John David Rich and Mark Alan Silberman v Australian Securities and Investments Commission

John David Rich and Mark Alan Silberman (the applicants) sought leave to appeal from an interlocutory costs order made by the primary judge against them in proceedings brought by the Australian Securities and Investments Commission (ASIC). The applicants were directors of a company involved in ASIC's proceedings.

The central legal issue before the Court of Appeal was whether the primary judge had erred in refusing to take into account the fact that the insurers of the applicant directors had refused to indemnify their legal costs when making the interlocutory costs order. The applicants contended that this refusal was a relevant consideration for the primary judge, particularly in determining the quantum of the costs order.

The Court of Appeal held that the refusal of indemnity by the insurers was an irrelevant consideration for the primary judge at the interlocutory stage, especially as it had not been raised before the primary judge. The Court reiterated the principle that interlocutory costs orders are generally made on the basis of the conduct of the parties in the litigation itself, and external factors such as insurance arrangements, unless specifically raised and relevant to the immediate application, should not influence such orders.

Leave to appeal was therefore refused.