Oz B & S Pty Ltd v Elders IXL Ltd

[1993] FCA 569

OZ B AND S PTY LIMITED v. ELDERS IXL LIMITED
No. NG635 of 1990
FED No. 569
Number of pages - 3
Costs
(1993) 117 ALR 128

COURT

IN THE FEDERAL COURT OF AUSTRALIA

STATE OF NEW SOUTH WALES
GENERAL DIVISION
Einfeld J(1)

CATCHWORDS

Costs - order sought that the applicant's principal director and shareholder pay the respondent's costs of an unsuccessful motion - whether jurisdiction to award costs against a non-party - motion futile

Federal Court Act 1976 (Cth) s 43(1),(2)

Knight v F.P. Special Assets Limited (1992) 174 CLR 178

Bent v Gough (1992) 36 FCR 204

Re Wridgemont Display Homes Pty Limited Jenkinson J unreported 4 December 1992

Re Landon Property Trust PLC (1991) 1 WLR 601

HEARING

SYDNEY, 9 July 1993

#DATE 6:8:1993

Counsel and solicitor for the applicant: Mr D.W. Elliott

instructed by Sydun and Company

Counsel and solicitor for the respondent: Mr R.W. White

instructed by Finlaysons

ORDER

Respondents' costs of the motion to be paid by Anthony Croke as assessed or taxed.

Note: Settlement and entry of orders are deal with in accordance with Order 36 of the Federal Court Rules.

JUDGE1

EINFELD J A motion by the applicant of 11 June 1993 to set aside an order of the Court on 24 September 1992, made ex parte, dismissing the applicant's claim for declarations and damages under the Trade Practices Act and for breach of contract, was dismissed on 9 July 1993. The respondent now seeks an order that the applicant's principal director and shareholder Anthony Croke pay the respondent's costs of the motion. Alternatively it seeks an order against the applicant which the evidence showed was an impecunious company.

1. The High Court held in Knight v F.P. Special Assets Limited (1992) 174 CLR 178 that there was power in provisions like subsections (1) and (2) of section 43 of the Federal Court Act 1976 to award costs against a non-party. Chief Justice Mason and Justice Deane held at 187-190 and at 192 that both at common law and in equity there was jurisdiction to award costs against persons considered to be the "real parties" to litigation. Their Honours said at 192-3 (and Justice Gaudron agreed at 205) that the statutory provision must be construed against this background and be thus taken as conferring a like jurisdiction. It should be exercised 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.

See also Dawson J at 203; the decision of a Full Court of this Court (Black CJ, Northrop and Ryan JJ) in Bent v Gough (1992) 36 FCR 204; and Re Wridgemont Display Homes Pty Limited Jenkinson J unreported 4 December 1992.

1. The respondent submitted that:
   

a) the impecuniosity of the applicant and its

capacity to meet an order for costs are not

disputed

b) Mr Croke commenced the proceedings and lodged the motion without authority from the board of the applicant company or its other directors

--as pointed out in the judgment of 9 July 1993, in his evidence on the motion he said that his wife and another man who were the other

directors had taken no part and had no knowledge of or role in the proceedings

c) Mr Croke or someone for whom he was acting had an interest in the proceedings and would have benefited from its success

d) the interests of justice demanded that the

respondent be protected from exposure to the

further costs of the futile motion

1. The applicant put forward as unproved the proposition that the applicant could not pay the respondent's costs. However, the evidence showed that it claims to be able to meet less than half of the amount ordered by Justice Spender which was itself less than half of the costs incurred or expected to be incurred by the respondent at that time. Even this amount it had to borrow. Moreover, if the applicant can pay the costs, it can no doubt answer any order made against Mr Croke or reimburse or indemnify him for any moneys he is required to outlay.

2. The applicant also argued that Mr Croke only acted as a director of the applicant which holds the copyright in the publication involved in the proceedings, but it seems to me that this argument misses the point of the application. In cases of this kind, it will often be the situation that the person targeted for a non-party costs order will be a director of the company involved: Re Landon Property Trust PLC (1991) 1 WLR 601. Hence it says nothing relevant that Mr Croke was acting in that capacity here.

3. Another argument of the applicant was that the motion was not vexatious or frivolous and the hearing was substantial. This is formally true but as pointed out in the judgment of 9 July 1993, the motion was futile because there was no point in setting aside the order of dismissal without cutting two thirds off the amount ordered by Justice Spender for security of costs and this was, for the reasons given then, a meritless concept.

4. In his evidence on the motion, Mr Croke said that he acted at all times alone and without any consultation with or decision of the other directors. The only facts presented in evidence, whether as to security for costs or as to delay in moving to restore the case to the list, were those relating to him and his family's company C.M. Croke Pty Ltd -- and very little evidence was presented even in those connections. Nothing at all was presented to suggest that anyone other than Mr Croke was interested in the case at all, and everything presented was to the contrary. For example, his whole case on why he took four months to find a solicitor to act for him on the motion was because only he could do it.

5. The correct inference to draw from the evidence is therefore that he acted alone and without regard to the cost consequences to the respondent of what he was doing. Because the applicant company had no money, he must have spent his own money to fund the motion and the case. He would hardly have done so unless he had a special personal interest in the litigation and could gain an individual benefit from its success.

6. I order that the respondent's costs of the motion as assessed or taxed be paid by Anthony Croke.