Spruson & Ferguson Pty Ltd v Gennochio

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FEDERAL COURT OF AUSTRALIA

Spruson & Ferguson Pty Ltd v Gennochio [2024] FCA 1227   

File number(s): NSD 6 of 2023
Judgment of: CHEESEMAN J
Date of judgment: 22 October 2024
Catchwords: COSTS – determination of two separate review applications in relation to Registrar’s decisions on costs relating to (1) a preliminary discovery application and (2) the costs of and incidental to providing preliminary discovery and production – Held: first review application dismissed with costs, second review application allowed with costs.   
Legislation:

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth)
Cases cited:

Cantor v Audi Australia Pty Limited (No 3) [2017] FCA 1079

Cobankara v Australia and New Zealand Banking Group Ltd [2017] FCA 419

El‑Debel v Micheletto (Trustee) (No 2) [2021] FCAFC 146

Lee v Dentons Australia Limited [2024] FCA 622

ObjectiVision Pty Ltd v Visionsearch Pty Ltd(No 3) [2015] FCA 304

Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657

Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 55
Date of last submission/s: 11 July 2024
Date of hearing: Determined on the papers
Counsel for the Prospective Applicant: Mr M Seck
Solicitor for the Prospective Applicant: Seyfarth Shaw Australia
Counsel for the Prospective Defendants: Mr D Mahendra
Solicitor for the Prospective Respondent: Kennedys (Australasia) Partnership  

ORDERS

NSD 6 of 2023
BETWEEN:

SPRUSON & FERGUSON PTY LTD (ACN 601 269 050)

Prospective Applicant
AND:

EDWARD GENOCCHIO

First Prospective Respondent

MICHELLE LEE

Second Prospective Respondent

DAVID MULLER-WEISNER (and others named in the Schedule)

Third Prospective Respondent

ORDER MADE BY:

CHEESEMAN J

DATE OF ORDER:

22 OCTOBER 2024

THE COURT ORDERS THAT:

1.The amended interlocutory application filed by the Prospective Applicant on 28 May 2024 be dismissed.

2.The Prospective Applicant pay the Prospective Respondents’ costs of the amended interlocutory application as agreed or assessed.

3.The order made by the Registrar on 21 May 2024 (in relation to the Prospective Respondents’ costs of and incidental to providing discovery and inspection by way of preliminary discovery) be set aside.

4.The Prospective Applicant pay the Prospective Respondents’ costs of the interlocutory application filed by the Prospective Respondents on 11 June 2024 as agreed or assessed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

  1. These reasons concern two separate review applications directed to two related costs decisions of a Registrar of the Court. The costs orders the subject of the review applications were both made in connection with the determination of an application for preliminary discovery which was referred to the Registrar. The applications for review do not extend to a review of the orders made for preliminary discovery. The review applications are concerned with the award of costs on that application and the conditional costs order made in relation to the provision of preliminary discovery.

  2. The Prospective Applicant,

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Details
Case
[2024] FCA 1227
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Spruson & Ferguson Pty Ltd, the applicant, and Gennochio, the respondent, were involved in a dispute over costs related to a preliminary discovery application and the costs associated with providing preliminary discovery and production. The case involved two separate review applications concerning the Registrar's decisions on these costs. The first application pertained to the costs of the preliminary discovery application, while the second application was about the costs of providing discovery and production of documents.

The legal issues before the court were whether the costs of the preliminary discovery application should be borne by the applicant or the respondent, and whether the costs of providing discovery and production should be borne by the applicant or the respondent. The court needed to determine whether the costs followed the event, considering the exceptional nature of the jurisdiction to order preliminary discovery and the circumstances under which the preliminary discovery application was made.

The court found that the applicant should bear its own costs of the preliminary discovery application, as it did not avail itself of the opportunity to agree confidentiality orders and inspect documents prior to commencing proceedings. This might have reduced or eliminated the need for the preliminary discovery application. Regarding the costs of providing discovery and production, the court set aside the Registrar's order and ordered the applicant to pay the respondent's reasonable costs of giving discovery and production of documents. The court considered the whole circumstances, including the exceptional nature of the jurisdiction to order preliminary discovery and the respondent's unjustified adversarial approach.

The court dismissed the first review application with costs and allowed the second review application with costs. The final orders were that the first application be dismissed, and the applicant pay the respondent's costs of that application as agreed or assessed. The order regarding the respondent's costs of providing discovery and production was set aside, and the applicant was ordered to pay those costs.

Orders

Orders of the court

1. The amended interlocutory application filed by the Prospective Applicant on 28 May 2024 be dismissed.

2. The Prospective Applicant pay the Prospective Respondents’ costs of the amended interlocutory application as agreed or assessed.

3. The order made by the Registrar on 21 May 2024 (in relation to the Prospective Respondents’ costs of and incidental to providing discovery and inspection by way of preliminary discovery) be set aside.

