FEDERAL COURT OF AUSTRALIA

De Tocqueville, in the matter of Pacific Current Group Limited v Pacific Current Group Limited (No 2) [2020] FCA 229

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiffs’ interlocutory process filed on 13 September 2019 be dismissed (with no adjudication on the merits).

2.    There be no order as to costs in respect of the plaintiffs’ interlocutory process filed on 13 September 2019.

3.    Subject to paragraph 2 of the orders made on 20 February 2020, there be no order as to costs in relation to the balance of the costs of this proceeding.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

1    On 20 February 2020, I gave judgment in respect of an application by Mr de Tocqueville and ASI Mutual Pty Limited for leave to bring a proceeding on behalf of a company pursuant to s 237 of the Corporations Act 2001 (Cth): De Tocqueville, in the matter of Pacific Current Group Limited v Pacific Current Group Limited [2020] FCA 172. These reasons, which deal with costs, should be read together with the 20 February 2020 reasons. I will adopt the abbreviations used in those reasons.

2    There are two discrete costs issues. The first concerns the costs of Mr de Tocqueville’s and ASI’s interlocutory process filed on 13 September 2019 seeking an order pursuant to s 247A of the Corporations Act. The second concerns the balance of the costs of this proceeding. I will deal with each in turn.

3    By the interlocutory process filed on 13 September 2019, Mr de Tocqueville and ASI sought an order pursuant to s 247A authorising them to inspect the directors’ and officers’ insurance policies to which the Proposed Proceeding may respond. At a case management hearing on 11 October 2019, PAC submitted the application should not be determined until after PAC had decided whether or not it would itself bring a proceeding. In light of the discussion at the case management hearing, orders were made (on 18 October 2019) to the effect that, by 4.00 pm on 25 November 2019, PAC file a written submission in relation to the s 247A application, unless PAC had by that date produced the relevant documents. In the event, PAC produced the documents and no written submissions were filed by PAC. It therefore became unnecessary for the application to be heard and determined.

4    Mr de Tocqueville and ASI seek an order for costs in their favour in respect of the application pursuant to s 247A. PAC submits that each party should bear its own costs. Each party has filed a short written submission on the costs of the application.

5    The Court has a broad discretion as to costs under s 43 of the Federal Court of Australia Act 1976 (Cth). In circumstances where there has been no determination on the merits, it may be appropriate to make no order as to costs. The considerations relevant to the exercise of the costs discretion in such a case were discussed by Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 (see, also, GH1 Pty Ltd (in liquidation) v Commissioner of Taxation [2017] FCA 652 at [24]-[25] and [30] per Robertson J and McLellan, in the matter of The Stake Man Pty Ltd v Carroll (No 2) [2009] FCA 1540 at [19] per Goldberg J). In the present case, I do not consider that either party acted unreasonably. In circumstances where there has been no adjudication on the merits, I consider it appropriate to make no order as to costs.

6    Turning to the balance of the costs of this proceeding, in my view, while the plaintiffs in the present proceeding (Mr de Tocqueville and ASI) have been successful, it is also relevant to have regard to the success or otherwise of the substantive proceeding that is to be brought pursuant to the grant of leave. That is, I consider it appropriate in principle for the plaintiffs in this proceeding to have their costs of this proceeding if the substantive proceeding is successful (but not otherwise): cf, Cassegrain v Gerard Cassegrain & Co Pty Ltd [2008] NSWSC 1159 at [19]-[20] and Re Imperium Projects Pty Ltd [2015] NSWSC 123 at [8]-[10]. In the present case, paragraph 2 of the orders that I made on 20 February 2020 already has this effect. Under that paragraph, in the event that there is a resolution sum in respect of the substantive proceeding, the funder, Mr de Tocqueville and ASI are to be paid the costs of this proceeding (provided such costs are not unreasonable) from that sum. In light of this mechanism, I will simply order that, subject to paragraph 2 of the orders made on 20 February 2020, there be no order as to costs in relation to the balance of the costs of this proceeding.

Associate:

Dated:    28 February 2020