FEDERAL COURT OF AUSTRALIA

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 3) [2014] FCA 758

THE COURT ORDERS THAT:

1.    The First Applicant pay the First to Thirteenth and Seventeenth and Eighteenth Respondents’ costs of their interlocutory application of 4 April 2014.

2.    The First Applicant pay the First to Thirteenth and Seventeenth and Eighteenth Respondents’ costs of the stay application of 14 May 2014.

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

REASONS FOR JUDGMENT

1    On 13 May 2014, I made an order (order for production) requiring the applicant (Asahi) to produce to certain of the respondents (the relevant respondents) an unredacted copy of a document the full disclosure of which had been resisted by Asahi on the grounds of legal professional privilege. My reasons for judgment, which explain why the relevant respondents were successful in their interlocutory application (the interlocutory application), are published as Asahi Holdings (Australia) Pty Limited v Pacific Equity Partners Pty Limited (No 2) [2014] FCA 481.

2    In those reasons and on the assumption that Asahi did not resist an order that it pay costs if it were unsuccessful, I indicated my preparedness to make an order that Asahi pay the costs of the interlocutory application incurred by the relevant respondents. Prior to any such order being made, Asahi informed the Court of its resistance to such an order and its desire to make submissions on the issue of costs.

3    Having considered the competing submissions of the parties, I have concluded that Asahi should pay the relevant respondents’ costs of the interlocutory application. Those submissions also addressed the question of the legal costs of an application (stay application) made by Asahi, for a stay of the order for production. I have also concluded, for the reasons that follow, that Asahi should pay the relevant respondents’ costs of the stay application.

Relevant Legal Principles

4    Section 43(2) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) confers a wide discretion upon the Court in relation to costs. That discretion must be exercised judicially.

5    In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119, Black CJ, Emmett and Middleton JJ said at [11]:

The usual practice is that costs follow the event and that the Court will order the recovery of costs by the successful party on a party-party basis but success or failure on separate issues may lead the court to engage in a process of apportionment: see Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261.

6    Section 37N(4) of the Federal Court Act provides that in exercising the discretion to award costs in a civil proceeding, the Court is required to take account of “any failure to comply with a duty imposed by subsection (1) or (2)”. Relevantly for current purposes, s 37N(1) provides that parties to a civil proceeding must conduct the proceeding in a way that is consistent with “the overarching purpose”. That purpose is described in s 37M and includes the objective of facilitating the just resolution of disputes “as quickly, inexpensively and efficiently as possible”. In particular, s 37M(2) identifies a number of objectives including the disposition of a proceeding in a “timely manner” and the resolution of disputes at a cost that is “proportionate to the importance and complexity of the matters in dispute”.

7    In exercising the discretion to award costs, the Court must take into account any failure to comply with the duty imposed on parties to conduct the proceeding in a way that is consistent with the overarching purpose: Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2012] FCAFC 183 at [57]-[58].

Costs of the Interlocutory Application

8    Asahi seeks an order that the costs of the interlocutory application be costs in the cause or, alternatively, if any costs are to be awarded to the relevant respondents, such costs be discounted.

9    Asahi contended that the usual order that costs follow the event ought not be made for two reasons. First, it relied on a number of concessions which were made in the course of the hearing by the relevant respondents. The concessions in question are referred to in my earlier reasons for judgment at [56]. In broad terms, it was conceded that legal professional privilege had attached to the document at issue. That left for determination the question of whether the privilege had been waived by Asahi.

10    Asahi characterised the concessions made as demonstrating that it was partly successful and that the mixed success of the parties on the interlocutory application should result in an apportionment of costs.

11    That contention is misconceived. This was not a case in which the parties enjoyed mixed success. Asahi failed to resist the interlocutory application and the relevant respondents were wholly successful. The fact that in obtaining the order sought, the relevant respondents made concessions in relation to some of the legal issues raised provides no basis for discounting the costs that would ordinarily be awarded to a successful party. Concessions or admissions negate the existence of a dispute on an issue. They are not, without more, demonstrative of a party’s success on the issue. Further, if the making of a concession was to be regarded as some admission of failure, parties would be discouraged from making concessions for fear of detrimental costs consequences. Cost orders should encourage, rather than discourage, the narrowing of issues for determination by the making of appropriate concessions.

12    In the absence of any suggestion by Asahi that the concessions made or the timing of those concessions involved some unreasonableness or some conduct which resulted in unnecessary costs being incurred by it, I can see no reason why the making of concessions by the relevant respondents should result in any disadvantage to those respondents on the question of costs.

