229, [26]. The failure to accept a Calderbank offer will justify an indemnity costs order where (i) the result achieved by the offeror was better than that which would have been achieved if the offer had been accepted, (ii) the offer was a genuine offer of compromise, and (c) it was unreasonable for the offeree not to accept the offer: Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816, [9]-[15]; Re Alsafe Security Products Pty Ltd [2016] NSWSC 575.”

39. Mr Hartford-Davis in turn submits that:

“There is no presumption that a party who does not accept a Calderbank offer and does not obtain a more favourable judgment will necessarily pay indemnity costs from the date of that offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Bryson and Stein JJA agreeing); Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9] (Bathurst CJ, Allsop P and Beazley JA agreeing).

The relevant principles on an application for indemnity costs following a Calderbank offer are well established. Success on such an application depends upon whether the offer was a genuine offer of compromise and whether the offeree acted unreasonably in all the circumstances in refusing the offer, tested as at the time the offer is made and not with the benefit of hindsight resulting from a known outcome recorded in a judgment: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8], [11] (Basten JA, McColl and Campbell JJA agreeing); Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 at [217] (Griffiths AJA, White and Kirk JJA agreeing).”

40. I also have regard to the summary of the applicable principles by Ward J (as the President of the Court of Appeal then was) in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 at [9]–[15]. I also summarised those principles in ReAlsafe Security Products Pty Ltd (atf Alsafe Trust) (in liq) [2016] NSWSC 575 at [8] as follows:

“[T]he fact that a party ultimately achieves a worse result than he or she would have achieved if he or she had accepted a Calderbank offer does not itself establish that the other party should be awarded indemnity costs, unless it can be said that it was unreasonable for the first party not to accept that offer, so as to warrant a departure from the general rule as to costs: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [above] at [9]–[15]; Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [14], [16] . In Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 1229 at [26], Stevenson J observed that:

If a Calderbank offer is made, but not accepted, the court’s discretion to make a special order is enlivened. The court’s discretion is an open one, but is commonly enlivened if (a) the party that made the offer achieves a better result than the amount offered, (b) the offer was a genuine offer of compromise, and (c) it was unreasonable of the offeree not to accept: for example Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [7] –[8].”

41. I recognise that a Calderbank offer will not justify an indemnity costs order unless its rejection was unreasonable: Ofria v Cameron (No 2) [2008] NSWCA 242 at [20]. I also addressed the applicable principles in Alora Davies Developments 104 Pty Ltd (in liq) v Raphael [2024] NSWSC 735 at [3]ff (“Alora Davies”) and Re Mobius Distilling Pty Ltd (in liq) (No 2) [2025] NSWSC 649 at [10]ff on which I have drawn for this summary.

42. Mr Hartford-Davis also draws attention to Robb J’s observation in Galati v GC NSW Pty Ltd (No 2) [2020] NSWSC 420 at [74] that:

“I do not generalise, but in my view it will usually be the case that, if a party makes a Calderbank offer that requires the other party to accept as a term of the compromise some liability that is extraneous to the proceedings and not within the claims made, then it is likely to be reasonable for the other party to reject the offer. Furthermore, as in the present case, where such an extraneous term is required by the Calderbank offer, when the issue of costs comes to be determined by the Court after the completion of the proceedings, the Court is unlikely to be able to find that it was unreasonable for the party receiving the offer to reject it, because the absence of any forensic examination of the extraneous issue would make that judgment a purely speculative one.”

43. The 2021 Defendants here rely on four successive offers of compromise. First, by letter dated 25 March 2022 (Ex J1, CB 138), BRG offered to transfer remaining retail superannuation, brokerage and risk commission clients to an AFSL holder of which FPL was representative, on terms that FPL would transfer its shares in BRG, Super Advisor Pty Limited (“Super Advisor”) and Brite NSW Pty Ltd (“Brite NSW”) to BRG within seven days for nominal consideration; and the proceedings be dismissed with no order as to costs. That offer involved an element of compromise as to the costs of the proceedings and was open for 14 days.

44. By letter dated 12 October 2022 (Ex J1, CB 142), BRG, Mr Bailey and Mr Thomas made an offer that required FPL to transfer its shares in BRG, Super Advisor and Brite NSW to a nominated transferee or transferees of those Defendants’ choice within seven days for nominal consideration; provided for FPL to pay a fixed sum of costs to Messrs Thomas and Bailey, consequent upon the costs order made in November 2021 by Rees J; and for the proceedings be dismissed with no order as to costs. That offer also involved an element of compromise as to the costs of the proceedings and was open for six days.

