ISG Financial Services Ltd v Australian Financial Complaints Authority Ltd; ANLP Pty Ltd atf AP Superannuation Fund v ISG Financial Services Ltd (No 2)

ISG Financial Services Ltd brought proceedings against the Australian Financial Complaints Authority Ltd (AFCA) and ANLP Pty Ltd, which was acting on behalf of AP Superannuation Fund. The dispute centred on various claims, including allegations of misleading or deceptive conduct and breaches of the Australian Securities and Investments Commission Act. The case was heard in the Supreme Court of Queensland. The primary legal issues before the court involved the application of the Hardiman principle to proceedings involving AFCA, the allocation of costs under the Uniform Civil Procedure Rules, and the evaluation of a Calderbank offer made by AFCA. The court also had to determine the appropriate costs for the second defendant’s separate proceedings in the District Court.

The court ruled that the Hardiman principle, which generally prevents a successful party from recovering costs from a losing party when the judgment is substantially in the successful party’s favour, did not apply to proceedings involving AFCA. This was due to AFCA’s unique status as a private body operating an approved complaints resolution scheme, which does not exercise judicial power and cannot enforce its own determinations. The court assessed the costs under rule 684(2) of the Uniform Civil Procedure Rules, considering that the plaintiff had failed on most of its claims at trial. It determined that 90% of the first defendant’s costs should be awarded to AFCA. Additionally, the court found that the Calderbank offer made by AFCA, which was reasonable but rejected by the plaintiff, did not warrant a departure from the usual approach to costs. The court also ruled that the second defendant was entitled to its costs from the District Court proceeding up to the consolidation date, and that it was reasonable for the second defendant to retain independent legal representation after the proceedings were consolidated.

The court ordered that the plaintiff pay 90% of the first defendant’s costs, including the plaintiff’s claim and the first defendant’s counterclaims, on a standard basis to be assessed or agreed. The plaintiff was also ordered to pay the second defendant’s costs of the District Court proceeding up to and including 8 September 2021, on a standard basis to be assessed or agreed. This decision underscores the court’s approach to costs in complex proceedings involving multiple parties and different stages of litigation.