COSTS – application for special costs order following dismissal of appeal – aspects of the appeal conducted otherwise than in accordance with the overarching purpose – special costs order made, payable on a lump sum basis
DBA(AU) AS TRUSTEE FOR DPT (and others named in the Schedule)
Third Appellant
AND:
SM
Respondent
JUDGES:
BESANKO, JAGOT AND LEE JJ
DATE OF ORDER:
12 DECEMBER 2017
THE COURT ORDERS THAT:
1.Order 2 made by Jagot J on 23 June 2017 be varied so as to delete the words “as agreed or taxed”.
2.The appellants are to pay on a party/party basis the respondent’s costs of the appeal save that the appellants are to pay on an indemnity basis the costs of the respondent of and incidental to:
(a)that part of the interlocutory application filed by the appellants on 17 July 2017 which sought leave to adduce evidence in relation to the appeal; and
(b)the interlocutory application filed by the appellants on 17 August 2017.
3.The respondent be awarded a lump sum for her costs in a sum to be determined by a Registrar of the Court.
4.Within 14 days, the respondent is to file…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
LFDB v SM (No 2) [2017] FCAFC 207
Case
[2017] FCAFC 207
Decision Date
CaseChat Overview and Summary
The case of LFDB v SM (No 2) involved the parties contesting the costs following the dismissal of an appeal in relation to an application under section 72(1) of the Trans-Tasman Proceedings Act 2010 (Cth) to set aside the registration of judgments from the High Court of New Zealand. The appeal was dismissed by the Full Court on 15 November 2017, and the Court ordered the parties to file written submissions regarding the appropriate order for costs. The appellants argued that no costs order should be made, while the respondent sought an indemnity costs order and a lump sum costs order.
The court was required to determine whether an order for costs should be made, and if so, what the nature of that order should be. The court considered the general proposition that the award of costs is discretionary but typically exercised in favour of the successful party. The court also considered the principles guiding the exercise of the discretion to make a special costs order, which includes taking into account any failure by a party to comply with the overarching purpose of the civil procedure provisions. The court found that the appellants' conduct of the appeal was characterised by delay, change of position, and meritless arguments.
The court decided to make a special costs order, payable on a lump sum basis. The appellants were ordered to pay the respondent's costs of the appeal on a party/party basis, but on an indemnity basis for specific parts of the appeal. Additionally, a lump sum for the respondent's costs was awarded, to be determined by a Registrar of the Court. The respondent was required to file and serve any evidence upon which she proposed to rely on the issue of quantification of the lump sum for costs within 14 days. Similarly, the appellants were required to file and serve any evidence upon which they proposed to rely on the issue of quantification of the lump sum for costs within a further 14 days. The Registrar was directed to determine the quantum of the lump sum for costs payable, and to order that the appellants are to pay the sum quantified within 28 days from the date of the order.
In summary, the court granted the respondent's application for a special costs order, ordering the appellants to pay the respondent's costs of the appeal on an indemnity basis for specific parts of the appeal, and a lump sum for the respondent's costs to be determined by a Registrar of the Court.
Orders
Orders of the court
1. Order 2 made by Jagot J on 23 June 2017 be varied so as to delete the words “as agreed or taxed”.
2. The appellants are to pay on a party/party basis the respondent’s costs of the appeal save that the appellants are to pay on an indemnity basis the costs of the respondent of and incidental to:
(a) that part of the interlocutory application filed by the appellants on 17 July 2017 which sought leave to adduce evidence in relation to the appeal; and
(b) the interlocutory application filed by the appellants on 17 August 2017.
3. The respondent be awarded a lump sum for her costs in a sum to be determined by a Registrar of the Court.
4. Within 14 days, the respondent is to file and serve any evidence upon which she proposes to rely on the issue of quantification of the lump sum for costs.
5. Within a further 14 days, the appellants are to file and serve any evidence upon which they propose to rely on the issue of quantification of the lump sum for costs.
6. The Registrar be directed pursuant to FCR 1.37 to determine the quantum of the lump sum for costs payable pursuant to Order 3 above (including the quantification of the costs payable pursuant to Order 2 made by Jagot J on 23 June 2017 as varied by Order 1 above) in such manner as he or she deems fit including, if thought appropriate, on the papers.
7. The Registrar be directed pursuant to FCR 1.37, at the conclusion of the quantification process, to order that the appellants are to pay whatever sum has been quantified pursuant to Order 6 above to be paid within 28 days from the date of the order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
On 15 November 2017, the Full Court dismissed an appeal against orders made by a judge of the Court dismissing an application under s 72(1) of the Trans-Tasman Proceedings Act 2010 (Cth)to set aside the registration of judgments of the High Court of New Zealand: LFDB v SM [2017] FCAFC 178 (Principal Judgment). The parties had foreshadowed application being made for a special costs order and when dismissing the appeal, the Court ordered the parties to file written submissions as to the appropriate order as to costs. The approach of ‘flagging’ such an application prior to judgment was consistent with the obligations of a party seeking such an order: see Westpac Banking Corporation v Wittenberg (No 3) [2016] FCAFC 51 at [9] per Buchanan, McKerracher and White JJ; Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144 at [5] per Dowsett, Perram and Pagone JJ. There is no need to recount the details of the appeal, nor of the history of the broader litigious saga in which the parties have been involved. These reasons assume familiarity with the background referred to in the Principal Judgment at [10]-[26]. The submission of the appellants is that no order as to costs should be made. This is because the controversy, at heart, is a de facto property dispute and, by analogy to s 117 of the Family Law Act 1975 (Cth) (FLA), the default position should be that each party bear their own costs. The respondent submits that not only should an order for costs be made, but that it should be made on an indemnity basis. The respondent contends that the appellants’ conduct of the appeal “amounted to an abuse of the Court’s processes” and was characterised by delay, change of position and meritless arguments. Additionally, a lump sum costs order is sought. It is convenient at the outset to reject the appellants’ contention that costs “do not… follow the event in such a matter as this”. For reasons explained in the Principal Judgment at [55]-[63], this was not a de facto financial cause as that expression is used in Division 2 of Part V of the FLA. The default costs position under the FLA is not an apposite analogy to this different character of litigation. The presently relevant approach is as was explained by Gleeson CJ, Gummow, Hayne and Crennan JJ in Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at 62-63 [25] that although there is “no absolute rule”, one of the “general propositions” regarding an award of costs is that “the award is discretionary but generally that discretion is exercised in favour of the successful party”: see also Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 88-89 [40]-[41] per Gaudron and Gummow JJ. When it comes to the respondent’s submission, the principles guiding the exercise of the discretion to make a special costs order can be shortly stated. It is trite that the Court has a broad power to award costs, including indemnity costs, under s 43 of the Federal Court of Australia Act 1976 (Cth) (Act). It has often been remarked that the discretion as to costs is unfettered, but in exercising the discretion to award costs, s 37N(4) of the Act requires the Court to take account of any failure by a party to comply with the overarching purpose of the civil procedure provisions, namely to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see s 37M(1). An award of indemnity costs is not a punitive measure, but is designed for “compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at 665 [20] (Gray J, Carr and Goldberg JJ agreeing). Consistently with facilitating the overarching purpose, such circumstances may include where a proceeding is unduly prolonged by groundless contentions: see Ragata Developments Pty Limited v Westpac Banking Corporation at 7, 8 (unreported, Davies J, 5 March 1993), and more generally Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [3]-[5] per Jagot, Yates and Murphy JJ.