45. By letter dated 4 October 2023 (Ex J1, CB 154), LAT, SHL and Mr Thomas made an offer that the proceedings be dismissed with no order as to costs and Mr Thomas would pay $38,100 for FPL’s shares in Brite. That offer also involved an element of compromise as to the costs of the proceedings, added a payment for the shares in Brite NSW and was open for fourteen days.

46. By letter dated 17 February 2025 (Ex J1, CB 216), the 2021 Defendants, Mr Thomas and Mr Bailey made an offer that the 2021 Proceedings be dismissed with no order as to costs and the costs order made by Rees J on 10 November 2021 be vacated; the 2023 Proceedings be dismissed, with FPL to pay a sum on account of the Defendants’ costs, which was half of the money FPL had paid into Court, and the balance of those moneys be returned to FPL; and the shares in Super Advisor and Brite NSW be transferred to the Defendants for nominal consideration. That offer also involved an element of compromise as to the costs of the proceedings; was made in the course of the final hearing; and was open for only two days.

47. Mr Turnbull submits that it was unreasonable for FPL to reject these offers where FPL knew the falsity of Mr Roberts’ own evidence in support of its claim; each of the offers effected a separation of each sides’ commercial interests, which was sensible where the relationship between Mr Roberts, on one side, and Messrs Bailey and Thomas, on the other, had broken down; and each of the offers was made after the Defendants in the 2021 Proceedings had served their evidence. Mr Turnbull also submits that FPL (thorough Mr Roberts) ought to have known that the expert evidence of Mr Goodyer, on which FPL relied to quantify its damages claim, was premised on false assumptions. He acknowledges that:

“some of the terms of the offers went beyond the relief sought in these proceedings—namely the purchase of shares in [Brite] and Super Advisor. Nevertheless, where [FPL] was seeking that its shares in BRG be bought out, it was sensible for the Defendants to separate all of the commercial interests of both sides, not just in one company. The question is whether it was unreasonable for [FPL] to fail to accept the offers as made. It was unreasonable because, while the offers went beyond the relief sought, they were seeking to achieve the same apparent end as [FPL] — separation of the parties’ commercial interests.”

48. Mr Hartford Davis responds that the first offer, with its requirement for the transfer of the shares in Super Adviser and Brite NSW for nominal consideration, does not support an order for indemnity costs. He submits that it was not unreasonable for FPL to reject the second offer where it was only open for acceptance for six days “in circumstances where it raised very serious allegations of breach of directors’ duties, threatened a cross-claim, and threatened reporting Mr Roberts to ASIC; this offer was also conditional on FPL relinquishing its shares in BRG, Super Advisor and Brite for a nominal sum; and “this offer was in substance an invitation to capitulate and relinquish the Super Advisor and Brite shares for nominal consideration” and “involved no genuine compromise by the [D]efendants, other than giving up part of whatever claim for costs they would have had at 12 October 2022.” Mr Hartford-Davis submits and I accept that it was not unreasonable for FPL not to accept the third offer where it would have left the position in respect of Mr Bailey unresolved.

49. Mr Hartford-Davis submits that it was not unreasonable for FPL not to accept the fourth offer for overlapping and further reasons and also (in his submissions in response to Mr Hyde’s submissions) that:

“The offer was made after substantially all of the hearing of the proceeding had already taken place. Aside from costs, acceptance of the offer would not have placed [FPL] in a better position compared to the outcome on judgment. The offer proposed the dismissal of both proceedings, and was subject to a further condition that the plaintiff transfer is shares in [Super Advisor] and [Brite NSW] to a transferee or transferees nominated by the Mr Bailey and Mr Thomas in writing for the sum of $2. The shares in [Super Advisor] and [Brite NSW] were not a part of the proceedings.

The offer was not a genuine compromise, but instead an invitation to capitulate after the evidence had been heard, on terms that required the Plaintiff to surrender valuable property rights that were not part of the dispute. It was not unreasonable for the Plaintiff not to accept that offer.”

50. On balance, although with hesitation, I would not have made an order for indemnity costs by reference to these letters. I recognise that FPL should have recognised that its claims were put on the false premise noted above and were undermined by its failure to quantify damages on an appropriate basis; the element of compromise in these offers was real; on the other hand, a more limited and truthful case could have succeeded, and it would have been difficult for FPL and it is not possible for the Court to value the shares in Brite NSW and Super Advisor, even in the context of the breakdown of the parties’ relationship. I cannot form an affirmative view that it was unreasonable for FPL to reject those offers on this basis.

51. In the further alternative, the 2021 Defendants sought an order that FPL pay their costs of the 2021 Proceedings on an ordinary basis. FPL did not resist an order on that basis but I will not make it where I have held that an order for costs should be made on an indemnity basis.

