Zreika v Client Management Systems Australia Pty Ltd (in Liquidation) and Ors (No.2)
[2017] FCCA 2989
•13 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZREIKA v CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD (IN LIQUIDATION) & ORS (No.2) | [2017] FCCA 2989 |
| Catchwords: PRACTICE & PROCEDURE – Costs – application for costs orders against non-parties for costs incurred during part of the substantive proceedings – application for costs for part of the substantive proceedings on an indemnity basis – application for party-party costs for remainder of substantive proceedings in accordance with the Federal Court of Australia Rules 2001 (Cth) – application for costs orders against non-parties dismissed – application for indemnity costs dismissed – costs awarded against Applicant in accordance with sch.1 to the Federal Court of Australia Rules 2001 (Cth). |
| Legislation: Competition and Consumer Act 2010 (Cth), sch.2 s.18 |
| Cases cited: Bakers Investment Group Australia Pty Ltd v Caason Investments Pty Ltd & Ors [2015] VSC 644 Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225 Joshua Brook Pty Ltd v Outdoor Centre Holdings Pty Ltd & Anor (No.4) [2014] FCCA 1325 Zreika v Client Management Systems Pty Ltd [2017] FCCA 169 |
| Applicant: | ZIAD ADEL ZREIKA |
| First Respondent: | CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD (IN LIQUIDATION) (ACN 116 874 170) |
| Second Respondent: | MICHAEL MIKHAEL |
| Third Respondent: | TAYTA CORPORATION PTY LTD (TRADING AS VISAGE CREDIT REPAIR (ACN 164 554 321) |
| File Number: | MLG 2278 of 2015 |
| Judgment of: | Judge Jones |
| Hearing date: | 7 September 2017 |
| Date of Last Submission: | 7 September 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 13 December 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Peters of Coopers Lawyers appearing briefly by telephone link |
| Solicitors for the Applicant: | Coopers Lawyers |
| Counsel for the First Respondent: | Ms Harris |
| Solicitors for the First Respondent: | J King Legal |
| Counsel for the Second and Third Respondents: | Mr Gronow |
| Solicitors for the Second and Third Respondents: | Smith Leonard Fahey Lawyers |
ORDERS
The Applicant pay the First Respondent’s costs incurred in the substantive proceedings on a party-party basis as agreed, or if not agreed, to be taxed in accordance with sch.1 pt.1 to the Federal Circuit Court Rules 2001 (Cth).
Otherwise, all extant applications are dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2278 of 2015
| ZIAD ADEL ZREIKA |
Applicant
And
| CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD (IN LIQUIDATION) (ACN 116 874 170) |
First Respondent
| MICHAEL MIKHAEL |
Second Respondent
| TAYTA CORPORATION PTY LTD (TRADING AS VISAGE CREDIT REPAIR (ACN 164 554 321) |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 2 February 2017, I dismissed the Applicant’s application for relief against the First Respondent, who at that time was the respondent in the substantive proceedings: Zreika v Client Management Systems Pty Ltd [2017] FCCA 169 (“the substantive proceedings”).
The First Respondent now seeks costs orders that the Applicant, and the Second and Third Respondents be jointly and severally liable for the following costs (“the costs application”):
a)the costs of the substantive proceedings on an indemnity basis from 8 October 2015 to 18 May 2016; and
b)from 19 May 2016 to 17 October 2016 (being the date of the final hearing of the substantive proceedings) on a party-party basis, to be taxed in accordance with the Federal Court Rules 2011 (Cth) (“the FCA Rules”).
The Applicant accepts that, having been unsuccessful in the substantive proceedings, he is liable to pay the First Respondent’s costs. The Applicant argues that costs should be awarded on a party-party basis in accordance with sch.1 to the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”).
The First Respondent submits that, given the circumstances of the substantive proceedings, the Court should exercise its discretion to award non-party costs against the Second and Third Respondents. The Second and Third Respondents were joined to the proceedings by order made on 27 February 2017.
The Second and Third Respondents seek an order that the First Respondent’s application for non-party costs against them be dismissed. The Second and Third Respondents further argue that, in the event the Court decides an order for non-party costs should be awarded against them, the costs should be on a party-party basis in accordance with the FCC Rules.
There are three issues that are required to be determined by the Court:
a)whether indemnity costs should be ordered for the period from 8 October 2015 to 18 May 2016;
b)whether an order for non-party costs should be made against the Second and Third Respondents; and
c)whether any party-party costs ordered should be in accordance with the FCA Rules or the FCC Rules.
All parties filed written submissions, and filed and served affidavits in respect of the costs application. Reliance was also placed on affidavits filed in the substantive proceedings.
All respondents attended the hearing of the costs application. The Applicant and his legal representative failed to attend in person at the hearing of the costs application on 7 September 2017. When his solicitors on record were contacted by telephone, the Court was informed that the Applicant relied on his written submissions and affidavits filed in these proceedings.
Background
At the relevant time, the Applicant conducted a business as a plasterer/renderer. The Applicant accrued a debt (“the debt”) to a supplier of building materials, Archiclad Pty Ltd (“the credit provider”), which he failed to pay. The First Respondent ran a business described by its sole director, Ms Louise Avni, as one which “conducts a risk management, credit management and legal debt recovery business.”[1] By deed dated 1 December 2012, the credit provider authorised the First Respondent to undertake receivables management services as its agent. The parties’ agreement included the following:[2]
[1] Affidavit of Louise Avni filed on 15 March 2016 at [1].
[2] Ibid Annexure LA-14 at [1].
1. The [credit provider] will refer its debtors to [the First Respondent] for the purposes of:
a) collecting an overdue debt;
b) locating a debtor by lawful means;
c) making field calls to the debtor;
d) undertaking appropriate legal action to recover a debt, with prior written approval of the [credit provider] and prior provision by [the First Respondent]to the [credit provider] of an estimate of the costs of recovery by means of legal action, not including defended legal action, and also including [the First Respondent]’s written recommendation as to the merits and prospects of legal action;
e) subject to this agreement, undertaking any other action to recover a debt, as instructed by [credit provider].
