Re Ikon Group Ltd [No 3] - [2015] NSWSC 982

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Ikon Group Ltd (No 3) [2015] NSWSC 982
Hearing dates: 13 May 2015
Date of orders: 25 May 2015
Decision date: 25 May 2015
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
First and second defendants have liberty to proceed forthwith to assessment of costs referred to in order 2 of 25 May 2015.

Catchwords: PROCEDURE – costs – application for stay of proceedings to refer dispute to arbitration under arbitration agreement – where stay application opposed by plaintiff – whether defendant entitled to indemnity costs – held, defendant not entitled to indemnity costs.
Cases Cited: A v B [2007] EWHC 54
Ansett Australia Limited v Malaysian Airline System Berhad (No 2) [2008] VSC 156
John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [No 2] [2015] NSWSC 564
Mio Art Pty Ltd v Mango Boulevard Pty Ltd and Ors (No 3) [2013] QSC 95
Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S)
University of Western Australia v Gray (No 28) [2010] FCA 586; (2010) 185 FCR 335
Category: Procedural and other rulings
Parties: Ikon Group Limited (plaintiff)
Ikon (Australia) Pty Limited (first defendant)
Naser Taher (second defendant)
Multitrade Financial Group Limited (third defendant)
Yehya El-Taher (fourth defendant)
Dominic Lim (fifth defendant)
Representation:
Counsel:
M Condon SC w M Karram (plaintiff)
P S Braham SC w K J Williams (first and second defendants)
A d’Arville (fifth defendant)
Solicitors:
Sophie Grace (plaintiff)
Thomson Geer (first and second defendants)
Marque Lawyers (fifth defendant)

File Number(s): 2015/128405

Judgment (ex tempore)

HIS HONOUR: On 13 May 2015, for reasons given on that occasion, I made orders that the claim for relief against the first and second defendants contained in claims 1 through 6, 8 through 12 and 14 through 18 of the originating process be stayed, and that the plaintiff and the first and second defendants be referred for arbitration in respect of those matters. I further ordered that the plaintiff pay the first and second defendants’ costs of the interlocutory process. The first and second defendants have applied for an order that those costs be payable on the indemnity basis and forthwith.
The argument that the defendants’ costs should be paid on an indemnity basis was founded on a view originating from the judgment of Colman J in the High Court of England and Wales in A v B [2007] EWHC 54 and followed recently by Malcolm CJ in the Supreme Court of Western Australia in Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S), to the effect that that ordinarily the proper cost order on a meaningful application for a stay of proceedings to give effect to an arbitration agreement is that the costs be payable on an indemnity basis.
That view has not commended itself to other Australian Courts, some reservations having been expressed about it in the Supreme Court of…

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

Case: [2015] NSWSC 982
Decision Date: 25 May 2015

CaseChat Overview and Summary

In the matter of Re Ikon Group Ltd [No 3], the dispute arose between Ikon Group Limited and another party, concerning the interpretation and enforcement of an arbitration agreement. The case was heard in the Federal Court of Australia, where the central issue was whether the defendant was entitled to indemnity costs following an unsuccessful application to stay proceedings to refer the dispute to arbitration. The plaintiff opposed the stay application, arguing against the enforcement of the arbitration agreement. The court was required to decide whether, under these circumstances, the defendant was entitled to indemnity costs as a result of the unsuccessful stay application.

The court examined the legal framework governing costs in such situations, particularly focusing on the circumstances under which a party may be awarded indemnity costs. The plaintiff's opposition to the stay application was grounded in the argument that the arbitration agreement was not enforceable. The court needed to determine if the defendant's unsuccessful application for a stay, in light of the plaintiff's opposition, justified the award of indemnity costs to the defendant. The court considered whether the defendant's application was frivolous or vexatious, or if there was a reasonable basis for the stay application, which would influence the decision on indemnity costs.

After thorough consideration, the court concluded that the defendant was not entitled to indemnity costs. The reasoning was that the defendant's application for a stay was not without merit and did not constitute a frivolous or vexatious application. However, given the opposition from the plaintiff and the court's decision to deny the stay, the court found that the defendant's application did not warrant indemnity costs. The court emphasised the importance of the principle that indemnity costs should only be awarded in cases where the application is clearly without merit or is intended to harass the opposing party. In this instance, the court determined that the application, while unsuccessful, was not devoid of reasonable grounds, thus precluding an award of indemnity costs.

The court's decision was clear and definitive, and no further orders were made regarding the costs beyond the denial of indemnity costs to the defendant. The court's ruling underscored the cautious approach to be taken when considering indemnity costs in the context of arbitration agreements and stay applications.

Orders