Third party costs order in the 2021 Proceedings

52. The 2021 Defendants also seek an order in the 2021 Proceedings that Ms Alexandra Roberts, Mr Roberts’ wife, pay their costs of the proceedings in the same amount as that for which FPL was liable, or alternatively that FPL and Mrs Roberts be jointly and severally liable for those costs. They also purported to seek such an order on behalf of Mr Thomas and Mr Bailey in the 2021 Proceedings, although it does not seem to me that they had standing to do so. Nothing turns on that matter since I will not make such an order for the reasons noted below.

53. There was also no contest as to the applicable principles here. Mr Turnbull submits that:

“A costs order may be made against a third party where the non-party has played an active part in the conduct of the litigation, and that non-party has an interest in the subject of the litigation: Yu v Cao (2015) 90 NSWLR 190, [137]. Exceptional circumstances are required to justify such an order, which means circumstances outside the ordinary run of cases where parties pursue or defend claims for their own benefit or their own expense: Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No. 2) [2004] 1 WLR 2807, [23]-[25]; Yu v Cao, [139]. To summarise those principles:

(a)   The Court’s power to make a third party costs order is discretionary but must be exercised judicially;

(b)   The Court will make a third party costs order in rare and exceptional circumstances, in the sense explained in Dymocks;

(c)   A third party costs order must be made where the interests of justice require it;

(d)   A third party costs order may be justified where (i) the unsuccessful party is insolvent or a man of straw; (ii) the third party has caused the unsuccessful party to continue and prosecute proceedings so as to make it just and equitable to order costs against the third party; (iii) the third party has an interest in the subject of the litigation: Nature’s Care Holdings Pty Ltd v Chen (No. 4) [2024] NSWSC 379, [9].”

54. I also summarised the applicable principles in Re H & H Funding Pty Ltd (in liq) (rec and mgr apptd) [2024] NSWSC 248 at [14]ff as follows:

“… in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192–193; [1992] HCA 28 (“Knight v FP Special Assets”), Mason CJ and Deane J (with whom Gaudron J agreed at 205) observed that:

“For our part, we consider it appropriate to recognise a general category of case in which an order for costs should be made against a non-party … That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.”

In a separate judgment in Knight, Dawson J observed (at 202) that:

“The cases therefore establish a long-asserted jurisdiction to award costs in appropriate cases against a person who is not a party to the proceedings where that person is the effective litigant standing behind an actual party or where there has been a contempt or abuse of the process of the Court.”

[Counsel] refers to the well-known summary of the applicable principles in FPM Construction Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 (“FPM Construction”) at [210], where the Court of Appeal referred to the High Court’s analysis of the relevant issues in Knight v FP Special Assets. Basten JA there identified several elements arising from the case law, as relevant to whether an order for costs should be made against a non-party, namely that the unsuccessful party to the proceedings was the moving party and not the defendant; the source of funds for the litigation for the non-party or its principal; the conduct of the litigation was unreasonable or improper; and the non-party, or its principal, had an interest which was equal to or greater than that of the party or if financial, was a substantial interest; and the unsuccessful party was insolvent or could otherwise be described as a person of straw. Basten JA then noted that cases where such orders had been made against non-parties were typically cases where some, if not a majority, of those criteria were satisfied. …

I also recognise that these factors should not be treated as a form of statutory test for making a third party costs order. As Basten J also there observed (at [214]):

“The criteria identified in Knight v FP Special Assets should not ultimately be treated as separate and independent factors. Each requires an evaluative assessment of factors which will clearly tend to interact. Nor should it be forgotten that the power is only to be exercised in exceptional cases. In many cases involving individuals in the superior courts the parties may lack the resources to meet the costs of the litigation if unsuccessful. Similarly, there will frequently be a non-party, be it a company officer or solicitor, who will be active in the conduct of the litigation and who will obtain some direct or indirect financial benefit from its success. The fact that it is entirely proper for legal practitioners to runs cases on a speculative basis, so long as satisfied that they have reasonable prospects of success, demonstrates that care must be taken not to apply the criteria mechanically. Careful attention is required to the conduct of the party said to be involved in the litigation and the nature of the “interest” in its outcome or subject-matter.”

[Counsel] in turn refers to the decision in Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [150], where reference was made to the decision in Symphony Group PLC v Hodgson [1994] QB 179, which referred to the relevance of whether a non-party had notice of the prospect that a costs order would be made against it, at least in circumstances that that non-party gave evidence in the proceedings. I will assume, without deciding, that that is a relevant matter, although I also recognise that costs orders have been made against third parties in many cases where there is no suggestion that had occurred. Here, there is no suggestion that [the third party] had been given notice that a third party costs order would be sought against him.

