FEDERAL COURT OF AUSTRALIA

Stevens v Wintawari Guruma Aboriginal Corporation RNTBC (No 2) [2016] FCA 747

ORDERS

THE COURT ORDERS THAT:

1.    The applicants pay the Aboriginal Corporation’s costs of the day reserved on 26 November 2015, and the disbursements on the Aboriginal Corporation’s application to set aside the subpoenas withdrawn on 18 February 2016.

2.    As to the costs reserved at the directions hearing on 9 December 2015, each party is to bear its own costs.

3.    The Aboriginal Corporation otherwise pay the applicants 90% of the costs of the applicants in the proceeding.

4.    There be no order as to costs of the motion or submissions concerning costs dealt with in these orders.

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

REASONS FOR JUDGMENT

BARKER J:

1    On 2 April 2015, a general meeting of the respondent, the Wintawari Guruma Aboriginal Corporation RNTBC, passed a resolution that the first, second and third applicants, the Stevens, be removed as members of the Aboriginal Corporation. On 29 February 2016, the Court made declarations that the resolution was invalid and of no force and effect, as well as orders requiring the Stevens be restored to the Aboriginal Corporation’s register of members. See Stevens v Wintawari Guruma Aboriginal Corporation RNTBC [2016] FCA 149.

2    The question now raised is whether the Aboriginal Corporation should pay the Stevens’ costs of the proceeding on the usual basis that costs follow the event. The Aboriginal Corporation contends that any costs awarded to the Stevens should be substantially reduced due to them failing on a number of issues at trial. It further contends that the Court should make different awards of costs in relation to different parts of the proceedings pursuant to s 43(3)(b) of the Federal Court of Australia Act 1976 (Cth).

3    It also seeks costs orders in its favour with respect to subpoenas withdrawn by the Stevens on 18 February 2016, and in relation to other issues that were adjourned seven days prior to trial.

4    The Stevens reject these contentions and contend that the Aboriginal Corporation should pay their costs to be taxed, if not agreed, in the usual form in the matter that went to trial.

Should the Stevens pay the Aboriginal Corporation’s costs with respect to the subpoenas?

5    The Aboriginal Corporation seeks costs in respect of its interlocutory application on 23 November 2015, to set aside the subpoenas issued by the Court at the request of the Stevens and then subsequently withdrawn by the Stevens against:

(1)    Australian Executor Trustee Limited;

(2)    Pascoe Custodian Services Pty Ltd; and

(3)    Pascoe Partners Pty Ltd.

(Collectively, the subpoenas.)

6    The Aboriginal Corporation notes that the subpoenas were withdrawn by the Stevens on the day of the hearing of the Aboriginal Corporation’s application to set aside the subpoenas, being 18 February 2016. It says that, as such, it should be awarded costs for disbursements, “get up” and preparation of the interlocutory hearing, in addition to the costs reserved at the hearing before Deputy District Registrar Stanley on 5 November 2015.

7    The Stevens say the subpoenas were not moved on as they were duplicates of the equivalent subpoenas in WAD 1 of 2015, and as soon as the traditional decision-making process issues were consolidated on the related proceedings, there was no need for the separate subpoenas. They say that so much was immediately apparent. The Stevens note that after the matter was stood down for discussions at the hearing on 9 December 2015, their counsel indicated to the Court that the subpoenas would be withdrawn.

8    Consequently, the Stevens say there should be no order for costs in respect of the interlocutory application to set aside the subpoenas in circumstances where the fact that the subpoenas would not be pursued had been clear for two months before the hearing.

9    In any event, they say the work undertaken in respect of the subpoenas was entirely duplicative of that undertaken in respect of the subpoenas in WAD 1 of 2015.

10    The Court notes that Deputy District Registrar Stanley on 5 November 2015 made the following orders:

1.    The Subpoenas for Production addressed to:

a. Australian Executor Trustees Limited;

b. Eastern Guruma Pty Ltd;

c. Pascoe Partners Custodian Services Pty; and

d. Pascoe Partners Pty Ltd as Trustee for The Pascoe Partners Unit Trust;

be discharged.

