FEDERAL COURT OF AUSTRALIA
Travaglini v Raccuia [2012] FCA 620
Citation: Travaglini v Raccuia [2012] FCA 620 Parties: DINO TRAVAGLINI (AS TRUSTEE IN BANKRUPTCY FOR THE ESTATE OF CARMELO FRANCESCO RACCUIA) v ANTONIO GUISEPPE RACCUIA and VASCO (WA) PTY LTD ACN 008 935 313 File number: WAD 36 of 2008 Judge: MCKERRACHER J Date of judgment: 14 June 2012 Catchwords: COSTS – application for leave to discontinue with no order as to costs – application of r 26.12(7) of the Federal Court Rules 2011 that the discontinuing party is liable for costs unless the Court is satisfied there is a good reason for ordering otherwise – whether parties acted reasonably in prosecuting and defending the proceeding
Held: when applicant commenced proceeding there was a reasonably foreseeable risk that litigation would become futile – applicant should pay the respondents’ costs upon discontinuance
Legislation: Federal Court Rules 2011 rr 26.12(2)(c), r 26.12(7) Cases cited: ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119
Ahmed v Minister for Immigration & Multicultural Affairs [2000] FCA 1436
Ann Street Mezzanine Pty Ltd v KPMG [2011] FCA 453
Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194
Bell v Macquarie Bank Ltd [2000] FCA 1521
Chapman v Luminis Pty Ltd [2003] FCAFC 162
Commissioner of Taxation v Edgewater Estates Ltd (No 2) [2009] FCA 811
Doolan v Newitt [2003] FCA 1507
Evans as Trustee of the Kamiyacho Superannuation Fund v BankWest [2007] FCA 506
Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319
McClure v Mayor and Councillors of the City of Stirling (No 3) [2009] WASC 247
Media Ocean Ltd v Optus Mobile Pty Ltd (No 11) [2011] FCA 19
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Mineralogy Pty Limited v National Native Title Tribunal [1998] FCA 1700
Novartis AG v Agvantage Pty Ltd [2012] FCA 160
O’Neill v Mann [2000] FCA 1680
ONE.TEL Ltd v Commissioner of Taxation (2000) 101 FCR 548
Potato Marketing Corporation of Western Australia v Galati Nominees Pty Ltd [2004] FCA 1216
Rhodium Australia Pty Ltd v Deputy Commissioner of Taxation [2012] FCAFC 17
Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd (2010) 77 ACSR 216
Smith v Airservices Australia (2005) 146 FCR 37Date of hearing: 27 April 2012 Date of last submissions: 1 June 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 40 Counsel for the Applicant: NDC Dillon Solicitor for the Applicant: Karp Steedman Ross-Adjie Lawyers Counsel for the Second and Third Respondents: KM Pettit SC Solicitor for the Second and Third Respondents: Murfett Legal
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 36 of 2008
BETWEEN: DINO TRAVAGLINI (AS TRUSTEE IN BANKRUPTCY FOR THE ESTATE OF CARMELO FRANCESCO RACCUIA)
ApplicantAND: ANTONIO GUISEPPE RACCUIA
Second RespondentVASCO (WA) PTY LTD ACN 008 935 313
Third Respondent
JUDGE:
MCKERRACHER J
DATE OF ORDER:
14 JUNE 2012
WHERE MADE:
PERTH
THE COURT…
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Details
- Case
- [2012] FCA 620
- Decision Date
CaseChat Overview and Summary
The matter before the court involved Travaglini as the applicant seeking leave to discontinue the proceeding against Raccuia and others. The dispute centred on the costs incurred by the respondents upon the discontinuance of the proceedings by the applicant. The Federal Court was tasked with determining whether the applicant should be liable for the respondents' costs following the discontinuance, in accordance with rule 26.12(7) of the Federal Court Rules 2011. This rule stipulates that the discontinuing party is liable for costs unless the court is satisfied there is a good reason for ordering otherwise.