On 8 September 2015, the Applicant authorised the Third Respondent, trading as Visage Credit Repair (“Visage”), to act on his behalf in relation to any or all of the following matters:[3]
[3] Ibid Annexure LA-4 at [1].
(a) To apply and receive copy of my/our credit report
(b) To view the credit information file held by any credit reporting agency
(c) Seek to procure any alteration on the credit information file held by any credit reporting agency
(d) Negotiate with any person who has provided credit to me/us or a third party for whom I/we have provided a guarantee or indemnity to vary the terms on which such credit was provided so as to enable me/us to satisfy any default or to otherwise compromise our obligations.
(e) Seek legal advice on my/our behalf.
(f) Liaise with any Court, seek copy of my court file(s), from any Court within Australia and/or overseas.
On 20 September 2015, the First Respondent was authorised by the credit provider to recover the debt and, if unsuccessful, to place a default on the debt.[4]
[4] Ibid Annexure LA-14.
On 6 February 2014, the First Respondent listed the Applicant’s default on the Veda Advantage Information Services and Solutions Ltd (“Veda”) database.[5] On 29 September 2015, the Applicant paid the debt.[6] However, the default listing remained on the Veda database, albeit the listing was updated to indicate that the debt had been paid.
[5] Affidavit of Michael Mikhael filed on 8 October 2015, Annexure MM-5
[6] Affidavit of Louise Avni filed on 15 March 2016, Annexure LA-5.
The Second Respondent, Mr Michael Mikhael, was at all material times, the director of the Third Respondent.
Preceding the payment of the debt by the Applicant on 29 September 2015, there were a series of acrimonious emails between Mr Mikhael, and Ms Avni, the subject of which were demands made by Mr Mikhael to Ms Avni that the default listing in relation to the Applicant be removed from the Veda database.[7]
[7] Ibid LA-7-LA-11.
On 8 October 2015, the Applicant filed an application seeking relief against the First Respondent based on a breach of the Privacy Act1988 (Cth) (“the Privacy Act”). The first Court return date was on 11 December 2015. The matter was listed for final hearing on 20 April 2016, on which day the Applicant sought and was granted leave to adjourn the hearing. On 18 May 2016, the Applicant filed a Statement of Claim which pleaded, in addition to his claim under the Privacy Act, that the First Respondent had breached s.18 of sch.2 to the Competition and Consumer Act 2010 (Cth) (“the Australian Consumer Law”) and further made a claim of common law negligence.
On the morning of the adjourned final hearing on 17 October 2016, Counsel for the Applicant informed the Court that, having obtained instructions from the Applicant, the claim under the Privacy Act would not be proceeded with. Counsel for the Applicant explained that the Statement of Claim filed on 18 May 2016 was drafted based on an incorrect version of the Privacy Act - the Privacy Act as at 18 May 2016. Counsel for the Applicant informed the Court that a substantially different version of the Privacy Act applied in February 2014 and, rather than further delay proceedings to enable an amended statement of claim to be drafted, the Applicant had instructed him to proceed only with his claims under the Australian Consumer Law and at common law.
Following the final hearing, I delivered a judgment and dismissed the Applicant’s application.[8] I found firstly, that the then respondent (now the First Respondent) did not engage in misleading and deceptive conduct pursuant to s.18 of the Australian Consumer Law by reporting commercial credit information on the Veda database on 6 February 2014 and/or 1 October 2015.[9] I further found that, if it could be said that the First Respondent had engaged in misleading and deceptive conduct, I was not satisfied on the evidence before me that the conduct caused the Applicant to suffer loss or damage.[10] It is relevant to note that the loss and damage asserted by the Applicant arose from his businesses’ failure to obtain loan facilities from financial institutions because of his poor credit rating. The Applicant’s common law claim of negligence was dismissed on the basis that, even if the elements of the tortious claim were made out, the Applicant had failed to demonstrate any breach caused loss or damage.[11]
[8] Zreika v Client Management Systems Pty Ltd [2017] FCCA 169.
[9] Ibid at [24].
[10] Ibid at [35].
[11] Ibit at [59].
I made Orders that day for the Applicant and the First Respondent to file and serve written submissions as to costs. The First Respondent filed written submissions on 9 February 2017, seeking orders that the Applicant pay the First Respondent’s cost of the proceedings on an indemnity basis from 8 October 2015 to 18 May 2016, and the remainder of the First Respondent’s costs be paid by the Applicant on a party-party basis in accordance with the FCA Rules.
On 24 February 2017, the First Respondent filed an Application in a Case that sought to amend its name on the title to these proceedings to identify that it was in liquidation. It further sought leave of the Court to join the Second and Third Respondents to these proceedings. Finally, the First Respondent sought a costs order that the Second and/or Third Respondent also pay costs on an indemnity basis from 8 October 2015 to 18 May 2016, and on a party-party basis thereafter.
It should be noted that the First Respondent’s position now is that indemnity costs be paid jointly and severally by the Applicant, and the Second and Third Respondents from 8 October 2015 to 18 May 2016 on an indemnity basis, and on a party-party basis in accordance with the scale set under the FCA Rules thereafter.
Orders were made on 27 February 2017 to join the Second and Third Respondents to the costs proceedings, and for the filing of outlines of submissions and any affidavits the parties intended to rely on.
Indemnity Costs
The First Respondent seeks orders that the Applicant, the Second Respondent and the First Respondent pay its costs on an indemnity basis for the period from 8 October 2015 to 18 May 2016.