13    The second basis relied upon by Asahi was that the relevant respondents raised a number of unsuccessful contentions. Those unsuccessful contentions, so Asahi contended, involved a substantial amount of court time and documentary evidence. Relying on ss 37M and 37N of the Federal Court Act and the judgment of Redlich, Priest JJA and Macaulay AJA in Yara Australia Pty Ltd v Oswal [2013] VSCA 337 at [51]-[52] (which dealt with similar provisions in the Civil Procedure Act 2010 (Vic)), Asahi contended that the relevant respondents had an obligation to ensure that the expenditure incurred on the interlocutory application was reasonable and proportionate to the proceeding in question.

14    The passage in Yara relied upon by Asahi addressed a situation where a party had produced voluminous, extraneous, repetitious or excessive documents. The passage is not really on point although it does demonstrate the wide nature of the considerations that may be taken into account in assessing the potential failure by a party to comply with the duty imposed by s 37N(1). As earlier stated, s 37N(4) obliges me to take into account any such failure in exercising my discretion to award costs.

15    The failure of duty by the relevant respondents asserted by Asahi in this case was, in essence, the wasted time and expense dedicated to arguments which were unsuccessful. There is a difference however, in terms of the obligation imposed by s 37N(1), between raising an unsuccessful contention and raising a contention that should not have been raised because it was unreasonable or unnecessary to do so. Prior to the operation of s 37N(4), unreasonableness has been an acknowledged touchstone as to whether a successful party should suffer adverse costs consequences for raising unsuccessful contentions or claims: Cultivaust Pty Ltd v Grain Pool Pty Ltd [2004] FCA 1568 at [41], Mansfield J. Whilst I consider that s 37N(1) has broadened the scope for the making of adverse cost orders, I do not consider that an ultimately successful party’s failure on a particular contention should necessarily or even ordinarily lead to adverse costs consequences.

16    I am not satisfied that the relevant respondents breached the duty imposed by s  37N(1). The unsuccessful contentions in question were all made in support of an issue upon which the relevant respondents succeeded. Whilst those unsuccessful contentions lacked merit, they were not unreasonably raised particularly as they related to a legal issue of significant complexity.

Costs of the Stay Application

17    On 14 May 2014, I made the stay order and reserved the costs of the stay application. The relevant respondents seek their costs of that application. Asahi contend that the order reserving costs be maintained.

18    The stay application was brought by Asahi. It was sought and granted on the basis that Asahi desired two days to consider whether to appeal the order for production and if so to file and have determined an application for leave to appeal. No application for leave to appeal was ultimately made by Asahi.

19    There is no reason why the costs of the stay application should not be borne by Asahi. Those costs were incurred to facilitate Asahi’s desire to consider whether to appeal. Whilst it may have been perfectly reasonable for Asahi to have sought that facility, in the absence of any unreasonableness on behalf of the relevant respondents (and none is suggested), there is no reason why the relevant respondents should bear the costs involved in Asahi being provided with the opportunity it sought and obtained.

Conclusion

20    In light of my findings I will make orders that Asahi pay the relevant respondents’ costs of the interlocutory application and of the stay application.

Associate:

Dated:    23 July 2014

Schedule Of Parties

    No: (P)VID87/2013

Federal Court of Australia

District Registry: Victoria

Division: General

Second Applicant:    INDEPENDENT LIQUOR (NZ) LIMITED

Second Respondent:    UNITAS CAPITAL PTE. LTD.

Third Respondent:    EAGLE COINVESTMENT PTY LIMITED (AS TRUSTEE FOR PACIFIC EQUITY PARTNERS FUND III CO-INVESTMENT TRUST)

Fourth Respondent:    JOMARK INTERNATIONAL IV B.V.

Fifth Respondent:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS FUND III (AUSTRALASIA) UNIT TRUST)

Sixth Respondent:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III (AUSTRALIA) UNIT TRUST)

Seventh Respondent:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS FUND III LP

Eighth Respondent:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III LP

Ninth Respondent:    PEP INVESTMENT PTY LIMITED

Tenth Respondent:    RICKARD JAN ROLF GARDELL

Eleventh Respondent:    ANTONY JOHN DUTHIE

Twelfth Respondent:    SIMON DAVID PILLAR

Thirteenth Respondent:    GEOFFREY JOHN HUTCHINSON

Fourteenth Respondent:    EUGENE WON SUH

Fifteenth Respondent:    JULIAN ALEXANDER BUCKLEY

Sixteenth Respondent:    PHILLIP MICHAEL BOWER

Seventeenth Respondent:    PEP ADVISORY III PTY LTD

Eighteenth Respondent:    UNITAS CAPITAL PTY LTD

Nineteenth Respondent:    AIG INSURANCE NEW ZEALAND LIMITED (NZBN 942 903 131 0048)

Twentieth Respondent:    ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED

Twenty First Respondent:    BEAZLEY SOLUTIONS LIMITED

Twenty Second Respondent:    CONTINENTAL CASUALTY COMPANY OF CNA OPEN BROKERAGE CLAIMS