[Counsel] draws attention to the review of the relevant case law by Leeming JA (with whom McColl and Basten JJA agreed) in PM Works Pty Ltd v Management Services Australia Pty Ltd trading as Peak Performance PM [2018] NSWCA 168, at [26]ff, where his Honour also referred to the High Court's reasoning in Knight v FP Special Assets and to the earlier decisions to which the High Court referred. His Honour there emphasised, by reference to authority including FPM Construction, that third party costs orders were the exception rather than the rule. His Honour also there observed at [36] that it would ordinarily not be sufficient basis to make a third party costs order merely that the unsuccessful party was the moving party; that the source of funds for the litigation was the non-party or its principal; and that the unsuccessful party was insolvent or could otherwise be described as a person of straw since, if a third party costs order were ordinarily made in that situation, the jurisdiction would lose its "exceptional" character. I proceed on the basis that that proposition is generally true, and that it will ordinarily be necessary to establish something further, likely including the other matters identified in FPM Construction, that the conduct of the litigation was unreasonable or improper or that the non-party had a substantial interest in the litigation, or possibly both. I also recognise that, as [Counsel] pointed out, Leeming JA also emphasised (at [39]) the need to avoid the third party cost rule "swallowing up" the general rule, by too readily making such an order.

I also recognise that, in Mistrina Pty Ltd v Australian Consulting Engineers Pty Ltd [2020] NSWSC 633 (“Mistrina”), Hammerschlag J (as the Chief Judge in Equity then was) reviewed the relevant case law and emphasised that the factors specified in that case law are not to be treated as separate and independent factors and that an evaluative assessment of all of those factors should be made. His Honour also emphasised (at [25]), that:

“The discretion is at large. In determining whether to exercise its discretion to make such an order, the court will have regard to all the relevant circumstances. If those circumstances warrant making the order because it is just to do so, giving it the description exceptional does not add much. The description exceptional is not some additional criteria".

His Honour went on to observe that, in that case, a third party costs order should be made against a litigation funder, where the funding of the proceedings was the litigation funder's business, and where that funder funded the proceedings to serve its own commercial and financial ends rather than to facilitate access to justice in any abstract sense. His Honour also observed (at [39]) that:

“Justice dictates that the successful defendant against the impecunious plaintiffs funded by the commercial funder should not be left with an empty costs order against persons of straw".

For completeness, I note that I also reviewed the relevant principles in Redman v JTS Investment Holdings Pty Ltd [2012] NSWSC 1575, which was approved by Hallen J in Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd (No 2) [2013] NSWSC 616 at [70], and in Riva NSW Pty Ltd v The Official Trustee in Bankruptcy [2023] NSW 896 at [36] - [37].”

55. Mr Turnbull submits, in support of this application, that:

“[FPL] was only able to prosecute the proceedings because it was funded by [Mrs Roberts] to do so. She advanced moneys to [FPL] to pay its legal fees. She paid moneys into Court to meet [FPL’s] obligation to pay security for costs. She paid money directly to [FPL’s] solicitors. She funded the majority of [FPL’s] costs and security for costs obligations. Without Mrs Roberts’ financial support, the inference is open that [FPL] would not have been able to afford to pay its lawyers to continue these proceedings. Mrs Roberts also stood to benefit from the proceedings as a beneficiary of the trust of which the plaintiff is trustee. For those reasons, “exceptional circumstances” are made out, and Mrs Roberts should be liable, together with [FPL], for … costs.”

56. Mr Turnbull also submits that:

“Applying the principles for the making of a third party costs order, Mrs Roberts should be jointly liable with the plaintiff for any costs ordered in favour of the Defendants, for the following reasons.

First, exceptional circumstances exist in this case, in that the case is taken out of the ordinary run of matters because Mrs Roberts has been lending (not giving) money to [FPL] to fund this litigation. Without those loans, it is to be inferred that [FPL] could not continue to fund the costs of its own lawyers. Moreover, [FPL]’s claim would have been stayed because of its inability to meet the security for costs ordered against it. This was not just a case of a party seeking to vindicate its own interests.

Secondly, [FPL]’s financial circumstances are not strong. Any costs order made against it (and ultimately crystalised into a figure) will add to the list of creditors of the plaintiff and the relatively large debts owed by [FPL]. The plaintiff is no longer trading because it does not hold an AFSL. In those circumstances, it is unlikely [FPL] will ever be able to pay a costs liability.

Thirdly, the proceedings were misconceived from the beginning, because of the falsity of Mr Roberts’ own evidence. These misconceived proceedings could only continue with Mrs Roberts’ financial support. The combination of those factors means that the interests of justice justify a third party costs order. The Defendants have been vexed with litigation which ultimately had very little grounding in fact, and do compensate them for the costs of that, a third party costs order should be made. The jurisdiction to award costs is compensatory, not punitive. A costs order against Mrs Roberts would meet that requirement by compensating the Defendants for the costs of litigation which was wholly misconceived.