Relevant principles
The principles summarised by Sheppard J in Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive”) are relevant to the Court’s consideration of whether indemnity costs should be awarded in exercising a discretion under s.79 of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCC Act”). His Honour, having reviewed the relevant authorities, summarised the principles as follows (Colgate-Palmolive at 232-234):
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of O 62, rr 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission (supra) and Handley JA in Cachia v Hanes (supra) on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require”. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston (supra) at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, “The categories in which the discretion may be exercised are not closed.” Davies J expressed (at p 6) similar views in Ragata (supra).
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
With respect, it seems to me that the following emerges from his Honour’s summary of the relevant principles:
a)the settled practice is that costs orders are made on a party-party basis, and costs orders ought not usually be made on a basis other than party-party;
b)the facts and circumstances of the case must be such as to warrant a departure from the usual course;
c)the categories of cases are not closed, although some circumstances which have warranted an order of indemnity costs can be identified; and
d)even if the facts and circumstances are such as to warrant departure from the usual practice, the Court retains a discretion not to make an order that costs be awarded on an indemnity basis.
Proceedings – 8 October 2015 to 18 May 2016
In considering the application for indemnity costs, it is appropriate to briefly set out the pleadings of the parties during the period 8 October 2015 to 18 May 2016.
On 8 October 2015, the Applicant (then represented by Smith Leonard Fahey (“SLF”) Lawyers, who now represent the Second and Third Respondents), filed an application for relief on the basis that the First Respondent had breached the Privacy Act by providing credit information about the Applicant to the credit reporting body, Veda.
The grounds of application included the following:
1. Pursuant to section 21D of the [Privacy Act] only a credit provider may disclose credit information to a credit reporting body pursuant to the provisions in the [Privacy] Act;
2. The [First] Respondent is not a credit provider as defined under section 6G of the [Privacy Act].
…
The relief sought by the Applicant was to the effect that the payment default listed by the First Respondent on the Applicant’s credit file be removed, and the First Respondent notify Veda of the removal.
Orders were made on 11 December 2015, including that the Applicant be granted leave of the Court to file an amended complaint and the matter be adjourned for final hearing on 20 April 2016.
The Applicant filed an Amended Application on 15 January 2016. The Applicant remained represented by SLF Lawyers at the time of making the Amended Application. The grounds of the Amended Application were relevantly as follows:
1. Pursuant to section 21D of the [Privacy Act] only a credit provider may disclose credit information to a credit reporting body pursuant to the provisions of the Act;
2. The First Respondent is not a credit provider as defined under section 6G of the [Privacy] Act;
3. The First Respondent breached the [Privacy] Act by providing credit information about the Applicant to the Second Respondent;
…
(Formatting omitted)
The relief sought by the Applicant was that the First and Second Respondents do all acts as may be necessary or practicable to effect the removal of the credit history of the Applicant with “the second respondent”. It is to be noted that the reference to “the second respondent” is a reference to Veda. Veda was never joined as a respondent in these proceedings. Thus, the Applicant and the now First Respondent were the only parties during the substantive proceedings.
In its Response filed on 29 January 2016, the First Respondent specified in its grounds of defence that s.21D of the Privacy Act “is limited to circumstances involving the communication of consumer information. The alleged communication was of commercial information.” The First Respondent further stated that it “was authorised to disclose credit information pursuant to section 6H of the [Privacy] Act.”
On 20 April 2016, the Applicant applied for and was granted an adjournment of the final hearing to 17 October 2016. By orders made that day, the Applicant was granted leave to file and serve a Further Amended Application, and the First Respondent was granted leave to file a Further Amended Response. The Court further ordered that the Applicant pay the First Respondent’s costs thrown away by the adjournment.
On 18 May 2016, the Applicant (now represented by Coopers Lawyers (Aust) Pty Ltd (“Coopers Lawyers”)) filed a Statement of Claim. The Statement of Claim relevantly pleaded that in entering a default listing on the Veda database, “the [First] Respondent purported to be acting as agent for and on behalf of [the credit provider], and therefore purported to be a credit provider as defined in s6H of the [Privacy] Act.”[12]
[12] The Applicant’s Statement of Claim filed on 18 May 2016 at [14].
The Applicant further pleaded:[13]
15. Pursuant to s21D of the [Privacy] Act, a credit provider must not disclose credit information about an individual to a credit reporting body unless, relevantly, the information relates to commercial credit.
[13] Ibid at [15].
The Applicant pleaded that the information listed on the Veda database was personal information and that it was entitled to injunctive relief under s.98(2) of the Privacy Act, “requiring the [First] Respondent to make an application to Veda, in accordance with its agreement with Veda, to remove the Default Listing” on the basis that the First Respondent did not comply with the requirements of the Privacy Act and the default listing was listed in error.[14]
[14] Ibid at [18].
On 16 June 2016, the First Respondent filed its Further Amended Response and Defence. It relevantly pleaded that “it is not a credit provider within the meaning of sections 6, 6G and 6H of the [Privacy Act].”[15] It did not plead to paragraph 15 of the Applicant’s Statement of Claim because “it contains no allegation of fact.”[16] As to the injunctive relief sought, the First Respondent denied the pleading and said further that the Applicant had no standing to bring a claim under the Privacy Act, that the paragraph is liable to be struck out for want of particularity. In the alternative, the First Respondent pleaded that on or about 22 October 2015 it had written to Veda, but that Veda determined that the default listing would remain. The First Respondent pleaded that, in these circumstances, the paragraph is liable to be struck out as the relief sought has been provided.[17]
[15] The First Respondent’s Further Amended Response and Defence filed on 16 June 2016 at [14].
[16] Ibid at [15].
[17] Ibid at [18].
As noted earlier, on the morning of the final hearing, Counsel for the Applicant informed the Court that the Applicant would not proceed with his claims insofar as they were made under the Privacy Act (see [16] above).
The parties’ submissions
The First Respondent submits that, as the 11 December 2015 and 20 April 2016 hearings were adjourned at the application of the Applicant, the inconvenienced party (being the First Respondent in this case) is ordinarily entitled to costs on an indemnity basis thrown away by the adjournments.[18]
[18] The First Respondent’s Submissions on Costs filed on 9 February 2017 at [10]-[12].