Twenty Third Respondent:    HISCOX SYNDICATES LIMITED

Twenty Fourth Respondent:    NOVAE SYNDICATES LIMITED

Twenty Fifth Respondent:    BRIT SYNDICATES LIMITED

Twenty Sixth Respondent:    R J KILN & CO LIMITED

Twenty Seventh Respondent:    ASPEN MANAGING AGENCY LIMITED

FIRST CROSS CLAIM

First Cross Calimant:    PACIFIC EQUITY PARTNERS PTY LIMITED

Second Cross Claimant:    EAGLE COINVESTMENT PTY LIMITED (AS TRUSTEE FOR PACIFIC EQUITY PARTNERS FUND III CO-INVESTMENT TRUST)

Third Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS FUND III (AUSTRALASIA) UNIT TRUST)

Fourth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III (AUSTRALIA) UNIT TRUST)

Fifth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS FUND III LP

Sixth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III LP

Seventh Cross Claimant:    PEP INVESTMENT PTY LIMITED

Eighth Cross Claimant:    RICKARD JAN ROLF GARDELL

Ninth Cross Claimant:    ANTONY JOHN DUTHIE

Tenth Cross Claimant:    SIMON DAVID PILLAR

Eleventh Cross Claimant:    GEOFFREY JOHN HUTCHINSON

Twelfth Cross Claimant:    PEP ADVISORY III PTY LTD

First Cross Respondent:    PETER MURPHY

Second Cross Respondent:    NICK MONTAGUE

Third Cross Respondent:    GREGORY ELLERY

Fourth Cross Respondent:    JULIAN DAVIDSON

SECOND CROSS CLAIM

First Cross Claimant:     UNITAS CAPITAL PTE. LTD.

Second Cross Claimant:    JOMARK INTERNATIONAL IV B.V.

Third Cross Claimant:    EUGENE WON SUH

Fourth Cross Claimant:    JULIAN ALEXANDER BUCKLEY

Fifth Cross Claimant:    PHILLIP MICHAEL BOWER

Sixth Cross Claimant:    UNITAS CAPITAL PTY LTD

First Cross Respondent:    PETER MURPHY

Second Cross Respondent:    NICK MONTAGUE

Third Cross Respondent:    GREGORY ELLERY

Fourth Cross Respondent:    JULIAN DAVIDSON

THIRD CROSS CLAIM

First Cross Claimant:    PETER MURPHY

Second Cross Claimant:    NICK MONTAGUE

Cross Respondent:    INDEPENDENT LIQUOR (NZ) LIMITED

FOURTH CROSS CLAIM

Cross Claimant:    GREGORY ELLERY

Cross Respondent:    INDEPENDENT LIQUOR (NZ) LIMITED

FIFTH CROSS CLAIM

Cross Claimant:     JULIAN DAVIDSON

Cross Respondent:    INDEPENDENT LIQUOR (NZ) LIMITED

SIXTH CROSS CLAIM

First Cross Claimant:    UNITAS CAPITAL PTE. LTD.

Second Cross Claimant:    JOMARK INTERNATIONAL IV B.V.

Third Cross Claimant:    UNITAS CAPITAL PTY LTD

First Cross Respondent:    AIG INSURANCE NEW ZEALAND LIMITED (NZBN 942 903 131 0048)

Second Cross Respondent:    ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED

Third Cross Respondent:    BEAZLEY SOLUTIONS LIMITED

Fourth Cross Respondent:    CONTINENTAL CASUALTY COMPANY

Fifth Cross Respondent:    UNDERWRITING MEMBERS OF LLOYD'S SYNDICATES 33, 2007, 2987, 4711 AND 510 IN RESPECT OF THE 2011 UNDERWRITING YEAR OF ACCOUNT

SEVENTH CROSS CLAIM

First Cross Claimant:    PACIFIC EQUITY PARTNERS PTY LIMITED

Second Cross Claimant:    EAGLE COINVESTMENT PTY LIMITED (AS TRUSTEE FOR PACIFIC EQUITY PARTNERS FUND III CO-INVESTMENT TRUST)

Third Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS FUND III (AUSTRALASIA) UNIT TRUST)

Fourth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III (AUSTRALIASIA) PTY LIMITED (AS TRUSTEE FOR THE PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III (AUSTRALIA) UNIT TRUST)

Fifth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS FUND III LP

Sixth Cross Claimant:    PACIFIC EQUITY PARTNERS FUND III GP (JERSEY) LIMITED AS GENERAL PARTNER OF PACIFIC EQUITY PARTNERS SUPPLEMENTARY FUND III LP