11    Relevantly, no reservation of costs order was apparently made.

12    The Deputy District Registrar then made the following orders on 26 November 2015:

1.     The Subpoenas for Production addressed to:

a. Australian Executory Trustees Ltd;

b. Pascoe Partners Custodian Services Pty Ltd; and

c. Pascoe Partners Pty Ltd

be adjourned to 27 November 2015 at 11.30am.

2.     Costs of today be reserved.

13    On 27 November 2015 and 9 December 2015, I made orders further adjourning those subpoenas until they were finally withdrawn by the Stevens on 18 February 2016. Those orders were silent on the issue of costs.

14    The Court considers there is force in the submissions made by the Stevens. Ultimately the subpoena issues were resolved in the related proceedings. They were discharged and the Aboriginal Corporation received the benefit of a costs order. Another costs order now would be in duplication of that made in the related proceeding. I would, however, award the Aboriginal Corporation the costs of the day reserved on 26 November 2015 and its disbursements on the subpoenas.

Should the Stevens pay the Aboriginal Corporation’s costs of the adjourned issues?

15    The Aboriginal Corporation also seeks the costs reserved at the directions hearing on 9 December 2015. At the directions hearing, the Stevens applied for and were granted an adjournment of a number of issues the subject of this proceeding seven days prior to trial. The Aboriginal Corporation says it prepared for the trial in relation to all relief sought by the Stevens in their originating application, including the adjourned issues. As such, the Aboriginal Corporation seeks its costs that were thrown away in preparation for trial of the adjourned issues, and costs of and relating to the directions hearing on 9 December 2015.

16    In response, the Stevens make two short points. First, they say their application to split the traditional decision-making process allegations from the trial in this proceeding was made on a proper basis in order to ensure the proceeding was determined without prejudicing the related proceeding of WAD 1 of 2015. They note that the application was made on notice and opposed, and they succeeded. Consequently, they say the ordinary rule that costs ought to follow the event entitles them to have those costs.

17    Secondly, they say there is no basis for an order in the Aboriginal Corporation’s favour. In circumstances where the Court considered there to be discretionary considerations that militated against the general rule, then the appropriate order is that each party bear its own costs of the application.

18    In the Court’s view, there should be no order for costs in respect of the costs that were reserved on 9 December 2015.

19    The Court recognises that due to prior case management in the matter, the Aboriginal Corporation expected all matters in issue in the proceeding to go to trial at the same time and that this Court ultimately acceded to a splitting of the issues at the motion of the Stevens.

20    In all the circumstances, where the Court exercised a discretionary judgment at the material time as to the best way to determine the various matters in issue in the proceeding, it does not seem appropriate to award those reserved costs to the Aboriginal Corporation.

21    Accordingly, as to the costs reserved at the directions hearing on 9 December 2015, there should be an order that each party bear its own costs.

Should the balance of the Stevens’ costs be reduced?

22    Otherwise, the Aboriginal Corporation submits that it should pay only 50% of the costs of the Stevens in the proceeding.

23    In this regard, the Aboriginal Corporation notes that the Court may award costs in favour of or against a party whether or not the party is successful in the proceeding under s 43(3)(e) of the Federal Court of Australia Act 1976 (Cth).

24    It says that where a litigant has succeeded only upon a portion of its claim, the circumstances may make it reasonable that it bear the expense of litigating that portion upon which it failed. See Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748, recently cited with approval by the Full Court of this Court in Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (No 2) [2016] FCAFC 76 at [10]. In this case, the Aboriginal Corporation says the Stevens failed on the following issues:

(1)    the alleged inability to cancel membership of the Aboriginal Corporation on the ground of “conduct detrimental to the interests of the Corporation”;

(2)    the Aboriginal Corporation’s alleged breach of its rule book;

(3)    the Aboriginal Corporation’s alleged breach of its rule book and/or the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) in submitting the special resolution to cancel the Stevens’ memberships to the next general meeting; and

(4)    the alleged denial of procedural fairness caused by the Aboriginal Corporation not permitting the Stevens to make an audio or audio visual recording of the general meeting.

25    The Aboriginal Corporation says the Court held that no relevant evidence was led by the Stevens of oppressive conduct concerning the Aboriginal Corporation’s failure to hold a general meeting for at least the period of January 2013 to 2 April 2015, nor its failure to provide its directors and members with financial, management and audit information for this period. It says this was so despite orders made on 9 December 2015, that these issues were to go to trial.