The First Respondent submits that the Applicant abandoned the Privacy Act element of the claim for the reason that:[19]
15… it was wholly misconceived and contrary to the established law, and the respondent ought not be put to any cost of defending it, especially when it was abandoned so late in the proceeding. Its prosecution and subsequent discontinuance caused loss to the respondent and unnecessarily prolonged the proceeding.
[19] Ibid at [15].
In oral submissions, Counsel for the First Respondent submitted that the principles set out in Colgate-Palmolive, which were enlivened by the facts and circumstances in this case, were that the proceedings were commenced in wilful disregard of established law, and allegations were made that ought never to have been made. The First Respondent submitted that as a consequence of this, there was an undue prolongation of the substantive proceedings due to groundless contentions.
In his written submissions on costs, the Applicant submits:[20]
5. It is true that the application was commenced based on the [Privacy] Act, and that the claims based on the [Privacy] Act continued until they were not pressed at the hearing. The reason they were not pressed was because Counsel for the Applicant became aware during the course of that hearing that an older version of the [Privacy] Act was the version that was in force when the conduct complained of occurred and that it was substantially different in both substance and structure to the current version of the [Privacy] Act. Upon becoming so aware Counsel for the Applicant, quite properly it is submitted, immediately made that fact known to the Court and to the Respondent. When faced with the choice of either further amending the claim in order to plead the correct version of the [Privacy] Act or not proceeding with that aspect of the claim, the decision was made to not proceed with that aspect, thereby obviating the need for a further adjournment. In that sense, the hearing was truncated rather than prolonged.
6. The principles set out in Colgate-Palmolive would only apply if the Court were satisfied that the Applicant had commenced the application knowingly based on the wrong version of the [Privacy] Act. There is no such suggestion in this case.
7. It is also worth noting that throughout the entire course of the proceeding none of the legal practitioners involved in the case, acting either for the Applicant or the Respondent, realised that the wrong version of the [Privacy] Act had been pleaded. Whilst the Respondent seeks to rely on its correspondence, none of that correspondence suggests that the Applicant’s claim was misconceived because it relied on the wrong version of the [Privacy] Act. Again, had the Applicant persisted with its application after the Respondent informed the Applicant that the wrong version of the [Privacy] Act was being relied upon then the principles in Colgate-Palmolive would be enlivened, but that is not what has occurred in this instance.
(Emphasis in original)
[20] The Applicant’s Submissions on Costs filed on 20 February 2017 at [5]-[7].
In the Applicant’s Submissions on Costs, the Applicant further notes that the First Respondent made an Application in a Case filed 18 March 2016 to strike out the proceedings, but that it did not press this Application in a Case.[21] This submission is disingenuous. As the Applicant knows full well, the Application in Case was listed for the same day that the hearing was first scheduled, being 20 April 2016. The Applicant sought and was granted an adjourned hearing date, as well as leave of the Court to file a Further Amended Application. I accept the First Respondent’s submission that, as the Further Amended Application included other causes of action, “there was no point in persisting with the dismissal application because it only related to the Privacy Act claim.”[22] I give no weight to the fact that the First Respondent abandoned its Application in a Case filed on 18 March 2016 to strike out the Applicant’s Amended Application.
[21] Ibid at [8].
[22] The First Respondent’s Submissions in Response to the Applicant’s Submissions on Costs filed on 23 February 2017 at [1].
There is no doubt that, at the time that the First Respondent reported the Applicant’s default on the Veda database on 6 February 2014, there was an earlier version of the Privacy Act in force. Having perused the version of the Privacy Act in force on 6 February 2014,[23] I am satisfied that the version of the Privacy Act in force on 6 February 2014 was very different in structure and substance to the version of the Privacy Act relied on by the Applicant.
[23] Privacy Act 1988 (Cth) incorporating amendments up to Federal Circuit Court of Australia (Consequential Amendments) Act 2013 (Cth).
In oral submissions, Counsel for the First Respondent argued that the Applicant’s reliance on the fact that his pleadings reflected the wrong version of the Privacy Act was no excuse in circumstances where the assumption behind the Privacy Act claims were:[24]
a)that the Privacy Act applied to the First Respondent; and
b)if there is a credit default that is inaccurate, a party can have that default removed as of right.
[24] See also the First Respondent’s Further Submissions in Support of Application for Costs Against the Second and Third Respondents filed on 9 August 2017at [2].
The First Respondent submitted that the second assumption is evidenced by the fact that the Third Respondent represented on its website that if a default is inaccurate, the Third Respondent can arrange for the removal of the default. The First Respondent also relies on the Second Respondent’s pre-litigation correspondence with a company (not named in these proceedings) and a letter of demand made to the First Respondent by the Third Respondent in September 2015.[25]
[25] Affidavit of Michael Mikhael filed on 8 October 2015, Annexures MM-9 and MM-12; Affidavit of Louise Avni filed on 15 March 2016, Annexure LA-7.
In addition, the First Respondent submits that these defects in Applicant’s claims under the Privacy Act were the subject of extensive inter-parties correspondence early in the proceedings.
Consideration
I do not find the reliance by the First Respondent on the contents of the Third Respondent’s website of assistance in resolving the question of indemnity costs.
I presume the First Respondent is relying on a statement contained on the Third Respondent’s website that, if a credit listing has been added unfairly, “[the Third Respondent] will get it removed.”[26] I would characterise this statement as mere puffery of a sales pitch by the Third Respondent. I am not satisfied that it can be inferred from the Third Respondent’s website that the Applicant initiated the substantive proceedings on the basis that a party can have an inaccurate credit default listing removed as of right.
[26] Affidavit Louise Avni filed on 24 February 2017, Annexure LA-27.