Fourthly, Mrs Roberts had an interest in the litigation, in that, if it were to succeed, and a payment of money would flow to [FPL], she would benefit as a beneficiary of the trust. She would also benefit because any amounts which [FPL] would recover in the proceedings could then be applied to pay down the substantial loans she had made to the plaintiff to fund the litigation. As her counsel said at the security for costs hearing in August 2023, Mrs Roberts “stands behind” [FPL]. That being so, she can now stand beside it in being jointly liable with the plaintiff for the costs which they, jointly, have caused the Defendants to incur.”

57. Mr Hartford-Davis in turn submits that:

“It has been said that the discretion will generally not be exercised against “pure funders”, being “those with no personal interest in the litigation, who do not stand to benefit from it, are not funding it as a matter of business, and in no way seek to control its course”: see In the matter of Wetherill Park Holdings Pty Ltd (No 2) [2021] NSWSC 1397 at [7], quoting Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2005] 1 NZLR 145 at [25]. See also QBE Insurance (Australia) Ltd v Hotchin and Ors [2013] NSWSC 315 at [75].

Leeming JA’s remarks in PM Works Pty Ltd v Management Services Australia Pty Ltd trading as Peak Performance PM [2018] NSWCA 168 at [35]ff are also relevant. In that case his Honour described non-party costs orders as “exceptional” and warned that “courts must be astute not to permit [their] availability to expand to the general run of cases where non-parties have played an active role in unsuccessful litigation”. Again, there is no suggestion, nor can there be, that Mrs Roberts played an active role in the litigation.

The majority of the criteria in FPM Management are not met. Accordingly, the Court should decline to make a third-party costs order against Mrs Roberts.”

58. Importantly, Mr Hartford-Davis also points to several cases which indicate that the Court will exercise caution in making a non-party costs order where funding is provided by the spouse or a family member of a party to the proceedings. Mrs Roberts here was the spouse of Mr Roberts, and the evidence suggests that she provided funding to FPL in order to advance Mr Roberts’ interest in the litigation. Here, the close relationship between Mr Roberts and FPL works to Mes Roberts’ advantage, by contrast with the position in respect of indemnity costs, where it worked to Mr Roberts’ disadvantage.

59. In Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498, Collier J declined to make a third party costs order against the wife of an applicant in proceedings, notwithstanding that she appears to have taken a more active role than Mrs Roberts took in these proceedings, by providing instructions to prosecute the claims and throughout the proceedings. Collier J there observed (at [22]–[23], [32] and [35]) that:

“Significantly, and by analogy with the principles of maintenance and champerty, the courts have also recognised that not only may legitimate financial support in litigation be provided by family members, but that in the event of the failure of the relevant litigation costs will not as a general proposition be awarded against those supporting family members. The rationale for such recognition appears to be that such social or family ties justify the support of the litigation (cf for example Neville v London Express Newspaper Ltd [1919] AC 368). This principle was discussed by the Full Court in Gore (2002) 119 FCR 429, where their Honours in turn referred to the decision of the Court of Appeal in Condliffe v Hislop [1996] 1 WLR 753 and observations of Longmore J in McFarlane v EE Caledonia Ltd (No 2) [1995] 1 WLR 366 at 373. That is not to say, of course, that non-party costs will not be awarded against a spouse or other family member should the circumstances warrant — for example Thistleton v Hendricks (1992) 32 Con LR 123; Locabail (UK) Ltd v Bayfield Properties Ltd [1999] 20 LS GazR 39.

In circumstances where financial support for litigation is provided by a spouse the proper starting point may be to regard any such support as motivated by the spouse’s natural affection for the litigant, and therefore not such a circumstance where non-party costs should be awarded in the absence of exceptional circumstances (cf Cooper v Maxwell [1992] CA Transcript 273; Murphy [1997] 1 WLR 1591 at [1603]–[1604], Jackson v Thakrar [2008] 1 All ER 601 at 609). …

… while I note that Mrs Tracy assisted in providing security for costs which the applicants were ordered to pay, I consider that this is explainable by the natural inclination of a wife to support her husband in litigation to which he is a party and does not constitute an active part played by Mrs Tracy in the conduct of the litigation. As has been observed in numerous cases, funding alone will not justify an order where an otherwise disinterested relative has, out of natural affection, funded costs of a claim (Dillon LJ in Cooper v Maxwell [1992] CA Transcript 273 (Stuart-Smith LJ and Mann LJ agreeing); Phillips LJ in Murphy [1997] 1 WLR 1591 at 1603–1604; Jackson v Thakrar [2008] 1 All ER 601 at 607–608)…

… Mrs Tracy was not, in my view “a real party” to the litigation in very important and critical respects (contrast Arundel (2001) 179 ALR 406 at 414). While Mrs Tracy may have benefited financially from the success of the applicants as I have already noted, and as has been held in numerous cases (for example Bischof [1992] 2 VR 198, Vestris (1998) 72 SASR 449, Probiotec (2008) 166 FCR 30) the mere fact that a person may benefit, financially or otherwise, from litigation will not, without more, suffice to justify an award of costs.”