26    In the circumstances, the Aboriginal Corporation says the sole issue on which the Stevens were successful at trial was the failure to give notice of the grounds for cancellation prior to the general meeting. It submits that the Stevens’ failure on all other issues should result in them not recovering all of their costs, and that they should bear the expense of litigating the portion of the proceeding on which they failed. Consequently, the Aboriginal Corporation contends that it should bear only 50% of the Stevens’ costs, save for the costs incurred with respect to the subpoenas and the adjourned issues.

27    The Stevens categorise the issues pleaded in their statement of claim as follows:

(1)    the traditional decision-making process allegations;

(1)    the “80% allegation”;

(2)    the “AGM allegation”; and

(3)    the natural justice allegation.

28    They say that while the traditional decision-making process allegations have not yet been heard, the remaining issues have been disposed of: the “AGM allegations” were expressly abandoned; the “80% allegation” was decided adversely to them; and they succeeded on the natural justice allegations.

29    The Stevens say that an objective reading of the statement of claim invites the conclusion that the two principal issues in the proceeding were the traditional decision-making process allegations and the natural justice allegations. The “AGM allegation” was, they say, a small point that was clarified following the return of a subpoena to the Office of the Registrar of Indigenous Corporations and, in the circumstances, its abandonment was proper. On the other hand, the “80% allegation” was essentially a “constructional argument” applied to the facts as it required no additional evidence; rather, it relied on the text of the clause and minutes of the relevant directors’ meeting so as to identify those who voted on the resolution.

30    In the circumstances, the Stevens say there can be no doubt that they succeeded on an issue of substance. That they chose not to pursue a minor allegation and did not succeed on another minor allegation is not, they say, the point. Neither diminishes the substance of their success.

31    The Stevens submit that, ordinarily, courts will not split costs by issue. By reference to the Full Court of this Court’s judgment in Telstra Corporation Limited v Australian Competition Tribunal (No 2) [2009] FCAFC 34 at [15], they say there is a general reluctance to engage in a “nit-picking exercise which would obscure and ignore the ultimate result”. They cite the Court of Appeal of the Supreme Court of Western Australia in Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) at [6] and [7], for the rationale for this reluctance:

The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent argument in relation to costs as an additional burden on its resources and the costs of the parties: see MacKinnon v Petersen (Unreported, NSWSC, 19 April 1989) (Cole J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] - [68] (McHugh J). Litigation is time-consuming, expensive and burdensome enough already.

In addition, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 [24].

32    The Stevens submit that there are no special features of this case that warrant departure from the ordinary rule that costs follow the event. They have obtained the very orders sought in the prayer for relief. In the circumstances, they say it would be artificial and contrary to the interests of justice to reduce their costs entitlement.

33    The Court considers that it should not endeavour, in some fine-tuned way, to award costs on the basis of who won this point or that point in this proceeding for the reasons given in Bowen.

34    There are, however, some cases, as the authorities cited by the Aboriginal Corporation demonstrate, where it is appropriate in all the circumstances of a particular case either not to allow costs in respect of a particular point agitated by the other party, and lost, or otherwise to award the ultimately successful party only a percentage of their costs having regard to how the case was run and the dictates of justice.

35    In my view, this is one of those cases where some costs allowance should be made, in the event, for issues either abandoned by the Stevens or not effectively pursued at the hearing; including the other oppression grounds that were not subject to evidence and dismissed.

36    For these reasons, the Court would discount the costs payable by the Aboriginal Corporation to the Stevens by 10%. In other words, the Aboriginal Corporation should pay 90% of the costs of the Stevens in the proceeding.

Orders

37    In these circumstances, the Court would order:

(1)    The applicants pay the Aboriginal Corporation’s costs of the day reserved on 26 November 2015, and the disbursements on the Aboriginal Corporation’s application to set aside the subpoenas withdrawn on 18 February 2016.

(2)    As to the costs reserved at the directions hearing on 9 December 2015, each party is to bear its own costs.

(3)    The Aboriginal Corporation otherwise pay the applicants 90% of the costs of the applicants in the proceeding.

(4)    There be no order as to costs of the motion or submissions concerning costs dealt with in these orders.

Associate:

Dated:    24 June 2016

SCHEDULE OF PARTIES