Further, I do not find the pre-litigation correspondence relied upon by the First Respondent of any assistance in determining whether the Applicant’s claims were wholly misconceived at law. Having read this material, I am satisfied that these are merely letters of demand from one agent to another agent, and even to a company which is not a party to these proceedings.
A perusal of inter-party correspondence demonstrates that both parties’ solicitors operated on the mistaken assumption that the current version of the Privacy Act was the applicable version in February 2014. This is also evident from the content of the pleadings by both the Applicant and the First Respondent in the substantive proceedings prior to the final hearing on 17 October 2016. Furthermore, it is not at all clear to me that the First Respondent’s solicitors’ correspondence with the Applicant’s solicitors regarding the alleged defects in the Applicant’s claim under the Privacy Act, and the First Respondent’s pleadings regarding the law, were consistent. In addition, when regard is had to the correspondence and the amendments in the pleadings, it could not be said that the Applicant wilfully disregarded the issues raised by the First Respondent.
In correspondence from the First Respondent’s solicitors dated 9 December 2015 to the Applicant’s then solicitors (SLF Lawyers), it is said that the grounds of the application:[27]
2. … are wrong because they allege that our client was not authorised to disclose credit information because it is not a credit provider. However section 6H of [the Privacy Act] entitles an agent to act on behalf of the credit provider in doing so.
[27] Affidavit of Louise Avni filed on 1 March 2016, Annexure LA-20 at [2].
On its face, it seems apparent that the First Respondent is asserting that the Privacy Act applied to it.
In his Amended Application filed on 15 January 2016, the Applicant pressed his position that the First Respondent was not a credit provider as defined under the Privacy Act. However, in the Amended Application, the relief sought has been amended to include an order requiring “the [f]irst and [s]econd [r]espondents” to do all reasonable acts to remove the credit listing. As I have earlier noted, Veda was never formally joined to the proceedings as a second respondent.
In correspondence dated 1 March 2016, from the First Respondent’s solicitors to the Applicant’s then solicitors (SLF Lawyers), the defects remaining in the Applicant’s claim were identified.[28] In this correspondence, no express reference is made to s.6H of the Privacy Act. Reference is made to the fact that s.21D of the Privacy Act applies to certain credit providers, and not to a non-credit provider. The First Respondent’s solicitors further asserted that s.21D of the Privacy Act does not apply to commercial debts. The First Respondent’s solicitors then alleged that the Court does not have power under s.98(2) of the Privacy Act to make an order to require the First Respondent to take any action. However, there does seem to be a concession that the First Respondent could be required to take some further steps (such as, requesting Veda by correspondence to remove the listing).
[28] Affidavit of Louise Avni filed on 24 February 2017, Annexure LA-29.
Clearly, the Statement of Claim filed by the Applicant on 18 May 2016 was responsive to the issues raised. It pleaded that the First Respondent fell within the scope of s.6H of the Privacy Act by purporting to act as agent for the credit provider, that the information listed on the Veda database in relation to the Applicant was personal information, that s.21D of the Privacy Act prohibited a credit provider from disclosing information about an individual other than information relating to commercial credit, and that the Applicant was entitled to injunctive relief under s.98(2) of the Privacy Act requiring the First Respondent to take steps in accordance with its agreement with Veda to remove the default listing (see [34]-[36] above).
Somewhat surprisingly (given its earlier correspondence and the Response filed on 29 January 2016), the First Respondent pleaded in its Further Amended Response filed on 16 June 2016 that it was not a credit provider within the meaning of ss.6, 6G and 6H of the Privacy Act (see [37] above).
Subsection 11B(5) of the version of the Privacy Act that was applicable on 6 February 2014, at the time the default listing was made by the First Respondent, provided:[29]
(5) Subject to subsection (6), while a person is acting as an agent of a credit provider in performing, on behalf of the credit provider, a task that is necessary:
(a) in processing an application for a loan; or
(b) in managing:
(i) a loan given by the credit provider; or
(ii) an account maintained by any person with the credit provider;
[29] Privacy Act 1988 (Cth) incorporating amendments up to Federal Circuit Court of Australia (Consequential Amendments) Act 2013 (Cth).
the first‑mentioned person:
(c) is taken, for the purposes of this Act, to be another credit provider; and
(d) is subject to the same obligations under this Act as any other credit provider.
Section 6H of the Privacy Act as at the adjourned hearing date, being 17 October 2016, provided:[30]
[30] Privacy Act 1988 (Cth) incorporating amendments up to Australian Crime Commission Amendment (National Policing Information) Act 2016 (Cth)
6H Agents of credit providers
(1) If an organisation or small business operator (the agent) is acting as an agent of a credit provider (the principal) in performing, on behalf of the principal, a task that is reasonably necessary:
(a) in processing an application for credit made to the principal; or
(b) in managing credit provided by the principal;
then, while the agent is so acting, the agent is a credit provider .
(2) Subsection (1) does not apply if the principal is an organisation or small business operator that is a credit provider because of a previous application of that subsection.
(3) If subsection (1) applies in relation to credit that has been provided by the principal, the credit is taken, for the purposes of this Act, to have been provided by both the principal and the agent.
(4) If subsection (1) applies in relation to credit for which an application has been made to the principal, the application is taken, for the purposes of this Act, to have been made to both the principal and the agent.
(Emphasis in original)
The question of whether or not the First Respondent fell within the scope of s.11B of the Privacy Act as in force on 6 February 2014 is a question of construction. I cannot determine whether the Applicant’s claims were wholly misconceived under the applicable version of the Privacy Act, as this was not argued before the Court. In my opinion, what can be concluded is that both the Applicant and the First Respondent misconceived the law, as both parties relied on an incorrect version of the Privacy Act in their inter-party correspondence and pleadings.