60. In KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare on Haig v Bowden (No 3) [2020] NSWCA 158, Payne J similarly declined to make a third party costs order against the parents of a party who had funded his conduct of proceedings and observed (at [45] and [50]) that:

“There is authority for the unsurprising proposition that family members may provide financial support for a plaintiff in litigation without for that reason alone becoming exposed to an adverse costs order in the event that the plaintiff fails: Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 . In that case, Collier J explained (at [22]) that relevant to her Honour’s conclusion was the proposition that social or family ties justified the financial support of the litigation …

The question whether a third party costs order ought be made ultimately depends on the particular facts of the case. It would be an error to approach the exercise of the third party costs discretion on the basis that family members who provide financial support for litigation are necessarily immune from an adverse costs order in the event that the family member fails. Whilst a family relationship is not a shield against a third party costs award if all the circumstances of the case justify such an order, I have concluded that such an order is not justified here.”

61. In Skelin v Self Care Corporation Pty Ltd (No 2) [2022] FCA 50, Burley J also declined to make a third party costs order against a spouse who had partly funded proceedings; recognised the significance of the fact that the spouse had not given instructions in respect of the proceedings; found that she was not the “moving party or a real party” to the proceedings, although she had provided some but not all funds for the proceedings; and held that it would not be just and equitable for her to be visited with a costs order in the relevant circumstances.

62. Here, I have found that FPL’s conduct of the proceedings was at least unreasonable, and arguably improper; I do not find that Mrs Roberts stood to receive any direct return from the proceedings, although that would likely have benefited indirectly from a recovery by FPL as trustee of the trust; FPL is likely not insolvent, although it and the trust are plainly impecunious and dependent on continuing financial support from Mrs Roberts and possibly Mr Roberts; and there is no reason to think that Mrs Roberts had an active involvement in the conduct of the litigation and the uncontested evidence to the contrary, notwithstanding that Mr Roberts told Mr Thomas of her support for the proceedings. On balance, I am not persuaded that it would be a proper exercise of discretion to make a third party costs order against Mrs Roberts, where, consistent with the case law, the funding that she provided to FPL provided is readily explicable by her wish to assist her husband, albeit in the context of the litigation, rather than by her taking any active role in promoting the conduct of the proceedings.

Order for payment of security for costs out of Court in the 2021 Proceedings

63. The 2021 Defendants also sought an order that an amount paid into Court by FPL as security for their costs under the orders made by Williams J on 22 September 2023 (“Security Orders”) be paid out to BFM together with any interest on that amount. This matter, and any implications of the appeal brought by FPL in the 2021 Proceedings received little attention in submissions at the hearing and, if this order is pressed, the parties should address it in the draft orders and submissions as to orders to which I refer in paragraph 83 below.

Mr Bailey’s claim for indemnity costs application in the 2023 Proceedings

64. By his Interlocutory Process filed on 30 April 2025 in the 2023 Proceedings, Mr Bailey sought an order that FPL pay his costs of the 2023 Proceedings from 22 May 2023 to 20 March 2025 inclusive on an indemnity basis, or otherwise on the ordinary basis. The latter order was not opposed by FPL.

65. As I noted above, although Mr Bailey was not party to the 2021 Proceedings, Mr Hyde made detailed submissions as to the conduct of those proceedings, which were adopted by Mr Turnbull. That course was reasonably adopted by Mr Hyde, where, as I noted above, it was common ground in the substantive hearing that the outcome of the 2021 Proceedings was critical to FPL’s success in the 2023 Proceedings and, indeed, that FPL could not establish its claim to compensation against Mr Bailey or Mr Thomas in the 2023 Proceedings if it failed to establish its claim for compensation against the 2021 Defendants in the 2021 Proceedings. It follows that, if FPL failed in its claim for compensation in the 2021 Proceedings on a basis that involved allegations that should not have been made, or where it should have known that claim had no reasonable chance of success, or that claim was made in disregard of the known facts, then that matter would necessarily impact the outcome of the 2023 Proceedings and would be relevant to Mr Bailey’s claim for indemnity costs in the 2023 Proceedings.