4. The Prospective Applicant pay the Prospective Respondents’ costs of the interlocutory application filed by the Prospective Respondents on 11 June 2024 as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The parties agreed to the applications being determined on the papers.PROCEDURAL BACKGROUND The procedural history is somewhat convoluted. I will address it only to the extent necessary on this application. On 20 September 2023, the Registrar published lengthy reasons in which he decided to grant the application for preliminary discovery (with minor amendment to the categories that had been sought) and made orders for the parties to confer and attempt to agree the appropriate orders. The parties did not agree the orders. They provided further submissions in relation to the form of the preliminary discovery orders and also in relation to costs. On 23 October 2023, the Registrar made orders for preliminary discovery; awarding costs on the preliminary discovery application; and reserving to a future case management hearing, the issue of costs of providing discovery. Relevantly, the order in respect of the costs of the preliminary discovery application required the GLMR Respondents to pay Spruson & Ferguson’s costs as agreed or taxed. Upon being asked to provide reasons for that order by the GLMR Respondents, the Registrar informed the parties that the order made was not the order he intended to make. The Registrar informed the parties that he intended to correct the order pursuant to rule 39.05(g) and/or rule 39.05(h) of the Rules. The Registrar recorded that the parties did not oppose him taking that course. The Registrar proceeded to issue what he described as a corrected order on 16 November 2023. The corrected order took the form of re-issuing the orders made on 23 October 2023 as “Amended Orders” with a notation that “This order was amended pursuant to r 39.05(g) and r 39.05(h) of the [Rules] on 16 November 2023”. In this version of the orders of 23 October 2023, the order in respect of the costs of the preliminary discovery application was changed so that it read “Each party to bear their own costs of the application for preliminary discovery”. This version of the orders was stamped on 16 November 2013. Spruson & Ferguson then sought reasons for the making of this version of the order. The Registrar provided written reasons for the making the costs order in the amended form on 6 December 2023. Notwithstanding the unusual way in which the cost order evolved, the parties have not sought to challenge the Registrar’s action in correcting the order in the way that he did. Accordingly, I express no opinion on this aspect of the procedural history. I will proceed on the same basis as the parties have in treating the order made in respect of the costs of the preliminary discovery application as being the order made on 16 November 2023, that each party pay their own costs of the application for preliminary discovery. On 16 November 2023, the Registrar ordered that the GLMR Respondents’ entitlement to recover their “costs and reasonable expenses of giving discovery and production of documents” to Spruson & Ferguson be reserved for determination at a further case management on 12 December 2023. The issue of Production Costs was not determined on 12 December 2023.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For these reasons, the order made in relation to Production Costs by the Registrar on 24 May 2024 will be set aside. In lieu thereof, Spruson & Ferguson will be ordered to pay the prospective Respondents’ reasonable Production Costs. In terms of the costs of the review application, the GLMR Respondents have succeeded and taking into account the whole of the circumstances, it is appropriate that they should have an order for their costs.CONCLUSION For these reasons, I will make orders as I have indicated in relation to each of the review applications.

Ratio Decidendi

Legal Principle Established

In response to the matters outlined in paragraph [29] above, the GLMR Respondents submit that:(a)there is no evidence that any additional costs were incurred by Spruson & Ferguson in making a witness available for cross-examination who had already provided an affidavit in support of the application;(b)at all times, the onus remained with Spruson & Ferguson to prove that the categories of documents were necessary for it to determine whether to commence a proceeding, and that it was not for the GLMR Respondents to demonstrate why certain documents were not needed; (c)the Registrar did not hold that they had misapplied the correct legal test – rather the Registrar merely stated the correct test when reciting the GLMR Respondents submission directed to establishing that in fact correspondence from Spruson & Ferguson indicated that it had already determined whether to commence proceedings; (d)the conditions in respect of production of documents were reasonable;(e)Spruson & Ferguson commenced the proceeding prematurely when the parties were still in discussions about a confidentiality regime; and (f)it was not unreasonable to put Spruson & Ferguson to proof in circumstances where it had not availed itself of the opportunity to inspect documents prior to commencing proceedings.Consideration I will first address Spruson & Ferguson’s contention that it should have its costs on the application. It may be accepted that Spruson & Ferguson enjoyed substantial success on the preliminary discovery application but that does not, in the present circumstances, engage the usual rule that costs follow the event. Subject to whether the GLMR Respondents have exposed themselves on the issue of costs by reason of taking an unjustified adversarial approach, the starting position is to afford proper weight to the exceptional nature of the jurisdiction to order preliminary discovery and accordingly it may be the case that even a wholly successful applicant may not be entitled to costs. The Registrar found that Spruson & Ferguson was entitled to bring the application (and, as mentioned, the parties do not seek review of the order made by the Registrar for preliminary discovery). That is also a relevant matter to take into account in exercising the discretion to award costs, but it is not determinative. The fact that the Registrar found that Spruson & Ferguson was entitled to bring the application does not render irrelevant the fact that Spruson & Ferguson did not avail itself of the opportunity to agree confidentiality orders and inspect such documents as the GLMR Respondents were prepared to provide. The possibility is that if Spruson & Ferguson had taken that step then the application may not have been necessary because, for example, Spruson & Ferguson obtained sufficient information via that avenue for the purpose of deciding that it would commence proceedings in respect of, at least, some of its claims. Once Spruson & Ferguson decided to commence a proceeding, if that had been the case, then it may have been that the documents sought via preliminary discovery may have been properly the subject of disclosure orders in the proceeding once on foot. It is not possible to be definitive, but it is at least possible. Alternatively, the scope of the preliminary discovery required by Spruson & Ferguson may have been reduced. These are matters which also must be weighed in considering the appropriate costs order. As it was, there was some agreement as to the categories of preliminary discovery that were ordered. That is also relevant to the exercise of the costs discretion.