It is difficult to understand the First Respondent’s argument that the Applicant misconstrued the law, because it assumed that the Privacy Act applied to the First Respondent. In its Further Amended Response and Defence filed on 16 June 2016, the First Respondent pleaded, in effect, that the Privacy Act authorised it to disclose credit information pursuant to s.6H of the Privacy Act. However, up until 18 May 2016, the Applicant pleaded that the First Respondent was not a credit provider within the meaning of the Privacy Act.
I am satisfied that the application filed by the Applicant on 8 October 2015 was made based on the assumption that if there is a credit default that is inaccurate, a party can have that default removed as of right. However, in the Applicant’s Amended Application filed on 15 January 2016, the relief sought was that all reasonable steps be taken by the First Respondent and Veda to remove the default listing with Veda. The character of the relief sought changed, and did not assume an inaccurate default listing could be removed as of right. Thus, it was only at a very early stage of proceedings that the Applicant sought relief based on the assumption that if there is a credit default listing that is inaccurate, a party can have that default removed as of right. I do not see this is a factor which would cause the Court to depart from the usual course for costs orders.
I am not satisfied that it could be said that the Applicant engaged in conduct that constituted wilful disregard of clearly established law, or which involved the making of allegations which ought never to have been made. In my opinion, it would not be appropriate to order indemnity costs on the basis argued by the First Respondent when the legal representatives of both the Applicant and the First Respondent had misconceived the law.
There is no doubt that the proceedings were delayed when the final hearing listed on 20 April 2016 was adjourned to enable the Applicant to further amend his pleadings. However, the adjournment of proceedings, or indeed of a final hearing, is not uncommon in this Court. An order that a party seeking an adjournment pay the costs of the other party thrown away by the adjournment is the usual means by which Court deals with any inconvenience to, or costs incurred by, the other party. In my opinion, a mere adjournment of the final hearing cannot, without more, be the basis for indemnity costs.
Accordingly, I am not satisfied that the facts and circumstances in these proceedings are such as to warrant a departure from the usual practice, which is to order the unsuccessful party to pay the successful party’s costs on a party-party basis. I am not satisfied that, in these circumstances, I should exercise my discretion to make an indemnity costs order for the period 8 October 2015 to 18 May 2016.
Non-party costs order
The First Respondent seeks an order that the Applicant, and the Second and Third Respondents be jointly and severally liable for any costs order made by this Court.
The parties agree that the application falls to be governed by the considerations applicable to costs orders against non-parties to a proceeding pursuant to the principles identified in the High Court of Australia’s decision in Knight v FP Special Assets Limited (1992) 174 CLR 178 (“Knight”).
Relevant Principles
In Knight, Mason CJ and Deane J said the following about the circumstances in which a non-party costs order might be made:[31]
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where a party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.
[31] Knight v FP Special Assets Limited (1992) 174 CLR 178 at 192-193; Gaudron J agreeing at 205; see also Dawson J at 202.
The relevant discretionary considerations were helpfully summarised by Elliott J in Bakers Investment Group Australia Pty Ltd v Caason Investments Pty Ltd & Ors [2015] VSC 644 (“Bakers Investment Group”) at [15]-[16]:[32]
[32] The Full Court of the Victorian Supreme Court dismissed an appeal against Elliott J’s decision, holding that His Honour’s discretion to order costs against the funding non-parties did not miscarry: Carter and Esplanade Holdings Pty Ltd v Caason Investment Pty Ltd (2016) VSCA 236.
15. In determining whether or not a costs order ought to be made against a non-party, the moving party need not establish that the non-party is, in effect, the opposing party. It may be sufficient if the non-party, by its involvement, may properly and fairly be described as a real party to the litigation.
16. Each case must depend upon its own facts, and no restriction ought to be placed upon the court’s discretion other than that it is to be exercised judicially. The following factors may be relevant to the exercise of the court’s discretion:
(1) The extent to which the non-party has funded the litigation.
(2) The extent to which the non-party has a real interest in the fruits of the litigation if the assisted party were successful.
(3) The level of control the non-party exercised, or was entitled to exercise, over the conduct of the litigation, including its resolution.
(4) Whether or not the non-party attended any mediation of the dispute.
(5) The financial position of the assisted party.
(6) Whether the conduct of the litigation by the assisted party, or, if applicable, the funding non-party, in either prosecuting or defending a claim, was unreasonable, improper or an abuse of process.
(7) Whether security for costs was previously sought.
(8) Whether a timely warning was given by the successful party to the non-party that costs would be sought against it.
(9) The extent of the impact on the court of the involvement of the non-party.
(10) Whether the non-party agreed to provide an indemnity to the assisted party for any adverse costs order.
(Citations omitted)
In Vestris v Cashman & Anor (1998) 72 SASR 449 (“Vestris”), the Court held that a Trial Judge (of the District Court) did not have jurisdiction to make a non-party order. Olsson J observed that, in the event he was incorrect in this conclusion, he would consider whether the trial judge’s discretion was exercised properly. His Honour summarised a series of broad propositions emerging from the published authorities bearing on the question of the exercise of discretion against non-parties to litigation (Vestris at 457):
(1) The mere fact that a non-party may have benefited from the litigation, by itself, is not a proper basis for an adverse exercise of discretion: see Bischof v Adams [1992] 2 VR 198.
(2) Where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in the result, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued: see Carborundum Abrasives Pry Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757.
(3) The existence of a special personal interest in or potential benefit from the litigation is a critical factor warranting an order against a non-party. The mere fact that the non-party may have funded the legal costs of the unsuccessful party will not normally be sufficient: see Re Foster; Ex parte Foster v Duus (1994) 121 ALR 494; Oz B & S v Elders (1993) 1I7 ALR 128.
(4) It is not necessary to prove fraud, bad faith or some improper motive on the part of the non-party, provided that the situation falls within categories (2) or (3): see Forest Pry Ltd v Keen Bay Pty Ltd (1991) 4 ACSR 107.