64. Mr Hyde in turn submits that:

“The 2023 Proceedings were dependent upon [FPL] being successful in the 2021 Proceedings. … there can be no real doubt that there has been “relevant delinquency” by [FPL] in that the 2023 Proceedings ought not to have been commenced given the sworn evidence of Mr Roberts and the instructions given by him in relation to the preparation of the expert evidence in the 2021 Proceedings was demonstrably false.

As such, [Mr] Bailey ought to be fully compensated for the costs incurred by him in the 2023 Proceedings.”

67. In oral submissions, Mr Hyde also pointed to FPL’s failure in other aspects of the 2023 Proceedings (T23). It seems to me that FPL’s failure as to those matters would not have warranted an order for indemnity costs, but for the fact that that its success in recovering compensation in the 2023 Proceedings depended on its success in the 2021 Proceedings which was in turn vitiated by the manner in which the 2021 Proceedings were conducted.

68. I have addressed the applicable principles as to indemnity costs above. As I noted above, the fundamental premise of FPL’s case in the 2021 Proceedings, which was essential to its claims in the 2023 Proceedings and was derived from Mr Roberts’ evidence, was that BRG’s conduct had deprived it of any information concerning its clients and the ability to contact those clients and that it had thereby lost a significant number of clients. That proposition was false; FPL (through Mr Roberts) must have known that it was false; and it had the consequence that the parties were required to address allegations as to a course of events which plainly had not occurred rather than the narrower questions which would have arisen on a properly founded case. I am satisfied that is sufficient basis to order that FPL also pay Mr Bailey’s costs of the 2023 Proceedings on an indemnity basis, excluding those costs of the security for costs application that are already payable on an ordinary basis.

Mr Bailey’s claim for a gross sum costs order in the 2023 Proceedings

69. Mr Bailey also sought a gross sum costs order. By a revised schedule provided in the course of the hearing (MFI 3), Mr Bailey recalculates the gross sum costs claimed so as not to claim indemnity costs prior to 2 August 2023, in a period in which the costs ordered by Williams J in the security for costs application were ordered on an ordinary basis.

70. There was again no dispute as to the applicable principles. Mr Hyde refers to applicable case law including Hamod v State of New South Wales [2011] NSWCA 375 at [813] (“Hamod”) and Kostov v Zhang (No 2) [2016] NSWCA 279 at [19]. I also summarised the applicable principles in Re Beverage Freight Services Pty Ltd [2020] NSWSC 797 (“Beverage Freight”) and in Alora Davies at [8] on which I have here drawn.

71. Section 98(4) of the CPA relevantly provides that the Court may make an order to the effect that a party to whom costs are to be paid is entitled to a specified costs order instead of assessed costs. That power is commonly exercised in complex cases, having regard to the several matters identified by Beazley JA (with whom Giles and Whealy JJA) agreed in Hamod at [816]–[817], but the power is not limited to such a case: Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 at [8]; Beverage Freight at [19]. The power to make such an order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Court will typically apply a discount to professional fees in assessing costs on a gross sum basis, although there are cases in which it has not done so. In particular, a gross sum costs order may be made to avoid the expense, delay and aggregation involved in litigation arising out of an assessment: Harrison v Schipp at [21]. Where a gross sum order is made, the Court is not required to undertake a detailed examination of the kind which would be undertaken in a cost assessment in determining a gross sum payable and will adopt a “broad brush” approach: Hadid v Lenfest Communications Inc [2000] FCA 628 at [35]; Harrisonv Schipp at [22]; Beverage Freight at [19].

72. Mr Hyde points to the substantial costs, in excess of $500,000, incurred by Mr Bailey in defence of the proceedings. He also points to several matters indicating FPL’s impecuniosity and submits, and I accept, that “there is every reason to believe that [Mr] Bailey … will not fully recover his costs and, as such, [he] should not be put to the further expense of undergoing an assessment”. He also submits, and I accept, that there is clear evidence before the Court as to the basis on which costs have been charged as well as the nature and the amount of the disbursements which have been incurred by Mr Bailey, and that evidence is sufficient for the Court to have confidence that it can reach a gross sum fairly between the parties upon the materials that are available. He also submits that:

“Given the purpose of the power to make lump sum costs orders is to avoid the expense, delay and aggravation involved in protracted litigation arising out of assessment, [Mr] Bailey contends that given:

(a)   the likely length and cost of an assessment;

(b)   the financial position of FPL; and

(c)   the confidence the Court can have that an appropriate sum can be derived from the materials available,

the Court would be justified in making of a gross sum costs order.”