Seventh Cross Claimant:    PEP INVESTMENT PTY LIMITED

Eighth Cross Claimant:    RICKARD JAN ROLF GARDELL

Ninth Cross Claimant:    ANTONY JOHN DUTHIE

Tenth Cross Claimant:    SIMON DAVID PILLAR

Eleventh Cross Claimant:    GEOFFREY JOHN HUTCHINSON

Twelfth Cross Claimant:    PEP ADVISORY III PTY LTD

First Cross Respondent:    AIG INSURANCE NEW ZEALAND LIMITED (NZBN 942 903 131 0048)

Second Cross Respondent:    ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED

Third Cross Respondent:    BEAZLEY SOLUTIONS LIMITED

Fourth Cross Respondent:    CONTINENTAL CASUALTY COMPANY

Fifth Cross Respondent:    UNDERWRITING MEMBERS OF LLOYD'S SYNDICATES 33, 2007, 2987, 4711 AND 510 IN RESPECT OF THE 2011 UNDERWRITING YEAR OF ACCOUNT

EIGHTH CROSS CLAIM

First Cross Claimant:    EUGENE WON SUH

Second Cross Claimant:    JULIAN ALEXANDER BUCKLEY

Third Cross Claimant:    PHILLIP MICHAEL BOWER

First Cross Respondent:    AIG INSURANCE NEW ZEALAND LIMITED (NZBN 942 903 131 0048)

Second Cross Respondent:    ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED

Third Cross Respondent:    BEAZLEY SOLUTIONS LIMITED

Fourth Cross Respondent:    CONTINENTAL CASUALTY COMPANY

Fifth Cross Respondent:    UNDERWRITING MEMBERS OF LLOYD'S SYNDICATES 33, 2007, 2987, 4711 AND 510 IN RESPECT OF THE 2011 UNDERWRITING YEAR OF ACCOUNT

NINTH CROSS CLAIM

Cross Claimant:    AIG INSURANCE NEW ZEALAND LIMITED (NZBN 942 903 131 0048)

First Cross Respondent:    PETER MURPHY

Second Cross Respondent:    NICK MONTAGUE

Third Cross Respondent:    GREGORY ELLERY

Fourth Cross Respondent:    JULIAN DAVIDSON

TENTH CROSS CLAIM

First Cross Claimant:    ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED

Second Cross Claimant:    BEAZLEY SOLUTIONS LIMITED

First Cross Respondent:    PACIFIC EQUITY PARTNERS PTY LTD ACN 082 283 949

Second Cross Respondent:    PEP ADVISORY III PTY LTD

Third Cross Respondent:    UNITAS CAPITAL PTE. LTD.

Fourth Cross Respondent:    UNITAS CAPITAL PTY LTD

Fifth Cross Respondent:    RICKARD JAN ROLF GARDELL

Sixth Cross Respondent:    ANTONY JOHN DUTHIE

Seventh Cross Respondent:    SIMON DAVID PILLAR

Eighth Cross Respondent:    GEOFFREY JOHN HUTCHINSON

Ninth Cross Respondent:    EUGENE WON SUH

Tenth Cross Respondent:    JULIAN ALEXANDER BUCKLEY

Eleventh Cross Respondent:    PHILLIP MICHAEL BOWER

Twelfth Cross Respondent:    PETER MURPHY

Thirteenth Cross Respondent:    NICK MONTAGUE

Fourteenth Cross Respondent:    GREGORY ELLERY

Fifteenth Cross Respondent:    JULIAN DAVIDSON

ELEVENTH CROSS CLAIM

First Cross Claimant:    CONTINENTAL CASUALTY COMPANY OF CNA OPEN BROKERAGE CLAIMS

Second Cross Claimant:    UNDERWRITING MEMBERS OF LLOYD'S SYNDICATES 33, 2007, 2987, 4711 AND 510 IN RESPECT OF THE 2011 UNDERWRITING YEAR OF ACCOUNT

First Cross Respondent:    PACIFIC EQUITY PARTNERS PTY LTD ACN 082 283 949

Second Cross Respondent:    PEP ADVISORY III PTY LTD

Third Cross Respondent:    UNITAS CAPITAL PTE. LTD.

Fourth Cross Respondent:    UNITAS CAPITAL PTY LTD

Fifth Cross Respondent:    RICKARD JAN ROLF GARDELL

Sixth Cross Respondent:    ANTONY JOHN DUTHIE

Seventh Cross Respondent:    SIMON DAVID PILLAR

Eighth Cross Respondent:    GEOFFREY JOHN HUTCHINSON

Ninth Cross Respondent:    EUGENE WON SUH

Tenth Cross Respondent:    JULIAN ALEXANDER BUCKLEY

Eleventh Cross Respondent:    PHILLIP MICHAEL BOWER

Twelfth Cross Respondent:    PETER MURPHY

Thirteenth Cross Respondent:    NICK MONTAGUE

Fourteenth Cross Respondent:    GREGORY ELLERY

Fifteenth Cross Respondent:    JULIAN DAVIDSON