Zacd Group Ltd v Bao (Costs)

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FEDERAL COURT OF AUSTRALIA

ZACD Group Ltd v Bao (Costs) [2023] FCA 1626

File number(s): NSD 604 of 2022
Judgment of: HALLEY J
Date of judgment: 19 December 2023
Catchwords: COSTS – application by defendant for costs of and incidental to case management hearings – where defendant seeks order that Court determine costs on lump sum basis and costs be payable forthwith – where case management hearings concerned dispute arising from defendant’s request to inspect a deed of settlement in related proceedings in Supreme Court of New South Wales – orders made that plaintiffs are to pay defendant’s costs of and incidental to the case management hearings, costs be determined by a Registrar on a lump sum basis and costs be payable within 28 days of Registrar’s determination
Legislation: Federal Court Rules 2011 (Cth) rr 20.31, 20.35, 30.28, 40.13
Cases cited:

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 Hadid v Lenfest Communications Inc [2000] FCA 628

Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

Richmond v Ora Gold Limited [2020] FCA 70

Sharif v Vitruvian Investments Pty Ltd (No 2) [2023] FCA 619

Watson v Kriticos (Costs of Summary Judgment Application) [2021] FCA 917

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 50
Date of last submissions: 3 October 2023 (Defendant)
4 October 2023 (Plaintiffs)
Date of hearing: Determined on the papers
Counsel for the Plaintiffs: Mr N D Riordan
Solicitor for the Plaintiffs: Thomson Geer
Counsel for the Defendant: Ms Z M Hillman
Solicitor for the Defendant: Clayton Utz

ORDERS

NSD 604 of 2022
BETWEEN:

ZACD GROUP LTD UEN 201630694E

First Plaintiff

ZACD (DEVELOPMENT4) LTD UEN 201816064H

Second Plaintiff

AND:

MR RICHARD BAO

Defendant

ORDER MADE BY:

HALLEY J

DATE OF ORDER:

19 DECEMBER 2023

THE COURT ORDERS THAT:

1.Rule 40.13 of the Federal Court Rules 2011 (Cth) be dispensed with.

2.The plaintiffs pay the defendant’s costs of and incidental to the case management hearings in these proceedings on 4 August 2023 and 4 September 2023 on a party and party basis in accordance with Orders 3 to 5 of these orders.

3.The defendant’s costs be assessed on a lump sum basis.

4.The matter be referred to a Registrar to determine the lump sum.

5.The plaintiffs are to pay the sum determined by the Registrar pursuant to Order 4 of these orders within 28 days of the Registrar’s determination of the lump sum.

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


REASONS FOR JUDGMENT

HALLEY J:

A.       INTRODUCTION

  1. On 8 September 2023, I made orders that the parties file and serve written submissions on costs with respect to case management hearings in these proceedings on 4 August 2023 and


    4 September 2023 (case management hearings) and that the issue be determined on the papers.

  2. The case management hearings were concerned with a dispute that had arisen between the…

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Details
Case
[2023] FCA 1626
Decision Date

CaseChat Overview and Summary

The case of Zacd Group Ltd v Bao (Costs) involved the defendant, Bao, seeking costs associated with case management hearings from the plaintiffs, Zacd Group Ltd. The dispute arose from the defendant's request to inspect a deed of settlement in related proceedings in the Supreme Court of New South Wales. The plaintiffs had refused to provide a copy of the Settlement Deed, citing a confidentiality clause. The case management hearings addressed this refusal and the implications for the litigation. The Federal Court was required to decide on the allocation of costs between the parties, specifically whether the plaintiffs should bear the defendant's costs of the case management hearings and if so, under what terms.

The court addressed the legal issues by first considering the principles of costs in Australian litigation, particularly focusing on the circumstances under which costs of case management hearings may be awarded. The court examined whether the plaintiffs' refusal to produce the Settlement Deed was unreasonable and whether this refusal justified the defendant's pursuit of the case management hearings. The court also considered the appropriate basis for determining the costs, whether on an itemised basis or a lump sum, and the timing of payment.

