FEDERAL COURT OF AUSTRALIA

Carpathian Resources Limited v Highmoor Business Corporation (No 2) [2011] FCA 616

THE COURT ORDERS THAT:

1.    The respondents pay the applicant’s costs of and incidental to the application, including reserved costs, to be taxed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

A QUESTION OF COSTS

1    In this matter, which was commenced by application filed 17 November 2010, amended with leave on 18 November 2010, the applicant sought both final and interlocutory relief. On 18 November 2010, the interlocutory application was heard and I granted the interlocutory relief sought by the applicant on 19 November 2010. Reasons were handed down on 23 November 2010 and may be found at Carpathian Resources Limited v Highmoor Business Corporation [2010] FCA 1294 (Carpathian v Highmoor).

2    On 2 December 2010, the applicant indicated that it no longer pressed for the relief sought in [6] of its amended application, and by order made 2 December 2010 I dismissed the applicant’s claim for the final relief in that respect.

3    At a directions hearing on 25 February 2011, the applicant indicated that it would no longer press its amended application for any final relief. An order was then made dismissing the amended application. However, the question of costs was left to be determined on the papers. The applicant was ordered to file and serve written submissions on costs by 11 March 2011. The respondent was to file and serve answering written submissions by 25 March 2011. At the time these orders were made the solicitors on the record for the respondents indicated they may soon seek to be removed from the record.

4    The applicant filed written submissions concerning costs on 10 March 2011. No written submissions were then or have been since filed by the respondents. The respondents’ solicitors previously on the record, Lavan Legal, filed a notice of withdrawal as solicitors on 4 March 2011. No solicitors have gone on to the record for the respondents since then. There is nothing to suggest that the respondents are or were unaware of their obligation to file and serve answering written submissions by 25 March 2011 in accordance with the Court’s direction. In these circumstances I consider it appropriate to determine the questions of costs.

5    The applicant seeks an order that the respondents pay the applicant’s costs of these proceedings, including any reserved costs, to be taxed.

6    In its written submissions filed 10 March 2011, the applicant says that all orders for final relief, save for the claim contained in [4], were rendered unnecessary by the findings made in the interlocutory application and the events that followed, including the findings made in related proceedings before Gilmour J, being the Federal Court application WAD 405 of 2010: see Carpathian Resources Ltd v Hendriks [2011] FCA 41 (Carpathian v Hendriks). These were the events that culminated in the applicant discontinuing its application for final relief.

7    The applicant contends they have been successful in their application against the respondents and that, in the ordinary and usual course, costs follow the event and that the applicant, as the successful party, it is entitled to be compensated by an order for costs in its favour.

8    The applicant contends that the only findings made which could be construed as adverse to the applicant were the preliminary views expressed in relation to the validity of the proxy forms: see Carpathian v Highmoor at [62]-[75]. However, this issue was of peripheral importance to the substantive questions to be determined in the interlocutory application: see Carpathian v Highmoor at [70] and [75]. Furthermore, the applicant contends there was no element of unreasonableness or inappropriate conduct on the part of the applicant in raising the issue given that it has not been finally settled by authority.

9    The applicant further contends that they acted reasonably in waiting until 2 December 2010 to cease pressing for a final order, in light of the contemporaneous events which are set out in Carpathian v Hendriks. The applicant also contends that the length of the proceeding was not increased by the applicant not pressing the final relief sought in the application until this date and that this was not significant when measured against the matters determined in the applicant’s favour.

10    The applicant contends that in the circumstances of this case, justice is served by the Court dealing with the costs of the proceedings globally and by characterising the outcome of these proceedings as one in which the respondents wholly failed and the applicant wholly succeeded.

11    Section 43 of the Federal Court of Australia Act 1976 (Cth) confers a broad discretion on the Court to award costs in proceedings. It is well understood that in the exercise of this discretion, costs will ordinarily follow the event and that a successful litigant will receive costs in the absence of special circumstances which justify the making of some other order.

12    In circumstances where an action is discontinued prior to a final hearing, costs may still be awarded. In Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, McHugh J observed at 624-625:

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action…Moreover, in some cases a judge may feel confident that, although parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.

13    I consider that the applicant can be taken to have been the successful party in this otherwise finalised proceeding, for the reasons it advances. The applicant was successful in its application for interlocutory relief. While the application for final relief was ultimately dismissed, this was only because of the applicant’s overall success in the proceedings involving the parties before Gilmour J.

14    There is no element of unreasonableness or inappropriate behaviour on behalf of the applicant which has resulted in unnecessary delay and expense in these proceedings.

order

15    I would therefore order that the respondents should pay the applicant’s costs of and incidental to the application, including reserved costs, to be taxed.

1.    The respondents pay the applicant’s costs of and incidental to the application, including reserved costs, to be taxed.

Associate:

Dated:    3 June 2011