(5) A failure on the part of the successful litigant to make a timely application for security for costs is a relevant consideration, where it appears unlikely that a corporate litigant will be unable to pay any costs awarded against it. The availability of an order for security for costs at an earlier stage of the litigation will, in any situation, be a strong argument for refusing to exercise a discretion to order costs against a non-party: see Knight v F P Special Assets Ltd per Mason CJ and Deane J.
Likewise, Lander J turned his mind to relevant discretionary considerations, and said (Vestris at 467-468):
The circumstances in which it is just to order costs against a person who was not a party to the litigation will be both rare and exceptional: see Aiden Shipping Ltd v Interbulk Ltd (at 980) per Lord Goff of Chieveley. If the order for costs which is sought against a non-party is in lieu of, in substitution for or complementary to an order for costs against a party, the circumstances for making such an order will not arise unless there is some connection or association between the party to the litigation and the non-party against whom the order for costs is sought. The connection must be of a kind that makes it just to make an order for costs in that the connection must be material to the question of costs: see Bischof v Adams [1992] 2 VR 198 at 205.
Whilst the circumstances to make an order for costs against a non-party will be both rare and exceptional such an order can be made without the moving party having to demonstrate any improper conduct of any kind on the part of the non-party. An order for costs against a non-party is not dependant upon any improper conduct on the part of any party. Of course in some cases improper conduct on the part of the non-party will be a relevant factor in the exercise of the discretion.
Whether it is just to make such an order involves the exercise of a discretion on the part of the trial judge: see Symphony Group plc v Hodgson [1994] QB 179 at 193. The discretion to make an order for costs against non-parties “must be exercised judicially and in accordance with general legal principles pertaining to the law of costs”: see Knight v FP Special Assets Ltd (at 192) per Mason CJ and Deane J.
It is not desirable to lay down any rules which would fetter the exercise of a trial judge to make such an order but some guidance as to the exercise of the discretion can be obtained from the decided cases.
In exercising the discretion regard would be had to whether the non-party could have been joined as a party earlier in the proceedings and thereby obtained the protection of the rules of court; whether the non-party has had any warning that an application for costs against that party would be made; whether, in those circumstances, the non-party could have applied to be joined in the proceedings and thereby had the capacity to influence the proceedings or the non-party could have protected itself by making an offer in accordance with the rules; whether if a warning had been given the non-party could have terminated the proceedings by discontinuance, negotiation, payment or otherwise; whether the party who would otherwise be usually liable for costs can meet an order for costs and if relevant the reason why that party cannot meet an order for costs; whether it was apparent at any earlier stage in the proceedings, and if so when, that the party could not meet costs; whether the moving party should have sought an order for security for costs; the relationship, if any, between the non-party and the party who would usually be liable for costs; whether the non-party has caused the proceedings; whether the non-party has funded the proceedings; whether the non-party stood to benefit by the litigation and if so how; whether the non-party had a direct or indirect financial interest in the litigation; and whether there has been any improper conduct on the part of the non-party.
None of the matters will necessarily be decisive. Indeed the presence of one or more of those matters does not inexorably lead to the conclusion that an order for costs should be made against a non-party. In Bischof v Adams the mere fact that a person may benefit from the litigation was not enough.
An order will be made against a non-party only if the justice of the case requires that an order be made.
With respect to the observation by Lander J in Vestris that the circumstances justifying a non-party costs order will be both rare and exceptional, it should be noted that Elliott J in Bakers Investment Group (after referring to the use of the word “exceptional” in the empowering provision of the Supreme Court Act 1986 (Vic)), said (Bakers Investment Group at [12]):
12. The making of orders against non-parties under s 24(1) is exceptional. But care must be taken in using this term, so that it is not understood as imposing a threshold that goes beyond the language of the statutory provision. As was stated by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd:
Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order.
(Citations omitted)
The factors that a Court should consider in exercising the discretion were also identified in Joshua Brook Pty Ltd v Outdoor Centre Holdings Pty Ltd & Anor (No.4) [2014] FCCA 1325 (“Joshua Brook”) at [42] as follows:
a) whether the party to the litigation is “insolvent or a man of straw”;
b) whether the non-parties were involved in the management of the litigation or played an active part in the litigation;
c) whether the third parties stood to gain financially from the outcome of the proceedings or had an interest in the outcome;
d) whether the non-parties should have been joined as a party to the action;
e) whether a security for costs application should have been made; and
f) whether there are other factors relevant to the interests of justice in favour of making a costs order against the non-parties.
The First Respondent’s submissions were crafted around the discretionary factors identified in Joshua Brook, whereas the Second and Third Respondents’ submissions were crafted around the discretionary considerations identified in Bakers Investment Group. The Applicant relied on its written submissions on costs filed on 20 February 2017.
I am satisfied that, in the circumstance of this case, the relevant discretionary considerations can be considered under the following headings.
The Applicant’s Financial Position
The First Respondent’s written submissions assert that the Applicant is a “man of straw” because:[33]
a)the Applicant is not the registered proprietor of any property;
b)the Applicant deposed that he is the sole income earner supporting a wife and four children,[34] that he has an inability to raise loan finance totalling $14,000 and that he is suffering financial consequences from his inability to do so;[35] and
c)the fact that the Applicant’s previous solicitors (SLF Lawyers) stated in an email to the First Respondent’s solicitor dated 13 April 2016 that the reason they were withdrawing was because their client cannot meet the ongoing costs of the litigation.
[33] The First Respondent’s Submissions in Support of Application for Costs Against the Second and Third Respondents filed on 21 March 2017 at [4]-[5].
[34] The Applicant’s Affidavit filed on 9 December 2015 at [6].
[35] Ibid at [12], [28].