The court had to decide whether the applicant acted reasonably in prosecuting and defending the proceeding, and whether there was a reasonably foreseeable risk that the litigation would become futile when the applicant commenced the proceeding. The court considered the impact of the applicant's allegations against the second respondent, which were not resolved due to the discontinuance of the proceeding. The court noted that the second respondent had been deprived of the opportunity to clear his name in respect of those allegations, which was a relevant consideration in determining the costs.
The court found that when the applicant commenced the proceeding, there was a reasonably foreseeable risk that the litigation would become futile. Therefore, the applicant should bear the respondents' costs upon discontinuance. The court emphasised that the decision was not on the merits but rather based on the applicant's failure to establish a good reason for the discontinuance. The court concluded that the prime facie entitlement of the party not discontinuing to costs should stand, and granted leave to discontinue the application with the applicant to pay the costs of the second and third respondents.
1. Leave is granted to discontinue the application.
2. The applicant is to pay the costs of the second and third respondents, to be taxed if not agreed.
The court had to decide whether the applicant acted reasonably in prosecuting and defending the proceeding, and whether there was a reasonably foreseeable risk that the litigation would become futile when the applicant commenced the proceeding. The court considered the impact of the applicant's allegations against the second respondent, which were not resolved due to the discontinuance of the proceeding. The court noted that the second respondent had been deprived of the opportunity to clear his name in respect of those allegations, which was a relevant consideration in determining the costs.
The court found that when the applicant commenced the proceeding, there was a reasonably foreseeable risk that the litigation would become futile. Therefore, the applicant should bear the respondents' costs upon discontinuance. The court emphasised that the decision was not on the merits but rather based on the applicant's failure to establish a good reason for the discontinuance. The court concluded that the prime facie entitlement of the party not discontinuing to costs should stand, and granted leave to discontinue the application with the applicant to pay the costs of the second and third respondents.
1. Leave is granted to discontinue the application.
2. The applicant is to pay the costs of the second and third respondents, to be taxed if not agreed.
Orders
Orders of the court
1. Leave is granted to discontinue the application.
2. The applicant is to pay the costs of the second and third respondents, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
It is also a relevant consideration in this regard, in my view, that Mr Travaglini advanced the contention against the second respondents that the relevant trust was a ‘sham’. The second respondent has been deprived of the opportunity to clear his name in respect of those allegations. As noted by her Honour, Stone J, in Smith (at [44]), this is also a relevant consideration. I emphasise that this is not deciding the matter in any respect on the merits but simply noting that the second respondent has been deprived, by reason of the discontinuance, of the opportunity to vindicate his position despite generally having incurred costs in preparing to do so. As her Honour noted in Smith (at [44]), although the reasons for discontinuance may vary considerably, it is likely to be in the interests of justice that in such circumstances the respondent to the claim should have those costs met by the discontinuing party. CONCLUSION In my view, there is now under the Rules a prime facie entitlement on the part of the party not discontinuing to costs. It can of course be disturbed. Even in respect of the former O 62 r 26(1) of the pre-2011 Rules that approach was not unknown: see for example Ahmed v Minister for Immigration & Multicultural Affairs [2000] FCA 1436 in which Emmett J held that where the discontinuing applicant failed to satisfy the Court that another order should be made, the respondent was to be awarded its costs. I would adopt that approach to the present situation. In addition, Lehane J held in Bell v Macquarie Bank Ltd [2000] FCA 1521 where the applicant discontinued albeit without leave that the applicant was prima facie liable to pay the other party’s costs because of the operation of O 22 r 3 and O 62 r 26 of the pre‑2011 Rules saying that (at [5]):the ordinary result of the applicants' discontinuance would be that they would be required to pay the respondents' costs of the proceeding. The question is whether the applicants have established that, in the particular circumstances of this case, there is any particular matter which should, as a matter of discretion, displace that ordinary consequence. These cases post-date Lai Qin. If the consequence of all of this is that parties reflect more carefully about the risks of launching into costly litigation, this is not to be regretted. For the foregoing reasons I would have been reluctant to deprive the respondents of their costs under the former Rules but in any event see no reason to do so under the Rules. Therefore, these orders are made:1.Leave is granted to discontinue the application.2.The applicant is to pay the costs of the second and third respondents, to be taxed if not agreed.
Ratio Decidendi
Legal Principle Established
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