Rambaldi (Trustee) v Meletsis, in the matter of the bankrupt estate of Karas (No 3)

In the case of Rambaldi (Trustee) v Meletsis, in the matter of the bankrupt estate of Karas (No 3), the dispute involved the determination of costs against a non-party bank, specifically Westpac Banking Corporation, and the applicability of indemnity costs. The matter was heard in the Federal Court of Australia. The primary issue before the court was whether there was a causal connection between Westpac's conduct and the costs incurred by the parties and, if so, whether the bank had acted unreasonably in complying with standard form freezing orders.

The court examined the discretionary powers under section 43(2) of the Federal Court of Australia Act 1976, which allows for the making of costs orders, including on an indemnity basis under section 43(3)(g) and against non-parties. The court considered two main questions: first, whether it was appropriate to make a costs order against Westpac as a non-party in respect of the hearings and applications; and second, if such an order was appropriate, whether it should be on an ordinary basis or an indemnity basis. The court concluded that there was a sufficient connection between Westpac's conduct and the costs claimed, warranting an indemnity costs order. This decision was based on the causal connection between Westpac's actions and the increased costs, as well as the bank's failure to communicate its inability to place partial restrictions on accounts to the defendants' solicitor in a timely manner.

The court's reasoning led to the conclusion that Westpac, as a non-party, should pay the plaintiffs’ and the defendants’ costs of the applications to vary the freezing orders on an indemnity basis. This decision was grounded in the established legal principle that a non-party may be held responsible for costs if their actions have a real and direct causal connection to the proceedings. The court found that Westpac's conduct was material to the issue of costs and that it had not acted reasonably in complying with the standard form freezing orders. The final orders mandated that Westpac Banking Corporation, as a non-party, pay the plaintiffs’ and the first and second defendants’ costs of the applications and this application, on an indemnity basis.