At the hearing, Counsel for the First Respondent accepted that, in light of the Applicant’s most recent affidavit,[36] the Applicant is a registered proprietor of real property in Victoria. However, Counsel for the First Respondent contended that on the Applicant’s own evidence, taking it at its highest, his equity in the land is minimal. Counsel for the First Respondent observed that the Applicant’s evidence was the estimated value of land is the vicinity of $105,000-$158,000, and that the then value of the mortgage over the land was $105,000. Consequently, Counsel for the First Respondent argued that the Applicant’s equity in the land could be zero. Counsel for the First Respondent submitted that, on the basis of the Applicant’s individual taxation returns attached to his most recent affidavit, his income is approximately $580 a week, from which he has to support his family and repay the mortgage. This evidence, it was argued by Counsel for the First Respondent, supports an inference that the Applicant cannot pay the costs of the substantive proceedings.
[36] The Applicant’s Affidavit filed on 25 August 2017.
The Second and Third Respondents submitted that the Applicant is not a “man of straw”, as his affidavit filed on 25 August 2017 discloses that:
a)the Applicant owns real property in Victoria with a substantial net value;[37]
b)the Applicant is conducting a profitable business and has a source income;[38] and
c)any diminution in his income and his inability to obtain further finance is due to the activities of the First Respondent.[39]
[37] Ibid at [3]-[8], Annexure A, Annexure C.
[38] Ibid at [9]-[12], Annexure C.
[39] Ibid at [8].
Consideration
In Bakers Investment Group, Elliott J, having reviewed the authorities in relation to the “person of straw” said (Bakers Investment Group at [29]):
29. In summary, and without being exhaustive, the term has been used to describe an insolvent person, a solvent person with little or no assets, a person who is or would be unable to meet all or substantially all of an adverse costs order within a reasonable period of time, a person who is unable to be sued as they are missing, a debtor who has already assigned all of its divisible property and a person not worth suing because they lack financial substance.
In these proceedings, no estimate has been provided by the First Respondent of the costs incurred by it on an indemnity basis, nor on a party-party basis, in accordance with either the FCA Rules or the FCC Rules. This makes it difficult for the Court to assess whether, having regard to the Applicant’s financial circumstances, he would be able to meet any costs order over a reasonable period of time.
Despite the Applicant’s evidence in his first affidavit[40] regarding the difficulties of raising a loan, it is evident, having regard to his most recent affidavit,[41] that the Applicant has been able to raise a mortgage in the sum of $105,000 in respect of real property that he has acquired, subsequent to the default listing on the Veda database. In my opinion, the reference by the Applicant to the adverse financial impact of the default listing on raising loans contained in the Applicant’s first affidavit[42] was in relation to the financial impact of the default listing on raising a loan for the purpose of securing contracts for the Applicant’s business, and the consequential impact on his business’ profits.[43]
[40] The Applicant’s Affidavit filed on 9 December 2015.
[41] The Applicant’s Affidavit filed on 25 August 2017.
[42] The Applicant’s Affidavit filed on 9 December 2015.
[43] Ibid at [30]-[32].
In my opinion, the characterisation by the First Respondent of the email dated 13 April 2016 from the Applicant’s then solicitors (SLF Lawyers) to the First Respondent’s solicitors (see [76(c)] above), is incorrect. In that email, the Applicant’s then solicitor (SLF Lawyers) asserted that the First Respondent’s solicitors’ correspondence has been deliberately voluminous, and state as follows:[44]
We also understand that this has been done for the benefit of your client, as your client has considerably larger abilities to meet your ongoing legal costs than ours, so your strategy appears, for the short term, to have succeeded.
[44]Affidavit of Louise Avni filed on 24 February 2017, Annexure LA-32.
SLF Lawyers then informs the First Respondent’s solicitors that they no longer act for the Applicant, and will file a Notice of Withdrawal on 15 April 2016.[45]
[45] Ibid.
In my opinion, this is hardly a statement by SLF Lawyers that they are withdrawing because their client cannot meet the ongoing costs of the litigation. It is a complaint that the First Respondent is deliberately increasing the Applicant’s legal costs through voluminous and unnecessary correspondence.
Whether there are other factors relevant to the interests of justice in favour of making a costs order against non-parties
In my view, there are no other factors relevant to the interests of justice in favour of making a costs order against the non-parties.
Conclusion
I have found that in the early stage of the substantive proceedings, from 8 October 2015 to 15 April 2016, the Second and Third Respondents were actively involved in the litigation of the substantive proceedings (see above at [141]). This is, however, but one of the discretionary considerations relevant to the circumstances of this case. Having regard to all the facts and circumstances, and taking into account all relevant discretionary considerations, I am not satisfied that I should exercise my discretion to award non-party costs against the Second and Third Respondents.
The costs scale
The First Respondent submitted that, wheresoever party-party costs are ordered, those costs should be taxed according to the FCA Rules, and not the FCC Rules. The First Respondent submitted that the reason for this is:[91]
7. … because the event-based schedule of costs in Schedule 1 to the Federal Circuit Court Rules 2001 do not make sufficient allowance for the manner in which the applicant ran its case, nor the purported complexity with which it articulated its case requiring among others, two adjournments and three revisions of its originating process.
[91] The First Respondent’s Costs Submissions filed on 9 February 2017 at [7].
It should be noted that the first adjournment of the proceedings occurred after the first Court return date, at which the matter was listed for final hearing in April 2016. I accept that the final hearing, originally listed in April 2016, was adjourned at the request of the Applicant, and costs were reserved. However, adjournments of final hearings are not necessarily uncommon in this Court, and can be accommodated in an events-based scale.
There were three revisions of the Applicant’s Application, however, I reject the argument that these revisions raised unusual or complex questions of law or facts which were required to be dealt with.
I see no basis for awarding party-party costs in accordance with the FCA Rules. Consequently, party-party costs will be awarded against the Applicant in accordance with the FCC Rules.
Conclusion
For the reasons set out in this judgment, I order that the Applicant pay the First Respondent’s costs incurred on a party-party basis in accordance with the FCC Rules.
I certify that the preceding one hundred and sixty-four (164) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 8 December 2017
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