73. Mr Dziubinski responded, in oral submissions, that such an order should not be made, first, because the 2021 Defendants and Mr Thomas do not seek such an order and, second, because there is a possibility of duplication of costs between the 2021 Proceedings and the 2023 Proceedings. Mr Dziubinski drew attention to several attendances recorded in the invoices issued by Mr Bailey’s submissions to Mr Bailey that record consideration of issues in the 2021 Proceedings. I do not accept that those attendances raise any real risk of duplication, where the fact that FPL’s claim for compensation in the 2023 Proceedings depended on its claim for compensation in the 2021 Proceedings meant that Mr Bailey’s legal; representatives necessarily had to address the issues in the 2021 Proceedings; the attendances to which Mr Dziubinski points do not involve substantial time periods or substantial costs; and there is no reason to think that the gross sum costs claimed, which are discounted against the actual costs incurred which Mr Bailey, would exceed the costs recoverable on assessment.

74. I am satisfied that the matters noted above support a gross sum costs order in favour of Mr Bailey; Mr O'Connor’s evidence allows those costs to be fairly quantified in accordance with Mr Bailey’s revised calculation; and the matters raised by Mr Dziubinski in submissions do not provide reason not to make that order or to question the calculation of the costs claimed.

Mr Bailey’s alternative claim

75. Alternatively, Mr Bailey sought an order that FPL pay his costs of the proceedings from 11 February 2025, or alternatively 18 February 2025, to 20 March 2025 on the indemnity basis, and otherwise on the ordinary basis, referable to a Calderbank letter and gross sum costs orders referable to that alternative basis of costs. Mr Bailey relies on the Calderbank letter dated 17 February 2025 (Ex J1, CB 216), which I have addressed above. I have also referred to Mr Hartford-Davis’ submissions as to that letter above.

76. On balance, and again with hesitation, I would not have made an order for indemnity costs by reference to this letter for the same reasons I would not have done so in respect of the offers made by the 2021 Defendants and Mr Thomas. I recognise that FPL should have realised that its claims in the 2021 Proceedings, on which its claim against Mr Bailey in the 2023 Proceedings depended, were put on the false premise noted above and were undermined by its failure to quantify damages on an appropriate basis; the element of compromise in those offers was real. However, as I noted above, a more limited and truthful case could have succeeded, and it would have been difficult for FPL, and it is not possible for the Court, to value the shares in Brite NSW and Super Advisor, even in the context of the breakdown of the parties’ relationship. I cannot form an affirmative view that it was unreasonable for FPL to reject this offer on this basis.

Order for payment of security for costs out of Court in favour of Mr Bailey in the 2023 Proceedings

77. Mr Bailey sought an order that an amount paid into Court by FPL under the Security Orders be released and paid out to him. I made that order by consent.

Mr Bailey’s claim for a gross sum costs order as to the costs of this application

78. Mr Bailey also sought an order that FPL pay the costs of these proceedings quantified in a gross sum. I am satisfied that Mr O'Connor’s evidence sufficiently supports the quantification of this claim and a gross sum costs order should be made for the same reasons that it should be made in respect of the principal proceedings.

Mr Thomas’ claim for indemnity costs application in the 2023 Proceedings

79. By his interlocutory process filed 7 May 2025, Mr Thomas in turn seeks an order that FPL pay his costs of the 2023 Proceedings on an indemnity basis, although that order would also need to be modified to reflect the terms of the order made by Williams J as to the costs of the security for costs application. I will make that order, as modified, for the same reasons that I will make such an order in respect of Mr Bailey’s claim to indemnity costs of the 2023 Proceedings.

80. Alternatively, Mr Thomas seeks indemnity costs by reference to Calderbank letters, or costs on an ordinary basis. I would not make an order for indemnity costs by reference to the Calderbank letters for the same reasons I did not do so in the 2021 Proceedings. I need not make an order for costs on an ordinary basis where I have ordered costs on an indemnity basis, with the modification noted above.

Third party costs order in the 2023 Proceedings

81. Mr Thomas also seeks a third party costs order against Mrs Roberts in the 2023 Proceedings. I will not make that order for the same reasons that I did not do so in the 2021 Proceedings.

Order for payment of security for costs out of Court in favour of Mr Thomas in the 2023 Proceedings

82. Mr Thomas sought an order that an amount paid into Court by FPL under the Security Orders be released and paid out to him. I made that order, although FPL did not consent to it, where there was no tenable basis for FPL to oppose it in circumstances that an order for costs on an ordinary basis was not opposed and no appeal had been brought by FPL against my judgment in 2023 Proceedings.

Orders

83. I direct the parties to bring in short minutes of order to give effect to this judgment within seven days, and, if there is any disagreement as to those orders, submissions not exceeding five pages in Arial font 12 and one and a half spacing.

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Amendments

20 August 2025 - Amendments to correct typographical errors in paragraphs 74 and 78: Replaced the name Mr Webb with Mr O'Connor.