The court concluded that the plaintiffs' refusal to produce the Settlement Deed was unreasonable, justifying the defendant's application for costs. The court held that the costs should be assessed on a lump sum basis and determined by a Registrar. It was ordered that the plaintiffs are to pay the defendant's costs of the case management hearings, which are to be assessed by a Registrar and payable within 28 days of the determination. This decision reflects the court's view that the plaintiffs' actions warranted the defendant's pursuit of the case management hearings and the need for a prompt resolution of the costs issue.

The final orders of the court included dispensing with Rule 40.13 of the Federal Court Rules 2011, directing the plaintiffs to pay the defendant's costs of the case management hearings, assessing the costs on a lump sum basis, referring the matter to a Registrar for determination of the lump sum, and requiring the plaintiffs to pay the sum determined by the Registrar within 28 days. These orders were made to ensure a swift and definitive resolution of the cost issue.

Orders

Orders of the court

1. Rule 40.13 of the Federal Court Rules 2011 (Cth) be dispensed with.

2. The plaintiffs pay the defendant’s costs of and incidental to the case management hearings in these proceedings on 4 August 2023 and 4 September 2023 on a party and party basis in accordance with Orders 3 to 5 of these orders.

3. The defendant’s costs be assessed on a lump sum basis.

4. The matter be referred to a Registrar to determine the lump sum.

5. The plaintiffs are to pay the sum determined by the Registrar pursuant to Order 4 of these orders within 28 days of the Registrar’s determination of the lump sum.

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

Background

Background to the litigation

For the reasons that follow, I have determined that the plaintiffs are to pay the defendant’s costs of the case management hearings in a lump sum to be determined by a Registrar and to be paid by the plaintiffs within 28 days of the Registrar determining the lump sum.B. BACKGROUND The factual background to the dispute concerning the production of the Settlement Deed is set forth in the affidavits of Ms Ball and Ms Fernandez. The correspondence between the parties annexed to the affidavit of Ms Ball and exhibited to the affidavit of Ms Fernandez, exposes the plaintiffs repeated refusals to produce to the defendant a copy of the Settlement Deed, notwithstanding that it was expressly referred to in the second further amended statement of claim filed on 7 August 2023 (2FASOC). It is sufficient for present purposes to refer to the following aspects of the factual background. On 18 October 2022, the defendant’s solicitors sought further particulars of the amended statement of claim filed on 2 September 2022. On 1 December 2022, the plaintiffs’ solicitors responded to the request for particulars. The response included a reference to the Settlement Deed. On 20 April 2023, the defendant’s solicitors wrote to the plaintiffs’ solicitors requesting a copy of the Settlement Deed. On 26 April 2023, the plaintiffs’ solicitors wrote to the defendant’s solicitors declining the request for a copy of the Settlement Deed on the basis that:As is evident from the manner in which that deed has been described, it is subject to a confidentiality clause which operates to restrain the parties to that deed from disclosing its terms to any third party. Our clients are accordingly restrained from providing your client with a copy of the deed and intend to adhere to their contractual obligations. On 20 July 2023, the plaintiffs’ solicitors provided a draft of the 2FASOC to the defendant’s solicitors. It is alleged in the 2FASOC that the plaintiffs’ damages case is to be understood by reference to the terms of the Settlement Deed: see 2FASOC at [77], [80], [80A] and [82]. On 25 July 2023, the defendant’s solicitors wrote to the plaintiffs’ solicitors advising them that the defendant would consent to the filing of the 2FASOC in the interests of expeditiously advancing the matter, if the plaintiffs identified the following information in relation to the settlement the subject of the Settlement Deed:(a)that date on which the proceedings were commenced in the Supreme Court of New South Wales seeking to recover the alleged loss of $37,500,000 (Recovery Proceeding);(b)the identity of the defendant/s in the Recovery Proceeding;(c)the basis on which the defendant/s in the Recovery Proceeding were said to be liable to pay the amount of $37,500,000; (d)how the Recovery Costs in the sum of $610,327.67 were incurred and why that sum is said to be a reasonable amount of costs; and (e)whether the sum of $30,800,000 was accepted by your clients as inclusive of all costs (i.e. the Recovery Costs).

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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